Business Metrics in Action

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Managing with metrics is the necessary step in order to standardize your processes and grow your business. Let's look at how metrics can be used in managing two areas of business where metrics are often overlooked.

Sales

The only metrics most businesses use to manage their sales activity are simple sales forecasts. The only numbers they care about are the actual sales revenue and profits.

Yet, numerous other measurements can be utilized throughout the sales process to help increase these sacred revenues. For example, firms that use inside sales forces should measure not only the number of units sold or appointments set, but the number of dials and actual presentations to customers. These numbers are important both in determining the effectiveness of your marketing criteria, as well as the skill of individual salespeople.

There are many variables that go into completing a sale, and some of these variables are beyond the salesperson's control. Break down the sales process into sub-processes, measure them accordingly, and you can manage the entire system more effectively.

Having all salespeople, both inside and outside representatives, record simple counts of their various activities on a regular basis will also increase efficiency. At the end of the day, have your reps record on a simple form their number of sales, dials, presentations, and even calls in which they could not get through. At the end of the week, have outside salespeople record their number of appointments, follow-up calls, assigned versus held appointments, and time spent traveling.

All of these metrics can then be summarized to give you norms and benchmarks of your sales process. Comparison with these norms will drastically increase your ability to train and manage your sales force. This measurement and comparison is the first step in instituting benchmarking and continuous improvement practices.

You can ultimately determine what results a given business activity will attain, but with metrics, you can determine the amount of activity. Measuring this activity is your best bet to be able to manage it correctly, and thus get the results you desire.
 

Marketing

Metrics are not only useful for statisticians in marketing research; they are also useful in other areas of marketing and business development. The more you can record and measure about each marketing activity, the more you will know about your market.

Promotional codes on direct mail pieces and questionnaires on web sites are examples of ways to gain specific data on your market demographics. Record this information for your current customers as well. Your salespeople should also collect information about prospective customers.

It is not only important to measure your marketing data, but you must also summarize it and organize it in the marketing databases. You will be surprised at how much you can learn about your market when you simply "listen" to it, by quantifying and segmenting your marketing metrics.

Michael Alter is President of SurePayroll. His payroll outsourcing firm processes and remits payroll taxes for small businesses across the country. He is a contributer to The Payroll Blog and Inc.com's Trade Secrets.