Do You Measure Your “Critical Drivers” Daily?
“Drivers” are key metrics that can expand (grow) or collapse (kill) your business or any business. Critical drivers are those key metrics, tested and tracked daily, that assist you to anticipate the future.
As I once heard Tony Robbins say, “Anticipation is power.” And I agree. When you look into the past – each day – you can predict the future of your business.
I’ve read many business management books over the years and one of my favorite quotes comes from Tom Peters says, “Test fast, fail fast, adjust fast.“
The age-old management adage, “You can’t manage what you don’t measure,” was probably first uttered (and discovered) by some bazaar merchant thousands of years ago in Babylon.
Yet it’s still positively accurate today!
In my experience, the easiest step to improve any business to begin measuring the critical drivers in the business and then celebrate and amplify what you want to see more of. Case closed.
For retailers like Sam’s Club, a core critical driver may be the “dollars-per-square-foot” generated in each store.
For a real estate management organization like Remax, it may be the “number of new agency offices” opened each month. For an insurance agency, it may mean the “dollars-per-policy” generated, or the “revenue-per-agent.”
The species or types of critical drivers you want to measure is not nearly as important as simply sitting down with your team and making a commitment to test, track and measure what drives your business.
For my companies – Heritage House Publishing, Inc. and Heritage House Media, Inc. – I like to measure these 4 critical drivers each day:
1. Number of new prospects (opt-ins)
2. Number of new students (1st time buyers)
3. Number of new multi-buyers (2nd-time buyers)
4. Number of new affiliates signed-up (resellers)
The emphasis on “new” is intentional. New means growth. New means expansion. And above all, new means anticipation of a brighter and more profitable future.
My good friend and colleague, James Arthur Ray is often heard saying, “You’re either growing or dying.” My sense of what that means as an entrepreneur is, “Your business is either expanding (growing) or collapsing (wilting or dying).”
So what about you? Which critical drivers will you begin to measure today? Which critical drivers have you measured in the past. Look, the simple intention to find critical drivers is driving toward measurement!
What to do now: Set aside 50 minutes of critical thinking time and decide on one (yes, just one for starters) critical driver you want to measure each day so you can experience anticipated business growth faster, better and easier.
Your comment on this post will be most appreciated.
Tags: alex mandossian, critical drivers, info products, metrics, online marketing, small business, tom peters, wikipedia
Of more than 300 posts I’ve published on this blog, this ONE may be the single most important to grow your business.
Please read it twice.
~ Alex
Hi Alex,
Fantastic as always! I will start today and my first measure will be the same as your first one: prospects. It is now on my daily measures list. Thanks in advance as I can already feel it will make a huge difference to look at this on a daily basis.
Enjoy the safari! Sounds like a great adventure.
Columbia
Great advice! And behind the “opt in” starting point are many activities that lead to that opt in. What are the top 5 (10, 7, 3 whatever!) daily activities that lead to the maximum number of opt ins?
From today on, I will keep track in a spreadsheet of at least this one critical measure: the number of people opting in at my main list building site, where people get to ask Dr Claude a question about unconditional freedom from unwanted conditions. I will also start keeping track like you Alex of Number of new students (1st time buyers) and the Number of new multi-buyers (2nd-time buyers). I don’t have an affiliate program yet.
Alex,
Your blog today snapped me to attention and made me realize I was not giving my business a true test. I indeed was not measuring the critical drivers and in doing so was truely limiting my business. An over sight, but an easy one to make. I am again on level ground. Thanks. Excellent blog.
The quote about either growing or dying reminded me:
“If you’re green, you grow. If you’re ripe, you rot.” — Sam Walton
My critical metric is number of available appointment slots booked per week. I aim for 4 meetings per day, 5 days per week so I have 20 avail. After that it’s number booked in advance, and finally, planned vs. actual appts per week.
This is for a normal prof. svcs company like mine, not an information product business.
Alex,
Very well written! Measuring the most critical drivers is one of the primary reasons that many micro-businesses fail and service professionals experience lackluster results. When women tell me that their husbands say, “we need to do something about your expensive hobby” in reference to their”business”…it’s due to the fact that they aren’t measuring their results.
When I was in corporate America, a mentor used to say, “what gets measured, gets done”. And another would say, “you inspect what you expect”.
So focusing on “new” growth measures such as the ones you outline above is a great indicator of whether your marketing efforts are on track. Best to measure these “leading indicators”, lest you are surprised by the “lagging indicator” of low to no revenue or profit!
Have fun on your African safari!
Hi Alex,
Thanks for the post. First a comment, then 2 questions that I think are important to follow up on James Ray’s quote, “Your either growing or dying”
I have heard this notion in the business world a lot, not just from James Ray and I think it is misunderstood. I have experienced people throwing it about as if to imply that any growth is good. Also, I have seen others feel pressured by some fear that if their business is not “expanding”, getting bigger that they are somehow inadequate, even if their business is providing value and sustaining itself. They somehow think they must do more.
I think there are too deeper questions that we all need to be asking as a culture at large and as business people so that we are not blindly “worshopping” the consumer god of “more”
1) What do we mean by growing? You said, “expanding” expanding how? Bigger and more are not the only ways to grow. Think quality, service, value for example.
(I know you get this)
2)”What are we growing?” …. “sickness or health”?
I first heard this question in a talk given by, I think it was William McDonough who co-wrote Cradle to Cradle or (it might have been Paul Hawken who co-wrote Natural Capitalism). I thought it was a great question and your post reminded me of it.
Our consumer culture has been entranced by the more/bigger is better supersize it Gods. Consider growing a business that is circular(cradle to cradle) instead of linear. See “The Story of Stuff” for more on that if you are curious.
Oh by the way, you can find William McDonough on the TED talks. It’s a good one!
Thanks for the work you are doing.
Life is full of surprises, find the good ones! Lisa
Drivers and other “mets” are slippery concepts for many entrepreneurs. I’m stunned at how few people use the most basic metric–revenue. Would love to have a dollar (hey, I just used a metric!) for every time I’ve been approached to do a JV by someone who either didn’t run the numbers or was using artificial digits. -Michael Angelo Caruso, EdisonHouse.com
You aren’t talking about drivers; you’re discussing key performance indicators (KPIs).
The difference is important.
1. A driver is something that pushes your business or industry forward, such as innovation or a customer’s need for more time. Ask yourself, what will make your business successful?
2. A KPI is how you measure your success. It’s an outcome. A KPI is often an early warning system.
In short, by understanding the drivers in your industry you’ll improve your KPIs.
Kit
Measurement is key. You should know where you stand on your business. Sometimes as business owners we move so fast through the day and I like your suggestion about setting time aside for starters on a critical driver. I will be working with my clients on that suggestions.
Alex:
Interesting post but it falls short of what readers really need. They need to recognize the “Core Drivers” not just “interesting drivers.
What would be useful here is for you to produce a “Revealing Question.”
I know questions that can help – but you are in the middle of this marketing maze, so I suspect you can produce something really powerful.
For example, your Insurance and Real Estate examples are measures that can help. But I think it leaves a false sense that if those drivers are focused upon, everything will be fine.
It speaks nicely to the business aspect of units of office growth or of dollars per transaction. It doesn’t really speak to the health and overall well-being of the business.
I think you can add questions that will help people really produce hard hitting and business lifting focus with performance.
Good luck – you do nice work.
Every significant area of life has critical drivers and measurements as well.
Unfortunately most people don’t examine them until they are in a state of chaos or serious decline.
To find more joy and happiness in life and in business, examine the drivers and measurements that cause the growth and fulfillment in ALL life areas (health, relationship, physical health, personal finance, spirituality, etc).
Live Your Dreams,
Jill Koenig
http://www.TheGoalGuru.com
Kit,
Yes, I am talking about Drivers. “Critical Drivers” of the business :-)
KPIs are typically tied to an organization’s strategy using concepts or techniques such as the Balanced Scorecard. All Critical Drivers are KPIs, but not all KPIs are Critical Drivers. It’s a subtle nuance, but the “critical” difference is ease of measurement.
But I don’t mean to fence on semantics, you’re spot on, in my view, with the comment on this post. And many, many thanks for taking the time to write it.
~ Alex
Bob S,
Thanks for your outlook. There’s always more depth to any of these posts. Most of what I write falls well short of the essence of the principles and concept and begs further questioning … just like you did in your comment.
To be clear, “Critical Drivers” are a start. They’re a spark, not the fire. If you’ve ever gone camping without matches, then you know how much more difficult it is to create a “spark” than to fan the fire.
Thanks for your comment, it was much appreciated :-)
~ Alex
I agree, Alex, that this could be the most important factor driving our businesses. Especially when you are doing an information marketing business, it’s easy to focus on the words/content and ignore the numbers.
That’s why in the first module of my course, I give my students a spreadsheet that automatically calculates some of these numbers for them.
Each month they track leads, conversions and traffic by just entering a few numbers and the spreadsheet gives them statistics on how well they are doing. For example, enter they enter the total number of subscribers to their newsletter and the number of subscribers to their blog and it calculates the number of new subscribers and the percentage increase.
The tricky part, we’ve found, is actually taking the time to put the numbers in the spreadsheet so they can do the analysis — which is a perfect task for an assistant.
This is so true. What we measure has our attention, which guides our thinking and action. Thank you for sharing what the key metrics are in your business. As internet marketers we would do well to follow your example. As a former magazine publisher I might add a small tweak however. Looking at new additions is good, of course, but we also need to be looking at the total. If we are losing customers/affiliates/subscribers faster than we are adding them this is not so good and suggest other issues. As you’ve said before, the best customers are the ones we’ve already got.
Alex,
Great post. I still remember “you can’t manage what you don’t measure” from my management studies (about 45 years ago) and it became my motto that took me through 35 years of management in my former corporate life.
It is as true today as it was 45 years ago. The only thing I’ve learned since venturing into 3 new businesses is that the critical criteria change as you progress through the learning curve.
Thank you for your great posts. always good information
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