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3 Numbers You Aren’t Tracking (But Should)

When I first began my career as an advisor, a mentor gave me two lessons that I still use today: If you can’t measure it, don’t do it; and the bottom line counts — provided you know how to count.

You have heard this advice or some version of it before. In practice, though, tracking your numbers and understanding the nuances of your bottom line can fall by the wayside. The fuzzier our data measurement and tracking become, the more we stunt our growth potential. When you don’t know what’s working and aren’t measuring its true impact, you can’t make smarter, more profitable decisions in the future.

If you are aggressively pursuing growth, you should track the true return on investment of your marketing and your true bottom line.

You may think you are tracking those numbers now, but you are likely overlooking key insights.

Measuring Your Prospecting Efforts

The game all businesses play is finding a way to put in X amount of money to then get more back out. This is the most basic form of the idea of return on investment, yet we often encounter advisors who aren’t assessing the ROI of their prospecting correctly or thoroughly. The apparent simplicity of calculating ROI obscures opportunities to better understand what you can do to make your business grow. “Money in” and “money out” are the ultimate end game, but there are more questions to answer along the way, especially if you are looking at marketing. Ask yourself the following:

  1. When will you reasonably break even on a new marketing tactic (and can you tolerate writing checks until then)?
  2. At what return will you feel good about a marketing investment? When will you feel great?
  3. Given your break-even point and your goals, how do you plan to address your potential discomfort between now and the return?

To use a common prospecting tool as an example, suppose you spend four hours this month attending network events. How many prospects will you engage, how many of those prospects will become clients, and what is the total lifetime value of those clients? Let’s take this big question apart into its variables:

  • Your investment (time and/or money).  You need this to determine your ROI, but we often find that advisors don’t know what they are worth per hour or how to measure the value of spending an hour doing one task versus doing another.
  • The specific activity you are measuring. Being clear now makes reviewing your prospecting  much easier later.
  • The number of leads you generated. This helps you calculate your conversion rate, but for this calculation to be meaningful, you need a stricter process for defining a lead. If you wanted, you could gather a nearly infinite number of names and phone numbers, but that doesn’t mean they are actually opportunities. Develop a process to qualify leads and track them.
  • The conversion rate and total number of those leads. How many clients you obtained for your investment, or what percentage of leads became clients.
  • The true value of the clients you converted. You may find that some sources of clients are actually less profitable than others or that certain types of clients are more likely to provide referrals or increase wallet share. Many advisors don’t measure these metrics, yet they have massive potential for driving revenue.

You should be able to do this math for all of your prospecting efforts. You may find a piece of your prospecting that perhaps feels good to do — such as an annual direct mail newsletter about your staff to the ZIP codes you target — but is not actually impacting the business. That enables you to reallocate those resources to an aspect of your prospecting that is performing far better, such as your appointment-setting program or your client appreciation events.

The Bottom Line You Don’t Know About

How you measure your bottom line is more than your total net revenue. Net revenue absolutely counts and is important, but by itself does not tell the entire story about the growth or trajectory of your business. The hidden challenge of an upmarket is that you can generate more revenue without ever expanding your customer base in a meaningful way.

For example, the health and benefits advisor could see a 15 percent increase in revenue for the business, but that increase might actually be a result of his clients growing — such as a business that expands from 21 employees to 45 employees. In this case, the advisor added new lives to the plan but did not add a new client. If the market hits a downturn and that same client lays off employees, that perceived growth will evaporate.

When you look at your bottom line, you need to see the whole story, and that means counting profit alongside the quantity of clients.

By tracking these numbers consistently — especially if it’s done in conjunction with the first piece of advice — you should be able to see how many new high-value clients you are adding. Your goal is not to get 100 mediocre clients to pad your client count, but rather to add ideal clients as well as bread-and-butter clients alongside the profit growth of your current client base.

Under those circumstances, your business will not only grow exponentially, but you also will better insulate yourself from the painful consequences of a recession.

Get Started

If you don’t have this tracking in place currently, the upfront work of going back through your activity and calculating your numbers might seem daunting, but don’t let that deter you from the growth opportunities on the other side of that effort. You will gain new understanding of your business and therefore be better equipped to reach new goals.

John Pojeta is the vice president of business development at The PT Services Group. He previously owned and operated an Ameriprise Financial Services franchise for 16 years. [email protected].


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