What metrics do you use?

[wackal]

What kind of metrics do people use to measure the performance of their business?

Right now, I'm looking at monthly customers, gross sales, and net profit. I was going to start keeping track of customer locations by country and zip code.

Does anybody have any ideas on what else would be helpful?

[lorax]

Level of effort to make that profit is important in my books.

[wackal]

level of effort is very important, but I was looking for things that would be a little easier to calculate. level of effort is kind of vague and I'm not sure if I could accurately account for the level of effort I put in.

[Essex_boy]

I take the numbers of order packed and shipped in one session divided by the profit made.

If it comes out at over twice my working pay rate ive got a successful store.

Thats why im happy to sell ten items make £50 on the lot and gross £400, 'cos I can pack 10 an hour.... Get my drift?

[Chndru]

It doesn't need to be complicated. One example could be Number of hours required/week*estimated weeks to reach the desired profit*your skill sets (in $/hr)

i am assuming, lorax is talking about this kind of effort

[lorax]

Yup. How much time do I spend working on the site in a given week. At the end of the month/year I should be able to compare how much time I put into the project against the profits I made. If I'm not seeing the hourly wage I targeted then it's time to rethink what I'm doing.

[your_store]

Level of effort to make that profit is important in my books

Same here. Level of effort and risk are very important. This is the main reason I won't sell anything less than keystone.

[Chndru]

Also a good thing to understand is that these kind of metrics have a long-range focus. It would be so easy to lose the focus of the big picture, when the going gets tough.

So, you can always factor in the expected growth in say (2/3 years) in your metrics.

[Hawkgirl]

Average customer value.
Average number of return visits/buys per customer per set period of time.
If recurring revenue product: average monthly revenue, time to payback and customer turnover rate.

[lorax]

A good book to read that might help you is called "The E Myth Revisted" by Michael Gerber. One of the fundamental principals he encourages is thinking in terms of what you'd do if you were to franchise your business. Now as far as actually streamlining your production, sales, and shipping departments go that's pretty easy to see. But look a bit deeper - what can you do to help you streamline how you manage and assess your business? A good read - helped me think, work, and evaluate my business in smarter ways and has improved my efficiency 110% to date.

[wackal]

thanks everyone for all the suggestions. I'm going to use some of the metrics that people posted and I'm also going to check out that book that Lorax mentioned. Thanks again!