There’s plenty of them out there.
“What gets measured gets done.”
“What gets measured gets improved.”
“What gets measured gets managed.”
“I would go a step further,” Gunner Technology CEO Cody Swann said. “What doesn’t get measured is worthless.”
Swann referred specifically to business development – in particular marketing, networking and sales.
Across industries, business owners and managers seem to all agree that measurement – reporting and tracking – are vital, but so few do it.
First, there’s the issue of effort and coordination. Measurement sounds great, until the commitment kicks in.
“If reporting and tracking were totally automated, everyone would do it,” Swann said. “But it’s a meta process. It’s not doing. It’s tracking the doing, so everyone wants to skip that part and get straight to what can be improved.”
This leads to a lot of assumptions that seem to be common sense, but lack data to actually back them up.
“If you land a huge client because they searched for ‘Gunner Technology’ on Google or whatever, your inclination is going to be: ‘Let’s go all in on Google!'” Swann said. “But that could a random chance. Heck, they may have even misspelled what they were really looking for.”
Unfortunately, companies make decisions off of these anomalies and then get frustrated when the results aren’t repeated.
“Marketing works,” Swann said. “Networking works. If they’re not working for you, you either don’t have something worth marketing or you’re doing something wrong.”
The second reason companies often forgo measurement and tracking is an issue of a kind of paralyzation.
“Folks worry about the ‘how’ other than that ‘what,'” Swann said. “How are we going to get this data? How are we going to tie it into that data? Then they go down that rabbit hole and never actually implement anything.”
Instead, Swann said, companies should start with the end result and worth their way back into the “how.”
“Tell me what you want to know and then we can work on how we’re going to get you the data to tell you what you want to know,” Swann said. “And, guess what? It is going to be a lot of work.”
The workload is often heaviest when first starting out, which is why companies give up so quickly, Swann said.
The companies that have success continuously refine their process and incrementally automate it.
Some data gathering and input will always require a human, but a lot of it can be automated, but there’s no point int worrying about that until companies figure out their process.
“Pin down the process,” Swann said. “Then figure out how to automate it.”
The last big reason companies avoid tracking and reporting involves accountability or the desire to avoid it.
“Everyone wants to say they’re working really hard and doing everything right,” Swann said. “But very few actually want to prove it. The funny thing is, it’s not a matter of trust. It’s a matter of measurement. OK. So you’re telling me cold calling doesn’t work? How many people are you calling each day? Where are you getting your information from? What are you saying?
“People just hate to be held accountable and will fight it tooth and nail, which is so weird because the goal of accountability is to make you as an employee better and make the company better as well.
“So often, I hear ‘I work all the time!’ OK, but what are you doing in that time? Show me. Immediate backlash. You’ve got to get rid of those people.”
Dealing with the second issue, “what” a company should measure is different from company to company and industry to industry, however, there are some common numbers that almost all companies should keep and eye on.
“If you can’t tell me what your customer lifetime value and acquisition cost, you shouldn’t be in business,” Swann said. “And you won’t be in business long unless you get on that right away.”
Customer lifetime value is the total revenue a company gets directly and indirectly from their average customer or client, including referrals.
So if Company X signs Client Y to a $10,000 contract and then two years later, Client Y refers Client Z to Company X on a $20,000 contract, Client Y has a lifetime value of $30,000.
Acquisition cost is what it costs to, in aggregate, land a new client.
So if Company X spent $1,000 on marketing which got Client Y to send Company X an email, followed up by a $100 dinner meeting between the two parties and finally, Company X paid a lawyer $2,000 to draw up a contract, Client Y’s acquisition cost was $3,100.
“If you know these numbers, it becomes a simple math problem,” Swann said. “Of course, you want your acquisition cost to be as low as possible, but as long as you have spare resources, you should spend up to $1 less than your acquisition cost in order to maximize revenue.”