Don't get me wrong, I think goal setting is key too. There's just one thing that I don't like about goals, which is that they give you zero clue about how you're doing on a day-to-day basis.
Think about it: goals might allow you to answer the question "Are we there yet?", but they don't tell you how your trip is going. You have your eye on your final destination, but you have no idea if you'll ever get there given your current route.
Does that mean you should stop setting goals altogether? Of course not. What you should do is to supplement your goals using Key Performance Indicators, also known as KPIs.
Now, I know what you're thinking. "Key performance indicators? That sounds like corporate gibberish. Are these really necessary?"
The answer is a definite yes. Think of your KPIs as a dashboard in your car. You have your gauges, which tell you if you've got enough fuel and how fast you're going. There's also your GPS -- this tells you whether you're on course, and it also flags out any major traffic or accidents, giving you a chance to reroute.
This brings up a question: What KPIs should you keep track of? Ideally, you should monitor a different set of KPIs for each function (marketing, sales, operations, finance, etc).
If you're completely new to KPIs, I recommend starting with your marketing KPIs. I've seen plenty of companies burn all their budget on advertising, without truly understanding how this helps their company or whether there are other (more effective!) methods of growing their business. Obviously, that's a huge mistake.
Want to increase the effectiveness of your marketing, and get more mileage out of your budget? Use these three marketing KPIs to benchmark your performance:
1. Lead Generation Cost
When I ask other small business owners what channels they're using to market their product/service, they usually rattle off a list of 10 or more channels. But when I ask these owners how much it costs them to generate leads via each channel, most of them don't have an answer.
You can see how this doesn't make sense. You need to know what channels are the most cost-effective for you -- this allows you to double-down on what's working, and stop wasting your time and money on what's not.
I've talked about how important it is to have clarity and focus as an entrepreneur; this applies to all aspects of your business, including marketing. With my company, we started off by focusing on a few key marketing channels, and we only explored other channels after we nailed the first few.
2. Customer Conversion Rate
Say you get 100 people who fill up a form on your website or call in to enquire, every single day. Out of all these folks, how many do you manage to convert?
I can't give you a magic number to aim for here, because conversion rates vary pretty widely. So look up the average conversion rate for your industry, and try and match it or do even better.
This is one of those things that requires only a once-off effort, but can result in a huge impact on your company. Say you spend a week analyzing your website visitors' behavior, and fine-tuning your site to optimize for conversions. If you're generating $100,000 worth of revenue per month on average, and you increase your conversion rate by just 5%, this would mean an extra $5,000 in the bank every. Single. Month.
Of course, you don't have to stop there. If you go on to optimize your site and increase your conversions even further, this will result in even more sales and revenue generated. The sky's the limit!
3. Average Ticket Total
Look, you're smart. You know that it's easier to upsell your existing customers rather than to win over new customers. At the end of the day, upsells make a huge difference when it comes to your profit, so focus on those upsells and increase your Average Ticket Total in the process.
Here's how I do it: I run the numbers, and figure out which of my sales reps are killing it when it comes to upsells. Then I get these people to share their strategies with the team, so that other reps can learn and improve as well.