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I spend much of my day looking at numbers, identifying what is working for our clients based on analytics and sending leads to their sales teams.
The challenge with massive amounts of analytical data is that businesses too often focus on the wrong numbers. What gets measured gets done, but we need to make sure the right work gets done.
There are two questions you can ask yourself to find the most helpful analytics data to grow your business:
- Is this number a measurement or a metric?
- Is this metric a performance metric or an outcome metric?
Find performance metrics to grow your business over time.
Measurement Vs. Metric
A measurement is a data point at a single point in time.
Typical measurements include things like how many people visited a website in a month, how much revenue a business received last quarter, the number of employees a business has, or the number of leads in a company’s sales funnel.
These numbers are important. Often, the goals businesses set are based on measurements like these. Out of context, however, these numbers don’t help very much. If you had 10,000 web visitors, but that was the same as last month, you’re not improving.
What’s more, if you set a goal for a specific measurement — say 10 leads in your sales funnel — and you hit that measurement, there is no incentive to continue to improve.
A metric is a data point in context.
Typical metrics include thing like the change in website traffic compared to last month, the change in revenue month over month, the number of employees at a company now compared to last year, or the growth in the number of leads in a company’s sales funnel.
A metric considers the past and puts your success (or failure) in context. Plus, a metric encourages continual improvement. If your metric is growing web traffic by 5% a month, you have to keep building upon your success. A metric of growing leads 10% a quarter encourages continual — and exponential — growth.
Metrics remind me of my days running 300-meter hurdles. (Don’t laugh, I got second in state!) There was never a race time that I was satisfied with. Sure, I wanted to break 40 seconds in the 300-meter hurdles, but even when I did, I didn’t stop and say, “Okay, I’m happy with this time.” There was always a new goal to push myself further.
Choose metrics over measurements so you continue to push the limits of what is possible in your business.
Outcome Metric vs. Performance Metric
Once you change your mindset from measurement to metric, consider the best metrics to use for your business.
An outcome metric looks back at what has already happened.
These outcome metrics are studied after the work is already completed. They can provide useful insight for the next time you do similar work, but they can’t change the result.
Typical outcome metrics are the examples mentioned above: traffic or revenue growth month over month. Knowing what happened to your traffic or revenue compared to previous timeframes is helpful for knowing what to do in the future. However, if you don’t have the metric until the month is over, you can’t correct course and improve that month’s performance.
For mid-stream adjustments, performance metrics are needed.
A performance metric measures the key activities that lead to successful outcomes.
Performance metrics are analyzed on an ongoing basis to make sure your work is on track to hit the target. If you don’t reach your performance metrics, you know that you will not meet your outcome metric. Fortunately, performance metrics help you make changes to alter the ultimate outcome.
In my track example, measuring only my race time in the hurdles didn’t help me get faster. Instead, I also measured the speed of my start out of the blocks. If I could get out of the blocks faster, I knew that my overall time would also get faster.
A typical performance metric would be something like the number of phone calls made to potential leads to reach the outcome metric of increasing leads in the sales funnel. If you make enough phone calls, you should reach your goal of leads.
Similarly, publishing a specific number of blog posts could be a performance metric that will help you reach your goal of increasing traffic month over month. The more content you share online, the more people will visit. If you fail to publish blog posts, it’s more likely that you will not reach your outcome metric of increased traffic.
Want Useful Analytics? Switch to Metric
If you are a manager, focus your team’s work around the metrics that matter. If you are doing the work yourself, identify which of your tasks indicate whether you will hit your ultimate goal. Share this information with your manager.
Data is powerful and works best with a clear target. Knowing if you will hit the target before you check, however, is business-altering.
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We will be hosting a webinar this spring all about analytics, and our subscribers will have the first chance to sign up. Plus, you’ll get a lot of great articles all about marketing based on useful data. I think you’ll love it!
Banner image: Fabio de Pietro