Business success depends 100% on knowing your numbers to profit. Because when you started out in business you set out to change the world, to help people to make a difference, and run your own show along the way…no more bosses EVER!
Entering the big, fun world of entrepreneurship and going it alone has been fun, the thing is, there are many people who go this path without a second thought on what numbers are needed to get the success they are looking for.
There are many people who like me are detail averse, and great at the big picture, and can get something off the ground super quick. What you may not have realised is the importance of knowing all the numbers in your business, more importantly, know the RIGHT numbers.
From the very first month, there were things to measure. Sales, leads, calls, clicks, and conversions. You name it, there was something to measure. Not to mention social media, analytics, Google analytics, Facebook ad analytics, and the list goes on. So how do you know what numbers are the important ones to keep your dream alive?
Now, as a recovering detail-averse entrepreneur, I struggled with this for a year or so in my business. I knew the money that I was making, I knew generally what the expenses were, I nailed how to monitor my leads, I knew to the cent what it would cost me to bring a customer through my marketing system to then convert to a customer.
As a small business social media marketing educator and entrepreneur, I want to take you through two sets of numbers I believe are essential to doubling net profits in your business.
The Accounting Numbers
What numbers should you be looking at?
Cash in the bank, making clear you know how much money you are generating versus how much you’re spending…at least 30 days out.
Be on top of your expenses, regular review of the bank, PayPal or credit card statements will keep it real.
Obviously, you need an expert in this space, please source your own accounting and bookkeeping requirements. A fantastic bookkeeper I know is Amanda Larkin from Your Mini CFO, she is awesome in making the accounting work for you. Tell her I said Hi!
When it comes to social media and marketing results, it depends on if the work you do is organic or paid. As I am passionate about people utilising organic growth to its fullest, I will focus on that.
Social Media Numbers To Know
I am often asked about the return on investment for time and energy that go into unpaid social media marketing, and it’s quite exciting if you look at the numbers, but it’s also very challenging because Facebook constantly changing and releasing new features, as do other platforms, which changes the algorithm, which of course change the tactics that you’re taking to get the most out of it.
With any significant growth, it’s more important than ever for brands to understand how to effectively use social media metrics. It’s a top priority when executing out what campaigns or what you’d like to post about or what offers you’re planning to determine your return on investment.
In social media and marketing online, your database is something that you should be monitoring. How many contacts are you adding into your database on a weekly basis?
If you are not collecting name and email from all who you come into contact with, please start today, and use a tool that meets privacy requirements.
Social Media Organic Metrics
Impressions and Reach
This can be a little confusing for most business owner’s let alone those in marketing.
Impressions are the number of times your post has been seen, which means that every time your post is displayed online it counts as an impression.
Reach is the number of people your content could potentially be seen by. For example, if your post was shown to the same person three times, you’d have three impressions, but only one reach.
Post engagement is the number of users who have interacted with your content, either by liking, sharing, retweeting, comments, clicks, etc. This does not result in a direct return on investment. However, it does validate the content that you are sharing that’s interesting and valuable to your audience, it means they are enjoying what you post!
And while I’m on definitions for social media, let’s talk about the algorithm. An algorithm is composed of thousands of data points that make certain posts appear first and others later on in your social feed.
For example, why do you always see the same people’s posts or the same type of posts? The algorithm, it is designed to show you more of what you react to (like, comment, share, tag etc).
This is why posting at the optimal times of the day are so important. Go into the ‘insights’ of your page or account, find out when you have the most engagement and adjust your posting strategy to these times.
Meaning, adjust the time you post to make sure that the maximum amount of people will see it.
Hashtags help people search and group similar content. They help make your content easier to find and solidify keywords associated with your brand. This can be a complex thing, click here to learn more about how I can help you find your best hashtags.
What do all the numbers mean?
A couple of things – the numbers never lie; all marketing and business decisions should be made from these numbers.
In social media, you’re looking for greater reach, higher impressions, more engagement, more clicks, more personal messages, more conversations with people who want what you do.
From one detail averse entrepreneur to another, the numbers matter A LOT!
I believe the most important number to work on is the annual net profit of a customer/ client. Let me say this another way. If you were to bring in one new customer tomorrow, on average how much profit would that transaction make for you over a 12 month period?
One of the key indicators I teach my clients is the five main areas in business you need to know to level up and successfully grow your business.
- Lead generation
- Lead nurture
- Sales and conversion
- Repeat business, upselling and referrals.
There will be some areas you are kicking massive goals, and others not so much. Click here to take the quiz.
The net profit / net worth of your customer per year.
Numbers You Will Need ->
Let’s look at how many people that you’re getting on a monthly basis.
You want to know what your annual leads look like. Monthly leads x 12
How many people are you converting from the number of people that you have coming through your door and who you’re making contact with?
Out of 10, how many people would you convert to a paying customer? This can then be converted to a percentage. EG: 20%
New Customers Annually
You can now work out how many new clients you get every year. Annual leads x sales conversion percentage
Average Price Per Sale
What is the average price per sale?
Work out the gross profit (the dollar value of your average sale). For example, the difference between the revenue ($200) and the cost ($150). To find the margin, divide gross profit by the revenue. To make the margin a percentage, multiply the result by 100. The margin is 25%
How Many Purchases Per Year Per Customer?
How many purchases are made each year for that one client?
You are almost there…
Annual Lifetime Value Of Your Customer
To calculate this, simply multiply the profit per sale x the purchasers per year
You can continue this to a longer game, where you look at the metrics on how many years the customers stay with you, how many referrals they give you and then how well you convert those referrals to paying customers.
However, for the purpose of this article, let’s focus on these numbers for an annual figure.
These nine figures are the golden tickets to doubling your net profit. Focus on the RIGHT numbers.
Disclaimer: I am not an accountant, this is not financial advice, it is simply a demonstration of how to focus on the RIGHT numbers to grow your business this year. Please source your own financial advice from an expert in this field.
Link This Number To Social Media
The goal with any social media campaign is the return on investment (ROI) for your time, energy and money.
Keeping the focus on organic growth, let’s work out what adding 10% to all these numbers might look like in reality.
|Formula||Numbers Now||Add Ten Percent|
|[A] Monthly Leads||70||77|
|[B] Annual Leads||A x 12||840||924|
|[C] Sales Conversion Rate (%)||20%||22%|
|[D] Annual New Customers||B x C||168||185|
|[E] Average $ Sale||$500||$550|
|[F] Profit Margin Of Sale||70%||77%|
|[G] Profit From Sale||$350||$423.50|
|[H] Average Purchasers Per Year||2||2.2|
|[I] Annual Profit Value Per Customer||G x H||$700||$931|
|[J] Annual Cash In The Bank||I x D||$117,600||$172, 235|
Revisit your original numbers, add 10% to each field. It’s not a 10% increase in dollars, it’s way more than that, it means tens of thousands without spending an extra dollar on advertising. You may not need as many people into your marketing as you may think, but you do need to know your numbers.
It could be you are meeting and connecting with people, it could be your nurturing and sales conversion is holding you back.
Now, just to reiterate people are not prospects, ask questions, please do not prospect without building a relationship first. They are people, which is why the biggest thing you want to do is to make sure you know who your ideal client is. You’re going to meet and build a relationship of trust with a person who potentially could be your ideal client.
The challenge comes in finding and meeting and converting because organic social media is a long game, and it won’t happen overnight, there is no silver bullet.
When you go straight to ‘buy my thing’ with your posts and marketing, statistics show that only 3 out of 100 are ready to buy at the time, which means you are missing the remaining 97 potential connections you could be making, because people who would like to know more about you and what you do, people who enjoy education.
When you spend the time educating, engaging and building relationships, you will attract another 60 people out of the 100, that means there are 63 you can help, but it needs a strategic approach, and organic reach is the answer. The rest will never be interested, which is why we focus on your ideal audience and not trying to help everyone.
Focus on the RIGHT numbers, the RIGHT people and watch your business gain traction.
Have a fantastic week,