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Commonly Overlooked Data Requirements

Here is a list of some commonly overlooked information that is important to know about the business, and that will assist in achieving future success.

Customer Acquisition Cost (CAC)

Very useful because it will let you see the cost and effort difference between the getting new customers and keeping the ones you have. Understanding the CAC allows you to instantly and accurately determine if a specific a advertisement should be placed or how much to spend on social media campaign or any other promotion activity. It will also show you where your efforts are working well and where they are not.

Customer Retention Rate (CRR)

This is the percentage of customers that keep buying from you every year. How long do you keep a customer once you get them buying from you? Tracking this over time and tied to other key factors allows you to see how the business is changing and if that change is for the better or if you are losing more customers. In some situations customer retention is zero because the business works with one time buyers. Many businesses operate like this is true, though it is not always necessary and may indicate an overlooked opportunity or “leaking money”.

Return on Effort (RE)

Return on Effort is a measure of how much reward you get for the amount of work put in. It is important because it lets you look at any activity, project or product and determine how the money that it will generate compares to the all the work that goes into generating that money. These measures can be hard numbers like time spent developing a product versus how many were sold at a specific price. Or it can be softer numbers more in line with opportunity costs like the product development time not spent on a different product versus the lost revenue it would have produced. The real value in RE is in being able to look at every thing you do and understand what it costs and what it is worth to the business.

New Customers Acquired (NCA)

How many new customers you acquire each year is a good indication of the company health. When compared to the total number of customers or the number of active customers it shows you were there may be serious problems in the business. Or it can show you were a new product or service opportunity is just waiting for you. To remain a viable business you must grow. But just bringing in more new customers may not be the best strategy. In fact it may not be a good strategy at all. If you can not keep the ones you bring in, it can be a huge drain on resources and an even bigger drain on profitability. Not to mention causing you to work way too hard to keep up.

Summary of Value

With these five pieces of information ACV, CAC, CRR, RE you can see a tremendous amount about the business at any given moment. If you collect them over a longer period you will also see the invisible trends in the business.

Be prepared to see ways to Stop Leaking Money and ways to start taking and making opportunities.

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