Every executive and manager worth their salary tracks key metrics—but an amazing minority of those metrics focus organizations on what really matters.
I’ve held P&L responsibility and lived the dashboard life. I’ve worked on clients’ company dashboards and many, many sales dashboards. Dashboards tend to be inwardly focused, tracking operations, processes, and tasks. Even sales dashboards are about selling activities—calls, demos, proposals, executive meetings, competitor identification, close dates, etc. Worse, dashboards are typically clogged with metrics that are easy to collect, not the ones that matter.
I’ve also grown businesses. Businesses are grown in conjunction with customers by providing value; more customer value than it costs the seller to deliver (so that pricing produces profit). If you’re trying to grow your business, why are so few of your metrics about the value you’re delivering to customers? This blind spot in your dashboards—both sales dashboards and executive ones—is causing you to bleed growth and profits.
For Starters, You Probably Don’t Even Define Value Correctly
Every executive—and every sales person—is sure they know what value is, until you ask them for a definition. Ask ten leaders in your company to write their definition of value, and compare. The results should disturb you.
Little wonder, then, that 22% of directors on boards, and a similar (or lower) percentage of sales people can actually articulate the value their company creates for customers. If you don’t know, you force your customers to figure it out for you—and you’re just plain lucky. Lucky you don’t have better competitors.
So Let’s All Agree on What Value Is
Value is the desirability of outcomes a customer achieves from doing business with you.
Customer outcomes are not benefits. Where benefits can be a simple customer result (think Harvard professor Theodore Leavitt’s “customers don’t want a quarter inch drill, they want a quarter inch hole”—the hole is a benefit). Outcomes are meaningful results (watching your granddaughter play with the wooden toy you built with your drill). Outcomes are customer-specific, and value only exists in the customer’s mind.
Easy to Collect Figures vs. High-Gain Metrics
Many VPs of sales complain that they measure “quantity not quality”, then return to using the dashboard with quantity-centric metrics they just criticized. The challenge is that we love easy-to-measure things like phone calls made, over “quality conversations conducted”. Even the AI tools that monitor and analyze conversations are crude: “how many times was a specific word spoken?” or “percentage of total seconds filled by seller speech vs. customer’s words”. Don’t settle for easy-to-measure.”Far better an approximate answer to the right question, than the precise answer to the wrong question,” said the famous statistician, John Tukey.
Quality conversations become easier to measure when you gauge "value articulated". Imagine insisting that your sellers do what top producers have always done: progress with the conversation until the customer can articulate the dollar (or euro/yuan/pound) value of an outcome they think your product/service can help them achieve. That metric is just as precise as the number of conversations, but represents quality. It also measures how well sellers complete the entire value-selling process (even if they got a customer to validate a desirable outcome, but not measure it monetarily—they didn't complete the task, and the metric shows as zero).
Internal Numbers vs. Externally-Focused Guidance
Internal, functionally-directed metrics have their place. That said, they tend to focus on efficiency, not effectiveness. It’s harder to track externally-focused metrics like what value (sometimes called “why buys” and “why nows”) is most compelling to different customer types. Doing so measures the kind of effectiveness that grows businesses.
Price is where the customer’s perceived value turns into your profits. Most companies don’t track discounts nearly well enough, and since value determines what a customer is willing to pay, discounts measure perceived value in the most concrete way. magine tracking which customers, which salespeople, and which sales managers are responsible for disproportionate discounting—in addition to measuring what time of the month and which products.
Lagging Measures vs. Leading, Predictive Indicators
Most companies measure customer satisfaction (CSat), and that’s as close as they ever get to customer perceived value. It’s good, but CSat is measured only after it’s too late to change. It’s a lagging indicator. You need to combine easy-to-measure lagging indicators with leading indicators that predict success.
Measure prospects’ responses to your specific differentiators—or better, differentiated outcomes. Those are leading indicators; predictive buying signals you can measure at the content engagement stage, during prospecting, throughout your sales process, through customer success measurement, to renewal rates…until they finally roll into that lagging measure, CSat. Now, you understand what causes satisfaction with high precision, and your metrics can guide marketing, pricing, and product development…you know,growth drivers. Combine these with pricing discipline for profitable growth.
Want to talk? I can help you develop metrics that matter, including elite selling behaviors, forecasts, pricing systems, and growth rate. Email me at firstname.lastname@example.org.