By Linda Williams, Featured Guest Contributor
How Do You Define Success For Your Pet Business?
Creating Key Performance Indicators( KPI): Part 1 Revenue
Is your business successful? How do you know?
The most common measurement of success is gross revenue. But how do you know if you’re on track to make that goal? What are the mini-goals that have to be achieved on a daily, weekly and monthly basis?
KPIs or Key Performance Indicators (KPIs) are mini-goals that you want to set for your pet business. They are critical milestones that contribute to achieving revenue (or other) goals. KPIs help you measure different parts of your business and contribute to achieving revenue and other goals you’ve set for your business regardless of your business size or business maturity.
Let’s use a simplified example to illustrate the concept. A pet retailer selling pet related products with an annual gross ( before expenses) revenue goal of $50,000 needs to establish daily, weekly and monthly gross sales goals.
Other pet retail store KPI’s may include:
- Number of items per transaction
- Average value per transaction
- Average value per customer
Pet retailers, service providers, non- profits and manufacturers all have specific KPIs, but common ones include:
- Margin ( gross revenue less all related costs) and that can be broken down by category or product/service
- Average spend per customer ( Take the total sales revenue over a period of time and divide by number of total transactions)
- Customer satisfaction levels ( Are you conducting surveys?)
- Customer attrition rates ( What percentage or number of customers are not coming back over a period of time?
- Marketing related*(Website traffic, social media statistics, advertising ROI, event sign ups, etc)
When trying to identify KPIs for your pet business ask yourself the following questions:
- What am I measuring?
- Why do I want to measure it?
- How will I measure it?
- How often should I measure it?
- What will I do with the information?
A note of caution, be aware if you are experiencing “analysis paralysis” where you have so much data it’s overwhelming and not helpful. Less is more. Pick 1-3 KPIs for your pet business to start out. Over time some KPIs may become less vital over time, and therefore you should review them once or twice a year to determine if they are helping you move your business forward.
Make a list of what you are currently measuring in your pet business and determine if the data is useful and is truly helping you make decisions about your business.
Check out our How to Define Success For Your Pet Business infographic below.
*In Part 2 of this article we will explore marketing and other KPIs that indirectly contribute to revenue goals. We’d love to know what you are measuring and how it’s helping you grow your business please share in the comments below.
Linda C. Williams is a marketing and branding expert with nearly 20 years experience across a variety of industries including consumer products, retail, healthcare and pets. She can be contacted at email@example.com.