If you want to grow your business you will need to measure the things that matter. As a business leader you need to see the big picture. That includes tracking the pulse of your business. Watching a dashboard of controls tells you if your car is operating properly. Having a dashboard for your business will tell you if your business is on track to reaching your goals.
As a leader who is working ON your business you will need to track important trends which can quickly warn of problem areas that need attention. You should not waste time getting bogged down in the small details of working IN the business or you will miss the forest for the trees.
You should measure business success by measuring trends and directions not numbers. Looking at the numbers alone will not tell the entire story. You should be measuring the trends and the movement toward the critical goals of your business.
These are some things that are worth measuring.
Finances – revenues and sales, profits, cash flow
Inventory – unusual drops or increases
People (Employees) – productivity, turnover, employee engagement scores
People (Customers) – customer satisfaction, customer loyalty scores
This information is vitally important to the leader of the business.
Of all the measurements one measurement that is the most important because it is the biggest predictor of future success. It is NOT finance and profit. That may surprise you. Of course, profit is indeed very important but is a measure of what has already happened. It should come with the same warning put on mutual funds which is “This represents past performance, which is no guarantee of future results.” That’s right. Just because you have had good sales and profits last year does not mean that you will have increased sales and profits this year. Sales and profits are TRAILING indicators.
A LEADING indicator which will predict future success is customer loyalty or the customer loyalty score. The most important measure of customer loyalty is the answer to this question. “How likely are you to recommend us to your friends?” You should survey your customers with this question along with other customer questions that will help you understand what you need to do to exceed your customers’ expectations. Whatever else you measure make sure that you track this. Rising scores will lead to more sales. In the same manner falling scores will predict decreased sales.
If you measure customer loyalty and see opportunities for improvement take action immediately. Taking the correct steps will help you create more sales, profits, and success.