Performance Metrics 101 For Aesthetic Businesses
Like many aesthetic business leaders, looking at your metrics consistently and understanding all of your KPIs may not be the highlight of your week. By reviewing your monthly reports, you can find hidden profit points, growth opportunities, and higher ROIs. Once you realize this, metrics will become your new best friend!
Looking at performance metrics often allows you to learn EXACTLY where you should be focusing for increased profits. Metrics and KPIs will give you insight into what your business is doing correctly and how it can improve. There are so many critical metrics that you can track, but first, you must understand what they mean for your business. This guide takes a detailed look at metrics and how they relate to your business. Let’s get started!
Let’s first define a few terms and concepts that I use with my clients before we dive in…
Performance Metrics is ‘tactical’ data that track the status of your business operations to gauge performance while
Key Performance Indicators (KPIs) are ‘strategic’ metrics that measure how the business is performing towards its strategic goals. Metrics support KPIs, but KPIs are key to achieving your business priorities. You must, therefore, choose the most pertinent KPIs for your goals.
Leading Indicators are predictive measures of performance.
Trailing Indicators are output measures of past performance.
Performance Metric Dashboard (PM Dashboard) is the document where all of your performance metrics and KPIs are stored. Your PM Dashboard should be consistently updated and reviewed every month. Traditionally, your PM Dashboard will consist of more trailing indicators.
Scorecard is a focused weekly report that keeps a high-level pulse on your top 5-10 KPIs. Your Scorecard should be reviewed weekly with your team and usually consists of a mix of leading and trailing indicators.
Leading & Trailing Indicators
Leading indicators help you predict future performance, allowing you to see opportunities or obstacles coming your way. Leading indicators are valuable for creating a resilient business that is both flexible and adaptive. These indicators help you make decisions about the future. A few examples of leading indicators would be:
- Rebooking Ratio
- Surgeries Booked
- Event RSVPs
Trailing indicators, also known as lagging indicators, measure your past performance. They tell you how well you have accomplished your goals. The majority of metrics that aesthetic business owners track fall into this category. Examples of such indicators would be:
- Marketing ROIs
- Client Reviews
- Client Retention
Both types of indicators are helpful when diligently tracking your KPIs and updating your Performance Metrics Dashboard. I recommend that your dashboard include 5-10 of your top KPIs and be a healthy ratio of both Leading & Trailing Indicators. Tracking these metrics will allow you to make better informed, strategic decisions.
Sharing information with your team is a critical component of resilient businesses when it comes to KPI tracking. Even though it may be uncomfortable, I recommend being transparent with them about your goals and performance metrics- especially at a revenue level. A well-informed team can understand the impact that tracking these metrics will have on the business, instills accountability, and educates the team on what it takes to run a business.
Metrics allow you to measure for success and aren’t just about seeing your revenue. Metrics also help you evaluate and create a better team culture, client experience, and better client satisfaction. You can keep track of your performance metrics on a daily, weekly, and monthly basis. Ensure that you are tracking the same reports and metrics month-to-month. I suggest recording your metrics on a Performance Metrics Dashboard or simple spreadsheet to increase efficiency. The information will help improve key performance against specific goals. As mentioned earlier, you should review these metrics with your leadership team every month.
There are six main categories of Performance Metrics and KPIs that I recommend tracking. Metrics support KPIs, but KPIs are key to achieving your business priorities. We’ll get a little more specific about each one as we continue throughout this guide.
- Marketing KPIs & ROI
- Capacity & Efficiency KPIs
The most elementary metric to track is your daily, weekly, or monthly Revenue. I recommend categorizing your main 5-6 streams of revenue (lasers, injectables, facials, retail, etc.) within your PM Dashboard. By breaking down your revenue in this way, you can see where your growth is occurring.
Your Dashboard should also break down revenue into Totals, Goals, Profit, Profit Margin, and Profit Margin Goals. As you create your revenue dashboard, create a year-to-date dashboard as well as a two-year overview. Your P&L data from the last two years will be important when creating goals and budgets for your business.
This is often the most dreaded metric to discuss….expenses. It’s also helpful, like we do with revenue, to break down and track your 5-6 main expense categories. You will want to evaluate your actual vs. your budgeted expenses on a regular and timely basis. I suggest using a 3-month rolling time frame due to monthly fluctuations and bulk orders.
As you run your business it will be important to keep your expenses in line with your budget (hopefully they are!) and adjust accordingly. Evaluating your expense metrics frequently will help you to regulate cash flows and guide future buying decisions. Moreover, by keeping a close record of this metic you can catch expanding expenses early and promptly investigate.
Marketing KPIs & ROI
Marketing data mostly comes from social media platforms (FB, Insta, YouTube) and Google Analytics. You should track the number of likes, follows, shares, views, and comments received on your social accounts as well as activity generated from your website and google listing. You want to assess engagement levels and growth rates, but most importantly- Lead Generation! Keeping meticulous track of your lead sources is vitally important to understanding which marketing tactics are working. By tying your lead metrics to your Marketing expenses, you can then determine your Marketing Return On Investment.
Tracking client KPIs is all about studying clients and their behavior and consciously adapting. These KPIs will help you monitor your revenue mix between acquiring new clients and serving existing clients. You will want to make sure that you are turning new clients into return clients as well as retaining existing clients through stellar client experience. Tracking these KPIs will also highlight issues you are having with client retention and ultimately client experience.
Client metrics are valuable to measure so you can diagnose and address service issues quickly. They allow you to pay attention to what your clients are saying and feeling. These metrics reveal the willingness of your clients to recommend you and are a useful gauge for loyalty!
Team KPIs are excellent for instilling accountability. Everybody on your team should be assigned a KPI, including YOU.. When everyone on your team is responsible for a specific metric, it provides clear expectations. Assigned KPIs recognize that every team member contributes to the business differently, and creates a culture of transparency.
To make these metrics work for you, put them into action with a Scorecard. This simple business tool tracks metrics weekly, keeping your team more focused. Another Scorecard benefit is that it allows you to recognize issues faster, allowing for quicker action and course-correction. Keeping a weekly scorecard planned with weekly discussions on results strengthens your commitment to resilience. By sharing your business metrics with your team, you get everyone on the same page. It’s easier to rally around big goals and create a “We” culture instead of a “Me” culture.
Capacity & Efficiency KPIs
Capacity & Efficiency KPIs are incredibly helpful when it comes to making decisions about your business operations. They answer questions like “Which of our rooms generates the most revenue?” “How efficiently is my business running” and “Is any of our equipment underutilized?”.
These metrics are important to track as you work towards reaching peak efficiency for your practice. They are also tell-tale indicators to help you when deciding if it’s time to expand. Huge business decisions about services are made based on these metrics. Capacity & Efficiency KPIs help you know when to keep, kill, or combine your services.
The following appendix is a list of metrics & KPIs by category that I suggest tracking for your business. You can create your PM Dashboard and Scorecard within Microsoft Excel. Another alternative if you are looking for professional, hassle-free metric tracking is to contact me. My team and I specialize in client-specific, done-for-you dashboards.
- Monthly Revenue
- Monthly Expenses
- Marketing Expenses
- Marketing ROI
- Google Analytics
- Social Media Analytics
- Online Reviews
- Email Campaigns
- ARC: Avg Revenue per Client
- New to Existing Client Ratio
- Client Retention & Churn Rate
- Referrals/ Net Promoter Score
- Appointment Stats
- Rebooking Rates
- Front Desk
- Nurse/ RN
- MAs/ Techs
- Patient Care Coordinator
- Practice Manager
- Physicians/ PAs
Capacity & Efficiency
- Rooms or Equipment
- Individual Team Members
- Total Business Efficiency
- Efficiency as related to time
- Efficiency as related to revenue
- Efficiency as related to profit
While I understand that performance metrics can be a tad dry and sometimes cumbersome to extract the right data, I am here for you. I can create custom Dashboards for your aesthetic business and help sift through the data. With a love for numbers, analyzing trends, and finding opportunities for optimization, I want to help you arrive at the best metrics & KPIs to set your priorities and meet your growth objectives! Contact me today at email@example.com.