Meaningful Business Metrics Aren’t About the Number
When it comes to business metrics, there’s a secret that top-performing leaders understand, but might not tell you aloud:
“Your customer doesn’t care about your internal scorecard.”
Top-performing leaders pick a few meaningful business metrics that encourage the right behaviors and achieve the results that truly matter to their customers. In contrast, managers who haven’t learned this secret focus on the numbers and frantically swivel their team’s focus back and forth between twenty-seven different measurements – most of which don’t directly affect results. Not to mention that no one can concentrate on twenty-seven metrics at a time.
How NOT to Use Business Metrics
I (Karin) saw the downward spiral a barrage of business metrics can cause when visiting with a manager who we’ll call “Sarah.”
I watched Sarah’s entire body tense up each time the hourly stack rankings buzzed in on her phone.
Sarah didn’t have to say a word. I knew that look from the inside out. As a Verizon contact center director, I’d been on the frantic receiving end of such beeps for many years. Hourly results coming in 15 times a day—quality, efficiency, sales. When they were good, I could breathe and go on with my day. But sometimes, that stack rank was an hourly reminder of all the work I, and my team, had to do.
As my blast from the past continued, I remembered the additional stress, when those hourly stack ranks, were followed up by a call from my boss “Have you seen the numbers?”
Sarah interrupted my painful flashback. “I’m sorry, Karin, but I’ve got to huddle the team. We’ve got to get to 94 by the end of the day.”
“What are you planning as your key message?” I asked. Sarah looked at me as if I was crazy. “Ninety-four,” she said. When I met with Sarah’s team later in the day for a focus group and asked what success looked like, they told her, “Ninety-four.”
Well, at least they were consistent.
Sarah’s focus on the number ramped up pressure and stress. It created more busyness and activity. But that focus on business metrics alone wouldn’t help her team succeed.
Messing Up Measurement
Here’s an example to help explain. Imagine for a moment that you go to the doctor and she tells you that you have high blood pressure. The doctor prescribes medication, a change in diet, and more exercise. Assuming you are motivated to get healthy, what would you do when you left the doctor’s office?
You might go to a pharmacy, fill your prescription, and head home. Once you get there, you might evaluate what food you have on hand and make a shopping list that includes whole grains, lean meats, and vegetables. You might take a walk and start an exercise plan that includes some yoga and stress reduction.
And yes, you’d probably measure your blood pressure once a day.
Eat well, exercise, and take your medicine. Keep up those behaviors consistently, and your blood pressure would likely improve.
Now, imagine instead that you leave the doctor’s office and go to a drugstore, pick up a blood pressure cuff, then head home and start taking your blood pressure every fifteen minutes – after all, this is important! It’s literally a life or death situation and you need to fix this. Every fifteen minutes you see that your blood pressure is still high.
Now you’re more stressed.
So now you start checking your blood pressure every ten minutes, only to see your blood pressure rise even higher. And you’re not doing any of the meaningful activities that would help improve your health.
We don’t know any healthy people who have ever done this with their blood pressure, but when it comes to leading business teams, we see managers do it all the time.
How to Make Business Metrics Meaningful
Your blood pressure reading is important. And your business metrics matter – a balanced scorecard, with well-selected key performance indicators, will reinforce your strategy and align actions with goals.
But managers who obsess about the numbers make a critical mistake: they focus on the score because they mistake the number for what it represents.
Your blood pressure readout is not your blood pressure. The score is a set of numbers that tells you what’s happening in your body. It’s an indicator of health, it’s not health itself.
If you’re in law enforcement, the crime rate is an indicator of public safety, it’s not public safety itself. If you’re in sales, your average sale per customer is an indicator of your relationship with your customers, it’s not the relationship itself. And, if you’re in customer service, your service ratings are indicators, they’re not the customer experience itself.
Whatever measurements you use in your business, it’s vital to remember that measurements aren’t what you do; measurement represents what you do.
This understanding translates into how you communicate with your team. Managers who don’t understand the difference between a score and what it represents will beat people up with the number. They say things like “we’re at 42, we’re at 42, get it to 39!”
Instead, a manager who understands the difference will look at that number and use it as an indication of what activities, behaviors, and habits need their focus. When your blood pressure is high, you take your medicine, exercise, and change your diet.
When one of your team’s most important measurements isn’t where you want it, where do you need to focus?
Four Ways to Use Data Well
There are four ways you can use data effectively:
1. Know what matters.
Your scores don’t really matter. They are there to help you and your supervisors make decisions, but the scores . . . don’t . . . matter. (And some important elements of your work can’t be measured easily.) What is truly significant? There is one way to find out. Ask: What does your customer or client most care about?
Your customer doesn’t care what grade your team received on your internal scorecard. No one outside your team or your manager cares where you are in a ranking, how close you are to your goal, or what grade you got.
Customers care about their results. For example:
- How long do they have to wait, and can they get their issues resolved to their satisfaction?
- Does your product work and meet their need the way they expect?
- Are they able to do what they expect when they use your service?
- Do they feel good about it?
- Does it help them?
Your team exists to produce those results. The results—what you do for your customers or clients—that’s what matters. Focus on what matters most, and we guarantee your score (the ones that matter) will improve.
2. Know the key behaviors that produce real results.
If you wanted to lower your blood pressure, you would know your key behaviors: take your medicine, eat well, and exercise. Similarly, there are core sets of behaviors that allow your team to achieve results and sustain them over time.
If you’re a convenience store retail manager, your key behaviors might include:
- Keep products stocked.
- Make sure the store is clean and neat.
- Don’t let customers wait in a line longer than three people.
If you’re a customer-service call-center supervisor, your key behaviors might include:
- Huddle with your team each day to connect and communicate.
- Listen to calls and provide balanced performance feedback.
- Get involved to help resolve the toughest customer concerns.
If you’re a nonprofit fund-raising director, your key behaviors might include:
- Build relationships with donors.
- Ask them to support the cause.
- Thank them in varied and meaningful ways.
Whatever your business, there are always key habits that build your meaningful results. Do you know yours? This is a critical step; you can’t improve your measurements if you don’t know what drives your success.
3. Emphasize key habits (not the score).
Like a drummer in a band, you keep the beat for the team. Everyone can play their parts when you keep time and anchor them in what really matters.
To keep the beat for your team, consistently communicate the key behaviors and activities. “This is how we succeed: We do A, B, and C.” All your communication—in team meetings, in one-on-ones, in email—will emphasize these core practices.
When you do discuss metrics, put them in terms of the key behaviors. For example, “When we do A, B, and C every day, we’ll maintain 80 percent-plus repeat visits.”
4. Check the score at appropriate intervals.
How often should you check your metrics? The answer is: as often as necessary to keep you on track and no more than that.
In other words, it depends on what you’re doing. To manage high blood pressure, a daily reading might be adequate. If you’re driving a convertible sports car down the highway, you’ll need to glance at the speedometer every so often to make sure you don’t get a ticket.
For your business, a good guideline is to think about how long it will take you to see results when you implement a change. If you make a change today, will you see results in a day? A week? A month? Six months?
Different businesses have different time frames. Generally, you want to check your business metrics often enough to confirm positive results or to catch problems when something changes, but no more than that. Otherwise, you’re wasting time and attention you could use to get the results that matter to your customers, clients, and constituents.
We’d love to hear from you. What are the most meaningful business metrics you use? How do you keep yourself and your team focused on the habits and activities that matter most?
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