A lack of knowledge is too often the cause of businesses failing. Whether it’s customer retention, marketing, or production, you can’t act on problems if you aren’t already aware of them. Monitoring these things carefully may help keep a business on the rails, but it might also uncover golden opportunities for you to take advantage of.
So what do metrics give us?
- Control – they allow us to control and evaluate performance
- Reporting – we use them to report to ourselves, our superiors, and external bodies.
- Communication – they tell people internally and externally what our key success factors are and what motivates us.
- Opportunities for Improvement – they uncover gaps between performance and expectation.
- Expectations – they frame expectations internally and externally. They help form what the customer expects.
How to decide which metrics to use
Defining the metrics you want to use to measure success isn’t always easy. It’s important to cut to the core of what you’re trying to achieve in order to make sure you get the benefits you’re looking for, and also to implement strategies with specific goals.
For example, for an online retail site, we might assume that the best metric to track could be would be sales, therefore our target would be to increase sales by X amount, or X percent. As an overarching target this might help and should certainly be monitored, but won’t provide much focus for the people acting upon it.Monitoring data is only valuable if metrics that are relevant to a company are being tracked, analysed, and then applied strategically. Each company will have different needs, disadvantages, and opportunities.In cases like this, it’s much better to dig deeper and investigate how you’re gaining sales, where you’re losing them, and what specific aspects of the sales pipeline can be improved. If you’ve already been monitoring your metrics, this task can be simple. You might discover that, whilst you are bringing in plenty of new sales, your customer retention is particularly low. By using this information to set a target linked to customer retention your strategy will achieve much more definition; now you might think that your customer aftercare needs to be improved, and this could lead to a far greater number of repeat orders. Suddenly you have a specific and actionable plan which you can implement, measure, and report on.
How to use your metrics
Establishing and monitoring key metrics will help you work in a more efficient way, by defining the process you’re going to measure, making changes, and then reviewing the impact. This is summed up in the ‘Agile’ Method:
- Define key performance indicators
- Implement improvements
- Measure success
- Create new improvements
- Prioritize improvements based on your returns and capabilities
Whilst you’re measuring the success of some brilliant strategy you’ve just come up with, make sure you account for any other factors that might impact the metric you’re using – the only thing worse than having no metrics is having ill-informed ones.
Example – Social Media
Metrics and control apply to every interaction a business has. Social business is important today, and is likely to be even more important in the future. Like other tactics that impact brand exposure and opinion, all too often social engagement is considered to be qualitative, but analysing this information in quantitative way will provide far more value to the business owner. Below are some of the ways you may choose to analyze your social performance, depending on what it is you hope to achieve from using social tools.
- Social media leads
- Engagement duration
- Membership increase and active network size
- Brand mentions in social media
- Blog interaction
p>Hopefully this has provided you with a bit more information on the importance of using metrics to measure your success. Remember, if it’s important, measure it!