Metrics can be an intimidating business concept.
Many business owners don't see the need to quantify various aspects of the company, and those who do are often scared away by the misperception that metrics require mathematical and analytical expertise.
But when properly applied, metrics can transform your company's internal processes. Strategic planning and decision-making become much easier when you can translate outcomes into real numbers. Even better, metrics give your team firm performance targets that can become a rallying point for the achievement of goals and objectives.
Be warned: Once you start incorporating metrics into the life of your company, it may be hard to stop. Here are some of the types of business metrics that have legitimate uses in the average small business workplace.
- Financial metrics. Financial metrics cover a lot of ground because in many ways, every business metric has a financial basis. Specifically, these metrics demonstrate the financial health of the business to company leaders, investors, employees and other stakeholders. A good rule of thumb is that if you think a financial metric might have value to a shareholder, it's probably worth tracking.
- Customer metrics. Customer metrics shouldn't be confused with sales metrics. While sales metrics track financial revenues, customer metrics track customers' perspectives about the business and the brand. These metrics can include survey ratings, customer loyalty data, customer service tracking and other measurements.
- Internal process metrics. Internal business process metrics attempt to identify the processes in which the business excels or should excel. Core and non-core business functions are fair game for metrics that have been created for the sole purpose of improving workflows and creating better operational efficiencies.
- Learning & growth metrics. Learning and growth metrics focus on issues related to the company's quest to achieve growth and continued value creation. Market share, innovation and many other metrics could fall into this category. However, all learning and growth metrics should culminate in a process of reflection about how the business can use its learnings to make actionable improvements.
- Worforce metrics. Although workforce metrics are often overlooked, they are an important part of your company's big picture. By tracking worker satisfaction, employee retention and other measures, you can dramatically improve production and workplace morale.