It’s surprising how many organisations we’ve worked with that have no idea of how to measure success within their businesses. Unfortunately, It can be difficult to grow your business and ensure long term success if you don’t spend time working on your business instead of in it. Whether you’re a small business or big business, every minute of time spent collecting and analysing success metrics will allow your business managers to pinpoint areas to improve within your business.
In this piece, we are going to first dispel some of the most common mythology around tracking your business success and finish it up with how to more effectively conduct your management review meetings so you can make sure that your organisation is staying on track with its vision and goals. This will give you an insight on how to track your business success and how to measure your business success so that you can achieve success in the long term.
Dispelling the Common Mythology
For your sales, rather than simply tracking revenue, a better indicator to keep an eye on is the percentage of leads secured per sales rep. This is indicative of a strong sales force in your organisation, which is more effective in tracking your sales team’s performance than simply looking at your revenue stream. If you’re looking solely at your revenue stream as a KPI, you stand to miss out on identifying underperformance which could be eating your organisation’s profitability from the inside out. Your marketing strategy is also fundamental to the volume of sales opportunities your business receives. A great marketing strategy will also give you the opportunity to increase your conversion rates and also allow you to expand your customer base, making way for the steady growth of your organisation.
The same applies to customer satisfaction. Simply tracking customer satisfaction with a questionnaire or a survey of your existing customers won’t paint the entire picture of your organisation’s ability to serve its customers. What you’re really investigating is how their experience was, and how likely they are to recommend your organisation’s product or service, so find that out: what percentage of your customers are referring new business toward your organisation? This paints that portrait much more accurately, allowing you to take the necessary steps in order to increase your customer retention and maximise the potential of your business.
Now, moving to the all-important measuring of profit in your organisation. Measuring the profits of your organisation is essential to its maintenance, ensuring that your cash flow is satisfactory enough to continue to operate.
Net profit is entirely misleading because certain underperforming areas of your business can be lurking behind the overall net profit figure, which makes it seem like your organisation is in a healthier state than it actually is.
To combat the dangers of this, look at building out a dashboard of statistics that breaks down each and every product, so you can take a more objective look at each of your organisation’s respective products or services. Looking at it through the lens of the percentage of gross margin by product will help you track profits of each respective area, which will help you separate the under-performers from the bedrock of your profits.
From here, we move on to your management review. This is where you bring in the numbers you’ve been collecting over a period of time, along with each respective member of the management or executive team, and conduct performance reviews, holding them accountable for their numbers. While this has negative connotations, it’s not aimed to name-and-shame the management figures of underperforming areas, it’s more of a learning exercise that will help you first establish which areas of the organisation need improving, which you can leverage everyone in the team to formulate ways to turn these numbers around.
People should be held accountable in the way that they’re responsible for their numbers, but you shouldn’t be holding a figurative gun to their head for the underperformance of certain areas of the business; sometimes it’s out of their control.
There’s no magic number here in terms of how often you should be conducting these management reviews, but at the very least, you should be meeting quarterly and presenting all your results. At Best Practice, we have smaller versions of these meetings each Monday, where a division meets to check over the past week’s results, and set an action plan for the coming week to ensure they’re able to achieve success at work. This is a useful exercise to maintain momentum in the business, as well as assuring that everyone in the business is on the same page in terms of the overarching goal and vision that the organisation is aiming toward.
If you are looking for ways to improve your business, get in touch with Next Practice Business Coaching. It is in our DNA to empower businesses to grow.