You work hard to grow your laundry business to fulfil your vision. You plan different strategies to make this a reality. Some things worked, some didn’t. And after a while, everything stopped working and you reach a point where things come to a standstill. The graph of growth of laundry business neither moves up or down.
These are the changes that happen to every business every once in a while in its lifecycle. This standstill is the point where you turn to your key metrics to determine what to do next.
Key Metrics of your business
Key metrics of any business refer to the categories of numbers and data that depicts a direct impact on your business. For example, a laundry and dry cleaning business owner key metrics should be the number of customers, number of orders, average monthly revenue, number of additional services(like, ironing, starch, etc), average order amount, etc.
Each of these mentioned metrics have their own impact. This impact directly affects business performance. Now, metrics like average number of garments per order may or may not affect the average monthly revenue because other factors like average price per service per garment equally affects the monthly revenue. Hence it cannot be counted as key metrics.
The point of discussing the key metrics is to lay grounds for the right numbers that need to be focused on. As a businessman you can not work on every metric impacting your revenue. The strategy doesn’t work because you waste a lot of time on irrelevant aspects and little is achieved in revenue. Hence focusing on the right revenue gets you faster results and keeps your business on track.
Now that we are all on the same page, let us further understand the most important metrics. Each of the key metrics need their own discussion to understand how they affect the business and what should be the strategy to work upon them.
Here, I will be discussing the number of customers and average order amount.
Impact of Number of customers and average order amount.
We all know the importance of customers for any business, the more the better. If you are to increase the revenue, your first action would be to increase the number of customers and it makes sense too because that instantly affects your business. But, there is a limit to how many customers you can acquire and at what cost. Customer acquisition happens in stages namely- awareness, interest, consideration and buying. Once a customer buys a service from you, that’s when they become an acquired customer. So to reach the final stage, you need to invest time and money both to acquire customers. So, the number of customers reaching the final stage is always lesser than customers eventually acquired. And this investment is what stops you from taking steps to acquire more customers aggressively.
But, there is a way that you can cut down this investment of time and money considerably by directing your focus to another metric which is increasing the average order amount of your existing customers.
To make it easier to understand, let us consider an example.
Let’s assume that currently your average order amount is ₹ 100. You have a total of 100 customers that monthly give you a revenue of ₹ 10,000. Now, if you increase the average order amount from ₹ 100 to ₹ 150, you have increased your revenue from ₹ 10,000 to ₹ 15,000. This is a growth of laundry business revenue by 50%.
Now, this increased revenue can be used to acquire new customers. Working simultaneously on both these metrics gives you faster and better results compared to the results that you would get by working on them one at a time.
As a businessman, you always look forward to ways to grow your business quickly and in a cost-effective manner. Many times, your success is limited due to a lack of knowledge on the right metrics to focus on or due to incurring costs.
Using our way to work simultaneously on increasing your revenue from bill amount and then redirecting that gain to acquiring new customers, can take a load off of your shoulders. You can not only optimize your monetary investments but at the same time, build better engagement for your current customers and acquire new customers as well. As a result, you are able to achieve an overall growth of the laundry business without compromising on profits.