Three years ago my buddy with an already successful company wanted to start a new e-commerce business. He shared the thought in our CEO group but it wasn’t well received. After all, at $400 in monthly revenue, the new idea appeared to be little more than a distraction from his “real” company. Fast forward to today where this new “distraction” consistently shattered their six-figure monthly sales figures – I caught up with him last week and asked him how he grew his company using metrics.
How to grow revenue by measuring what you want done
We talked about how everything is about building systems, measuring its performance, and then making necessary changes based off of the information we have. We talked about sales and revenue metrics in specific. He started out with top line (revenue) – a financial metric that should be readily available to any serious CEOs. His goal was to grow it – so they backtracked it to the number of sales and set a goal against it. The goal was 200 orders in a given month.
Funny how if you set a clear goal and get your entire team to buy into it – you end up hitting it. He didn’t stop at 200 orders though. He dove deeper into the data and discovered something interesting; while their total order numbers increased, most of it was coming from repeat orders and not new customers. In fact, they were losing new sales to competitors! (Things weren’t as rosy as it appeared.) So they honed their focus on getting new customers and aligned their efforts on that – promotions that targeted first-time buyers, internal celebrations built around new acquisition metrics, the whole nine yard. Two months later, while they grew their revenue from new customers, they also blew their original goal of 200 orders per month completely out of the water.
1. Start at the top
you want to start measuring and hacking your business? Just pick an output metric that’s already available to you, see how you’ve been doing, then set a goal against it. Don’t overthink.
2. Identify the drivers to your output metrics
In our case, the number of orders was what drove our revenue. Set a goal there then align the team behind it. Make it a theme, create a strategy, turn it into a game – you’d be surprised how your team can help drive their inputs if you just show them how. If they know how they can succeed, they will do it.
3. Dig deeper
Now that you have a good handle on the 10,000-feet view – what else is interesting? Ask the right questions (new order vs. old order) and see what else we can hack to move the needle. Set goals, measure, act, then iterate as needed.
What do you think? Is there an output metric that you’d like to drive? What other tips have you found to be helpful in your business to move the needle? Let us know in the comments below. Or let us help you identify your own key metrics.