{"id":6247,"date":"1970-01-01T00:00:00","date_gmt":"1970-01-01T00:00:00","guid":{"rendered":"https:\/\/websitedemonow.com\/profitpro\/7-powerful-ratios-to-start-tracking-now-to-increase-profits-in-202\/"},"modified":"2022-06-09T05:32:17","modified_gmt":"2022-06-09T05:32:17","slug":"7-powerful-ratios-to-start-tracking-now-to-increase-profits-in-202","status":"publish","type":"post","link":"https:\/\/websitedemonow.com\/profitpro\/7-powerful-ratios-to-start-tracking-now-to-increase-profits-in-202\/","title":{"rendered":"7 POWERFUL Ratios To Start Tracking Now To Increase Profits in 202"},"content":{"rendered":"

SEVEN POWERFUL RATIOS TO START TRACKING NOW\u00a0<\/span><\/strong>
\n<\/span><\/strong>
\nDoctors in the developing world measure their progress not by the aggregate number of children who die in childbirth but by the infant mortality rate, a ratio of the number of births to deaths.\u00a0<\/span><\/span><\/span><\/p>\n

Similarly, baseball\u2019s leadoff batters measure their \u201con-base percentage\u201d \u2013 the number of times they get on base as a percentage of the number of times they get the chance to try.\u00a0<\/span><\/p>\n

Acquirers also like tracking ratios and the more ratios you can provide a potential buyer, the more comfortable they will get with the idea of buying your business.\u00a0<\/span><\/p>\n

Better than the blunt measuring stick of an aggregate number, a ratio expresses the relationship between two numbers, which gives them their power.\u00a0<\/span><\/p>\n

If you\u2019re planning to sell your company one day, here\u2019s a list of seven ratios to start tracking in your business now:\u00a0<\/span><\/p>\n

1. Employees per square foot\u00a0<\/span><\/p>\n

By calculating the number of square feet of office space you rent and dividing it by the number of employees you have, you can judge how efficiently you have designed your space. Commercial real estate agents use a general rule of 175\u2013250 square feet of usable office space per employee.\u00a0<\/span><\/p>\n

2. Ratio of promoters and detractors\u00a0<\/span><\/p>\n

Fred Reichheld and his colleagues at Bain & Company and Satmetrix, developed the Net Promoter Score\u00ae methodology, which is based around asking customers a single question that is predictive of both repurchase and referral. Here\u2019s how it works: survey your customers and ask them the question \u201cOn a scale of 0 to 10, how likely are you to recommend <insert your company name> to a friend or colleague?\u201d Figure out what percentage of the people surveyed give you a 9 or 10 and label that your ratio of \u201cpromoters.\u201d Calculate your ratio of detractors by figuring out the percentage of people surveyed who gave you a 0\u20136 score. Then calculate your Net Promoter Score by subtracting your percentage of detractors from your percentage of promoters.\u00a0<\/span><\/p>\n

The average company in the United States has a Net Promoter Score of between 10 and 15 percent. According to Satmetrix\u2019s 2011 study, the U.S. companies with the highest Net Promoter Score are:\u00a0<\/span><\/p>\n

USAA Banking 87%\u00a0<\/span>
\nTrader Joe\u2019s 82%\u00a0<\/span>
\nWegmans 78%\u00a0<\/span>
\nUSAA Homeowner\u2019s Insurance 78%\u00a0<\/span>
\nCostco 77%\u00a0<\/span>
\nUSAA Auto Insurance 73%\u00a0<\/span>
\nApple 72%\u00a0<\/span>
\nPublix 72%\u00a0<\/span>
\nAmazon.com<\/span><\/a>\u00a0<\/span>70%\u00a0<\/span>
\nKohl\u2019s 70%\u00a0<\/span><\/span><\/p>\n

3. Sales per square foot\u00a0<\/span><\/p>\n

By measuring your annual sales per square foot, you can get a sense of how efficiently you are translating your real estate into sales. Most industry associations have a benchmark. For example, annual sales per square foot for a respectable retailer might be $300. With real estate usually ranking just behind payroll as a business\u2019s largest expenses, the more sales you can generate per square foot of real estate, the more profitable you are likely to be.\u00a0<\/span><\/p>\n

Specialty food retailer Trader Joe\u2019s ranks among companies with the highest sales per square foot; Business Week estimates it at $1,750 \u2013 more than double that of Whole Foods.\u00a0<\/span><\/p>\n

4. Revenue per employee\u00a0<\/span><\/p>\n

Payroll is the number-one expense of most businesses, which explains why maximizing your revenue per employee can translate quickly to the bottom line. In a 2010 report, Business Insider estimated that Craigslist enjoys one of the highest revenue-per-employee ratios, at $3,300,000 per employee, followed by Google at $1,190,000 per bum in a seat. Amazon was at $1,010,000, Facebook at $920,000, and eBay rounded out the top five at $530,000. More traditional people-dependent companies may struggle to surpass $100,000 per employee.\u00a0<\/span><\/p>\n

5. Customers per account manager\u00a0<\/span><\/p>\n

How many customers do you ask your account managers to manage? Finding a balance can be tricky. Some bankers are forced to juggle more than 400 accounts and therefore do not know each of their customers, whereas some high-end wealth managers may have just 50 clients to stay in contact with. It\u2019s hard to say what the right ratio is because it is so highly dependent on your industry. Slowly increase your ratio of customers per account manager until you see the first signs of deterioration (slowing sales, drop in customer satisfaction). That\u2019s when you know you have probably pushed it a little too far.\u00a0<\/span><\/p>\n

6. Prospects per visitor\u00a0<\/span><\/p>\n

What proportion of your website\u2019s visitors \u201copt in\u201d by giving you permission to e-mail them in the future? Dr. Karl Blanks and Ben Jesson are the cofounders of Conversion Rate Experts, which advises companies like Google, Apple and Sony how to convert more of their website traffic into customers. Dr. Blanks and Mr. Jesson state that there is no such thing as a typical opt-in rate, because so much depends on the source of traffic. They recommend that rather than benchmarking yourself against a competitor, you benchmark against yourself by carrying out tests to beat your site\u2019s current opt-in rate.<\/span><\/p>\n

Dr. Blanks and Mr. Jesson suggest the easiest way of increasing opt-in rate is to reward visitors for submitting their e-mail addresses by offering them a gift they\u2019d find valuable. Information products \u2013 such as online white papers, videos and calculators \u2013 make ideal gifts, because their cost per unit can be almost zero. Using this technique and a few others, Conversion Rate Experts achieved a 66 percent increase in the prospects-per-visitor rate for SOS Worldwide, a broker of office space.\u00a0<\/span><\/p>\n

7. Prospects to customers\u00a0<\/span><\/p>\n

Similar to prospects per visitor, another metric to keep an eye on is the efficiency with which you convert prospects \u2013 people who have opted in or expressed an interest in what you sell \u2013 into customers.\u00a0<\/span><\/p>\n

Conversion Rate Experts\u2019 Dr. Blanks and Mr. Jesson recommend you monitor the rate at which you are converting qualified prospects into customers, and then carry out tests to identify factors that improve that ratio. Conversion Rate Experts more than doubled the revenues of\u00a0<\/span>SEOBook.com<\/span><\/a>, the leading community for search marketers, by converting many of SEOBook\u2019s free subscribers into customers. Techniques that were found to be effective included (perhaps counter intuitively) restricting the number of places available; allowing easier comparison between SEOBook and the alternatives; communicating the company\u2019s value proposition more effectively; and simplifying its sign-up process. The trick is to establish your benchmark and tinker until you can improve it.\u00a0<\/span><\/p>\n

Acquirers have a healthy appetite for data. The more data you can give them \u2013 in the ratio format they\u2019re used to examining \u2013 the more attractive your business will be in their eyes.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

SEVEN POWERFUL RATIOS TO START TRACKING NOW\u00a0 Doctors in the […]<\/p>\n","protected":false},"author":3,"featured_media":7479,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[591,599],"class_list":["post-6247","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-business-valuation","tag-profit"],"yoast_head":"\n7 POWERFUL Ratios To Start Tracking Now To Increase Profits in 202 |<\/title>\n<meta name=\"description\" content=\"Here are 7 powerful ratios that will help the business owner understand their business valuation ahead of offering the business for sale.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"7 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