Don’t be scared of metrics and data in your organisation. Measuring what’s important in your business is your secret weapon to managing for high-impact growth.
As the owner of an SME, have you ever taken the time to consider the elements that drive corporates to perform? Entrepreneurial business are quick and agile; this is their edge. What they lack in resources they make up for in speed and a lack of bureaucracy. Decisions can be made quickly and on the ground. And yet corporate organisations that do well aren’t only profitable because they’re large and have resources – but because they’re obsessed with performance.
Do you know simple metrics in your business like customer acquisition costs versus customer lifetime value? If you don’t, you’re missing the biggest factor in organisational growth: Measuring everything so you can do things smarter and better.
“Corporates spend a lot of time and investment researching and implementing systems and processes that drive performance, profits and growth in share prices,” says Romeo Kumalo, co-founder of Washirika Holdings and former Executive Commercial Director, Chief Commercial Officer and CEO International Business at Vodacom. “Not only do they have systems in place though, but they’re fanatical about measuring whether or not key objectives are being met. They understand the fundamental truth that if you can’t measure something, you can’t know if you’re delivering on it.”
The power of measuring metrics
“One of the reasons why we’re able to follow a risk model is that we measure everything,” explains Tom Goldgamer, co-founder of 3-Way Marketing and the Benater Group, a R200-million business. “We understood the business environment we operate within and its returns. We know the importance of giving measurable value to our clients. We never do anything we can’t measure, because that’s how we charge clients, prove our value to them, and keep improving our services.”
The risk model that Goldgamer and his co-founder, Danny Aaron, follow is simple: They shoulder an upfront cost, and clients only pay for sales leads that are converted. This requires two things. First, the company’s analytics need to be superior, and are constantly being updated. Second, everything – and that means everything – is measured.
“From launch we decided to spend money on client campaigns before we made cash,” explains Aaron. “Following this risk model philosophy meant that we needed to invest in people and processes though. We did it carefully, testing and measuring everything each step of the way.
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“For example, we place conversion managers on site at each client’s office. This is an upfront cost for us, and it’s one we shoulder before they’ve paid for a single lead. Our team member assists the manager with analytics, and best practice to ensure all leads are converted in to sales.
Because we measure everything, we’ve learnt that in sales there are crucial touch points that ensure higher conversions, such as the time it takes to touch a lead, scripting, closing techniques and so on. An on-site resource makes the likelihood of successfully addressing these principles much higher, but we make sure that we’re always measuring all the data available to us to ensure we’re on the right track, delivering on our objectives, and working with the most up-to-date data and trends.”
Getting the fundamentals in place – and then measuring them
For Kumalo, high performing corporates consistently deliver for their shareholders because the fundamentals of any business are in place: Systems, processes and governance to ensure everything is being measured. This means that employees all operate within a performance management system, but over and above that, everything else has a system, process to follow and data to be measured – all to meet specific objectives.
“Where is money being spent? Are your books in order? Do you take minutes at meetings? This might sound ridiculous, but it speaks to how organised, systematic and professional your business is,” says Kumalo.
“If you aren’t taking minutes, it’s unlikely you’re measuring leads to conversion ratios, customer acquisition versus lifetime sales costs, or any of the other hundreds of things that you sould be measuring.”
The important thing though is to just get started.
“Data is just information. Too many business owners and managers see it as intimidating. It’s not,” says Aisher Pandor, co-founder of tech start-up SweepSouth, a cleaning services website that has attracted significant funding since its launch in 2014, largely due to the fact that it’s founders are able to show investors a detailed look into the business’s metric because they measure everything.
“Just start with something — one small unit of measurement. Once you’ve got that, build on it. You’ll be amazed at what you can do and the decisions you can make once you have data at your fingertips. Information is power.”
“We call it ‘getting on the journey’, and it’s based on advice I received at an Entrepreneur’s Organisation event,” says NetFlorist co-founder, Ryan Bacher. “We were advised that if you want to change something in your business, you need to start. Take bite-sized chunks and get on the journey. It doesn’t happen overnight, but if you aren’t measuring your business, you can’t manage it, it’s that simple. So choose one thing, and start measuring.
“We started with fuel consumption. Once we had interesting data that we could work with and make adjustments to our systems and processes, we started measuring the next thing. Slowly we built up data that gave us a view into our business that we’d previously never had.”
According to Bacher, the same is true of employees. “People want attainable goals. Once they can see them, you can give them assistance to get there. It gives everyone purpose.”
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To determine what to start measuring, begin by ascertaining your ‘north star’. What is important to you? What key measurement will drive business growth?