7 Tips On Building Your Business With Better Metrics

Guest post written by Justin Moore

Justin Moore is CEO of Axcient a provider of data backup software.

Justin Moore

Measuring and managing with metrics is essential to keeping your business on target. It’s critical to choose the right parameters – and then to know how to use them. Measuring with the wrong metrics can do more damage than good. Getting too obsessed about the numbers can lead to bad decisions and make you forget about the human element, that you’re managing people, not robots. And not measuring on at least a weekly basis can leave problems undiscovered until it’s too late to course-correct. But, when you leverage metrics properly, they can be one of the most powerful ways to propel your business to success. I’ve found an effective metrics-based management strategy that strikes the proper balance.

1. Measure before you manage

Accountability is fundamental to effective management, but it’s impossible to achieve it without tracking each department and individual progress against very specific, measurable goals and objectives. Every element of your business should be measured – marketing, support, operations, sales, finance, engineering, employee performance, and so on. You first need to determine the right metrics and then make sure you have all the tools you need for measurement.

2. Choose the right metrics

Using metrics is a bit of a double-edged sword, because it can just as easily send you off track as it can bring you greater focus. The key to effective measurement is knowing what to measure. First, you have to really know your business, starting with your core values, vision, and company mission. Ask questions like:

• What five things will most impact the business in the next 12 months?
• What are specific revenue objectives, both for the year and for each quarter?
• What are the “subjective” criteria for success in the next 12 months?

Then pick your metrics based on what matters the most to your business. Set yearly and quarterly company and departmental goals, from which individual objectives are created.

3. Avoid common metrics pitfalls

I’ve learned from past mistakes that metrics must be extremely clear. A broad goal like “provide better customer support this quarter” can leave everyone, at the end of the quarter, with very different ideas on whether or not that goal was met since there were so specific metrics tied to it. Other common pitfalls avoid include:

• Metrics with inaccurate or incomplete data
• Metrics that are complex and difficult to explain
• Metrics that complicate operations and create excessive overhead
• Metrics that cause employees to not act in the best interest of the company

In brief, metrics should be so clear that an outside person could come in at the end of the quarter and check whether the objectives have been met.

4. Invest in tools that deliver real-time feedback

To make metrics really effective, you need real-time feedback. Whenever possible, invest in measurement tools that put your metrics at your fingertips. Today’s Software-as-a-Service (SaaS) applications make it easier than ever to quickly and frequently pull data that provides measurement against objectives. You might use Salesforce reports to track sales activities and leads. Or HubSpot for Website rankings and inbound site links. QuickBooks, Excel and other office applications you’re already using can be set up to collect and analyze current data.