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metrics for consulting business

8 Metrics For Consulting Businesses: What To Track (And Why)

By Michael Zipursky
4 Comments

What metrics for consulting businesses should you track if you want to grow?

You’ve heard it before: what gets measured gets managed.

But if you don’t even know what to measure, how are you supposed to manage (or improve) it?

We’ve had many consultants in our Clarity Coaching Program ask us about what they should track.

After all, consulting businesses are different from your traditional product-based business.

You aren’t tracking how much a product takes to produce or how many units you’ve sold.

Instead, you’re selling your expertise through consulting projects.

We’ve put together a list of the 8 key metrics for consulting businesses to track.

By the end of this post, you’ll learn about the metrics we recommend you track if you want to grow your consulting business — as well as how to track and improve them.

Before we talk about the 8 metrics, it’s important to understand why you track them in the first place.

Why Metrics Are Important To Track (& Be Careful Of Vanity Metrics)

Imagine that you’re in a car and you want to get to a specific location.

Your destination is 780 kilometers away. You need to figure out how long it takes to get there.

The problem?

Your car doesn’t have a speedometer. You have no idea how fast you’re going.

You have no idea how long it will take to get to your destination.

That’s what it’s like running a consulting business without tracking the right metrics: you’re flying blind.

You don’t know where to focus your time, attention, and energy.

You aren’t sure what you need to improve to reach your goals.

Metrics are important to track because they help you keep a pulse on your business. They help you identify where your problem areas are.

However, there are an infinite amount of numbers you could track.

So how do you pick the right ones?

In our Clarity Coaching Program, we had a client who was tracking many different metrics. But they focused on the wrong ones.

They were obsessed with their website traffic and their amount of social media followers.

We call these “vanity metrics.”

Sure, the number of people who arrive on your website or who follow you on social media can be important.

But they are only useful if they help you create sales conversations (one of our 8 metrics you should be tracking).

If they don’t, then what’s the point? High numbers in these areas might look great, but they aren’t moving the needle for your business.

The client also insisted on sending an email to their list each week.

However, the emails didn’t actually result in conversations with clients.

So, we instructed the client to start tracking their number of sales conversations.

The goal of their marketing was no longer just to spread the word about their business— it was to generate more sales conversations.

And by making this shift, we helped them generate 7 inquiries from their first new weekly email.

That’s an example of why metrics are important to track — and why it’s important to track the right metrics.

They help you focus on the right things to help you achieve your goals.

With that understanding, let’s dive into the 9 metrics.

8 Consulting Business Metrics To Track (& How To Improve Them)

Here are the 8 metrics that every entrepreneurial consultant should be tracking:

Magic #

What It Is: The number of prospects you have to reach out to in order to achieve your revenue goals.

For this metric, you’ll have to know a few different numbers:

  1. What is your monthly revenue target?
  2. What is your average project worth?
  3. How many conversations do you need to have each month to land one client/project?

If you know these 3 numbers, you know how many direct outreaches you have to make in order to achieve your monthly revenue target.

In our Clarity Coaching Program, we provide a spreadsheet that you can use to plug in your metrics and get your magic number.

Here’s a recent video to walk you through the exercise.

Many of the following metrics are based on this magic number.

If you have the aspirations of reaching a specific revenue target in your consulting business, you start with your magic #.

Direct Outreach

What It Is: How many prospects you’ve reached out to.

How To Improve It:

  • Commit to reaching out to your magic # of ideal clients each week.
  • Overcome your fear of cold calling or cold emailing using the strategies we teach.
  • Send personalized emails and outreach messages like video messages.

Sales Conversations

What It Is: How many sales conversations you’ve had with your ideal clients.

How To Improve It:

  • For prospects who respond to your initial outreach messages, ask them if they’re willing to have a call about their business and goals — and how you might be able to help.
  • Adopt the consulting sales mindset: forget about making the sale, just focus on having a helpful conversation with your prospective client.
  • Be “in the flow“: constantly connecting with people in your market, making introductions, asking for referrals, etc.

Sales Call Conversion %

What It Is: The percentage of sales conversations you turn into consulting projects.

How To Improve It:

  • Improve your sales skills: practice makes perfect, and the more you practice selling, the better you’ll be at it.
  • Target the right ideal clients: the more clarity you have on your ideal client, the more of them will be the right fit for your services.
  • Ask meaningful questions: questions about the value you might create for your client, and go deeper into why they are seeking help.

Proposals Sent/Offers Made

What It Is: How many proposals you send to clients following sales conversations.

How To Improve It:

Proposals Won/Loss

What It Is: How many proposals you’ve won and loss.

How To Improve It:

  • Present your proposals on a call instead of sending it via email and waiting on the client to respond.
  • Use a discovery offer: sell a smaller, fixed-price engagement so that the client feels less risk about investing in a larger consulting engagement without having worked with you before.
  • Offer 3 options: give your client a choice on “how” to use you whether than to use your or not.

Average Project Revenue

What It Is: How much you sell your average consulting project for.

How To Improve It:

  1. As you gain more experience on a certain type of project, consistently increase the price because you are delivering more and more value.
  2. Use value-based pricing so that your projects are based on the value you create instead of how much time you spend working on the project.
  3. Delegate other aspects of your business so that you can spend more on project work and deliver more value to your client.

Monthly Revenue

What It Is: How much revenue you generate every month.

How To Improve It:

  • Try the hybrid consulting model so that you can sell recurring or productized consulting engagements.
  • Build a consulting team so you can take on more capacity and projects.
  • Systematize your sales process so that you can close a higher percentage of business.

Now that we’ve covered the “why” and “what,” we’ll talk about how you can track these metrics.

How To Track Your Consulting Business Metrics

What are the best ways to track your consulting business metrics?

Now that you know the 8 metrics you should know, I’ll discuss how you can track them.

Setting up a CRM and pipeline is a great way to get started.

In Lesson 5.7 of our Clarity Coaching Framework, we teach how to use your CRM and pipeline to turn prospects into paying clients.

metrics for consulting business to track with crm and pipeline

Here’s a breakdown of each column:

  • LEAD: You’ve identified the prospective client and have begun reaching out to them to set up a conversation.
  • CONVERSATION: You’ve had a sales conversation with the prospective client.
  • PROPOSAL: You’ve sent a proposal to the prospective client.
  • WIN: The prospective client has accepted your proposal and you won the business.
  • LOSS: The prospective client has declined your proposal and you lost the business.
  • NURTURE: Most people you reach out to won’t be ready to buy or make a decision right away. In fact, even people who say ‘No’ to a proposal now, may buy from you later as long as you stay top of mind through your nurture process.

This covers many of the metrics in the list above.

And it gives you a clear visual of how you’re doing — and a progression on how you’ll take each prospect from a lead to win/loss.

Besides the pipeline, you can also use a simple Google Sheet.

It might look something like this:

8 metrics to track for your consulting business

Update each metric at the end of each month so you can review your progress.

With this spreadsheet, you’ll see the progress that your consulting business is making at a glance.

By using the CRM and pipeline approach, along with the spreadsheet, you’ll understand what’s going on in your consulting business.

You’ll know what areas you’re weak in, what areas you’re strong in, and where to focus on if you want to grow.

For example, let’s say you have a low number of sales conversations, but your sales call conversion rate is high (50%).

Your sales skills are good.

However, your marketing skills are lacking, and you need to focus on generating more sales conversations.

But if you aren’t even tracking this information, you’re flying blind. You’ll try and improve all aspects of your business when you need to focus on specific areas.

By simply paying attention to and tracking these numbers, you’ll stay focused on what areas of your business need the most help.

You’ll be surprised at how many ideas will come to you by focusing on the right metrics.

Action Step: Strack Tracking Your Consulting Business Metrics

The action step for this article is simple: start tracking your 8 metrics!

Save a copy of our pipeline worksheet, and start using that to track your pipeline.

Then, create a quick spreadsheet with your metrics like the example here.

Make a note in your calendar to update your metrics at the end of every week.

After one month, identify your weakest link.

  • Are you not making enough direct outreaches?
  • Are you not having enough sales conversations?
  • Are you having enough sales conversations, but you aren’t closing a high enough percentage of them?

Your pipeline and spreadsheet will help you answer these questions. And they’ll help you choose an area of focus.

A system is only as strong as its weakest link. Focus on where you are weakest, and it will improve your entire consulting business — and help you grow the business.

And if there’s a particular area where you’re struggling, whether that’s…

  • Using a direct outreach strategy that makes it easy to reach out to your ideal clients
  • Leveraging value-based pricing to triple the price of your consulting projects (without adding more work)
  • Creating proposals that will put 70% of prospects in that “WIN” column

Reach out to us for help.

We help consultants master all of these areas so they can build predictable, profitable, and scalable consulting businesses.

4 thoughts on “8 Metrics For Consulting Businesses: What To Track (And Why)

  1. Otobele Akpesiri says:

    Great article Michael, there’s still alot for me to learn.
    Thank you for this informative piece

    • You’re very welcome and thanks for sharing and letting me know that you enjoyed the topic.

  2. Joe O'Mahoney says:

    Hi Michael,
    I find your videos very interesting, thank you. I’m a Professor of Consulting (who knew!) at Cardiff Uni…..

    Joe

    • My pleasure Joe and thank you for the comment. If we can be a resource to you or your students do let us know.

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