Keep track of the right things in 2010. Many business struggled because they weren’t monitoring the numbers that make a difference, and didn’t notice the decline until it was too far gone.
One that I consider the most important to track is called a T-12 report, or Trailing 12 month report. It gives you a trend analysis for how your business is performing and smooths out spikes or in revenue that may give a false sense of security. For example, an unexpected large piece of business is nice for bottom line, but can skew projections and give an inaccurate picture of a company’s true trends. It is easily charted by plotting a running 12 month total, Jan’08-Jan’09, Feb’08-Feb’09, and so on. This is particularly valuable with a running 3-4 year average and clearly shows “state of the business.” It also can enable you to catch a product that is declining in popularity before it becomes a financial strain, or can allow you to maximize a growing demand efficiently.
Other numbers to track that are not typically monitored include churn ratio – or the number/rate of customer turnover over a set period of time, monthly, quarterly, and yearly. Another metric is the number of brand new customers sold. Tracking these “first ins” will reveal the ability of marketing and sales to win market share. Those two metrics in tandem are a powerful blend. Don’t be deceived by new customers if you find that you’re losing as many as you’re winning. Also track average sale size, dollar volume proposed vs dollar volume won, and close ratio.
Most business owners worth their salt will check income vs expense and monitor monthly revenues and profit margins. However, it’s not just about money (yes, I said it.) Anytime you change a component of your marketing plan, its effect on your sales plan should be closely scrutinized. I’m a believer in a blend of both passive (radio, tv, print, social media) and active (phone calls, networking, door-knocking) behaviors. Where these to systems play nicely together, the results are ten-fold what they would be alone.
Experience will tell you what to track. Look for cause and effect relationships. There are also some amazing resources available. One that I highly recommend is a simple book called CEO Tools: The Nuts-n-Bolts of Business for Every Manager’s Success . My thanks to Dan Kliethermes of Kliethermes Homes & Remodeling for sharing that resource with me!
Paying attention to a few less obvious metrics like these will make sure you’re not missing critical pieces of information. And you don’t have to be a business owner to track this information. Sales people, in essence, run a business-within-a-business. If you don’t see it that way, you should. Know your numbers, chart the course, and keep it on track in 2010.
Happy Selling!
Categories: Business, Business Development, Entrepreneurship, Financing, Management, Marketing, New Business, Research, Sales, Success.
