Imagine trying to run a business without any idea how much money you’re making. You don’t know your inventory costs or how much revenue your business has.
How likely is this business to succeed?
Unfortunately, that’s how most online businesses run their companies. They might have a vague idea of how much money they’re making or how many visitors they’re getting, but in reality they’re keeping very poor track of their online business.
Some business owners are even surprised when at the end of the month their business isn’t profitable.
Wise business owners on the other hand track almost everything in their business.
What You Can Track, You Can Improve
If you were to ask a business owner how well his site sells, most business owners would probably give you a response like: “Pretty good.”
How difficult is it to improve a website that sells “pretty good?”
It’s next to impossible. Because there are no measurable metrics, there’s really no way to measure whether or not something you’re doing is actually working or not.
On the other hand, if a business owner could tell you “Out of every 150 visitors, we’ll make one sale for $40.”
With this business owner, you could …
- Improve the ratio of visitors to buyers, so that one out of every 100 will buy. Or …
- Increase the sale amount from $40 to $60 so the business makes more money per sale
Whether your efforts in increasing profits are effective or not can be clearly measured. If the numbers show an improvement, it worked. If the numbers don’t show an improvement, it didn’t work.
In short, what you can track, you can improve. What you can’t track or aren’t tracking can’t be improved.
Up Next: Keeping a Pulse on Your Business