To harness business intelligence, metrics are important. Metrics give you insight into your firm’s performance and make the difference between you reaching your long term business goals and missing them.

What makes a good business metric?

Your business metrics need to be measurable. Metrics are all about tracking progress. You need to know what you are trying to track . A good financial metric must be:

Comparable: Being able to compare a metric over time will provide you an indication of the direction which your business is headed. For example, understanding that your average client revenue increased 60% compared to last year, is more meaningful than stating that the average client revenue increased $1000. You need to benchmark your firm’s performance.

Understandable: Business metrics need to be clear. You need to understand the numbers you are measuring and why you are measuring them. Internally, this is even more important as people in the business need to know the metrics which your business is focused on and be able to discuss them effectively.

Key Metrics for a Service Business

There are a number of crucial metrics which every service firm should focus on. Here are some of the most important ones:

Monthly Recurring Revenue (MRR): This is the most important metric to consider in your service business. Given that service business have fixed costs to acquire clients, you can achieve profitability as soon as your Monthly Recurring Revenue covers your operating expenses. This is because because once a new customer is acquired, there are no further fixed costs or sales expenditures. MRR is also a very predictable source of ongoing revenue and a major source of revenue for service businesses.

Growth Rate: Your firm needs to be able to scale efficiently. You need to calculate at what percentage you are growing your revenue and what compounded annual growth rate you are achieving. As soon as the cost of acquisition is lower than your client’s lifetime value, you can grow your business rapidly and will have the solid underlying business model to achieve profitability.

Average Revenue Per Client: You need to be able to segment your client base and work out which customers are generating the most/least revenue for your business. This helps you to prioritize your clients and measure how effective your service offerings area. Your business should target the right clients as you will boost the value you provide and increase the average spend in return.

Churn: This is the number of subscribers who discontinue their business. This is very negative as it reduces your MRR. For your firm to grow sustainably, you need to keep the churn rate low.

Net Promoter Score: The Net Promoter Score is a metric for customer experience management. It is calculated on a 0-10 scale, with the question being: How likely is it that you would recommend the brand to a friend or colleague? You want your business to have as many clients as possible scoring 9-10. This means that they will be very loyal customers and are likely to refer others, you should have a plan for them to be nice and make referrals.

How do I get Metrics like these?

You should centralize your data and then build a dashboard over the top to display key metrics. For Practice Ignition customers, this is done for you with Practice Ignition’s Dashboard. It tracks your firm’s average Monthly Recurring Revenue, Growth Rate, Average Revenue per Customer and splits your earnings between MRR and Projects.

Takeaways and Information Session

To leverage business intelligence you need to focus on key metrics. You then need access to all of these metrics in one place so you can actually implement changes which make your business more efficient. Be sure to checkout our guide to becoming a firm of the future.

The Practice Ignition Dashboard provides your business with all the key metrics and presents them in a way that is easy to interpret.

Learn more about our Dashboard, make sure to join Ryan Embree for a Practice Ignition Training Webinar on June 14th, 2017. All attendees will receive a two week for trial for attending this webinar since you will become a pro after one easy training webinar.

Get an education and get excited with your free trial. We know you will simply love this client template software as much as everyone does. It makes sense and saves you hours of work! All attendees receive free 14 day trial.

Register Today!