What makes a good metric?
In terms of reporting, metrics are simply the values that are assessed. For instance, a monthly sales report might include total sales divided by salesperson. This metric allows you to readily identify how each member of your sales team is performing, which in turn helps you make decisions to improve sales.
So let’s say you’ve just finished that cross-tab report you’ve been working on. It’s pretty good, but you’ve recognized there’s some room where additional metrics would help substantially. Before you start calculating away, you begin to ponder—which ones would make a difference?
While there’s a great deal of nuance for each situation, here are a few considerations that could benefit you in your search to create more meaningful reporting…
Is the metric simple to implement?
It’s easy to get so involved in curating a report that you lose sight of the effort it takes to produce it. Often, the metric’s value is worth less than the time it took to create it. That’s why it’s necessary to employ a simple method to gather data that requires little-to-no overhead to maintain.
In your monthly sales report example, it would be a rather small matter to include an additional metric—your top selling products for the month. This requires no further action from your salespeople to provide the information, as well as no additional maintenance to include in the report. If, however, the desired metric requires extra work from the sales team to track and process, then it may warrant a reevaluation of the importance of the metric.
Does the metric serve as a guide for future action?
There’s a big difference between information that’s simply “nice to know” and information that has the potential to change how you or your organization acts. A metric should provide you with insight into your business practices; it informs you about trends in your data, which should help guide your strategic decisions.
In your monthly sales report, the total sales are broken down by each salesperson, so you can determine which of your salespeople may need additional training if they’re falling behind in their numbers. Looking forward, you know you’ll want to focus on training, which allows you to budget and plan accordingly, with the end goal being that your salespeople in training ultimately improve their total sales. Therefore, if a metric isn’t helping you make these kinds of decisions, it may indicate that you’re tracking the wrong kind of information.
Is the metric derived from concrete business practices?
Identifying areas of your business to develop metrics for ensures that the data you’re collecting is actionable. It’s the whole reason reporting is done! It empowers managers to evaluate and, when necessary, adapt, scrap or update business practices.
Let’s break it down to an actual employee activity, for instance…sales by salesperson. By selecting this kind of metric, you naturally move from asking, “What do we know?” to “What do we do about it?“, with clear areas of focus. By contrast, if you select a more nebulous metric, like the increase percentage in a certain type of product sales, it puts you in a position where you must determine what that means, and then figure out if you want to, or can, do anything about it.
Selecting the right metrics
There’s an endless number of metrics that could potentially have value when creating a report. For instance, in your monthly sales report, you may decide you want to include last year’s monthly report for comparison, or the time spent with each customer compared with the total sale. Maybe you want to analyze repeat customers’ spending trends, too—the possibilities are endless.
Nevertheless, it’s important to balance the metrics you want to report on with the level of effort exerted to obtain the information, the data’s purpose, and your overall ability to influence or incite change.
We’d love to hear from you!
Comment below with your own ideas for business reporting, or let us know if we can assist you with reporting in any way.