One of my initial questions with any new client is to ask what business measures for success they have in place to determine whether their strategy & marketing activities are working for them.
Unfortunately, I often find 2 scenarios; 1) there are no measures or metrics set, or 2) the measures that have been set are vague and aren’t reviewed on a regular basis.
It strikes me that business owners are so busy (understandably!) trying to build on their business’ success, create growth, gain brand awareness and ultimately sales and profit that they miss one of the crucial elements to success; a set of business measures to demonstrate that their business has gone from A to B, or at least somewhere towards to B. Without these measures, no business can actually be sure they are working towards the business’ end goal or if they are on the right track or not as there’s no definition of what the right track or end goal is.
And when I say business measures, I’m not meaning the number of likes on the Facebook business page, or the number of views on Linked In, as these aren’t true measurements. Yes, likes on a facebook page can widen your audience to an extent, but it’s interaction that a business needs on any platform; a potential customer starting their journey & following the funnel through to the end results, ie. a sale. Views on Linked In aren’t necessarily true ‘views’. Someone scrolling past your post can equally be considered technically as a view on the post’s stats as someone who actually reads your post, as I understand it. Not a meaningful metric if they’re not going to be interacting with your business with the result of contributing to your business’ bottom line.
What Business Measures to Use…
So what metrics should be in place? That all depends on what you are wanting to achieve within your business or with your business goals; there’s nothing set in stone. However, here are some headline measures that you might want to consider if you don’t already include them in your business metrics:
- Sales Revenue – income received from customer purchases less any returns or refunds within the same time period
- Gross or Net Profit – gross profit = total sales revenue less the cost of the goods sold / net profit = total sales revenue less all the costs associated with producing that product
- Production / Operating Costs – all costs associated with the creation of your product or service (incl. labour costs, material costs etc.,)
- Online versus Direct Sales – sales made via your website / online selling channel versus those direct to your business (ie. via a shop or by phone)
- Lead to Client Conversion – the number of monthly new leads compared to the number of monthly new paying customers
- Net Promoter Score – a marketing metric that is measured on a ten-point scale via customer surveys and interviews
- Website Traffic – utilise free tools such as Google Analytics to track your monthly website traffic as well as the traffic sources, and the journey of your customer once they land on your site
- Employee Happiness – conduct team surveys or use an HR tool (such as Thrive, the employee engagement tool) to collect quick feedback on the teamwork and personal satisfaction levels
The best way I have found to record the data, in my years of working in and with corporates as well as SME businesses, is on a bespoke dashboard which is easy to populate, quick to view & has some visual presentation rather than just numerical. Also, assigning one person within the business to regularly collate the report & present it to key decision makers makes for great accountability & responsibility within the business.
So whether or not you’ve got your measures in place for your business, here are my top tips for creating a meaningful business metrics system:
- Set up a dashboard for easy access, quick viewing and ensuring the same information is collated every time
- Track the metrics in graph form as well as numerical for trend impact
- Review on a daily or weekly and definitely a monthly basis to ensure you have a consistent view of what is happening within your business
- Investigate why the data is not meeting the goals set – whether it is are higher or lower! Consider market activity, competitor activity and your business’ own marketing activity when analysing the measures
- Share the metrics and data with your employees and increase their likelihood of buying into the business’ goals – growth is so much easier when your own staff are working towards the same direction; same goes for your vision/company strategy.
- Review and check that the metrics you have set are the ones your business really wants to monitor. The same goes for your business’ goals – ensure they are absolutely relevant and not a simple distraction
- Appoint an individual to collate and report on the metrics agreed and the regularity of communicating the dashboard (daily or weekly)
- Be selective with metrics for the business overall as well as some for any specific activity that your business might be engaging in (ie. a specific promotion or marketing tactic)
- Ensure that any refunds or returns are considered in the data and share this as a measure if relevant. If it’s looking like there is a high number of returns or refunds being claimed, it’s a clear indication of an underlying business issue
- Consider the trends of the data month by month and year on year to establish a more long-term view
- If you or someone in the business sees a recurring issue, address it! For example, if sales are consistently under or over performing, investigate as to why so you can adjust or capitalise on a process, a cost, a business goal or indeed an overall strategy
- Be sensible – don’t drown in data and measures! These metrics are traffic lights for your business, not a distraction or reason to pull employees away from their ‘real’ jobs. Pick a few relevant business measures (also known as key performance indicators), gain input from key employees or managers and consider the bigger picture rather than looking down a straw at your business.
Once a business has this process in place, the information flow is clear and relevant, perfect for really seeing where the business is going and where certain strengths lie. Have you got your business measures for success in place? If you’re struggling with where to start, contact us to see how we can help you. www.jolongconsulting.com