Blog - What Success Means to a Business
Posted 3 years ago
Business Success isn't all about revenue, Ben Sugden of Abzorb explains...
One thing that many successful businesses share at their core is the mantra “That which gets measured gets done”. The idea that measuring activity gives you control over the activity’s outcome has been put forward by experts since the renaissance and can be applied to any goal based activity from weight loss to business growth.
Many businesses trudge through their day-to-day operations, unaware of their performance levels and struggling to “succeed”. For some it is the lack of clear goals, for others it is a lack of clear direction on how to achieve those goals and for others is a focus on financial metrics alone that let the business down.
When we consider what success means to a business, it usually comes down to revenue – a measurable financial metric – but is that it? Revenue may be your end result, it’s there in the books every year, after all but how did you get there?
And that is where non-financial metrics come in. Regardless of the sector you operate in, the size of your business or the age of your enterprise there are several key metrics that successful businesses measure and act upon. These metrics can apply to some or all areas of your business and each brings a benefit to the area they are applied to.
- Market share; how well do you compare to your competitors? How does your customer base compare?
- Brand awareness; how well known are you for the services you offer? Where do you rank on popular search engines? Do you have a strong local presence? Do you have a strong national presence?
- Product penetration; what percentage of your business offering is taken up by your existing customer base? Are there opportunities for growth within your existing customer base?
- Sales “Call to Conversion” rates; How many sales calls lead to an appointment? How many appointments convert to a sale?
- Referrals? How many customers have put you in touch with prospects within their own sphere of influence?
- Speed of operational performance; What are the average production rates for your products? What is the average time spent on a service call? How many of those production tasks or calls fall outside that average?
- Speed of innovation; how quickly do you adopt or introduce new products and services? How many new products and services do you have on your immediate roadmap or in the pipeline?
- Customer satisfaction; are your customers satisfied with the service they receive? Are customers kept informed at key points throughout their uptake of your products and services?
- Customer retention; Are you retaining hard-won customers as time goes on? How many customers have you lost recently compared to those won? What is the net effect of those wins and losses?
- Employee satisfaction; are your staff engaged with the business? Are you engaged with your staff, do you communicate the business’s goals with them effectively?
- Social Responsibility; Are you a good neighbour? What impact does your business have locally or nationally? Do you monitor your environmental impact?
Implementing even a small proportion of the metrics mentioned is easier said than done. The benefits however are vast. There have been several studies over the last decade that demonstrate a definite connection between the effective measurement of these kind of non-financial metrics and business growth.
The real challenge in implementing any kind of metric to drive success in business is ensuring you have a clear definition of what success means to your business. We’ve already agreed that revenue is important and profitability should fall in nicely after that but to really drive success you need to look at some of the metrics suggested above and link them to a goal that supports that success.
Whilst there is a definite science behind these non-financial metrics, their implementation is far more fluid and needs to be adapted to each business based upon their unique needs and personality. There are many tools and methodologies out there to assist businesses in adopting these metrics and each has its own merits and techniques. Most of these methodologies follow the S.M.A.R.T. way of thinking insofar as goals or targets are Specific, Measurable, Achievable, Realistic and Time-bound.
As an example, you may want to increase revenue by focussing on sales of a new product. Your financial target is the overall goal but you can tie key sales performance indicators, market share analytics and even product penetration and referral metrics to that one goal.
By setting sales targets around a specific number of sales calls being made, appointments sat and sales converted we have 3 metrics that can be measured daily, weekly or monthly.
Each of these metrics can be tied to a specific revenue figure meaning that making a specific number of calls will cascade to a specific number of appointments and then sales conversions; ultimately your financial target is met by ensuring non-financial targets have been met.
In my experience, the metrics I monitor and act upon help me keep my eye on the ball. With a management team that monitor the metrics that affect their own areas of the business we help steer the business on a journey of growth. We avoid surprises and ensure that the overall business goals are met on a predictable schedule.
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