.As the business owner, how your business performs depends on you. But do you know how your business is performing?
To effectively run a business, you know to know your numbers. Do you know how much it costs you to get and retain a customer? Do you track the flow of money in your business? Do you understand your financial statements? Do you know the return of investment of your marketing campaigns?
Scott Drayer, Director of Marketing of the men’s clothing store Paul Fredrick gave this advice in Retail Online Integration Magazine (January 2011 issue):
Understand the basic math of your business. What’s your buy/retention rate? What’s your average yearly spend per customer? If you understand those, you understand how many new customers you need to fuel growth and hit your one year-, two year-, five year-sales goals. What’s the lifetime value of those new customers? How much can you invest in a new customer? How do these numbers differ between channel, media and program? Risk is unavoidable, but understanding the variables for the growth of your business allow you to take much more educated risks — and win more often.