Stay Out Of The Ditch: Part 3 Measuring
Updated: Sep 18, 2020
If you missed the introduction to this blog series, take a quick moment to check it out! It tells a story about the 20-something version of me, a bit about Aristotle, and the thought that our business activities can either move our business forward or slow us down…sort of like driving on the road versus in the ditch. The ditches are the ‘too much’ or ‘too little’ on either side of ‘just right’.
Today we will apply this idea to measuring.
Of the ditches we have described so far (goal setting and executing), measuring is the one I see WAY more people in one ditch than the other. Can you guess which one? Yup. Most are in the Too Little ditch. For those rare people who are in the Too Much ditch, hours of their month are spent keeping up spreadsheets and analyzing data. Because of this extreme, I will be spending more time on the Just Right section (hoping to win some of you over to start tracking SOME data in your business!)
On rare occasions, I meet a business owner who knows EVERYTHING about their business. They can rattle off the top 5 Instagram posts from last year, the daily average sale details for the last 90 days, the open rate of their last 6 newsletters, and their close rate per 100 cold calls.
While I fully support measuring data points in your business, there is a Too Much ditch that can take away from moving your business forward because you are always looking back. In this ditch, it can be difficult to distinguish data from important data. It can also be hard to know what data to consider when making decisions for your business because there is just so much of it!
More often, I run into business owners who do not measure anything (beyond total gross revenue) in their business. This can be for a myriad of reasons. For example, not having the time, not knowing how to create a system to track the data or, most often, not feeling good when they see the results.
This leads to “going with my gut” decisions which often miss the mark. As there is not a good way to truly see what leads to business growth, these business owners constantly try new things or get stuck bad patterns.
Data helps you make good decisions. Yet, the challenge is, some data can feel like a judgment on our success or failure. So, before we start to track data, we need to have the right mindset around data.
Which brings me to divorce. Not the legal dissolution of a marriage, but the second:
...to "separate or dissociate (something) from something else"
In regard to business, I want to make the case that if you are able to divorce your emotions from the data you track in your business, you will make better decisions.
For example, I was talking to a client recently who didn't want to look at her financials because they are not where she wanted them to be. It is 100% difficult and discouraging when business is down!
What if you could see the decrease as a data point and NOT a single indicator of your success or failure? If you can see a dip in revenue as a data point, it can help you see trends, learn when and how you need to adjust your marketing, understand more about your retention rate, etc.
In the same way, an increase should not just be a "good-feels-bringer", instead it should be confirmation that joining that networking group WAS worth your time, or the new ads you are running are working or that client retention is up.
When we are able to see data in our business as guideposts, tools, and information versus success or failure, we are able to make more strategic, purposeful, thoughtful decisions.
So, what do we track?
If you are not tracking any data, I would encourage you to start with three things:
-Marketing Activities (networking, cold calling, social media, other)
-Client numbers (on-going and project-based)
-Sales (current and projected)
These three things are all tied to customers. Without them, you cannot survive. There are LOTS of things you could track within each one of these but start by focusing on the things you do on a regular basis.
1) MARKETING ACTIVITIES:
Make a list of the marketing activities you do each month. Networking meetings, groups, events, one-to-one coffees, posting on social*, etc. This can be as simple as a word document or an Excel spreadsheet.
Keep track of who you met with (or the event), and what came of it. More introductions? A client? An invitation to speak? Nothing? Remember that some “results” may be a few months later!
*a note about social. Remember that Social media is a long game. If you are posting on a platform, and not seeing “clients” come from that post, don’t worry. Adjust what you are measuring. Measure engagement, new followers, etc. Social is PART of your marketing strategy, not all! Also, if you are in your first year as a business owner and trying to keep up with 4+ social platforms, that may be too much Simplify and become an expert on a specific platform that is best for your client base, then expand as time and money allow.
After tracking your marketing data for a couple of months, you should be able to see your fastest route to customers. It is networking? Social? Cold calling? Events? Speaking engagements?
Once you know your sweet spot, increase your activity in that area. Does it pay off?
Then, go back and look at your second fastest route to customers. Evaluate if there are ways to change tactics or messaging. If you can try a couple of new things, can you increase your client numbers?
Keep refining until you have 1-3 ways of gaining new customers that is consistent. This will help you ramp up or down as needed.
2 & 3) CLIENT NUMBERS & SALES:
If you have a large volume of clients, your invoicing software will be able to run reports for you on this data. If you serve a smaller number (dozens a year) then you can use the system below:
In an Excel document, have the first column be the name/company of the client, then the next twelve columns will be the twelve months of the year. The last column will be a note about how you secured the client (referral, website, networking group, etc.)
For each client, fill in the dollar amount you were paid each month. If you do multi-month contracts, make the first-month green and the last month orange to see starts and stops and have another color for contract renewals.
At the bottom of each column, create a formula to calculate the total revenue for each month, then add a formula that adds all the monthly totals together to give you your yearly total.
As you build out the year, you will start to see holes in income or busy seasons. If it is February and you have multiple 6 months contracts, you should be able to see your projected income months in advance.
This data can also be used to alert you to a when multiple contracts are ending at the same time and give you time to run ads or increase your networking to onboard new clients.
You will also be able to see how you are securing new clients. As you look at this list, what surprises did you find? What trends can you pick out? Is a specific person or group supplying most of your referrals? If so, how can you replicate that relationship?
As you track this data, use it to make decisions that will continue to move your business forward, and let go of the stuff that does not. Are there fancy tools to track this stuff as you grow? You bet! For now, keep it simple and focus on growth.
Congratulations, you are tracking what you need to track to help your business grow – you are out of the ditch!