Marketing Metrics - KPIs for Small Businesses
Key KPIs for Small Businesses – Part 1
When you’re marketing a small business on a tight budget, every penny counts. In order to maximise effectiveness, it’s important to have a ‘road map’ to success, so that you know that ‘if I do activity X activity Y and activity Z, I’m likely to achieve my marketing objectives and, in turn, my business goals’.
The KPIs below will help you keep your marketing activity focussed on achieving your business goals.
But where do you start? And how do you know what works and what doesn’t?
You start with the facts and you work backwards. On a monthly basis, record the following:
- Number of sales
- Value of sales
If you divide sales value by number of sales you get an average transaction.
The aim here is to understand the conversion rate from enquiries/footfall to sales, e.g. you may achieve 1 sale for every 4 enquiries.
3 Brand Impacts
An impact occurs when a potential customer sees your brand.
This could include all or several of the following:
- Local press/magazine ads (readership = impacts)
- Leaflets distributed
- Website traffic (potential customers only)
- Social media impressions
It’s not an exact science, but over time, you’ll get a good indication of the relationship between impacts (the number of times people see your brand) and enquiries/footfall.
So, how does it all work?
Assume the following figures over a 3 month period:
- Total Number of Sales: 300
- Total value of Sales: £48,000.00
- Average Sale: £160.00
- Enquiries/footfall: 600
- Conversion Rate from Enquiries/Footfall to sale: 50%
- Brand Impacts: 300,000
From this we know that, based on current activity:
- 500 impacts = 1 enquiry/visit
- 1,000 impacts = 1 sale
Therefore using the above figures, you know with reasonable accuracy that your brand needs to reach 1,000 new potential customers to generate £160.00 of incremental monthly revenue.
NB don’t be daunted by the brand impact figures. A local magazine advertisement can easily generate 50,000 impacts on its own. Ultimately, marketing is a numbers game. Many successful brands use models based on thousands of impacts generating tens of enquiries and handfuls of sales.
Of course, these aren’t the only variables, over time you can refine the model by experimenting with things like:
- Different media
- Different creative treatments
- Different offers