Why the right stats mean everything to your business
Measuring performance and making improvements is a critical part of our culture at Crugo. If you’re not measuring then you don’t know how well you’re doing — and as Peter Drucker said, “If you can’t measure it, you can’t improve it.” Put simply, if you’re not measuring results then making changes is almost pointless as you’ll have no idea if they provide a benefit to the business or are actually making things worse.
What to measure?
There are a host of different metrics that can be used to gauge performance. It’s not just about boiling everything down into a single figure, of course, but instead deciding upon a range of Key Performance Indicators (KPIs) that will collectively measure the health of your business. These metrics can be applied to every area of the workplace, from the profitability of specific business activities to the benefits provided by different departments and even different staff members.
At Crugo, we pay close attention to the number of sign-ups that we receive, as well as stats like our conversion rate — and how we spend time and money across the business. Personally, I love stats (and Excel) and I’ll measure and analyse anything and everything that I can.
There are also vanity metrics. While online traffic and social media likes might look impressive, in nearly all cases they are only proxies for real value. Whether you’re selling a product or monetising via online advertising, the key number to track should almost certainly be actual revenue.
Doing this allows you to precisely gauge the success of marketing and promotional strategies. How does spend match to income, for example, and how does this map onto other metrics? Having a firm grasp on the data, and on costings, will allow you to precisely calculate the value of a lead. Your acquisition cost isn’t necessarily just a percentage of the margin, either, but can also be a fraction of the lifetime customer value — the average amount that they will spend with you over the course of your entire working relationship. This was the logic by which AOL sent out millions of free CDs carrying their software in the 1990s (at an enormous cost to the business).
Having control of the data will also allow you to zoom in on specific audience segments. For example, if you can identify people who are likely to spend more or who are likely to become repeat customers then you can set out to find more similar individuals and you can closely tailor your service to their needs (just think of business class in air travel as a model).
What’s more, if individuals buy your product once and never buy it again or recommend it to anyone else, then you may well be doing something wrong. While you can stimulate sign-ups via advertising, if you’re not seeing organic growth then there will always be a cap on how far and how quickly you can scale. If each customer recommends your service to multiple contacts, on the other hand, then you can see viral network effects in action and potentially achieve exponential growth. The key to cracking this is not just measuring growth but also tracking customer retention and separately observing the engagement of organic sign-ups and paid acquisitions. If it turns out that users who find you via advertising are far less likely to stick, then you may want to adjust your approach.
While online businesses have access to a phenomenal range of stats (from clicks and conversions to heat mapping and demographic data), there are an increasing range of metrics available to businesses more firmly rooted in the real world. There’s a reason why shops issues loyalty cards, after all: to acquire minute-by-minute information about your buying habits, matched to demographic information and (potentially) your email address. Indeed in the decade from 2016 to 2025, it is predicted that the global sum of recorded data will increase ten times over. And while the Internet of Things and the growing wearables market are generally seen as consumer trends, they also have enormous potential in business, collecting data, providing on-demand services and tracking staff activity. All of these data points give businesses a vast amount of information to identify where processes can be improved and where new opportunities can be seized upon.
Missing the human element?
There are those who argue that statistics don’t tell the whole story and that they can’t convey the humanity of a situation — and this isn’t entirely wrong. For example, how would you apply metrics to your family or friends? The key thing here, however, is that your family relationships aren’t strictly rational: you don’t expect an input-output ratio and you don’t ask for an ROI from these relationships.
Moreover, if you feel that your stats provide an incomplete picture, then take them with a pinch of salt and consider how you can expand their scope with ancillary metrics. Just because you’re struggling to measure something doesn’t mean that it can’t or shouldn’t be tracked. For example, you might struggle to quantify customer satisfaction. As a solution, customer service could be graded based on the average amount of time that a client is on hold before reaching support or perhaps on how customers rate the interaction on a scale of one to five (keeping in mind that they may only do this if they’re either very happy or extremely frustrated). These numbers may present an incomplete picture but they are a crucial starting point — allowing you to set targets and to identify where things might be going wrong. Are dissatisfied customers all complaining about the same fault with a product? If so, it’s time to investigate.
Joining the dots
At Crugo, we also believe that it’s important to have a culture of transparency. Rather than locking up data and decision making processes, we want to enable our team to see what’s happening and why.
One way that we put this in action is to have large screens up in our office so that we can put our core metrics on constant display for the team, providing a sense of performance at a glance. From server loads and network connections to open support tickets, response times and meetings scheduled, it’s available on a TV somewhere in our office.
Having all this information out in the open allows everyone — across the engineering, marketing, customer engagement and customer success teams — to be in the loop and to understand how the business works. Each month we analyse all these different metrics to gauge how we are doing, before planning out the next month’s strategy.
We even have events that trigger different sound effects that get played out on the office’s speakers. For example, an air horn sounds when a new support ticket is opened, ensuring that they never go unnoticed and that response times are as fast as possible. Depending on the nature of your business, this can also take the form of small celebrations — for example, ringing a bell each time a sale is made. This can be a nice pat on the back for the team, but also provides a sense of the flow of business.
Data is a key part of our culture and as well as recognising wins on the micro level, we want data across the business to be open to everyone. This forces us to develop robust, logical business strategies, rooted in the data, and allows our team to examine the rationale behind our plans — and to identify new opportunities as well as unforeseen challenges. In today’s world, it’s hard to argue: data is king.
