Growth KPI’s — Metrics To Grow Your Business
When you have crossed the chasm, your business needs to shift from business model discovery, to business model execution. That doesn’t mean that you stop searching or experimenting, but it does mean that you now need to incorporate business performance metrics. You will no doubt at this point have a range of growth hypotheses which are tactical and strategic; each of which having different time lines for analysis.
With the hypotheses in place, you’ll need to understand your resource runways and would be advised to put in place a structured OKR/KPI framework for your management team to review. Stretching across silo’s, these KPI’s should incorporate a mix of outcomes and outputs. Even at this stage, focusing on delivery time and budget alone is not enough, you will need to demonstrate value to customers continuously. It might b some time before you make a profit, so you will need to track your progress against your goals. Remember your environment is constantly changing and so should you.
Below is an example of a generic KPI framework that I have personally applied in several businesses. Although in each context, I extended and altered the KPI’s to be more relevant for the stage of the lifecycle, business type and domain. Each of the categories will need to contextualised and extended to meet your business needs. Consider the data points need to be structured in a way which allow you to learn.
All of the above data points are grouped within 5 main themes of :
- Growth Hypotheses
You’ll notice that some of the data points within the categories can be translated to metrics such as NPS, and others are free text. The latter provide subjective overlay and interoperation to the metrics which should provide a stronger overall narrative of your business performance. You should also notice, the KPI’s and categories are not split by function alone. Your business goals although might be supported or populated by department, should not be functionally focused. If your operations are delivering well without issues, but you have low customer engagement or NPS scores, this will not keep your business alive alone.
Having a spread of KPI’s is important to better understand how your business is navigating against your growth ambitions. By triangulating a range of KPI’s which span across different areas, you are better positioned to see cause and effect and will find yourself better informed to make strategic and tactical changes. Although this may seem intimidating, many of the data points shown here can be populated or retrieved automatically if you have CPM or operational systems in place such SalesForce, Zendesk, Jira Service Desk, Hubble and more.
The range of categories can be extended or altered as you see fit in order to meet your business needs and domain. For instance, Pearson have a whole branch of categories on Learner and Efficacy Outcomes for all their educational based software. This supports the global strategy that all products must demonstrate efficacious benefits.
A key point to consider with all the metrics and data points above is to be clear on the timeline considerations. Each of the metrics will need to consider seasonality and market patterns. For example, a high majority of fragrance sales spike in the months approaching the Christmas period. Also when measuring more complex lagging indicators such as efficacy or lifetime value of the customer (LTV), this might take more than a quarter. You will need to decide when a KPI measurement will be best measured in reference to time in order to meaningful.
Constant micro-measurements might be constructive in some areas, but may invoke negative knee-jerk reactions in others. You may also discover that there are leading indicators which could be added to the above, which allow you to react before the review. An example of this is where some companies are able to measure social media engagement as an indicator of future sales with a percentage of confidence.
If you’re interested in this topic and more, you might be interested to know that we are exploring this topic in a soon to be published book covering Lean Enterprise Product Development through the lens of a Lean Enterprise Product Lifecycle. This book is being written by myself in collaboration with Sonja Kresojevic and Tendayi Viki. Details will be announced over the coming months.
Read more at www.strongandagile.co.uk