How to find metrics that matter to your business

How to tune out the noise, tone down the data firehose, and home in on the numbers that truly drive your business.

As the head of a company whose business is helping organizations harness information and turn it into actionable insight, I know just how valuable data can be in revealing important trends and anomalies, and telling a story about how a business is performing relative to its strategic goals.

But one thing I’ve learned over my years as CEO of multiple companies is that data can be a double-edged sword. As helpful as digging into the numbers can be, metrics overload is a very real phenomenon that can distract organizations and their decision-makers from focusing on what really moves the needle for the business. The sheer volume of data flowing across our digital networks can make it tempting to try to measure too many things, and thus difficult to zero in on the metrics and KPIs that get to the essence of your organization’s health and performance.

Data should inform and galvanize, not confuse and paralyze. To get more of the former and less of the latter, my advice is to focus on a handful of high-level metrics that are simple, measurable and relevant to organizational objectives. Tune out the stuff that could be impactful but isn’t actionable, as well as the stuff that’s actionable but not impactful. For a people-focused business like ours, that means giving highest priority to satisfaction metrics that gauge how well we’re taking care of our customers and our employees, while also closely watching key revenue and profit metrics. Generally, you want to be sure that C-level decision-makers are concentrating on broad, macro-level metrics (though not always to the exclusion of other, more granular metrics as needed), while specific departmental and project leaders are focusing on the metrics impacting the things within their purview (without losing sight of the bigger-picture metrics, of course).

Here’s a handful of macro-level metrics that, in my experience, are particularly helpful at keeping organizational leaders attuned to what really matters to the business.

Customer experience metrics

As a company whose customers use our products every day in the core of their businesses, we are hyper-focused on people — and thus so are our metrics. We’re constantly asking ourselves, are our customers happy and are we providing value to them? For answers, we focus on Net Promoter Score (NPS). Monitoring customer satisfaction and loyalty through NPS yields the kind of insight that leads to product and service innovations. We also closely watch customer contacts/engagements metrics to ensure we are staying connected with the people that matter most to our business, our customers.

Employee engagement and experience metrics

Because customer satisfaction is inextricably linked to employee satisfaction, it’s also critical to measure employee engagement and sense of fulfillment in their jobs with a metric like Employee Net Promoter Score (eNPS). Consistent check-ins with employees are particularly important nowadays, with the pandemic straining peoples’ emotional and physical well-being.

Annual recurring revenue

For companies like ours, this can be a pure reflection of how well we’re doing for our customers. As a software business, recurring revenue and customer retention rate tell us where we stand with our customers, the extent of our progress toward meeting long-term goals, and what we can expect in terms of future growth.

Operating cash flow

As people-focused as an organization’s metrics might be, it’s also vital to keep your finger on the pulse of metrics around cash. We keep close tabs on cash ebitda, a proxy for the cash flow we are generating. Measuring cash ebitda allows us to prioritize how best to invest our cash, such as to enhance the customer experience, hire top talent, and develop new products (or enhance existing ones).

Community involvement

We view our company as part of a broader community that extends not only to our employees and the immediate areas where we live and work, but to our customers, prospects, and beyond. So our role is to help other members of that community succeed, for example, by participating in advocacy groups for women and for adolescent mental health. We try to keep up with the great community work done by our founder and make sure our employees have the resources, time, and encouragement to participate in our community. There is no great metric for measuring this, but we do track the time our employees spend on community activities and the funds that we dedicate to those activities.

The bottom line with metrics is that they should help you to clearly see the forest and, when necessary, the trees. For that, your organization needs tools that enable you to readily capture data, filter out the anomalous, incomplete, and superfluous stuff, and give it a context to turn it into insight. Wherever I’ve been as CEO, I’ve made a point of arming myself and my teams with simple-to-use, automated analytics capabilities that enable us to easily view, manipulate, and glean actionable insight from our data. Because the action that results from that insight is ultimately what drives growth for an organization, whatever business it’s in.

The post How to Find Metrics That Matter to Your Business appeared first on Inc.

Original source: Inc.

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