How to measure what matters
Measuring what matters is essential for professional services firms, says Author and Consultant Tim Williams, particularly as firms continue to experiment with the concept of outcome-based compensation agreements.
“Most measures of performance – sales, market share, stock price, etc. – are lagging indicators that only tell us where we have been,” he writes in a LinkedIn influencer post. “What we need are leading indicators. We need to measure not just brand success, but understand what are the precursors of brand success.”
Williams notes that marketers typically spend their time and energy analyzing the result instead of observing and understanding the process that leads to the result.
“Most leading indicators never appear on a financial statement or sales report, but they have tremendous predictive power – that is, they will drive the numbers that ultimately appear on the financial statements,” he writes. The correct leading indicators will foretell the lagging indicators.”
While some lagging indicators – such as incremental profits generated from a marketing campaign – are important and relevant measures of marketing success, many traditional measures of success are the result of historical practices rather than a careful study of cause and effect.
“The challenge – and the opportunity – is to engage marketing teams in identifying the metrics that predict a brand’s success, and then work to improve them,” he writes.
Here are a few examples:
• Client compliments
• Client complaints
• Client referrals
• Client suggestions
• Online endorsements
• Positive brand experience
• Percent of target population knowledgeable about brand
• Positive press coverage
• Percent of clients who give high ratings to their experience with brand
• Degree to which clients are satisfied with service from firm
• Degree to which employees have positive views of the firm
• Degree to which employees believe the firm practices are in line with the brand’s stated values
• Degree to which employees are satisfied working for the firm
• Intent of employees to retain their employment status)
• Likelihood employees would recommend the firm to a friend
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