One of the key lessons I’ve learned in over twenty years of coaching is: If you can’t define it, you can’t measure it. If you can’t measure it, you can’t manage it.
But what is “it”? What are the specific activities you, the CEO, should be tracking on company-wide scoreboards? And how are you going to get to the BIG outcome you want if you can’t lock these details down?
Quite simply, you’re not. So stop spinning your wheels and follow these four steps to definable, measurable, manageable metrics that will get you moving again. With the New Year fast approaching, now is the time to plan for next year’s success.
1. Refocus on your HOT.
When struggling CEOs can’t tell me what key metrics they’re tracking, there’s usually not one reason for this potentially fatal lack of clarity. More often than not, there are a bunch of nagging problems that are obscuring the CEO’s original vision. These distractions might be the result of chasing after shiny new objects, scattershot planning, a sense of complacency, or plain old panic.
Time to clear your desk and get back to basics. Forget about the latest trend. Forget about what your competitors are doing and how they’re doing it. Forget about flinging every desperate idea you have at the wall until something sticks.
Instead, think about why you’re the CEO of this company in the first place. What is that Huge, Outrageous Target (HOT) you set once upon a time that, for whatever reason, you’ve lost sight of? Why are you climbing the mountain, and what’s the view going to look like when you get to the top?
For CEO Coaching International client Rich Balot, the HOT was $1 billion in sales. For Grasshopper, the HOT was mastering their core competency in virtual voicemail. For TaskUs, the HOT was to be a global leader in outsourcing.
Three Huge, Outrageous Targets hit by three companies that had the courage to think BIG and the discipline to focus on those targets above all else.
2. Identify your killer metrics.
No two companies are the same. But all successful companies know that the difference between staying stuck in neutral and shifting into high gear is managing the killer metrics that are most tied to growth.
Take Grasshopper. After asking themselves some very challenging questions, they determined that growing as a SaaS company depended on their customer acquisition cost, churn rate, average revenue per user, and the lifetime value of each client.
Everything Grasshopper did to raise its valuation north of $170 million was based around measuring and improving these killer metrics. They did vigorous market testing. They scrapped initiatives that weren’t working and refocused their resources on those that were driving up the growth rate. And they brought in triple-A talent who kept driving that growth and pushed the company up to the next level.
3. Break “it” down.
If you’re selling a product, your killer metric might be sales to new customers, cost per lead, or lowering your product return rate. A service company might focus on the revenue that each employee generates.
Those are good metrics. But the crucial next step is where most struggling companies keep tripping over themselves. “I’m going to sell to new customers” or “I’m going to get more clients” are not actionable activities that you can track and measure every day, every week, every month, every quarter. You have to break down that goal by asking yourself a simple but powerful question: How? What are the systems and processes you have in place that are going to drive up those killer metrics, and your company’s growth?
Let’s say you’ve determined that new clients are your killer metric. Acquiring X new clients per quarter will lead you to your year-end growth target.
That’s a good start. Now, ask yourself, “How am I going to acquire X clients this quarter?” This might lead you compare the relationship between how many prospect meetings you have per quarter and how many of those meetings lead to new clients.
OK, then, “How do I get more prospect meetings?” You might look at how many meetings you get per hundred mailers you send out, or how many phone calls your sales team has to make.
Now we’re getting somewhere! Sales calls per day, per month, per quarter. Mailers sent. Email campaigns started. These are actionable steps that you can plaster on a big scoreboard. These are small, workable tasks you can track, measure, and manage. These are the things your company needs to achieve short term in order to grow BIG long term.
4. Monitor your cash.
There is one key metric that applies to any business of any size: cash.
A good CEO should be obsessive about cash. That means checking your bank accounts regularly. That means making sure you’ve done everything you can to shorten your cash operating cycle so you’re getting paid as quickly as possible. That means monitoring cash levels like your daily cash balance and cash flow.
All the defined tasks that you’re measuring and managing should be keeping you profitable and growing. If they’re not, then what good are they? You might need to circle back to step one. Or better yet, schedule an annual planning session that will shake off some cobwebs and recalibrate your focus on the right metrics, the best processes, and the clearest path to BIG.
About Mark Moses
Mark Moses is the Founding Partner of CEO Coaching International and the Amazon Bestselling author of Make Big Happen. His firm coaches over 170 of the world’s top high-growth entrepreneurs and CEO’s from over 20 countries on how to dramatically grow their revenues and profits, implement the most effective strategies, becoming better leaders, grow their people, build accountability systems, and elevate their own performance. Mark has won Ernst & Young’s Entrepreneur of the Year award and the Blue Chip Enterprise award for overcoming adversity. His last company ranked #1 Fastest-Growing Company in Los Angeles as well as #10 on the Inc. 500 of fastest growing private companies in the U.S. He has completed 12 full distance Ironman Triathlons including the Hawaii Ironman World Championship 5 times.