“If you can’t measure it, you can’t manage it”
The measurement and evaluation of performance requires answering 4 basic questions:
- What has happened?
- Why has it happened?
- Is it going to continue?
- What are we going to do about it?
Financial & Non-Financial Indicators
The above 4 questions are taken from a very interesting article well worth browsing at www.fpm.com/journal/mattison.htm which explains that financial indicators (such as KPIs – key performance indicators) are not indicative of effective business management or business progress.
Financial indicators can ‘encourages management to take a number of actions which focus on the short term at the expense of investing for the long term’.
“Research in support of this approach has come up with new dictums for the workplace : “the less you understand the business, the more you rely on accounting numbers” and “the nearer you get to operations, the more non-financial performance indicators you realise could be valuable aids to better management.”
Financial indicators can ‘encourages management to take a number of actions which focus on the short term at the expense of investing for the long term’, and it goes on:
So what do non-financial indicators relate to? They relate to the following functions :-
- manufacturing and production
- sales and marketing
- research and development
- the environment
Adapting A Balanced Scorecard
The Balanced Scorecard (BSC) provides an excellent starting point for developing a tailored methodology for tracking both financial and non-fincnail key performance indicators of company performance.
BSC identified ‘4 perspectives’ in the early 90s by which to monitor long-term strategic progress in the company:
- Internal Business Process
- Learning and Growth
And I have adapted it to suit my own approach to business development (as detailed within this Tracking section of the site) as follows:
“Money isn’t everything… but it ranks right up their with Oxygen”, said the great sales trainer Zig Zigler.
Whilst compensation comes in such forms as ‘sense of achievement’, due to the essential goal of business being to ‘make money’, it is financial metrics of the business unit that form the basis of this Compensation View on my suggested Balanced Scorecard for any company. With intangible compensation being considered as a close second.
At the highest level, you are tracking shareholder value and sustained competitive differential advantage.
> Visit the Compensation page
This really covers the external output of the buiness. What societal contribution has your business created? This relates to the customer, as well as other resources throughout the supply chain and value chain, and speaks to the mission of the business strategy and values.
Ultimately, these measurements are based on the customer experience and customer performance management.
Back-End (Customer > Retention) Intelligence
Now at the level of campaign management for customer acquisitions and retention programs, including soft measurement and hard measurements. See the Marketing ROI page and Customer Performance Management page.
To identify the value of your expenditures, stick to this simple rule: If you cannot measure it, do not do it.
Front-End (Prospect > Acquisition) Intelligence
Here we are foussed on the metrics of lead generation campaigns such as traffic generation through SEO, SEM, Social Media, offline advertising, etc.
At the most basic, adding Google Analytics to your websites will deliver insightful information about your visitors and where they are coming from.
Tracking of Marketing Campaigns ultimately lead to a handful of numeric measurements.
For a marketing manager these are known as your KPIs, or Key Performance Indicators. These few numbers provide an overall at-a-glance view of the effectiveness, growth, and ‘health’ of your marketing campaigns.
The Aggressive Marketer seeks to have under-the-thumb control of those KPIs through a series of Tracking Reports that track and measure the progress of each and every marketing campaign, source of revenue, and influence on the bottom line that exists for the business.
Your KPI’s must be measured with vigor to validate any and all marketing campaigns you run.
LTCV: Lifetime customer value… What is the long-term average dollar value of my customer?
Tracking can be time consuming, but very helpful in helping to direct marketing spend.
> Visit the Contribution page
Here we cover the processes and protocols of project management. The time and task management of each individual within the company. The efficiency drivers for optimal performance.
> Visit the Operations page
Creating new and improved operations as well as customer experiences (which includes product development, promotional activity, and company image).
> Visit the Innovation page
Contact me for recommended resources and techniques for Tracking.