Part of setting goals for your business is assessing what you can reasonably accomplish and what’s more of a pipe dream. However, the only way to know which goal is attainable is to measure your results as accurately as you can and then make informed decisions about where you can go from there. That’s why a set of key performance indicators (KPIs) is vital for any growing business.
1. Revenue
Let’s talk about the bottom line. At the end of the day, you want your business to turn a profit. The most basic and one of the most important KPIs is your overall revenue. There are plenty of great programs out there to help you organize your finances like Quickbooks, but if you can, it’s worth bringing in a professional bookkeeper to help advise on all financial decisions and manage them.
Using a booking system like TrekkSoft, you have a clear view of your turnover from all channels, and you can also connect your booking system to apps like Quickbooks using the Zapier integration.
Use TrekkSoft Business Intelligence and wider reporting to track your sales, turnover, and performance by channel.
2. Customer acquisition costs (CAC)
In a perfect world, you’d set up shop on a Monday and by Friday, you’d be booked with customers for the next three months. Unfortunately, it doesn’t work that way. As the saying goes, sometimes it takes money to make money. You have to market your business and do something to bring customers in the door. But at what cost? The CAC is essentially your marketing expense. It’s the money you have to attract and obtain new customers.
This is an area that a lot of small businesses struggle with. Especially as the best way to advertise can change from year to year, or even from one month to the next. A lot of businesses take a gamble on marketing themselves and burn up a lot of cash without the desired result. Now is the time to sit down and think about how much you’re really spending to earn each customer.
3. Customer retention
Once you have a customer, how long do they stick around? Do they come back? Do they bring their friends with them this time? Do they tell their loved ones and social media followers to check out your tour? As a business owner, you should be retaining your customers and making them happy, not just searching for new ones.
A great way to measure this is to offer customer rewards (such as vouchers or discount codes) for those who come back. Or, if your business relies on seasonal tourists, you could create a referral program where you offer a discount or prizes to customers who spread the word. Get creative with it, but just make sure you have something in place that’s easily measured.
4. Referral rate
Speaking of referrals, you need to track how many customers you gain from other customers. The referral rate helps you keep your CAC lower and statistically, has shown success in making your ROI higher. Referral programs work, so if you don’t have one already, it’s time to put one together for your company.
5. Cost of goods sold (COGS)
Now that we’ve talked about the importance of customers, it’s also important to look at the value of your offer. The cost of goods sold (COGS) are any expenses directly related to providing a service. For a tour operator, this includes the cost of staff salary, insurances and equipment for starters.
6. Customer satisfaction
A common mistake that businesses make is thinking that having more customers will solve all their business woes. But if your offer isn’t very good or the cost outweighs the value, your customers aren’t going to be very happy. Having a lot of customers won’t mean much if few of them are satisfied by the services you’re providing. In fact, it can work against you, as those customers are likely to share their experiences with friends, family members, or even strangers through reviews on TripAdvisor. There’s no doubt about it - this is a crucial KPI for all tour & activity companies that want sustainable growth.
Related reading: How to improve your TripAdvisor ranking by understanding its algorithm
Overall, there are dozens of KPIs you can look to to measure your company’s success. Those measurements will be different for each business, but these six performance indicators will help you to move ahead and ensure a successful year.
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