Knowing your customers - their wants, needs and behaviours - is a sure way to strengthen any business. How can you do this? There are many pieces of customer information businesses can choose from that may be beneficial.

These metrics can be looked at on an individual level, by customer segment, and overall. Additionally, they can be trended over time to gain insight into the direction your business is taking.

In future posts, we'll delve into how to calculate these metrics and talk about some examples to help you understand their use.

We've talked a lot about metrics - we've figured out which ones we have, which we need, and how many to add to our dashboard. We have information about our business - now how do we use it?

Our metrics portfolio should provide us with a snapshot of where we are at, and it should also give us the ability to spot trends. Spotting trends early is important so that we can build on our successes, and/or identify and deals with problems while they are still small.

Although each company must determine the most important trends for their business, there are a few that most businesses will want to be aware of - negative trends in these areas are red flags that problems may be arising. The most obvious of these are, of course, financial trends such as decreases in revenue or profit - a sure sign that something needs to be corrected. However, there are other trends we can look for which can help us nip problems in the bud - BEFORE they hit the balance sheet.

• Losses in efficiency or productivity - Looking for trends in metrics such as cost to serve, resolution times, and design, building or shipping costs, can alert us to issues that may be sapping our business' profits.
• Decreases in market share or against other market benchmarks - Your business is growing at a rate of 10% per year - seemingly a positive trend - but the market in growing at a rate of 15% per year. By looking at your business' trends in a larger context, you can seek out opportunities or advances in the industry you may have otherwise missed.
• Changes in customer behavior - Loss of regular customers, notable changes in buying patterns, or decreases in customer satisfaction can alert us to problems that are sure to hit our bottom line sooner or later. Regularly tracking customer indicators such as our Net Promoter Score empower us to deal with customer issues before they have a chance to grow. We'll look at tracking customer trends in greater detail in future posts.


There are no crystal balls in the business world with which to see the future - but by leveraging the power of trends, we can increase our ability to predict and shape our business' future success.

In our last posts, we looked at key metrics, and discussed evaluating what the "right" metrics are for your unique business. The next question is - how many metrics do we need?

The answer - as with most things - will be different depending on our specific business reality. However, as a general rule, a metrics portfolio should contain somewhere in the range of five to about a dozen well-chosen metrics in order to be both effective AND manageable.

Why not more?

There are many reasons why more is not better when it comes to metrics, many of which we looked at before - too many can obfuscate the facts, be tricky and resource-draining to monitor and analyze regularly, confuse or turn off our audience, or perhaps worst of all, end up simply unconsidered and unused. Collecting and analyzing the data takes time, money and effort - all things no business wants to waste. By going overboard on metrics, we risk investing a lot for very little pay-off.

Why not fewer?

"Everything should be as simple as possible, but not simpler." - Albert Einstein

It's as true for business as it is for science - and there simply is no magic metric that will provide all the information we need in a single number. To be effective, a metrics portfolio needs to give us some sense of where we are and where we are going, and needs to provide enough depth that insight can be gleaned from information. To try to achieve this with only one or two metrics would be limiting, at best.

The number of metrics your business chooses to track and use will be based on a combination of your business intelligence needs, combined with the time and resources available for tracking and analysis. By aiming for a reasonable number - enough to be insightful, not so many to be overwhelming - you can create a metric portfolio that will be the right fit for your business.

In my last post, we reviewed some of the key metrics that are useful to track for most businesses. However, every business is ultimately unique, with its own set of goals to reach and challenges to contend with. Thus, the "right" metrics will be different for each business. How do you know which are right for you?

• Start with your strategy: Measuring things that do not support your strategy will ultimately be unproductive. Start with your strategic goals, and ask yourself what you need to know to determine whether you are reaching them. An excellent question to consider: What piece(s) of business intelligence could change the way we do business? If you run a call centre, for example, a strategic goal might be to reduce cost to serve by 10%, and a corresponding metric might be "average time to resolution".
• Take a metrics inventory: Once you've looked at metrics from a strategic standpoint, ask yourself the following three questions: What do we currently measure? What do these measures tell us about our business - what questions do they answer? What questions remain unanswered - what else do we need to know that our current measures don't tell us?

  Some organizations will find that they do not have enough metrics; others may find themselves bogged down with more information than they could possibly need or use. Once you've taken an inventory of your business' metrics, you will be able to eliminate metrics which are not relevant to your strategy, and/or fill in the knowledge gaps by devising new metrics that address your unanswered questions.

• Ask yourself, can we take action with this information?: Knowledge is power - but only if you can actually use it. Focus on those metrics which can lead to productive action rather than spending a lot of time on areas that are outside of your sphere of influence. Additionally, create context for your metrics (often by ensuring you can compare them, either to a prior period, plan, competitor or market) to make the numbers meaningful.
• Factor in your audience: Different levels of the organization need different types of information. If you are addressing your call centre manager, providing high-level information such as "your cost to serve is 10% higher than the market" will not be as effective as something more specific such as "you need to reduce the number of transfers per call within your department". Similarly, providing your president with the details of call times within a department would be too granular, whereas providing him or her with comparative performance data between departments might be useful. The effectiveness of your metrics will in part be influenced by whose hands they are put into. Making sure each level of the organization has actionable information ensures everyone is empowered to contribute to the business' ultimate success (for more on this, please see my post on Balanced Scorecard).

Metrics are critical - but they should always be used as a tool rather than an end in themselves. Ultimately, each business needs to determine its course, and then create a set of actionable measures that will support it in reaching its goals.

The start of a new year is an excellent time to assess our prior year's performance, so that we can set the appropriate course for the year ahead. Success is built on a variety of factors; therefore, it makes sense to measure the business in a variety of ways (for one excellent tool, see my post on Balanced Scorecard).

A significant portion of our evaluation will be financial; however, looking other areas will provide context and insight into the reasons for our financial results, as well as opportunities for improvement. We will look at these factors overall and additionally may want to measure individual areas of the business, e.g. marketing, product lines, etc.

• Financial: Take a look at the final numbers on the balance sheet. What were our revenues, profits, and/or financial growth? How did we fare against any targets we had set? (This is also an excellent opportunity to pull together any financial records that will be required for upcoming tax purposes.) Finally, look at the return on business investments for the prior year.
• Customer: Did we grow our base? Were our customers satisfied and are they coming back? Where did we deliver to our customers, and where did you fail to deliver? This will uncover opportunities for the year ahead in addition to providing context for financial results.
• Process: Did we improve efficiency or effectiveness, or are there areas where we have lost efficiency or effectiveness? Did we meet any goals we had set in terms of quality control, delivery times, or other process-based improvements? Have our processes kept pace with changes in the business (e.g. growth, new products, changes in strategy)
• Innovation: Did we move the business forward in terms of new products or services? Did we meet any goals we had set around education or skills development? Have we kept pace with changes in the industry over the past year, or are their gaps that need to be addressed going forward?

To make the assessment as concrete as possible, consider creating a yardstick to measure success against. Measure business performance on a scale of 1 to 5, with 1 being "We did not achieve that goal" and 5 being "We exceeded that goal". This is a simple but objective way to determine how well we did at achieving our goals.

Ideally, we measure our 2011 performance against goals set at the beginning of the year; however, even if we did not have defined goals, we can use a similar yardstick to measure performance against anticipated results (although this is not as objective a measure, it is still a step in the right direction. Then, we can set goals based on our current position, for the year ahead.

In my next post, we'll look at how to set up a measurement focused year.

Happy New Year from the Tingley Advantage!

Do you have any New Year's resolutions? What about for your business? Here are six resolutions to consider making for 2012:

1. Get to know your customers better.
2. Make the most of your business' social media strategy.
3. Implement a Balanced Scorecard to ensure every level of your organization supports your strategic goals.
4. Get a handle on your business processes, so you can make them better.
5. Find new ways to tell your company's success stories.
6. Measure, measure, measure!

Whatever your resolutions may be, wishing you and your business all the best for a successful 2012!

Regular readers of my blog will know that I am passionate about measurement as a critical component of managing and maximizing your marketing efforts. A solid measurement strategy ensures that you KNOW what works - rather than guessing. And a solid measurement strategy will generally incorporate the principles of testing and control.

Testing is a process whereby we create an objective for our campaign or initiative and then measure whether the objective is being reached based on the initiative's success against a control group. Testing enables us to confidently answer questions such as:

• Is our initiative or program working? Is it worth the investment we are making in it?
• Could it be working better than it is? Or could a different approach be more effective?
• What specifically is driving its success or failure?

How do you answer these questions? By implementing a continuous process of defining a question, creating a test, measuring the results, learning from the results, and then refining your initiative (including a new test).

Let's look at a simple example:

A translation company is considering mailing a follow-up package to prospects who contact their firm for a quote. The goal of the package is to convert prospects into customers. The package will be somewhat costly and time-consuming to create and mail, and the firm wants to be sure their investment will pay off.

Question: Is our initiative or program working?

Test: A random sample of prospects are excluded from the next mailing. The conversion rate of this group will be compared to the conversion rate of the contacted group.

Measurement: The conversion rate of the contacted group is higher than that of the excluded group.

Learning: The return of the marketing investment is sufficient to justify its continuation.

Refined Initiative: The welcome package is mailed to all prospects.

Having completed this test, the translation firm should also refine their test variables with each mailing, so that they can continuously improve their initiative. Examples of tests to consider could include:

• A lower cost package versus the current high-cost one
• An e-mail versus a mailed package
• The timing of the mailing (sooner vs. later)
• One customer segment's response versus another's

Each test will either reveal a more effective (in terms of cost, effort, etc.) way of executing initiative, or will serve to objectively prove the current initiative's effectiveness.

The Balanced Scorecard is a management tool that translates a company's strategy into specific, actionable and measurable goals and activities. By cascading these goals and activities down through the organization, level by level to the individual employee, it ensures that each and every individual effort is driving the company's strategic goals forward.

The scorecard is called "balanced" because it defines goals in four different areas: financial, customer, process, and learning and development (including innovation and employee development). This ensures that financial and non-financial goals are balanced against each other, leading to stronger success for the company.

Any business can benefit from some version of a scorecard (the complexity of which will vary depending on the size and diversity of the organization). Bain reports that the Balanced Scorecard was one of the top ten management tools used in 2010.

What are the advantages of using a Balanced Scorecard?

• Business activities are linked to the company's strategy; extraneous activities can be de-emphasized or eliminated.


• Success is measured in a balanced way by identifying and providing equal emphasis on financial and non-financial drivers.


• Each and every member of the organization understands how and why their contribution matters to the company.


• Employees are rewarded for activities that really drive the company's success

In a future post, we will take a more detailed look at the implementation of a Balanced Scorecard.

Determining the ROI of your social media efforts can feel like a challenge. Today's guest blogger, Andrew Jenkins of Volterra Consulting discusses how to tackle it.

Social Media ROI is not so hard to measure if you know what you are measuring. When the subject of social media comes up in conversation, so does the question of ROI. Often companies want to see a business case to justify incorporating social media, but one of the more snarky responses might be, "What is the business case for your phone or email?" I am not going to go there -- but I will offer a more constructive explanation instead.I think a business case can be made for social media and that ROI can be proven.

The key is to design it into your strategy from the outset. What I mean by that is to create a situation where you can determine the direct correlation between an activity within social media and a positive result regarding your company like increased website visits, customer inquiries, newsletter registrations, or online transactions. Whether it is a direct mail piece, a microsite, your website, a tweet, a Facebook post, or a blog post, you can distribute content or links that will generate actions with associated analytics. You can test different content or links with different channels to see which platforms or channels produce the best results and refer the most traffic. Google Analytics, Bit.ly, and Facebook Insights are just a few examples of tools that provide those analytics and insights necessary for you to determine ROI.To be fair, determining the ROI requires a certain level of understanding of social media and how content gets shared. Once you understand how social media works, you will feel more confident and comfortable about how to measure ROI.

Social media is meant to complement your existing marketing activities and objectives rather than operate independently. Assuming you properly measure the ROI of your current marketing efforts, it will not be a stretch for you to determine the ROI of your social media efforts.

Andrew Jenkins is principal and founder of Volterra Consulting, a management consultancy helping clients with strategy and strategic planning. Areas of focus include social media, mobile/wireless, e-business, and Internet technologies.

All data (like all customers) is not created equal. While good quality data is crucial to the successful management of your business, bad data can have negative effects ranging from inefficiency to uselessness to detriment. What comprises good quality data? At the most elementary level, it needs to meet the following three criteria:

• It should be complete.


• It should be accurate.


• It should be collected in a consistent manner.

When any of these quality factors are compromised, your business is at risk of having data that is inefficient to use, misleading, and/or unusable - and the impact of these risks can range in severity depending on what the data is used for.

Let's look at a hypothetical example of KidCo, a company which manufactures children's car seats. The company's customers register with KidCo using their addresses for the purpose of marketing, warranty administration, and in case of a safety recall.

If the addresses they collect are incomplete, inaccurate, on inconsistent, they run the risk of:

• Inefficiencies such as: high returned mail rates on DM campaigns; manual research and additional data entry to complete addresses; manual corrections to inconsistencies in formatting in order to enable automation such as mail merges.
• Misleading information such as: faulty geographically-based analysis of customer base; inability to de-dupe customer lists leading to duplicate information.
• Unusable information such as: inability to confirm warranty coverage, resulting in lost customer goodwill; customers who are uncontactable.

Based on the above list, the impact on KidCo's customer relationships and reputation could be negative in the case of a marketing campaign or warranty administration. In the case of a safety recall? The inability to contact customers due to poor data quality could be downright disastrous.

Data is only as useful as its quality allows . Ensuring the data your business collects is complete, accurate, and consistent ensures that your business has the foundation it needs to make sound decisions.