I’m a big, happy, anal-retentive, Excel-spreadsheet-loving, egg-timer-running believer in measuring stuff.
And by stuff, I mean:
- Revenue
- Profits
- Marketing efforts, including both time and money spent. (If you hear an egg timer beeping in the background, that would be me. The best system I’ve found for analyzing time is right here. It’s called Freckle and I dare you not to fall in love with it.)
- Email open rates and clickthrough rates.
Without measuring, there’s no way to know what’s working so we can tweak.
But sometimes measuring can feel like a dictator.
Take revenue, for instance.
Is revenue really the most reliable picture of whether your business is succeeding?
Relying too much on revenue is like standing at the counter spooning peanut butter into your mouth right from the jar.
It can’t be good for you in the long run–even though it feels really good at the time.
Be Not Like eBay, the Company That Had Had WAY Too Many Spoonfuls of Rich, Creamy Peanut Buttery Quarterly Numbers.
eBay is a great example of how rigid adherence to the bottom line can have dastardly effects.
A New York times Sunday Magazine article from October 2008 spelled out in excruciating detail how the company kept insisting on following profits rather than taking a chance on innovation.
According to the article:
“EBay has known for years that some Web buyers were looking for a different experience. Surveys suggested that auction participants were alienated by untrustworthy sellers and hidden shipping fees, and increasingly preferred the certainty of instantly buying items at a fixed price. Although eBay executives recognized and routinely acknowledged the problem, they never took bold, direct steps to address it.”
Speaking about the push to invest in digital media like Amazon and Napster a former eBay executive was anonymously quoted as saying:
‘Nobody really shut it down. The process shut it down. The company was obsessed with making quarterly numbers.’
In contrast, it was Amazon’s ‘willingness to be misunderstood,’ its ‘long-term orientation,’ and its ‘willingness to repeatedly fail,’ in the words of Amazon founder Jeff Bezos, that ultimately helped it become wildly successful.
Obviously, we need revenue.
But revenue is merely a symptom of a thriving business.
Not the entire goal.
Revenue should be weighed alongside a host of other variables.
And maybe a strict return on investment shouldn’t always be the key consideration.
If professional services are really about relationships, we need to measure cumulative effects over time.
We need to measure qualitative stuff, too.
And that takes patience.
What if you stopped making revenue your number one goal, and added some bread and some strawberry jam, and maybe a tall glass of milk?
How would you measure the success of your business? Here are a few of mine:
- Is your website speaking to your favorite clients? How do they respond to what you have to say?
- How many projects or tasks are you able to delegate to other members of your team instead of handling everything yourself?
- How well are you setting limits and maintaining a regular schedule with no unexpected, rush jobs?
- How many weekends do you spend not working?
- What percent of your clients are repeat clients?
- What percent of your clients are ideal clients?
- What percent of your clients are buying packages so you’re not reinventing the wheel with every project?
- What’s your profit? How much money are you keeping?
- How well are you documenting systems and processes so you’re not wasting time on repeatable tasks?
- What percent of your proposals are accepted?
- What kinds of results are you getting for your clients, and what are they saying about it?
- What percent of your clients are coming from referrals?
Okay, I showed you mine. What are yours?
Expeditions in progress:
Dig up more good stuff:
12 Comments
It’s really too early to say (given that it’s been less than a week and two of those days were weekend days) what measurement tools I will be using now I’m taking the business off in a new direction.
However, I have used some or all of these measures in some capacity to measure the success of the business’ past performance.
I’m going to make a note of these, because I think they will be extremely useful as my business moves forward.
P.S. Thank you so much for all your support and encouragement in getting this whole thing started. I have total respect for you and it means a great deal knowing your support has been there for me!
Joely, awww, shucks, it’s my pleasure! Watching you is an inspiration and I can’t wait to see how your business grows. May you have plenty of the best kind of peanut butter!
Good piece! To sum up, relying too much on a single metric will yield one-dimensional results.
I like your list. I’m crap at measuring anything though I completely buy the rationale. So knowing that list is there is going to help me, I’m sure.
@David You got it!
@JoVE Thanks for your comment! True confession time: I’m crap at measuring stuff, too, which is why I make lists of stuff to measure. That way when measurement time (aka tax season) comes, I’ve got other numbers to keep me company. Bookkeepers don’t know everything and they can’t predict the future. If I spend a month not marketing myself as hard because I’m creating a new program that will enable me to get more clients, then I shouldn’t ding myself at the end of the month if one set of numbers isn’t as good as the last month.
A woman after my own heart — Kelly, I love your list. Too often you hear copywriting gurus focusing on the bottom line and not enough about what makes the bottom line worthwhile — i.e. time off!
Thanks, Dianna! It’s great to hear that comment from someone who gets such spectacular results for her clients. (Maybe that’s partly BECAUSE you give yourself the time off!)
Man, am I late to this party, but I LOVE what you wrote here. We took a deep breath and decided in the first quarter of this year to not focus on revenue and instead focus on infrastructure.
The business surprised us by continuing to come close to the revenue we’ve had for several years, although it was lower. The problem was the increased expenses associated with infrastructure.
And, what happened is that we are now set to potentially double or triple our revenue in the next 18 months, in a very stable way. But if we’d just focused on revenue numbers… well, you already said it well enough.
Mark, WOW! That’s a pretty amazing story, and I can’t wait to see what happens next. Watching expenses go up and revenues go down is a nice way to set off Lizard Brain Syndrome. You’re an inspiration for trusting in the process.
It is amazing, Kelly. And, watch us to see how it turns out. If I show up on your doorstep, hat out, then you’ll know it didn’t go quite according to plan…
Hey, I just found you via Ben Settle’s twitter… I love your post here. Your copy has such vibrant personality! I’d like to comment more, but I still hold a day job (transitioning into a marketing strategist)… and the subject matter of this piece happens to be where I work.
Not too keen on getting dooce’d
Hi Colin, thanks! I’m thrilled you risked dooce-ing to stop by!
Here’s to making independence day come sooner rather than later…
Kelly