What is growth tracking?
Growth analytics is the process of analyzing data related to user acquisition, conversions, retention, and sales in order to assess performance against corporate objectives, establish critical indicators for gauging growth and uncover factors that influence profitability.
Companies may have a clear picture of what drives conversions, repeat visits, customer retention, churn rates, and other growth aspects by collecting and evaluating growth analytics. Because even customer questionnaires aren't 100 percent accurate and don't present a whole picture, there's no conclusive way to tell what drives development without it.
Tracking growth metrics is beneficial in that it gives insight into previous occurrences and may assist a firm in continuing to expand or improving growth in the desired direction. Growth indicators reveal a lot more about a firm than whether or not revenues are increasing or decreasing.
What insights can we gain from growth tracking?
Growth tracking can provide valuable insights such as:
Which growth metrics are the most important and should be tracked?
There are literally hundreds of metrics that a business may measure. Many of those measures, however, are irrelevant in terms of business growth.
Any statistic that provides demonstrable value towards achieving corporate growth goals, whether directly or indirectly, is worth measuring. They're referred to as key performance indicators (KPIs) (KPI). The following are some of the most important growth measures to examine:
1. Revenue Generation
This is the most basic growth measure, yet it's worth monitoring. Revenue should ideally increase year after year. If revenue isn't meeting expectations, management should look at what may be changed to increase sales. Are you reaching out to the correct people? Is your message getting through to them at the appropriate point in the sales funnel? Do you need to make any changes to the pricing?
2. Cost per lead
What is the cost of generating a lead? Is the conversion rate sufficient to justify the cost? The cost per lead is calculated by dividing your marketing and advertising expenses by the number of leads generated over a given time period. As advertisements take impact and are improved, the acquisition cost should drop over time.
3. Cost Per Customer (CPC) Acquisition
Analyze the cost per client acquisition to go a step further. This includes both leads and conversions. If your conversion rate is 10%, it will take 10 leads to convert one lead into a client. If a single lead costs $10 to create, the cost per acquisition would be $100. The aim is to make the customer's value (i.e. how much they buy or spend) as much as higher than the acquisition cost.
4. Average Revenue Per User (ARPU)
ARPU is calculated by dividing total revenue by the number of users. To figure out which sort of user earns the most money, it's preferable to look at this measure by cohort.
Is it possible for you to maintain consumers after you have them? Retaining consumers is far more cost-effective than converting a fresh lead. Getting a new client is five times more expensive than keeping an existing customer. Increasing retention by only 5% can increase earnings by up to 95%. Client retention is also an indicator of customer loyalty, which has long-term implications for growth.
The capacity of the sales force to upsell clients can sometimes determine revenue growth. Upsell stats can reveal whether you're losing out on possibilities to boost revenue and lower cost per lead.
7. Conversion Rates
Your conversion rate is the percentage of leads that become customers or take a specified action. This measure varies greatly based on the aims of a firm and what they consider a conversion. Lack of quality leads, landing pages that miss the target with the message, the sales team's approach, and a variety of other issues can all contribute to low conversion rates. The measurements can help you figure out where you can make changes.
8. Active Users
The user base is an essential growth measure for many firms, and it may be more revealing than total users numbers. It's important to define what constitutes an engaged user. Daily active users (DAU) and monthly active users (MAU) are two indicators to keep an eye on (MAU).
Measure the metrics that matter with Royex Digital and grow your company in the desired way.
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