7 Tips On Building Your Business With Better Metrics
Measuring and managing with metrics
is essential to keeping your business on target. It’s critical to choose the
right parameters – and then to know how to use them. Measuring with the wrong
metrics can do more damage than good. Getting too obsessed about the numbers
can lead to bad decisions and make you forget about the human element, that
you’re managing people, not robots. And not measuring on at least a weekly
basis can leave problems undiscovered until it’s too late to course-correct.
But, when you leverage metrics properly, they can be one of the most powerful
ways to propel your business to success. I’ve found an effective metrics-based
management strategy that strikes the proper balance.
1. Measure before you manage
is fundamental to effective
management, but it’s impossible to achieve it without tracking each department
and individual progress against very specific, measurable goals and objectives.
Every element of your business should be measured – marketing, support,
operations, sales, finance, engineering, employee performance, and so on. You
first need to determine the right metrics and then make sure you have all the
tools you need for measurement.
2. Choose the right metrics
Using metrics is a bit of a
double-edged sword, because it can just as easily send you off track as it can
bring you greater focus. The key to effective measurement is knowing what to
measure. First, you have to really know your business, starting with your core
values, vision, and company mission. Ask questions like:
- What five things will most impact the business in the next 12 months?
- What are specific revenue objectives, both for the year and for each quarter?
- What are the “subjective” criteria for success in the next 12 months?
Then pick your metrics based on what
matters the most to your business. Set yearly and quarterly company and
departmental goals, from which individual objectives are created.
3. Avoid common metrics pitfalls
I’ve learned from past mistakes that
metrics must be extremely clear. A broad goal like “provide better customer
support this quarter” can leave everyone, at the end of the quarter, with very
different ideas on whether or not that goal was met since there were so
specific metrics tied to it. Other common pitfalls avoid include:
- Metrics with inaccurate or incomplete data
- Metrics that are complex and difficult to explain
- Metrics that complicate operations and create excessive overhead
- Metrics that cause employees to not act in the best interest of the company
In brief, metrics should be so clear
that an outside person could come in at the end of the quarter and check
whether the objectives have been met.
4. Invest in tools that deliver
real-time feedback
To make metrics really effective,
you need real-time feedback. Whenever possible, invest in measurement tools
that put your metrics at your fingertips. Today’s Software-as-a-Service (SaaS)
applications make it easier than ever to quickly and frequently pull data that
provides measurement against objectives. You might use Salesforce reports to
track sales activities and leads. Or HubSpot for Website rankings and inbound
site links. QuickBooks, Excel and other office applications you’re already
using can be set up to collect and analyze current data.
Whatever measurement tools you use,
be sure to connect and automate them as much as possible so you don’t spend all
your time on number-gathering. At Axcient, some programming from our engineers
and in-house Salesforce experts allows us to feed numbers and charts from more
than a dozen measurement tools into “Departmental Dashboards.” Using the
dashboards, management is able to quickly view the status of every group in the
organizational weekly meetings.
5. Share metrics with employees
One of the most important and often
missed reasons to track metrics is cultural. At Axcient, we share metrics and
results not only with management, but with every employee. At all-hands
meetings, we go through slides that Axcient shares with the board of directors.
A large screen in the common area shows weekly highlights – and challenges.
Maintaining transparency and celebrating big wins leads to a culture of
success, where everyone is on the same page and motivated toward unified goals.
6. Remember that accountability
starts at the top
Business
leaders don’t always recognize how closely employees will follow their example.
But if you want your workers to take goal-setting seriously, you should be
prepared to share your own goals – as well as how you came out on delivering on
them at the end of the quarter. Such transparency shows your team that you are
in the trenches with them, making every effort to achieve what you set out to
do – even if your targets were off.
7. Continually question, reevaluate,
and refine
Keep in mind that you will need to
reevaluate and adjust your metrics as your business priorities change. Every
week, month, and quarter is a new opportunity to test and refine your ability
to set and track metrics that will drive growth. When you invest time and
thought into setting, monitoring, sharing, and refining your metrics, you’ll be
amazed at how much more in tune you are to the state of your business, and how
much more easily you can make the critical decisions that can catapult your
business’ success.
http://www.forbes.com/sites/ciocentral/2012/07/09/7-tips-on-building-your-business-with-better-metrics/
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