Running a member-based business is much more than just hiring staff and servicing customers and members. To ensure it’s going smoothly, it’s important to keep track of data that directly correlates to the potential success of your business. Key performance and financial metrics can help you address any problems with your business before they occur. Here are five key metrics that every business owner should track.

Sales include your earnings through customer purchases of your service. Of course, if this number is high, it generally reflects that you’re doing something right. But this piece of information can reflect other meanings and trends as well. You should be measuring your sales revenue against other metrics, such as return-on-investment, asset turnover ratio, and more. These numbers can help you assess how your business is doing and how it measures up against your competitors.

2. Customer Acquisition Cost

Since customers don’t grow on trees, it is likely that you will have to spend some money to acquire new members. This number can be calculated by dividing the cost of your marketing and sales by the number of customers that you have gained over any given time period. A lower CAC is generally better, but it may depend on your business model. Your CAC could fluctuate, especially if you introduce new services that require higher margins, but be sure to watch this number and evaluate it alongside other metrics.  

3. Customer Loyalty and Retention Rate

Your retention rate measures the percentage of members who stay with your business, or customer loyalty. One easy way to measure your retention rate is by subtracting the number of new members from your total number of customers at the end of the month (or any period you decide on), then divide that by the number of members you started that month (or period) with. You want to keep your retention rate as high as possible because it can reflect what you’re doing right and what practices you may need to change.

4. Margin

You may have heard the importance of “watching your margins,” when it comes to running a business, and its importance should not be understated. Understanding how much things cost you—such as marketing expenses, staffing salaries, and fixed costs—as well as how much you earn is a good way to help you figure out how your business is doing. While there are a number of ways to calculate your margins, your revenue should generally exceed your operating expenses. If it doesn’t, it could imply that you are not ready to grow your business yet, or that you could be potentially losing money.

5. Return on Advertising Spending

Marketing expenses are generally a necessity for any business. It’s important to get the word out about your business and, without proper marketing, it can be hard to do that. With that said, it’s important to keep track of your spending and, more importantly, its returns. All you need to do in order to calculate this number is divide the sales that were generated by your marketing spending. Theoretically, you should generate more than you spend. Be sure to assess which marketing channels work best for your business so you aren’t spending money on avenues that aren’t worth your time.

Xplor Recreation’s membership management software can help businesses of all sizes connect with their communities, giving your organization the ability to manage all aspects of your operations, marketing, and financing. Our integrated marketing and built-in reporting enables users to create, customize, and run any report at any time, allowing you to create and schedule custom financial, attendance, utilization, marketing, and forecasting reports all from the same interface. Learn more about the software here.

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