How to Measure Business Success?
Wondering how to measure business success? Here are some ways to quantify your growth journey.
Your financial success can be measured by your Net Profit Margin. This is a financial ratio used to calculate the percentage of net profit your company produces from the revenue. Revenue refers to your total sales for the period. Net profit is calculated by deducting all your expenses from the revenue figure, typically taking into account costs such as for labour, materials, rental, marketing, depreciation and tax. Also called the bottom line, net profit is typically expressed as a percentage but is sometimes also represented in decimals.
As an indicator of your company’s financial health, you can track the increase and decrease in your net profit margin over the year and also comparing against a similar period in previous years. It enables you to assess whether your pricing strategy is generating sufficient net profits from sales and whether current costs are being managed. You can also do forecasting of your net profits based on your sales data.
It is important to know that investors will use your net profit margin and changes over the years to assess your company’s management. Ideally, it should show increasing margins, which means that your company is able to produce profit through effective cost control and strengthening pricing power.
Manpower and Staffing Success
Employee satisfaction can be defined as the contentment level of employees with various aspects of their job. Closely related to culture, having happier employees equal to a happier company. If you care for your employee’s wellbeing, your employees would be more willing and eager to support your company’s mission and will do more to achieve your goals. The Employee Satisfaction Index (ESI) can be a quantitative way to measure your staff’s happiness at work.
The ESI survey comprises of questions under the 7 categories; Extrinsic rewards (Tangible rewards given to your employees such as salary and bonuses), supervisory support (How happy your employees are with their team leaders’ performance), reward fairness (How appropriately rewards are distributed among employees), autonomy (How much freedom your employees feel they have in how they carry out their role), corporate image (How much your employees like your company), affinity (How supported your employees feel by their colleagues), development (How satisfied your employees are with the career prospects and opportunities your company provides them).
Measuring each category with 2 to 4 individual questions each to help you gather sufficient information to act on. The questions will each use a 10-point scale, ranging from 1 (strongly disagree) to 10 (strongly agree). You can then use the consolidated
Here are some benefits of higher employee satisfaction rates:
Reduced turnover; Valuing and appreciating your employees will help increase their employee satisfaction towards their job. By finding out what really matters to your teams, you can remove roadblocks and create a positive working environment that will help keep your employees around for the long haul.
Improved brand image; Once you create a better working environment, you will see an increase in employee morale, and you will also see more high-calibre candidates keen to work for you.
Increased productivity; Happy employees exhibit higher productivity at work. Through measuring of employee satisfaction, you have the data needed to undertake initiatives for boosting your workforce productivity and to measure the effectiveness of those initiatives over time.
Getting employee feedback; Employees generally have valuable suggestions and feedback from them will reveal crucial areas for improvement. By sitting down with your employees for their opinions, you can gather data that surveys or reports cannot.
Client Satisfaction Success
Net Promoter Score (NPS) is a tool which enables you to gauge your clients’ loyalty with your company, their customer experience and hence is a leading indicator towards business growth. NPS has gained wide adoption in major companies and has formed an important part of these companies’ customer experience management programmes.
Using a key question “How likely are you to recommend (brand) to a friend or colleague?”, respondents will score it between 0 (not at all likely), to 10 (extremely likely), with 5 being neutral. Respondents will thereafter be grouped into 3 categories.
Promoters (score 9-10) are loyal enthusiasts who will continue purchasing and refer others, fuelling growth. Passives (score 7-8) are satisfied but unenthusiastic customers who are open to competitive offerings. Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth by way of negative word-of-mouth.
Subtracting the percentage of Detractors from the percentage of Promoters yields the Net Promoter Score. This score can range from 100 (if every client is a Promoter) to -100 (if every client is a Detractor). You can then use this score with other measures from the individual phases along the customer experience journey, thus leading to an actionable plan to improving your client experience.
Branding and Marketing Success
You can measure brand awareness through growth in traffic. Through the use of web analytics programme such as Google Analytics, you can discover trends in direct traffic which comes from users who typed the URL directly into their browser to get to your website.
This is important as users remember your company’s URL specifically. As an important part of brand awareness, direct traffic is a good measure of your brand recall on your clients.
Branding success is also measured via earned media. Earned media is the publicity your brand gets without having to pay. This includes examples such as your company being mentioned in an article. Earned media helps you to build brand awareness. Through the use of social tracking tools, you can find out when, where and how often your business has been mentioned.
Also known as social listening, by tracking the organic conversations about your brand across various online channels you get to hear your clients’ thoughts as they are naturally expressed. This is more effective than surveys and you can get more truthful responses.