What you measure is what you grow. If you can’t measure, you can’t manage.
As business owners, we know how important performance metrics and knowing your numbers is to the success of your business.
However, there are specific numbers that 10x companies rigidly measure, and review regularly, and it can be easy to be swayed in measuring the WRONG things.
Vanity metrics are numbers we like to look at. It’s the number of likes, the number of page views, or anything that we look at and it makes us feel good, however is not making any significant impact to the bottom line of your business.
It can be easy to get caught up in “seeing traction” on our website, or seeing a spike in customer enquiries, however it can all be a whole lot of smoke and mirrors if it’s not proven by data to convert to sales or lifetime customers.
So what should you be measuring and focusing resources on?
Exactly how much is it costing your business on marketing efforts, advertising to acquire one customer? When you can calculate this with precision and accuracy, you can quickly and effectively make changes to your current efforts to maximise your spend in the right places.
If you are currently spending more than your customer is worth, how can you change that? For example, if you are spending on average $125 across advertising mediums on average to acquire one customer, whose lifetime average spend is $25, that’s obviously not very effective.
Retaining loyal customers who continue to come back, are much more cost-effective on a business than spending on acquiring new customers.
10x companies know that maximising the value for an existing customer, and nurturing that relationship is critical to the financial health of their business.
Netflix is a 10x company who has a very specific review process based on hiring, firing and measuring performance based on company values.
Being one of the most influential and fast growing brands in the last 5 years, they now attract some of the globes highest performers in innovation and technology.
Their process uses a method of aggressive accountability, with a monthly review by the team and self, of measuring performance based on their core company values – judgement, communication, curiosity, courage, passion, selflessness, innovation, inclusion, integrity and impact.
These core values have a specific and detailed explanation of what this is, and how it is measured.
To read more about Netflix’s unique company culture and processes, click here.
We may be preaching to the choir here, but I see a lot of businesses that start based on a dream, a passion, a yearning desire to make an impact, or have seen a gap in the market that needs to be filled.
However, at the end of the day – is your business actually making money? Once you’ve paid your staff, paid your overheads, paid suppliers – is there a margin of profit there to not only survive, but thrive?
It is a sobering fact to know that more than 85% of small businesses fail in the first 2 years, and we want to ensure you’re not one of them!
How often are you measuring changes in your sales or revenue activity? What does this tell you?
Based on our previous blogs about what 10x companies do differently in regards to assessing data, what empirical evidence do you have to support your assumptions or hypothesis of such fluctuations or spikes?
By measuring the right things that have the biggest capacity to move the needle in your business, begin by focusing on these key metrics.
We go in to depth on how to manage performance, provide you with templates, worksheets and guides on a range of key metrics in our online 90 Day Culture Accelerator program.
To find out more, click here.