Great Metrics Are in the Paycheck of the Beholder

  |  July 7, 2011   |  Comments

How can you implement successful metrics to help you measure your success?

The average employee wants to make the rent. They want a roof over their heads and the ability to put food on the table.

The corporation wants to increase shareholder value. The division wants to earn more, spend less, and have happier customers. The departments want to grow market share and increase profits. These precepts vaguely point the way toward performance indicators, which, we hope, eventually lead to specific metrics.

Those specific metrics are then cobbled into a dashboard, which is used as a sword of Damocles over your budget or an indication of which team wins the Friday afternoon bowling outing depending on corporate culture.

But the measurement thing pretty much stops short there. People get anxious. Deadlines get met to the detriment of quality. Only those who own their own bowling shoes actually care.

Make It Personal

I spent 10 years in sales. I flourished in an environment when my actions affected my paycheck. So if you want to have the best, specific metrics, they have to be aligned to organizational goals, of course. But more importantly, you need to align individuals' compensations packages to those metrics.

It's tough to get people to talk about how they earn their paycheck. To begin with, it's astonishing how many people simply don't know.

They were given a speech about their productivity and contribution at the start, but discussions about recompense are few and far between and are considered an inappropriate topic for public conversation.

I don't want to know how much you make - that's none of my business. But unless you know - and are willing to discuss the basis for your income - you can't implement successful metrics to help you measure your success.

Picking Valuable Goals

So begin with your organizational goals. Yes, we want to raise revenue, lower costs, increase satisfaction, and beat the pants off the competition in terms of the number of patents filed and cool t-shirts handed out at trade shows. But which of these takes precedent?

A manager's paycheck should be tied directly to specific changes in specific metrics over specific time periods within specific budgets. It's important that the recipient not control the measurement methods (so he can't game the system), but has a contract that stipulates the rules of engagement will not change. That way everybody can track their numbers with confidence.

Clarify your goals and the proper metrics will become apparent as will the systems to capture the data necessary to track those metrics. Analyzing more and more detailed metrics can be a great help, until they reach that mystical point of diminished returns. But the sweet spot of measurement is where the data and the reports tell me if I'm going to earn my bonus.

Provide Useful Metrics

If my goal is to increase online sales, then measuring only sales will give me no visibility into the selling process. I'll want to track click-throughs, page views, conversion rates, and customer satisfaction, as well as revenues. I can drill down deeper and measure click-streams - the various ways people meander around my website - in order to improve usability and speed the sales process. I can measure the effects of altering the words I use to describe my offerings. I can track the types of questions the call center fields and try to answer those questions during the buying process before people have to ask.

With state-of-the-art web analytics tools, I can measure every keystroke and the X-Y coordinates of each and every mouse movement in order to assess customer behavior within every page on my site. This is where the return on investment issue comes into the picture.

If you collect too much data, if you produce too many reports, if you have too much information to muddle through, the cost of collecting, storing, analyzing, and reporting that information is, by definition, more expensive than the benefits you can derive from it as a decision-making tool.

However, if individual goals are in strict alignment with corporate goals and you give everybody the power to track their own success, they won't get bogged down in the details. They will gravitate toward the metrics that are useful rather than merely interesting or bountiful and your entire team will become data driven. After all, that's the best way for them to bring home the bacon.

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ABOUT THE AUTHOR

Jim Sterne

Jim Sterne is an international consultant focused on measuring the value of the online marketing for creating and strengthening customer relationships. Sterne has written eight books on using the Internet for marketing, produces the eMetrics Marketing Optimization Summit and is co-founder and current chairman of the Digital Analytics Association.

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