Take Flight – Business Growth Strategies with Business Coach Dan Holstein

Metrics For Measuring Success

February 08, 2022 Dan Holstein Season 1 Episode 70
Take Flight – Business Growth Strategies with Business Coach Dan Holstein
Metrics For Measuring Success
Show Notes Transcript

Would you like to get an accurate idea of your business performance but don’t know what exactly to look at? In this video, I go over important metrics for measuring success in your business and how you can identify the changes that you need to make in order to scale.

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First of all, it’s important to keep in mind that there’s only a few indicators you should be measuring. The question is: How do you determine which indicators to look at?

Well, it’s important to figure out what it is that you want to change. If you want to change your profitability, then it’s a good idea to measure profits. If you want to change the quantity of your sales, then you should look at sales. The change you want to see will ultimately determine your metrics for measuring success.

So, which metrics will be most likely to tell you about your business performance? For this, you’re going to have to look at both lagging and leading indicators.

A lagging indicator for sales would be how many sales were actually made. Lagging indicators are helpful because they show us patterns after the fact. A leading indicator in the case of sales would be prospecting activities. Things like, how many proposals did you make? How many people did you talk to over the phone or face-to-face?

Once you can see the data for the lagging and leading indicators, you can take action to change the activities leading to the outcomes you want. The value of these different metrics for measuring success is that they allow you to focus your time and energy. If you want to improve your overall business performance, getting clear about what needs to change is a crucial first step.

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Hey everybody, Dan Holstein here helping your business take flight, and today we're talking about measurements. Specifically measuring the things in your business that are critical to your growth and success. So how do we know what to measure? Well first of all we only want to measure a few key things, or a few key things per department or functional area of the business. Otherwise we're going to end up having too much data, it's going to be a mess, we're not going to take any action on it, and the only reason really we measure is so that we can confirm that things are working, or to see that we're making the change that we want to see in that particular area of the business. So how do we determine what needs to be measured? Well it's what you want to see changed. If you need to improve your profitability, let's start by measuring our profits. If you need to change the quantity of your sales, let's measure our sales activity. If it's marketing, let's measure our marketing. But what exactly do we measure around these things? Well let's take sales for an example. We're going to have a lagging indicator which is going to be how many sales were actually made, and we're going to have leading indicators. The leading indicators are activities that will lead to the sale, lead to that outcome of the sale which is the lagging indicator. It's lagging because something else has to happen first before you get the sales outcome. We can measure sales results, we can measure sales by product line, by service line, by geography, by client type. We can break that down so we can see trends. So those are always outcomes. And then we can measure our leading indicators. The actions that we take that lead toward sales happening. Now everyone has a slightly different sales process, so for your sales process there's going to be some level of prospecting, so we want to measure what are those prospecting activities that we're taking per day, per week, per month. We want to measure say, maybe it's how many proposals did we submit? How many phone calls did we make? How many networking events did we go to? How many people did we actually talk to on the phone? How many did we talk to face to face? You want to measure the key actions that you know that when they happen, they lead to a sale. And you want to put them in just a simple dashboard, and it could be something as simple as Excel where you just have the different columns, it could be a white board. It doesn't really matter what it is technological or not, simple, whatever works for you and your team to be able to see the leading indicators that are leading to the outcome you want, and then the lagging indicator, the actual outcomes. And this is where we start to spot trends. If we're not seeing the outcomes that we want to see, that's okay, we come back to our leading indicators. What needs to change in the activity that we're taking right now that we're doing that's going to lead to those outcomes? Is it the level of activity? Is it our sales ability? Do we need some training or coaching? Do we need to do more activity? Do we need to shift our focus to a different product or service because something that we're offering is no longer as relevant as it used to be? These questions are things that you'll be able to answer because you're watching the data and you can see what's changing. So that's it for this week. Just make sure you're measuring what's important, what you want to see change in your business, measure your lagging indicators, but make sure that you measure your leading indicators. Those actions that you an adjust and change to lead to the outcomes that you want to see. This is a pretty big topic, so if you have some questions about lagging and leading indicators, what to measure in your business, hit me up for a chat. I'm happy to help and get you straight and forward on what you need to measure to get the growth and scalability that you're looking to see in your business. That's it for this time, we'll catch you next week. Have a great week.