Tracking performance against relevant targets and benchmarks is vital in any business. Nevertheless, choosing the right metrics and implementing effective measurement practices is often easier said than done.
Define Aligned Targets Early
Before you can measure anything, you need to clearly define what successful performance looks like for your company’s unique goals and situation. Don’t just blindly adopt generic industry averages as your targets.
Gather your leadership team to align on the key objectives you’re striving to achieve over what timeframes. Whether it’s revenue, customer, operational or other targets, root them in your distinctive business strategy and priorities.
Quantify Target Outcomes
Once you have reached a consensus on the main objectives, convert them into specific and measurable outcome metrics. For example, revenue targets might include metrics like total sales figures, renewal rates, average deal sizes, etc.
Ground these metrics in numerical data you can accurately track over time, not vague qualitative descriptions. That’s the only way to truly evaluate performance in an unbiased, verifiable manner.
Measure Process Metrics Too
While outcome metrics show you whether you’re achieving desired results, process metrics reveal how effectively and efficiently your organization operates. They provide diagnostic insights into potential areas for improvement.
Track process metrics like average handle times, response rates, error rates, cycle times and resource utilization. These illuminate roadblocks, inefficiencies, or waste that outcome metrics alone can’t pinpoint.
Combine Leading and Lagging Indicators
Some metrics measure changes or progress as it’s actively happening (leading indicators). Others only become apparent after outcomes are finalized (lagging indicators). You need a balanced blend of both.
For instance, in a sales cycle, leading indicators like opportunity creation and deal velocity foreshadow upcoming closed revenue (a lagging indicator). Monitor a mix to stay ahead of risks or opportunities.
Leverage Benchmarking Solutions
While internal targets and process metrics are important, the experts at ISG explain that comparing your performance to industry peers and competitors through benchmarking solutions provides invaluable additional context.
There are benchmarking databases, reports, and tools covering thousands of operational and financial metrics across industries. Use them to identify areas where you may be underperforming or have opportunities to gain advantages.
Just don’t rely solely on benchmarks. Consider your company’s unique products, strategies, situations, and strengths when interpreting relative performance.
Contextualize With Qualitative Insights
Quantitative metrics alone often can’t fully explain underlying causes or help you determine the next best actions. Balance your measurements with qualitative insights gathered through methods like:
- Customer/ Employee Surveys & Interviews
- Gemba Walks / Observations
- Call Monitoring / Transcript Analysis
- Social Media Listening
- Focus Groups
Having a deeper understanding of people’s emotions, actions, and experiences can reveal the underlying reasons for changes in metrics, enabling you to respond effectively.
Visualize and Share Performance
Create user-friendly dashboards that centralize and present key performance indicators for easy access and exploration by relevant individuals. Drive accountability by regularly presenting high-level scorecard views in team meetings and leadership reports. Give people self-serve access to drill into details and uncover insights. Collaborative data democratization maximizes metrics’ organizational impact.
Iterate and Evolve Constantly
Measurement should be an ongoing, evolving process of continuous improvement, not something done once and forgotten about. Track whether your current metrics are still serving their intended purpose and adjust as needed.
Regularly reevaluate data quality, metric definitions, targets, benchmarks sources, tools, and reporting based on new insights, business changes, or strategic shifts. A stale, rigid measurement system inevitably becomes misaligned and misleading over time.
Conclusion
Consistently measuring and analyzing your performance through the right lenses provides crucial intelligence for optimizing operations and out-executing competitors. Combining financial metrics, operational metrics, qualitative insights, and external benchmarks into interactive reporting means you’ll gain a comprehensive view of your organization’s true strengths and opportunities.