Measuring Metrics and KPI’s
You might think that measuring metrics and KPI’s are things you’ve heard connected to larger companies that have been around for a while. But here’s a secret - the sooner you start measuring them the faster your business can grow if you use them correctly, no matter how small or new your business is.
Without these measurements, you’re technically business blind. You can’t see what you’re not looking at, and what you don’t look at usually does not improve. Which is why I like this quote attributed to Peter Drucker:
“What gets measured gets improved.”
These numbers can be overwhelming, so I see a lot of business owners avoid dealing with them. There can be feelings of insecurity or failure if you don’t think your numbers are saying what they “should”.
I also see many entrepreneurs and small business owners blow right past their goals, not stopping to acknowledge their achievements and how they happened.
By setting up a Metrics tracking system for your business you can embrace your achievements, and find the places where you can make improvements to reach more goals and reap more rewards.
To simplify, if you plant a garden then never check to see if it needs watering or weeding, it probably won’t thrive. But if you keep an eye on the growth in your garden, when the leaves start to wilt, and you learn to water it the day before that happens, the reward will be lush beautiful flowers.
What Are Metrics and KPI’s?
Something to remember - All KPI’s are metrics, but not all metrics are KPI’s. And they are all just numbers - information and data that you decide if you want to take action to change them.
Metrics - Information about an area of business - marketing, networking, revenue, profit, client retention, etc. They measure all sorts of things in your business. Social media analytics is an example. Analytics tell you how many people see a social media post, did they “like” or comment, or did they click through any links you provided.
KPI’s – KPI’s measure how well you are progressing towards your key business goals, or not. So, if social media drives your new client acquisition, tracking how many people click from your social media posts to your website can be an important key performance indicator for you.
There are two types of KPI’s, lag indicators and lead indicators.
Lag Indicators measure things that have already taken place and can’t be changed. Profit is a good example. Your profit is your sales minus your expenses. You can see that number for last month, or last year, but you can’t do anything to change it.
Lead Indicators are what you CAN change. They are the future numbers you target to reach your goals. They “lead” you to reaching that target.
So, again, what can you do to impact your sales numbers? Maybe in your business networking is the key driver of sales.
Let’s say you average four networking events each month. From each event, you have phone calls with two people. Out of those eight calls each month, you typically convert three clients.
You might decide that you would like to double the amount of clients you get from networking each month. So this month you will aim to attend eight networking events, estimating that you will schedule 16 calls, and from that you can estimate that you could convert 6 clients. The number of networking events you attend would be that lead indicator - ultimately “leading” to your sales.
Since you’re basing this on existing metrics it’s pretty realistic that you could achieve your goal.
Track Your KPI’s
The awesome benefit of Metrics and KPI’s is the longer you track them, the closer you can get to your goals based on longer periods of data. It’s a cumulative effect. One month can give you a decent idea of how your numbers work, but 6 months, a year, or 5 years can really clarify the effects of using lag and lead indicators in your business.
The key to tracking metrics and KPI’s is starting small. You can start with networking, like the example above. You can look at revenue and net profit. All you have to do is have a clear process for collecting the data and a strategy for using it, and taking action on improving that area of your business.
The mistake I see people make is to create bigger tasks associated with this process. If you don’t want to get overwhelmed by the numbers, and avoid tracking them, you need to commit to small, realistic actions.
It’s simple, but not necessarily easy for everyone. That’s where I can help. In my Path of Action Strategy & Accountability Group this is part of what we work on. If you need more focus and attention on setting this up, I also work one on one with clients to really get confident about their execution.
Find out which option is best for you by scheduling a call with me.
P.S. Ready to stop spinning in place and get to the other side of your goals? Here are several ways I can help:
Download my free weekly planning guide - it will help you become more intentional with your time, develop a clear action plan for your week, and ensure that you are focusing on activities that will move your business forward - Download Now
Join our next CEO Power Planning Session and spend two and a half hours ON your business. During this facilitated workshop, you’ll set and prioritize your next 12-week goals, break them down into an executable action plan and create a resource plan - Join the Wait List
Apply for the next Close the Gap Program and stay on track to achieve your most important goals. 1:1 support and guidance on prioritizing goals, creating a plan and putting structure and routines in place. Then 12 weeks of group support around execution - Apply today