Increasing your profits by knowing your numbers: Part 3

Previously, we’ve explored various key performance indicators and their respective value as tools for effectively managing your business and increasing profits. Today, we’ll review those KPIs and leave you with some next steps for using them.

In the initial article for this series, we began with the importance of having a strategic plan. It’s important to create a comprehensive, and well-thought-out, plan that will guide your organization for at least the next two years. It’s nearly impossible to get to your destination if you have no roadmap to take you there.

Next, we examined closing ratio. This one has numerous benefits including helping you measure the effectiveness of your sales efforts. It can be an indicator that you need more work on your sales strategy, increased or improved marketing or additional training for your salesforce.

Following closing ratio, we reviewed customer lifetime value. It may be a newer term for some, but it’s an important one. You need to understand the average revenue for the lifetime a customer remains with you.

Additionally, you should know which customers make up the top 20% of your revenues, these are the ones that deserve extra care and feeding.

Lastly, we examined churn. That’s the number and/or percentage of existing customers you lose each month/quarter/year. Analyzing this factor can provide insights into which types of customers you are losing, which products or services are most vulnerable to loss, etc.

What’s almost as important as securing a new customer? Retaining an existing one. We covered the fact that acquiring customers costs about four to five times more than retaining one. If you don’t have a written retention plan or post-sale customer care program, schedule time to develop and implement one immediately. Your churn statistics will be key in this process.

A good practice is to tie the compensation of managers and appropriate line employees to some of your critical success factors. This creates a win-win situation for both the company and your team members. The company achieves its key goals and the employees are rewarded for helping it do so.

What’s next?

A good place to start is to revisit the recommendations from the previous two articles. For instance, build your customized dashboard using the metrics that you find most useful. If your company already has a dashboard reexamine how you use it. Do you use it to plan, forecast, etc.? How often is it reviewed with line employees? Managers? Senior leadership? What trends have you identified? What areas have you found that need improvement?

If you could use some guidance building your dashboard, or revising your sales plan or strategy, I’m happy to sit down with you and your team for a 90-minute complimentary executive strategy session.

G. Deon Bradley is a nationally certified business consultant and executive leadership coach. He is one of only 10% of certified coaches in North America. You can contact him at

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