Choosing What to Measure
10 years ago Hutch Morzaria 1
An old business axiom says:
You can’t control what you don’t measure
As a result, nearly everything in business is measured, tracked, monitored, analyzed, and benchmarked. To flip this on its head a little bit though … should you measure what you can control or rather what is outside of your control? While it is easy to put a number to things that you have complete control over wouldn’t there be a greater impact to your bottom line and the business if you started measuring things that impacted your customers but that you didn’t have complete control over?
You’ll find that you will see a far greater improvement as well as improved education for your teams and progression towards your goals if you start measuring the things that you can influence and not just the things that you control.
Any color as long as its black
Probably one of the greatest quotes that never was is a perfect example of this point. While you can definitely control the color of your product by offering only one choice to your customers you are definitely not going to have satisfied or happy customers if you do not give them a choice.
Total control does not make for happy customers and in a similar manner, what you can completely control is trivial. The important stuff is important because it’s outside our circle of control. Revenue and profit are obviously essential to any business. Monitoring your bottom line is only one part of the formula. It’s essential that you are measuring the factors that actually are critical to your company. Here are some guidelines on helping you develop a plan to do this.
- Goals – what are you trying to accomplish? What is it that your business does and build your goals around that. Make the goals a stretch but achievable. Determine your measures for success. Make your goals challenging, but achievable. Your goals can be fairly large in scope – decrease customer churn, launch into a new market etc… however while your overall goal is broad in scope, you will need to break it down into specific and achievable objectives that are measurable and achievable.
- Company Performance – how does your company compare against the industry at large? What percentage of your industry/market does your company control or have an influence on? What turnover does your company have and how does that compare to the industry at large?
- Strengths and Weaknesses – be honest with yourself but ensure that you are accurate. Where are you strong and where are you weak? What can be done in each area to enhance your company further and give you an increased advantage on your competition?
- Customer Retention – one of your main goals should always be customer retention as getting a new customer is five times more expensive than retaining a current one. Work on issues that increase and improve customer and brand loyalty. Ensure that your teams are trained on customer service and that a helpful attitude greases more wheels!
- Advertising and Marketing – ensure that you are measuring the outcome of any advertising campaigns and marketing activities that your company does. Your marketing results may be measured in sales (dollars or units), market share or a variety of other factors. The goal should obviously be the number of new customers your advertising dollars earn.
- Employee Performance and Churn – track your employees and their performance. Top employees are crucial to your companies success and you need to ensure that you are hiring top quality and retaining top quality.