Previously I highlighted the importance of self-care and self-love for business leaders, CEO’s, and entrepreneurs. I described the process and benefits of raising your love quotient, LQ, and how it can help you move past emotional hurdles that hold you back from interacting effectively with your business.
In my last article, I stressed the importance of being in reality with your business. I also introduced the topic of metrics and made an important connection between love and metrics. In this article, I unravel the third piece of the puzzle. Together we will further explore metrics by doing a deep dive into what you should look at and when, why you should do so, and how to put the insights gained to use.
When metrics matter
There are two factors that influence when and to what degree metrics can be brought into your organization; the point of growth your business or organization is in, (Revenue or Stage) and how much you have raised your LQ and embodied LQ leadership. High LQ Leaders want to be in reality with their businesses. They have loved themselves deeply, feel safe and grounded in their leadership, and want to make the best decisions possible.
Where are you in the revenue growth life cycle?
Metrics will play a different role at different stages of your business’ growth and evolution. Your business’ level of maturity will determine both the importance of metrics within that context and the level and depth of insight you can attain.
It’s interesting to note that the nature of love and consciousness is one of expansion, and if you look at the purpose and intent of a business, it is also to grow and expand, to increase revenue and impact. Usually, in the early stages of your business, the main focus is on driving revenue and sales, and so you may not have developed a full suite of metrics in the business. However, around the $1 million to $10 million range, metrics become critical. As you grow beyond the $10 million dollar revenue range, it becomes even more important to be in reality with all aspects of the business so you can make the appropriate adjustments to continue to grow.
Your LQ impacts your relationship with reality
Sometimes there’s a denial or an avoidance of reality, because you know something is shifting and changing and you don’t want to face it. This is where love can come in and become a powerful element in the relationship with metrics and reality. If there is an avoidance of reality, it may be because you don’t feel safe enough to face the aspects of your business that you suspect, sense or intuitively know is not working.
You may not want to face it because it is too upsetting or painful, however the more deeply that you love yourself, the higher your LQ, the more you are able to face whatever is there in front of you. And in fact, the more deeply you love yourself, the more you will find that you actually want to be in reality with all areas of your life; your relationships, your health, your bank account and your business. You will want to embrace metrics.
Perception vs. Reality
I look in the mirror every morning when getting dressed. Why? I want to put my best foot forward and looking in the mirror enables me to see how I look and make any adjustments. I also have close personal friends, mentors and a coach who I confide in, bounce ideas off, and who hold me accountable. These people act as mirrors for me too.
They reflect back what I can’t see about myself. That’s one of the interesting things about life. There’s the subject and the observer. Even though I, as the subject, have developed a good sense of self-awareness, I have blind-spots and that’s what my mirrors do. As observers, they can see what I don’t.
Mirrors, no matter what form they take, whether it’s a physical mirror, or another person or in the case of a business, metrics; mirrors enable you to see yourself or your business so you can make corrections. In business, metrics enable your ability to take effective action. They enable you to see clearly so you can see the reality of your business and take more effective action.
I see cases where businesses focus too heavily on revenue and they neglect other important aspects such as customer experience or community impact. In these cases the businesses’ reputation can be negatively impacted, costing the company market share and ultimately lost revenue.
Social media marketing is another typical example. There are two key measurements that are reflective of a Social Media program’s performance. One is the engagement rate, i.e. how much of your active audience is actually engaging with your content. This is reflected by the amount of time a user spends on the page, whether he clicks through, likes or shares the content. Another important metric is the ROI. If you have a product or a service and you are directing people to a sales page, how much revenue are you generating from your social media activity? Metrics relating to traffic, activity and conversion will tell you what the ROI is.
Many times people don’t even know that those are important metrics to look at. They will look at more surface level metrics like the number of followers or likes, which are not really indicative of how well the social media program serves the business. This is an interesting dynamic that is present in human nature. We tend to focus on the superficial, on how things look on the outside without really going deeper. However, it is only when you go deeper that you get to truly understand a person, organism or organization. Metrics allow you to see the reality of your business and the right metrics allow you to see underneath the surface, what is really happening, and what is really important.
Knowing which metrics to look at and why
One of the important things about metrics is understanding the purpose. What is the reason you are looking at this particular metric? Why is this important? Without that understanding there will be a tendency to focus on the surface level, or what looks pretty, or what you think is effective. You want to create long-term sustainable results, and part of that is understanding which metrics to look at and why.
Going back to the example of social media, you will need to ask yourself what is the purpose of using social media? How is it impactful in serving your brand? How is it helping you fulfill your mission and serving your customers? To answer these questions, you need to look at things like engagement, how that translates to improved customer service, overall brand recognition as well as revenue and profitability.
In cultivating a good relationship with metrics, creating an effective dashboard and knowing which metrics to look at; you also need to understand why you are paying more attention to certain metrics than you are to others.
How you look at data
Another important aspect of metrics is how you are actually looking at the data, i.e. the frame that holds the data. How is the data being displayed? How is the frame being constructed and what are the relationships between the different metrics?
According to Analise Polsky, thought leader, SAS Best Practices “Visualization works from a human perspective because we respond to and process visual data better than any other type of data. In fact, the human brain processes images 60,000 times faster than text, and 90 percent of information transmitted to the brain is visual. Since we are visual by nature, we can use this skill to enhance data processing and organizational effectiveness.”
From a high-level dashboard perspective, you would want to see your most important stats displayed prominently. Things like revenue, profitability, store traffic, enquiries, sales, employee performance, etc.
In an e-commerce scenario, you will want to look at sales data more closely. If you know that two items are usually sold together (complementary products); and you have set your store up to promote that sales strategy, you won’t be surprised when an increase in the sale of one product will correspond with an increase in the sale of another. If you don’t see that expected result, you will know that it’s something to look into.
It can be helpful for you to explore all the different ways of looking at information so you can find the way works best for you.
You have metrics… now what?
When you have the right data frames and you are looking at your stats at regular intervals, you then begin to have effective conversations with your team about how to change your behavior. In a business where you are assigning responsibility to team members, this also becomes an important way to hold both yourself and your team members accountable.
Having the data, creating the frame and looking at the metrics is one thing, but it’s really what you do with that information that counts. Data is most useful to you when you can gain insights from it, when new connections are being made in the brain. When you use what the data is telling you to change your behavior, that’s when you see the results you are looking for. That is when you begin to move closer towards your goals.
I recently worked with a client who was outsourcing the management of their Facebook ads to a third-party vendor. They were getting a 10% return on the front-end and some back-end offers too. Many times, people in this client’s industry i.e. information marketing and business coaching lose money on the front-end and make up for it with back-end offers. So overall 10% is a good return for their industry.
The client looked at the reports that were emailed to him weekly and had discussions with the vendor, however the weekly report was a static report showing only what had happened in the previous week with no comparisons from the week before that, or the week before that. They were not setting any goals around the data or having discussions about their progress.
When I came in, I created a whole new structure for how the metrics were being looked at. We created a report similar to a P&L. We had a month over month layout of how ads were performing and how their content was trending over time. By consolidating the weekly reports we could view the ad spend vs. ROI over time. We began to make meaningful observations and have more productive conversations with the vendor around the reports.
The client could hold the vendor accountable and enjoyed better performance. They ended up going from 10% ROI to 30% ROI, which was very significant. By changing how the data was structured the client could make important connections, have better conversations around the data and manage the vendor better. Improving the marketing performance of this single advertising medium had a tremendous impact on the overall business performance.
A lot of times when clients consistently monitor the P&L in their businesses they realize “Hey, I’m spending a lot here, let me change that”. It doesn’t even have to be a big Aha moment, like light bulbs going off in your brain. More often than not, it’s a lot more subtle. Just a quick thought can influence behavior and make a great impact over time. But that can only happen when you’re interacting with the data, and that thought becomes the impetus to trigger a change in behavior.
It could be that you are looking at your dashboard and you think “Oh man, revenue is really low” or “Hey we’re doing really well but that’s not showing up as profitability so what changes need to be made?”. These thoughts give rise to active conversations that take place between people inside of the organization. Having conversations around metrics gets everyone thinking and talking about how you can make your organization more effective. A lot of times it’s not just one thing but several measures which, when applied together, make a tremendous impact.
Putting it all together
One of the benefits of raising your love quotient is that it helps you to improve your relationship with your business. When you improve your LQ, you will want to understand all the different dynamics present within your business. We refer to this as being in reality with your business. One of the best ways in which to know your business better is by making use of metrics.
Metrics, however, can be tricky. If there is an underlying bias (you like what you have) or cognitive dissonance (you see what you want to see) you may tend to only look at surface level data. It is important to be aware of these kinds of dynamics that can get in the way of having and using metrics.
In this article I discussed when to look at metrics, which metrics to look and how to do so. I also talked about the value of communication around reports or metrics, and the potential behavioral changes that could arise therefrom.
When you look at your stats in the right way, you can take the right actions at the right time and make better decisions. This skill set of effective decision making around metrics is something that can be developed. For many companies who have not done this before, are not yet clients or who may have looked at metrics sporadically, this requires a mindset change. You’re developing a new paradigm within your company for making decisions and this requires a new way of doing things. I have helped many companies improve their business performance by improving the way in-which they relate to themselves and in turn improving the way they relate to their businesses.