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TIPS FOR USING METRICS TO TRACK BUSINESS SUCCESS

Updated: Nov 9, 2022


Tracking Business Success


A problem within a business can be very much like diagnosing a cold. There are symptoms like a cough, sore throat, low-grade fever, runny nose, and congestion. The difficulty is that those are symptoms of several illnesses like the flu, Covid-19, or early-onset pneumonia. If misdiagnosed, you could treat the wrong disease and get worse instead of better.


Assessing the Problem

The same is true in business. A problem can be seen as or manifest itself in one way but could be a symptom of a completely different issue. Human nature tells us that we will usually have to change something or spend money to fix what is not working and are eager to get started.

As a small business owner, you want to ensure that the money and time you spend making changes within your business provide you with a return. This is especially true when you are changing parts of your business or spending money in areas related to growth and increased sustainability. We all want to ensure that we fix what is broken, but would it not be even better if we knew exactly how successful we were in our efforts?

Business Situation

Let us use a specific business example of one of our clients to understand metrics' importance. In this business, the salespeople always approach the Sales Manager and Owner for a discount. The salespeople told them that the price was why they couldn't sell and that the competition had a better website and marketing materials. They tried to convince the owner and manager that sales would increase if they lowered their product price and created a new website and brochure. You need to improve your customer growth, but the question is if you drop your price and call a web design and marketing company to create a website and brochure, will this increase your sales? The short answer is probably not. Because this is just based on sales personnel perception, it would be hard to know the underlying problem.


  • If you decide to drop the price and that isn't the problem, you could be leaving money on the table and eroding your margins without uncovering whether that is the real issue.

  • It could be as simple as the customer not understanding the value of your product versus the competition and your sales force selling just on price alone and not selling on value. (This is a sales problem, not a price problem).

  • It could be an awareness factor that someone needing your product or service searched for it on Google and could not find you. (This is a market awareness problem, not a price problem).

  • It could be a combination of all of the above, but you would want to make sure that if you were going to make a change or spend money, you could determine where the issue lies and the success rate.

Determining The Right Issue Through Metrics

  1. Once you drop the product's price, it would be tough to increase it again.

  2. An example of one way to attack this and track the success rate would be to run a time-limited promotion. Run the promotion for a time period through your sales reps only; if the price is the only issue, there should be a sudden uptake in sales. You would want to track your run rate by sales rep before the promotion and the run rate during the promotion. You would also like to see if there was an overall increase in your sales by lowering the price or whether it eroded your margins without increased revenue. Before the promotion begins, you would want to set your required targets for success.

  3. Next, you know that your prospects' are buying a product from your competitors with less functionality. The value you have over them is either not being articulated by your sales reps or through your communication materials. It also could be that the extra functionality might not be necessary to the potential customer. The sales reps said the competition had a better website and brochures. They all need to be aesthetically pleasing, but the graphic design does not make or break the sale. No one has ever purchased something off a brochure or because a website was "more attractive" than the next.

  4. What can have an effect is the written content itself. As a first step, you could reposition your product or service on your website and in key marketing pieces. You also want to ensure your sales reps are focusing on the value of your product and positioning correctly during the sale.

  5. Determine the time & costs that it will take to do this.

  6. Set a time frame to see how this would affect your business without changing your prices and measuring your success.

  7. The problem with your website may or may not have had anything to do with the look or messaging; it could be that the website was not being found through Google or any major search engines. Most of your prospects are researching companies that offer the products and services they need online before they ever talk to anyone. If you could not be found, your company might not appear to be a valuable contender in your industry. Therefore prospects might expect to pay less for your product. Even a small company can look big on the web.

  8. You will need to determine the cost of Search Engine Optimization for your site from a third party if you cannot do this yourself.

  9. Before you begin, you want to determine where you are ranked today and how many visitors you have, along with your current keywords.

  10. You would then want to have someone monitor your progress after SEO is implemented and track whether there was an uptake in sales from this change. (Note that this change will not be immediate).

The Actual Issue Uncovered

Initially, most people would think that the price is the main issue in this scenario. In the actual situation, it turned out that this was not the case, and if the price had just been lowered, any additional sales generated would not have covered the decrease in the margin.


Though the competitor's website was more aesthetically pleasing, the company was being found through SEO. The issue was positioning and articulating the product's value through the brochure and the website. The costs associated with the change were low as they included only wording changes to the web and brochure, along with training of the sales reps in articulating the actual value and positioning the product correctly against the competition.


Breaking potential problems into manageable and trackable pieces allowed the company to uncover the underlying issues hindering its growth. By running the discount promotion for a short period – it became apparent that just decreasing the price was inappropriate. The traffic to the website was in line, so prospects were visiting; they were not contacting the business.

Though competitors were lower in price, they did not offer the same functionality for the price. The real issue was not communicating the value they were receiving for the price paid by the customer. The value was not articulated through the web, marketing materials, or by the sales reps. Once these changes were made, sales began to increase, and sales reps were not asking to discount the product as they were previously. The business owner could see that the few dollars he spent on wording changes increased his product growth by 20% without affecting his margin.


Summary

Using metrics and tracking can be simple to implement. Making many changes at once is difficult to track and determine the real issue. Often, this is overlooked due to the enthusiasm of trying something new to make a significant impact. It is essential to break down the changes or new spending into manageable trackable functions to ensure you know what you implemented will or will not give you the desired results.

If you are not sure how to do this in your business, we can provide help through business coaching to help you determine the steps and select the right metrics to track. This is a key step in any strategic planning consulting engagement.

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