Metrics guide businesses to the most effective and productive use of their physical, financial, human, and intellectual resources.
Companies may use metrics for compulsory reasons such as monitoring regulatory compliance or contractual obligations or for managing processes and people for financial concerns. Metrics help in all the aspects of business including finance, competition, marketing, standards and customer service. Companies should measure what is important to them and not all companies track the same metrics. At their core, metrics provide insight into:
- Where a company has been
- Where it is going
- Roadblocks to success
- Milestones and goal achievement.
Advantages of Metrics
Data is like communication: it’s best when you keep it simple. Effective metrics provide actionable information. In addition, employees must understand the metric, why it is important, and most importantly how they can apply it. For example, if improving the customer experience is an organizational goal, the number of complaints received each month would be a key metric. And goals around this metric should be stated as clearly and succinctly as possible. For example, set a goal of “x” number of complaints or complaints as a percentage of sales per month.
Metrics benefit a company in many ways. Metrics:
- Drive the strategy and direction of the company
- Provide goals at the company, department, or employee level
- Improve decision making
- Enhance performance
The best metrics change and evolve with the company and their use improves internal and external relations.
If you follow sports, you know that team or player performance cannot be distilled into a single statistic. It’s only after you look at complimentary data and the data as a whole that you can determine the effectiveness of a player or team’s ability to perform and win.
The same principle applies when looking at business metrics. There is no one single metric that can determine the measure of a company’s financial performance. If profit were the only metric ever considered, Amazon would have folded as an on-line book seller. To fully grasp the value of your business, you must use many different metrics.
Using dashboards to track and communicate data
To a driver, the vehicle dashboard provides insight into what is happening under the hood as well as what is happening on the road. A combination of visual gauges and displays tells you everything from speed to oil pressure to outside temperature. These are the key metrics you need to operate the vehicle safely and monitor vehicle performance. When it comes to business dashboards, the term may mean different things to different individuals.
A well designed business or executive dashboard is a visual display of KPIs, metrics, and other crucial data points that show the status of a company, sector, or a specific process.
The proper business dashboard for your company will provide executives and crucial shareholders detailed insight into company performance against strategic aims.