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Running a successful business requires regularly assessing and analyzing key metrics related to sales, engagement and financial results. By understanding the current situation and comparing it to previous results, it is possible to identify trends, make solid plans for future expansion and growth, and rectify any areas that need improvement.
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How do you know which metrics you should monitor?
The franchisor will regularly assess the performance of every branch of their business, comparing sales across the different businesses, growth rates, revenue generated per square foot, and overall net profit. Just because your franchisor is reviewing and analyzing these metrics does not mean that you can put your feet up and await feedback.
To improve your service offering and profit margins, you must proactively review some fundamental metrics, including:
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Revenue:
Monitor all of your sales, and on at least a monthly basis, calculate the income generated from sales minus the cost of any refunded or undelivered products to determine whether your business is flat lining, improving or declining. You will be able to identify trends, such as whether you are busier at a particular time of the year or whether spikes in sales coincide with special promotions or events.
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Profit:
The amount of sales you make does not always coincide with the amount of profit you generate. Occasionally, sales of high-ticket items will increase your sales statistics but not your profit as the cost of purchasing these products is greater. Ideally, you want to make a healthy profit on every sale to cover overheads and wages while being able to pay yourself.
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Website traffic:
To maximize your business success, you need to attract the right customers. Understanding whether your marketing efforts are attracting customers from your target demographic is important. You can use your website or social media engagement statistics to determine what proportion of visitors to your site actually make a purchase and tweak your SEO or marketing and promotional material, if needed, to capture the attention of your target audience.
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Engagement:
Do your social media posts get plenty of likes, shares and comments, or do people view them and pass by without commenting? Ideally, you want maximum engagement from every public posting because the algorithms in the system will recognize that your posts are interesting and promote them to a wider audience, thereby growing your reach. If your engagement statistics don't make for impressive reading, consider ways in which you can make them catchier and encourage participation.
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By spending time reviewing and analyzing these metrics, you will be well positioned to make future business decisions. Discuss your findings with your franchisor to determine how well they align with the overall brand KPIs and how you compare to other branches of the franchise. Your franchisor may be able to help you improve your messaging techniques to appeal to a wider cross-section of the population, growing your sales and profit margins.
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