Entrepreneurs: Measure the right KPI when it comes to your Start-ups

Entrepreneurs: Measure the right KPI when it comes to your Start-ups

The need for measurement is most evident when a start-up competes with itself. This is the best sort of competition for two primary reasons. Firstly, doing better than you did the previous year is a sure sign of growth. Secondly, self-competition is the perfect stimulus for self-motivation. Comparison with an external entity can sometimes have a damaging effect. But, competition with oneself creates a drive to get better and leaves no room for excuses.

The most elementary questions that cross our minds, when we think about measurement are why and how. I urge you to answer these questions before you read on.

Why should I measure?

Right from marking one’s height on the wall as they are grown from a toddler to an adult, to using a stopwatch to measure Usain Bolt’s speed in training, measurement is the key to improvement. If you are unsure of what to beat to get better, what are you competing against? You need a benchmark to measure progress. A performance index at the end of each year is the best benchmark for the next, considering a constantly growing start-up.

How should I measure?

There are many ratios which act as progress indicators. They can be classified under the broad category of Key Performance Indicators.

KPIs are vital to the growth of a start-up. There are numerous KPIs that can be used to measure every facet of your business. However, using every available KPI can be illogical and redundant. Picking smart KPIs for most relevant measurement is truly a challenge. The choice of KPIs for any business depends on the industry. The rest are specific to the way each business is modeled and managed.

Here, we will deal with the most common KPIs, which hold good for any start-up to accelerate growth:

– Customer Acquisition Cost:

Every business – product based or service driven – needs customers to sustain operations and consequently grow. But, how efficient is your approach to acquiring customers? This can be answered when you calculate the average resources spent on gaining a customer. When compared with customer retention rate and attrition rate, the customer acquisition cost makes more sense and acts as a good indicator to know if your start-up is improving its assets or bleeding finances without apt compensation.

– Lifetime Value:

Over time, the term brand loyalty has become so cliched, that its significance in the business world has faded. However, brand loyalty could be the difference between a sustained business and one that looks set to end before it can establish itself in the market. Customer lifetime value is the net value of all transactions, across the entire period of an average customer’s relationship with your business. The higher this number, the better for your business, because it significantly reduces the stress placed on finances by the customer acquisition cost. It also justifies the resources spent on acquiring a new customer.

The ratio of lifetime value to customer acquisition cost is known as the golden metric in business. When calculated, a number under three is considered to be poor. However, until a start-up establishes itself in the market, it is hard to acquire a customer following or brand loyalty. Keep your eye on this number to ensure that it rises with every passing year, but don’t get disheartened if your golden metric starts off below 3.

– Profit margin:

The bottom line of every organization is directly affected by profits margins, making it the easiest to grasp of all metrics. Simply put, the profit margin is the difference between the selling price and cost of production. Its simplicity should not tarnish its importance, as this metric is a very good indicator of sustainability and growth potential of a start-up.

There are dozens of other KPIs that are specific to varying industries. Some KPIs are used to measure your business against industry standards or leaders. Though these may seem a bit much for budding start-ups, it’s never futile to measure KPIs and device strategies for improvement. These smart tips should come in handy while selecting the right KPIs for steady business growth:

– The salmon strategy:

It is fascinating to watch salmon swim upstream, against the current, to spawn in their home stream. Sometimes businesses must take a page out of the salmon’s book and work backward to solve certain problems. The most notable quandary faced by start-ups is the choice of KPIs. Sometimes its easier to choose KPIs based on the data that is readily available to you. A balance sheet is mandatory for any organization, making most of the primary KPIs easily attainable.

From over two decades of experience, I have noticed that the hardest KPIs to measure are the ones that are related to marketing. With the advancement in technology, it is relatively easier to keep tabs on your marketing team. The use of link management platforms is a novel method to erase obscurity and measure marketing campaigns purposefully. The analytics on these platforms are so comprehensive that precision is never compromised. Social networks, such as Facebook, provide their analytics but do not explicitly state the number of bots that have clicked on your link. Invariably your measurement is flawed.

– Split the responsibility:

Division of labor, based on one’s skill set is the best way to tackle any challenge. In keeping with this axiom, measurement of KPIs is often split into few sizeable chunks and assigned to particular teams. Not only does this ease the burden of measurement, but ownership also ensures that these teams take upon themselves the onus of improvement. Such motivation is a key ingredient to the growth of any start-up.

– Measurement without action is futile:

The sole purpose of measuring KPIs is to improve upon existing business tactics. Without such impetus to improve, measurement is like a mirage of success. Be it to up the bottom line or expand the business, the need for progressive action is only surpassed by adept execution.

– Concentrate on the most important KPIs:

KPIs vary in importance depending on the type of business and strategies employed to achieve business goals. The most important KPIs for a start-up may be the customer acquisition cost, whereas an established brand, in the same segment of the business, may consider customer lifetime value to be more significant than the rest. Whatever be your elixir to accelerated growth, the right KPI must be measured and monitored on a regular basis to stay on track to success.

Five Ways to Acquire More Customers Right Now

Five Ways to Acquire More Customers Right Now

In today’s ruthless world of business, brands are faced with challenges aplenty. The most significant of which – an ultimatum of sorts – is encountered when a brand is a knee deep in business stagnation. The question of whether to grow or go has visited the minds of CEOs the world over. However, it’s very unlikely to encounter a decision maker who chooses to go instead of growing. A decision well worth every applause, but is it deserving of a standing ovation? Certainly not, until the brand has harnessed the potential to grow, filled its sails with desire and ambition, and most importantly traded its dinghy for a galleon.

Customer acquisition is one of the most important drivers of business growth. A larger customer base equates to increased profits, which in turn acts as the seed for business expansion. But, how do we gain the attention of potential customers and convert them into loyal brand followers? Digital transformation has ushered a barrage of changes, a lot of which have had a detrimental impact on traditional marketing approaches. With the influx of several low-cost channels to reach out to customers, the need for expensive advertising is on the decline.

This trend has also overturned the ideology of hard selling and replaced it with more intuitive inbound approaches, which focus on exceptional customer service. ‘Value’ has never been more appreciated, by consumers and businesses alike. Present day consumers are always on the lookout for brands that offer more than just an array of exceptional products. Businesses, on the other hand, are equally appreciative of value, as it is an inexpensive way to get noticed by potential buyers.

One such unique value addition is found in link management platforms. These platforms allow for the personalization and analysis of marketing links. The rocketing use of personalized links, by world-renowned brands, to reach out to their target audience has caught the eye of many a customer. Branded links stand out for their novelty, making them click-worthy. It also works well for smart marketers who can now use links to promote their brand message.

Mountain Standard, an outdoor gear brand, has fully espoused the trend of digital marketing, so much so that they do not own a physical store to sell their products. Most of their sales take place through their online channels, while few customers buy from non-traditional pop-up stores in the U.S. The brand uses the contemporary strategy of smart content and incredible service, which have become cornerstones to the brand’s success. Their vision is simply brilliant! It reads -Premium goods at an honest price = More money for your adventures.

How does Mountain Standard sell premium goods at affordable prices and still manage to churn out a handsome profit? The theory is simple. They save a significant sum of cash in overhead costs by boycotting traditional retail stores that charge an exorbitant price just to place a product on their shelves. That’s all there is to it. But, practically, to sell goods without a chain of stores is much harder than it seems. The company makes this possible through their impressive website, which showcases every available product. A crossed out standard industry cost of the product is displayed next to the product, and the Mountain Standard cost – 40% to 50% lower – is placed next to it. A discount as such is sure to incite sales. The brand also conducts annual surveys to understand the changing requirement of their online consumers. In doing so, their website is always customized for better customer experience. It is said that in today’s digital world your website is the front of your brand, as opposed to office space, not so long ago. Mountain Standard has certainly brought this statement to life!

Not all brands can be as astute in their endeavor to garner customers. Some brands adopt a more direct approach to marketing. Very often direct marketing and hard selling are used interchangeably. However, hard selling is no more a marketing technique. In fact, it is a sure way to drive customers to your competitors. Here are five ways to draw customers to your brand:

Social influencers continue to grow in importance:

Social influencers have gained significant momentum over the past couple of years. Though it may seem like this trend is bound to decline sooner rather than later, brands continue to employ influencers in different capacities. Innovative ways to reach out to customers coupled with the trust they have in influencers has worked wonders for brands.

Traditional approaches such as guest blogging are one sure way to attract attention. Social media networks create a buzz whenever an influencer has an opinion. In due time the message reaches relevant audiences and brands benefit from the seed which is sown in the minds of potential customers through influencers.

More recently smaller organizations have started using bigger brands for promotion. It is known as the ‘host-beneficiary’ arrangement. In this case, an established brand promotes a product in their email to regular customers. This offers a chance to market to a new database of like-minded customers. In exchange, the smaller business may pay for the cost of emailing or offer commission on sales.

Press for press coverage:

The press will never become obsolete. It has withstood the test of time and is still considered to be one of the most powerful forms of media. A press release will do your brand a world of good. Not only will it ensure a good deal of readership, but it will incite trust, as it is coming from a recognized source. This is sure to be an expensive affair and should be undertaken after careful consideration.

Content marketing is at its peak:

Ask google what is the single most influential marketing tactic, and the answer is sure to be smart content! Content can make or break a brand. Right from SEO to social posts, content is the game changer! An expert content anchor can run a marketing campaign into a pot of gold. Great content without direction is a wasted effort. It is futile to have good content without a content strategy. Content creation and distribution go hand in hand. When you hit the right balance, you will see marketing miracles unfold before your very eyes.

If customer is king, customer feedback is the signet ring:

Brands have spent millions on customer surveys and test groups to analyze and improve upon existing products and services. The budget is set to increase in the days to come with the onset of personalized marketing. Without such feedback, it is impossible to create personalized products, service or marketing campaigns to sell the former. Brands with the best personalization strategies will make it big in 2018.

Focus on improving brand loyalty:

Brand loyal customers are hard to attain. Especially with the many choices in today’s market, one mistake is all it takes to lose a good chunk of loyal brand customers. However, these customers are sure to bring in a horde of new customers if their needs are met with value-added services.

2018 is certain to change the landscape of marketing. As marketers, we live in exciting times, when competition is driving mind-blowing innovation. I, for one, cannot wait to see what the latter half of 2018 has in store for us.