In this world of big data, it can be easy to get too caught up stressing over figures and spreadsheets leading to confusion and bewilderment. To avoid the trap of ‘analysis paralysis’, we need to simplify the process. We need to understand what key metrics are important, and how these can be used monitor, and ultimately work to improve, performance.
A robust suite of key business metrics underpin the ongoing measurement of how well business is performing allowing us to identify areas that are beating expectations, and highlighting areas that require a different strategy. Business metrics enable us to set targets that we can collectively work towards and provide a framework whereby we can compare the effectiveness of our strategies whether that be against past performance or within our competitor set.
The four key components of meaningful metrics
To effectively monitor business performance and measure success, metrics need to meet four criteria. They need to be measurable, relevant, actionable and comparable.
Data required to create the metric needs to be easily accessible so you can create the metric in order to analyse it. Your systems should provide you with data, reports and graphs that will help you to measure the outcome of your strategies.
Metrics should be customised to your business, your goals, and your targets. There is no need to analyse business metrics that reflect the number of spa products being sold in the UK if you don’t have a spa at your property
Business metrics are at their most powerful when, on analysis, they can drive an action plan as part of a continuous effort to improve business. Strong performance suggests that your strategy is working and to carry on doing ‘more of the same’. Weak performance typically indidates that a change in strategy is required. Where a shortfall in performance occurs due to circumstances outside your control, such as golfing revenues that are weather dependent, a change in strategy will typically have little impact on performance. Powerful metrics should ideally highlight where action can be taken.
Metrics in isolation do not provide is with a full picture. However, when compared to another data set, a story emerges and one from which an action plan can be built. The comparable data set could be internal metrics, such as comparisons against past performance or against budget, or may be external as comparisons are made to your market and competitor set.
Download 'your free 'Checklist for Tracking your Success' below!
To add some clarity as you start to build a framework for ongoing measurement of your business, download our 'Checklist for Tracking your Success' for free until Monday 3rd May, where we take you through the five key indispensible business metrics you need to monitor to identify what's working well, and where you need to make changes.
And if you are keen to understand more about how key metrics can give you the insight and knowledge to make business transforming decisions, visit Revenue Academy, our online learning portal. Module 4: 5 Metrics to Measure Success will support you as you get to grips with what and how you should be measuring and help you identify which areas of your business are letting you down, and where you could be performing better.