A company’s revenue is a primary way to define and measure business growth. Yet, it is not the only way.
Other factors can come into play. These include market share growth, user growth rate, customer lifetime value (CLV), net promoter score (NPS) and employee satisfaction.
Taking a look at these factors together can show you how and where the business is growing and where you can direct your attention to further improve. Ongoing improvement should be an area of concentration for every business regardless of the specific methods of measurement utilized.
• Market share growth takes a look at how well your business is competing in your industry.
• User growth rate evaluates how well your organization acquires new customers.
• Customer lifetime value (CLV) shows the amount of money customers will spend on your products and services over time. It is determined by multiplying the average value of a sale by the number of transactions and the average customer lifespan. CLV represents the upper limit on spending of a company to acquire new customers. It can help you learn and understand how much your organization can be willing to spend on marketing, advertising and related efforts to acquire new customers. The average customer lifespan is the average number of days between the first and last order dates of all your customers. It can be calculated by adding all customer lifespans, divided by the total number of customers. For new businesses that have not yet compiled sufficient data to factor into an equation, the average customer lifespan is thought to be about three years.
• Net Promoter Score (NPS) is another market research metric and is based on a lone survey question asking those responding to rate the likelihood of their recommending a company, product or service to someone else. NPS is derived by subtracting the percentage of detractors from the percentage of promoters in the specific survey question collected. NPS is generally used to assess overall customer satisfaction and assess how likely customers are to recommend a company to a peer or a professional colleague.
• Employee satisfaction provides insights into measuring growth. Beyond the basics of an appropriate wage and work environment are a myriad of factors to consider.
• Every employee has his or her own sets of skills and internal motivators. Find out what they are because motivated employees expend greater effort, which progresses to greater success and job satisfaction. Similarly, make sure employees know why their work matters to customers and each other as part of the process. By communicating with employees and recognizing and rewarding good work, employee satisfaction grows.
• Some employees may not be thrilled with the boss, governing board, economy or other factors, but have tight bonds with the people they work with daily — their work family – and unwaveringly support each other. By giving potential associates a chance to chat with peers, managers, predecessors and tour the facility, you’re helping prospects see how well they would assimilate with the culture, which can be a fast path to success and growth.
• Promote personal and professional growth and exploration within the organization by sharing with employees how their success will be measured. What formal and informal training opportunities are available to them? Will peers and managers both participate in the associate review process? Forbes noted 32% of employees do not receive feedback from their manager in their first 90 days.
Ensuring you are dialed into the sentiments of your customers and associates and measuring progress in a variety of ways will assist you in measuring your organization’s growth.