Are you using the wrong metrics for steering your company?

Symptoms might include:

  • Consistently re-acting rather than acting
  • Feeling like you’re drowning in data while starving for actionable insight
  • Learning about bad trends too late to avoid suffering a loss

Now, it’s easy to think this is the result of not getting your information soon enough.

If you don’t get last month’s numbers until mid-way through the current month, that can be a problem for sure.

But that ain’t THE problem you’re dealing with.

Even if you were told how you were trending for the month at the halfway point every month, you’d still be suffering the same problem, just slightly less severely.

The problem is that the metrics you’re using to steer your company are OUTPUTS rather than INPUTS.

Revenue is an output, of course.

But so are:

  • Booking rates
  • Conversion rates
  • Average ticket price

And this isn’t just me saying that. Jeff Bezos — billionaire founder of Amazon — agrees with me. Here’s him saying the same thing [bolding mine]:

“Senior leaders that are new to Amazon are often surprised by how little time we spend discussing actual financial results or debating projected financial outputs. To be clear, we take these financial outputs seriously, but we believe that focusing our energy on the controllable inputs to our business is the most effective way to maximize financial outputs over time.”

Bezos doesn’t focus on conversion rates, he focuses on:

  • selection,
  • pricing,
  • consistency of in-stock status for items,
  • speed and reliability of delivery,
  • ease of ordering

Those are INPUTS. They help determine the output of Conversion Rate.

How you can tell whether a metric is an input or an output?

There are three important cues:

1. The metric itself indicates how to positively improve it.

You can tell Booking Rate is an OUTPUT because you can’t directly improve booking rates.

If you want to improve that metric you’ll need to figure out what INPUTS affect them before you do anything else.

And then you’ll have to wait on the lag time between taking action and seeing the results show up in those OUTPUT metrics.

This is why relying on OUTPUT metrics alone is like navigating from the rearview mirror.

Take booking rates. If you want to improve them, you’d probably want to look at the following inputs:

  • How long till calls were answered?
  • Number of CSRs on duty per incoming calls?
  • Average length of call?
  • Percentage in which the customer was able to book their preferred time?

Not surprisingly, booking rates increase with:

  • Prompt answering (and no hold time),
  • Expressed empathy and reassurance (leading to appropriate length calls), and
  • Prospects being able to book service at their convenience rather than yours.

You can directly take action to improve those inputs by looking at those metrics alone.

If it’s taking too long to answer the phone or there’s too much rollover to your answering service, you don’t have enough CSRs for the amount of incoming calls.

So if you’re actively measuring the number of CSRs per inbound calls, you can take action to adjust that ratio in real-time. Or nearly real-time.

It’s not an after-the-fact output.

Similarly, if a high percentage of your customers can’t book the time they want, then you need more techs or plumbers or whatever on staff for those days and hours.

Now, you might be understaffed, making it more difficult to immediately fix this input metric, but it is at least actionable.

At the very least, you can manage your business around this limitation, and prioritize elevating it, now that you know you have it.

2. Inputs Are Customer-Centric; Outputs are Business-Focused

No customer cares what your booking rate is, or what your conversion rate is.

They DO very much care about having a knowledgeable CSR answer their call right away. Just like they care about being able to get service when it’s most convenient for them.

Similarly, no customer cares about Amazon’s cash flow or quarterly earnings.

They DO care about low prices, in-stock items, and fast delivery times.

So if your company dashboard is entirely company-focused and there’s nothing customer-centric about the metrics on your dashboard…

Then it’s very likely your “dashboard” is more of a rear-view mirror than a forward-looking tool.

3. INPUTS are typically measured against a sweet spot, instead of an absolute.

This isn’t the case all the time, but it’s often true.

When looking at Booking Rates — an output — your ideal is an absolute. The closer to 100% the better.

Whereas CSRs per incoming calls would be aimed towards a sweet spot, something like 1.2 CSRs per incoming call.

Same thing with the average time spent on a booked call. You’ll be measuring towards a sweet spot, rather than trying to get as close to zero seconds as possible.

And it’s likewise with how many options your people present to a customer. It’s not a more is better situation. Nor is only one option usually the right call. Most of the time, you’ll be aiming towards a sweet spot of 3-4 options.

So if all of your metrics are measured against absolutes rather than sweet spots, you’re likely only looking at outputs rather than inputs.

What Metrics Are YOU Tracking?

I’m not saying that output metrics aren’t worth tracking. They most certainly are.

What I’m saying is that output metrics without input metrics leave you with little insight into how to improve operations.

Because if you focus on the inputs, the output metrics will follow.

But the reverse is usually NOT the case.

So what are the input metrics for your company?

And are you bothering to track them?

If not, why not?