Five Key Characteristics of Effective Business Metrics for BSCs and Security Contractors
09/26/17 | 9:00AM | Posted by TEAM Software
Making business decisions that are not based on data is no longer an option. Data provides insight to improve your business decisions and guide your business strategy. Your strategy is only as good as the goals you set, and a business goal that’s not achievable doesn’t help your business grow. By analyzing multiple metrics, and then incorporating market benchmarks and industry trends, you’ll see a more robust business strategy that drives a successful future.
But there’s so much data and multiple ways to slice and dice — where do you start? What data is most insightful? Questions like these, along with extensive industry and market research and conversations with clients and subject matter experts, are what guided TEAM as we created the insights dashboard, our new analytics solution. The goal was to launch a dashboard with standard business metrics initially and continue adding more metrics that fall more outside the standard metrics box. The solution is meant to guide smarter decision-making based on actual data from WinTeam – the core financial, operations and workforce management solution. While developing the solution, we wanted to ensure every metric included was valuable to our customers. As such, we identified five key characteristics of metrics that help drive clear, actionable decisions.
“Our goal is to understand the metrics that can help you make better decisions and make those metrics extremely simple to get,” said Travis Graham, TEAM Reporting and Analytics Product Owner.
Characteristic No. 1: Proactive
Traditional analytics show a summary of the past. But, when you use proactive metrics, you can spot trends as they are developing and make decisions that influence the results going forward, or even as it’s happening. Using metrics to forecast a future state can help you better leverage your resources to impact your bottom line. For example, tracking your actual hours compared to your budgeted hours as it updates in real, or near-real, time can help you spot problem areas with your job budgets proactively. If any job sites are bumping up against budgeted hours early in the week, or likewise, if any jobs are unexpectedly under hours, that can be indicator to dig deeper and take some action. Do you need to be more realistic about your budgeted hours? Are you missing out on billable work? Do your employees need some training to work more efficiently? Asking these questions as the trends emerge can help you respond proactively and protect your margin.
Characteristic No. 2: Actionable
A metric is no good if you can’t do anything with the information. A metric is actionable if it provides enough context to act and eliminates guess work in how to use the data. For example, a metric displaying your job costing data, or expenses and revenue related to each job or site, can give you a good idea of which jobs are most — or least — profitable. Comparing jobs to each other in context can help you identify the outliers and act accordingly.
Characteristic No. 3: Evaluative
Good metrics also have an element of evaluation associated with them. When you make a change, an effective evaluative metric will enable you to see the impact of that decision and determine whether the decision drove better results. It’s a simple cause-and-effect relationship. Your quality assurance (QA) program gives great examples of evaluative metrics. QA indicates where change is necessary to ensure customer satisfaction and effective performance. And similarly, once you’ve acted to improve deficiencies, this same metric can help you evaluate its success. You could potentially spot seasonal trends and make changes to your plans for the next year. Or, maybe you notice that more training is necessary when you have an influx of new employees and lower customer satisfaction scores.
Characteristic No. 4: Relevant
How many times have you heard the following statement: We’re doing it that way because that’s what we’ve always done. Probably more times than you’d care to admit. But, doing things because you always have is comfortable, and it’s easy. That mentality can be ineffective when considering how to measure the success of your business, though. Look for metrics that are relevant to your business and industry, as well as those that provide helpful, actionable information. You probably track employee turnover for a number of reasons, including as a way to understand why customer complaints increase. But, that number alone doesn’t tell the whole story. Drill further and look for correlations to see if the turnover is related to certain locations, supervisors or managers, customer-service ratings, etc.
Characteristic No. 5: Authentic
Numbers don’t lie. But anyone can manipulate numbers to support a decision that has already been made. Using a metric to support preconceived notions doesn’t help you make decisions, or even provide your business with value, and it can hurt your overall success. You want your metrics be like Switzerland — neutral.
Think about a sales goal that evaluates only the total number of new customers and not the revenue they bring in. If your goal is 10 new customers, and you add 20 new customers then it’s a successful year, right? Maybe, but not all customers are created equal in terms of size or needs, and a simple quantity in this case isn’t an authentic number. An authentic metric would help you look at more than just one piece of the equation. Consider this: what’s the lifetime value of each of your customers? (Customer lifetime value, or CLV = the net profit associated with a customer, or revenue associated with the customer, less sales and support costs over the course of the entire relationship). Your top customers by revenue may actually fall lower on the list when you take the cost of supporting them into consideration, and that’s what an authentic metric can help you determine.
So, the next time you have a decision to make, whether it’s big or small, take a few minutes to see if the metrics you use to evaluate that decision matches up with these characteristics. Smarter decision-making doesn’t have to be hard. And, for TEAM SaaS clients, we make it even easier with our latest analytics solution, the insights dashboard. If you want access to the new dashboard, contact your account manager.