Tracking metrics is key to measuring success, planning for the future, and identifying weak points in any business. For consulting companies especially, some metrics are essential to keep up with. Projects vary, which means revenue can vary significantly, and visualizing trends will help you judge business performance. Below, we will explain eight essential metrics you should track for your consulting business.
1. Generated Leads
Without clients, your consulting business has no revenue. Generating leads is vital for keeping a consultant busy with projects, especially early in the business’s development. Measuring the number of potential clients will help you determine how effective your marketing strategy is.
2. Conversion Rate
Getting leads is only step one. Another key performance indicator (KPI) is the rate at which you convert leads into clients. This metric will help measure how effective your sales and proposal process is.
3. Repeat Clients
How many of your clients come back with more projects for you? Repeat clients demonstrate that you are doing good work and help you establish a more predictable income.
4. Satisfaction Rate
On a similar note, you should survey your clients after each project to measure their satisfaction with your services. This will help you catch things your clients might like to see and ensure you offer the best service possible.
5. Resource Utilization
Another critical area you should consider is how efficiently your business is using its resources. You want to aim for higher utilization but still leave yourself a little bit of wiggle room. If you’re struggling to fill team members’ hours with productive work, it might be time to either add more projects or downsize your team.
6. Project Margin
Projects cost money. Measuring your project margin requires subtracting the cost to execute the project from the gross income of the project. It can be a great practice to offer discounts for particularly large projects or repeat clients, but you want to ensure you don’t create a negative profit margin.
7. Gross Margin
On a larger scale, you should track the overall gross margin of your consulting business or the overall profitability. This metric helps you gauge how much money your firm is bringing in, which will help you plan for the future and ensure you are using your resources wisely.
8. Billings
Projects run at different times of the year and for various lengths of time, so tracking billings helps you measure how much revenue you expect from payments over the course of a specific month or other range. This might help you decide whether or not to charge partial payments throughout a project or to work harder to add more projects to a time of year that tends to see less revenue.