Finding the Truth in Your Business
From the headline of this post you might expect to find a lengthy manifesto about purpose and passion in business, but the truth in most businesses lies in the numbers. (Sorry if the Zen picture made it worse – I just liked it)
Analytics or metrics or whatever you choose to call how a business performs can not lie – as long as you ask the right questions and track the right things.
A Bain survey of executives at hundreds of companies around the world revealed that only 4% of companies are really good at analytics.
The subtitle of the survey report – How analytics differentiates winners sheds some light on the findings and importance of data. The survey is heavily focused on enterprise firms and leans towards discussion of “big data,” but the lesson is universal.
Three findings in particular stand out – Companies that get good at analytics are:
- Twice as likely to be in the top quartile of financial performance within their industries
- Three times more likely to execute decisions as intended
- Five times more likely to make decisions faster
For any business to have the full picture of the health, growth and status at any given time they need to build dashboards that give them the most up to date information that is tied to their overall objectives.
Because that’s where the truth in your business lies.
Few businesses, regardless of size, obsess over numbers as they should. My guess is that the reason for this is that while it’s one of the most important elements, it’s also one of the hardest to set up and analyze for someone that’s typically answering the phones, going on sales calls, fixing broken links and doing the work for which customers pay you.
Another factor may be that they get overwhelmed by the amount of things you can track. When it comes to analytics what to track is simple – track what matters most.
I’m tempted to scream the Jack Nicholson line from A Few Good Man – “you want answers?” “I want the truth.” “You can’t handle the truth!” – but, of course, I think you can and you must.
Now I know that may seem obvious, but stop for a minute and ask if you could come up with less than six numbers that would tell you everything you need to know about your priority initiatives.
There are things that you need to track over time for reporting, forecasting and goal setting, but there usually only a couple things that matter day to day, week to week, regarding your current highest payoff priorities and those need to go on a dashboard that you can visit daily.
Now, no one can tell you what that handful of metrics should be, but when you discover them and focus on them – you’ll have access to the truth about your business.
Let me give you an example. Most businesses rely on referrals, but few track, analyze or even amplify that fact that they are quite referable. In these businesses we usually develop some systematic approach to referral generation and then we obsess over tracking referral actions.
The key is to get as granular as you can so you are tracking things you can impact with campaigns, tweaks and processes. So in my example above you might start by obsessing over reviews or testimonials as a way to measure the type of satisfaction that leads to more referrals as opposed to simply keeping score of referrals received.
I find it helpful to think in terms of four distinct dashboards. One for marketing, sales, finance, and customer satisfaction.
Marketing – Your marketing dashboard is the place to track the channels you are currently using. You might even consider specific dashboards for more active channels to track your various experiments and test projects. Typical marketing dashboard metrics include:
- Social Media
- Lifetime value of a customer
- Value of a lead
Sales – Your sales dashboard is how you keep track of your sales pipeline elements of the marketing hourglass. You might also add specific conversion metrics discussed in the previous lesson. Typical sales dashboard metrics include:
- New customers
- Sales cycle
Finance – Your finance dashboard is where you keep track of the money elements of the business. Most businesses use historical data in financial reports, but keeping up on trends is a great way to get some insight into the health of the business. For example, if your customers start to trend towards late payments, you might have an issue with sales or service. Typical finance dashboard elements include:
- Cash flow
- Budget vs. actual
- Cost to acquire a customer
- Accounts receivable aging
Customer satisfaction – Your customer satisfaction dashboard is where you keeps tabs on how happy customers are. Sometimes you have to dig for things that will give you this kind of data, but there’s a sure relationship between complaints going up or down or referrals going up or down that can tell you where you need to put some emphasis. If you measure something like response time, you have the ability to laser in and find ways to improve it. If you don’t, you’ll never have the data you need to know where to focus. Typical customer satisfaction metrics include:
- Support tickets
- Response time
The following tools are nice options for creating tracking dashboards and making them available to key staff members or advisors. Most also allow you to create customer elements unique to your business by using Google Sheets spreadsheets.
- Determine the metrics you need for each of your four dashboards
- Create a spreadsheet or adopt a tool to compile this data
- Create a process for keeping your data fresh