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We’ve discussed the importance of tracking the right data and how to incorporate your ideas into the results. But, it’s also important to consider when to use data. Even though a variety of metrics can be tracked in real time, not all warrant immediate change. Pivoting your business strategy too frequently will not yield positive or negative results because you will never see a tactic fully played out. That’s why it’s crucial to use data to develop long term strategy—and to stick with it.
Revenue is important to any business. It is an easy measure that states how well a business is carrying out their goals, but it does not detail how efficiently the business is operating. Profitability, on the other hand, will shed more light on how well a business is using its revenue. No matter if a business is experience record gains in revenue, operators may be overlooking inefficiencies in other areas, such as low retention among customers or high rents in office place for a mostly remote workforce. More importantly than looking at the money a business earns, it’s crucial to consider how much money a business spends when determining if it will be successful in the long run.
Okay, so you’re focused on profitability now. The best metric on which to evaluate your profitability is your team. Most companies are aware of the positive impact of low employee turnover on its bottom line. Turnover is costly because every new team member requires extra time for onboarding and training, as well as a probation period during which they are still learning the intricacies of their jobs. But for companies with low turnover, it’s even more important to consider the progress of tenured staff members. Employee stagnation negatively impacts profitability over time. As an employee’s time with a company grows, so should their contribution to the team vis-a-vis increases in client orders, improved product marketing, and new client acquisition. Evaluating how team members spend their time through key performance indicators (KPIs) will positively impact a company’s long-term growth. An easy way to keep track of KPIs are through leaderboards that update automatically and in real time.
Regardless of turnover, consider the measurements used in your company’s hiring process. Are new hires made quickly or after thorough vetting? While every candidate for a job will be unique in their experience and what value they can add to a company, the way in which candidates are evaluated, how their compensation is determined as they relate to how they perform after hire will shed light on profit and, therefore, long-term success.
Not only do you need to look internally at how your people are operating, but also externally. At times, the ideal customer of a business and its current audience differ. Some companies have what may be called their aspirational customer—the group of people or entities they wish to use their product. But those may not be the same people who need or use the product. This may indicate that marketing efforts are being misused or misunderstood. Use data on customer profiles to better understand who wants to use your product and track that data against the prospective client profiles to better target the efforts of your sales team. Use your CRM to automate lead scoring – demographically and behaviorally – to better target your aspirational customers. Salesforce lets you set the parameters in which you want to track, and Marketo can alert you of a lead score threshold reached so you can hit them while they’re hot. Whether your ideal customer demographic is the CEO, or the behavior is downloading an ebook, you can set scores to rank your incoming leads to prioritize how you spend your time for each one.
Many businesses apply the data of successful companies to their own strategy. Yet, the strategies that are most frequently published are those of companies who successfully used them, excluded of companies who applied the same strategies and failed. This leads to overconfidence in particular tactics without understanding the full picture. Before adopting a strategy of a successful business to your own, look at all of the factors involved, such as business size, age of business, and objective and product. Then look at how these companies measured success and over what period of time. While this information may shed light on proven strategies, they do not take into account the unique qualities and goals of your business nor do they encourage businesses to take risks beyond the status quo. In building a long-term strategy, there is tremendous power in the small details, such as success of engaged employees, practical use of company assets, and corporate communication to prospective clients. Articles on management will produce ideas for how to measure this, but an individualized approach to capture data is more important when looking at long-term growth.