Metrics are Your Benchmarks for Success
Every success is based on the achievement of expectations, whether it’s exceeding a goal, meeting requirements or delivering a finished product that’s well-received by a customer. And, in order to truly chalk up successes when they occur, it’s important to understand and define your expectations at the very beginning.
Metrics play an integral role in the pursuit of success because they do so much to facilitate the end result. Without a benchmark for what needs to be achieved or a method for evaluating the process from conception to fruition, you might not truly understand what it is you’re shooting for and what it takes to get there. Because of this, every first step on the road towards success needs to start with well-defined metrics.
What are metrics?
Simply put, metrics are facts, figures and data that illustrate progress, goals, and even setbacks in regard to a specific aspect of business. You might have metrics that are used specifically for a project—like a budget, timeline and deliverable materials—while other, broader metrics may be used to define larger models of success—such as measuring revenue in a fiscal year, manpower hours and client retention.
Metrics are put into place to clearly define exactly where you stand in terms of your goals. If you’re meeting the benchmarks defined by your metrics, you know you’re on track for success; if you’re not, you’ll be alerted to the need for improvement and reevaluation of your processes and goals.
How do you create the right metrics?
Creating metrics to gauge your successes isn’t about picking goals out of the air and working towards them—it’s about evaluating your resources, abilities and potential to ensure that you’re setting standards that are attainable, yet push the boundaries for positive growth.
Metrics should always be straightforward and clearly designed. Good metrics will tell you three things: 1) your goal, 2) where you stand concerning your goal, and 3) areas that are surpassing or falling short of your expectations.
Why are metrics important?
Metrics are important because they give insight into all facets of business—even those that are not specifically defined within the metrics that you set down. Let’s take a look at a basic example:
Your company has defined metrics for annual revenue and new client acquisition, which specify goals of $1.2 million in total revenue and 120 new clients over the fiscal year. After the first quarter of the year (three months), you evaluate your metrics to find that you’ve obtained $250,000 in revenue and have secured 35 new clients so far. By overlaying these figures with your metrics, you’re able to see that while you’re exceeding your projections for new client acquisition, you’re falling a bit short on your revenue goal.
Using the example above, we’re able to glean a significant amount of data about business operations and how the metrics are being affected by these operations. For example, exceeding a client acquisition goal but falling short on a revenue goal could mean that the value of new client contracts isn’t keeping up with revenue needs. It could also mean that the pricing model for specific services is too low to be sustainable. Finally, it might also suggest that the business is marketing to the wrong types of clients and is undervaluing its potential for securing high-revenue customers.
Metrics are the gateway to understanding your business in all of its facets and knowing your strengths, weaknesses, triumphs and pitfalls, no matter where they might be occurring. And while setting goals and creating metrics are crucially important for any business, it’s equally important to evaluate these metrics consistently, to proactively act and react to shortcomings before they create problems and disruptions that become immediate issues for business.
The strive for continued improvement
Metrics are by no means concrete and, in fact, they should evolve and be revisited constantly by a business. Simply “setting and forgetting” metrics does nothing to solidify their purpose. Constantly benchmarking your business against its many metrics is a sound way to make the necessary changes to your operations that will grow the business continually and sustainably. Metrics create accountability that will help your business succeed in both the short and long term.