The Five Metrics of Success

If I was sitting on an isolated Caribbean island, and I had five metrics, I could run my business. All I’d need is a marketing indicator, an employee engagement measurement, a customer loyalty indicator, track of cash flow, and velocity of profit. Those were the things I had to measure in order to plan my strategy for growth and profitability. What are yours?

To be successful, what you need to measure is your organization’s Vital Factors – the things that are most important to its growth and health. A successful CEO should be able to identify these measurements and clearly define owners for each Vital Factor, and delegate everything else. 

The first indicator I needed was for tracking my marketing. I needed to know my X-Y-to-Z ratio, and put that ratio to work defining where I needed to focus, who I wanted to reach, and how well I was converting initial contacts to sales.

Second, you need some indicator of the culture within your business. A lot of people use the employee net promoter as an indicator, but the real challenge is to achieve a consistent and coherent culture that positively affects every part of your business. Your employees need to be working cooperatively, and they all need to clearly know how their efforts help the business succeed.

The third category would be customer loyalty and customer satisfaction – we used the NPS. We all know that without customers, your business fails. If you gain a reputation of customer dissatisfaction, you’ll be focusing all your efforts to change it (or lose current and future business!), rather than focusing on making your business grow.

Next, you need to track your cash flow. Most people get that, but during my time as Global Chairman of Entrepreneurs’ Organization, I was surprised at how many businesses forget about – or devalue – this measurement. It’s critical to your organization’s health! Cash is oxygen for your business.

The fifth metric may be the most important; velocity of profit. That’s your profit-per-X. think of X as what you want more of, perhaps profit-per-employee, profit-per-customer, or profit-per-location. At Restaurants on the Run, we used profit-per-delivery, because we wanted each and every delivery to be as much of a business gain as possible.

Peter Drucker, said “If you can’t measure it, you can’t improve it,” and that’s especially true of young businesses. When you’re fighting for your place among many competitors, and trying to find a distinct avenue of evolution that will make your company prominent and supported by a loyal and stable customer base, you need to know what your company does best, and where it gains the most return for its investments of time and energy.

So, where are your most Vital Factors, and how are you focusing on them? 


​ The Disciplined Leader

What do the best leaders have in common? The answer is one word: Discipline. A disciplined leader is one who identifies and focuses on the Vital Few: the 20% of activities that will drive 80% of the results. Learn More

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