Leaders often get distracted when they focus on vanity metrics. They lose sight of the goals that truly matter to the long-term growth of their company and neglect both their customers and their employees.
Obviously, you want to avoid that. The first step is establishing the right benchmarks for success, allowing you to set clear expectations for yourself and your team.
For instance, you shouldn't get too consumed with increasing sales if that compromises their profitability. In a world where billion-dollar companies seem to appear overnight, it's tempting for management want to scale revenue at any cost.
To do that, some brands slash their prices and offer customers generous discounts to incentivize a purchase. That helps inflate user counts and top-line sales. But it's an unsustainable strategy that relies on razor-thin margins, which leaves little-to-no operating budget to support other marketing, customer service, and research and development efforts.
At my company, Amerisleep, we set minimum benchmarks across different categories and departments which allows us to take a more holistic approach to business building. We prioritize customer retention, employee happiness, eco-friendly and sustainable practices, adherence to brand values, existing product improvements, new product development, and profitability.
Over the past decade, as we've grown our brand, we've steadily increased our expectations across each of these metrics to guide our success. With that experience in my back pocket, here are my favorite tips you can follow to ensure you're chasing the right goals for your organization:
Look beyond your competitors.
As you begin to create a roadmap for benchmarking your business, it is tempting to restrict yourself to researching examples from companies of a similar size that operate within the same industry to gauge your own growth projections. Indeed, knowing your market and understanding your competitors are important considerations, and similar organizations can provide easy-to-translate models for success that you can implement without much hassle.
However, you limit yourself if you don't look beyond your industry for innovative examples. Successful companies in categories that are very different from your own may have developed creative ways to measure their progress that can be adapted to fit your specific parameters with little modification.
Focus on metrics related to your core activities first.
It's natural for your key performance indicators to evolve as your business needs do, but you have to start somewhere. Certain metrics may no longer be useful after you have established a new distribution channel, or they may lose their ability to tell a valuable story about your business.
You will need to adapt your qualifications for success as time goes on, but you do need a reliable group of indicators that you can build off of. That's why it's best to start creating your benchmarks by looking at core activities that are, and will remain, central to your value proposition.
Incorporate innovation into your long-term goals.
When many leaders design benchmarks for the early activities of their company, they focus on traditional growth metrics such as average deal size, marketing reach or social engagement. While these data points can tell you a lot about the state of your business, you also need to consider what your track record with innovation can reveal as well.
When you make creativity a key measure of your success, it sets a standard that your team can carry through even after your goals change. As you integrate original thinking into your organization on a more consistent basis, it will reflect in better performance results across all your core metrics.