In a data-driven business landscape, leaders rely heavily on analyzing company metrics to make informed decisions. However, understanding the multiple factors and points to consider when interpreting these metrics is crucial for accurate analysis.
Below, 18 Young Entrepreneur Council members share their tips to help a leader ensure their analysis of company metrics yields accurate and actionable insights. Using these strategies, a leader can determine whether the data indicates they’re on course or if they should be prepared to challenge initial perceptions, alter strategic courses or take proactive measures for future success.
1. Start From Your Annual Goal
Metrics for a company are all related to the overall annual goal and ideally, quarterly goal setting. Most companies measure too much or not enough. Starting not from metrics, but from the overall goal, will help you break down relevant metrics. I use mental models such as Occam’s razor to decide what to measure. I eliminate most metrics to keep tracking simple. – Libby Rothschild, Dietitian Boss
2. Ensure Each Team’s Metrics Align With Broader Goals
When analyzing company metrics, leaders should be aware of the “local optimization” trap. This is a state where departments or teams optimize their individual metrics without focusing on the overall company goals, or even at their expense. To avoid this, leaders must ensure that the analyzed metrics from every team are aligned with the broader company goals through constant improvements. – Vikas Agrawal, Infobrandz
3. Bring In Domain Leads For Brainstorming
When analyzing various company metrics, leaders should bring in the leads of the respective domains. This will help them interpret the findings better and draw suitable results from the data. Since domain leads are better acquainted with efforts that led to certain outcomes, brainstorming with them can help leaders come up with fitting strategies and action plans based on the results obtained. – Chris Klosowski, Easy Digital Downloads
4. Regularly Audit Your Metrics
When was the last time you audited your metrics to understand the metrics that really matter? Auditing your metrics should be as routine as auditing your software or subscriptions. One of the biggest mistakes you can make is making decisions based on outdated metrics. Understanding and regularly assigning metrics that really matter is essential to understanding performance. – Matthew Capala, Alphametic
5. Identify And Eliminate Vanity Metrics
Vanity metrics may look good on the surface, but they don’t actually tell you about your performance or provide actionable insights. Factoring them into your analysis can be misleading, as they severely affect the overall results. So, look out for them and drop them from the process before deriving any conclusion. – Jared Atchison, WPForms
6. Be Wary Of Surrogation
Surrogation is the tendency to replace abstract strategy with metrics. To avoid surrogation, involve strategy implementers in strategy formulation, use multiple yardsticks and avoid tying incentives to a single metric. For example, obsessing over your Net Promoter Score will pressure the customer service team to prioritize the score over resolving customer issues—leading to even more undesirable scores. – Devesh Dwivedi, Devesh Dwivedi
7. Ensure You’re Measuring Accurate And Complete Data
Having metrics is crucial, but tracking metrics does nothing for you if the data you are reporting is inaccurate. For example, having a metric of converting three customers a week is great, but not knowing how many customers called in that week gives you inaccurate reporting for that metric. Relying on gut reactions or insufficient data can be harmful. Metrics are great, but data doesn’t lie. – Alexis Austin, Right Law Group
8. Pay Close Attention To The Gross Margin
When analyzing company metrics, employees should always focus on the gross margin, because the higher this margin is, the more your company can earn with each dollar sold. This metric is important because it reflects improved processes and production, and your company’s productivity translates into sales. Make your sales and production processes more efficient. – Josh Kohlbach, Wholesale Suite
9. Consider The Context Of Company Metrics
It’s essential to understand the underlying factors that affect the data and to interpret the metrics in the larger context of the business. This can change how results are viewed by giving a more accurate picture of the company’s performance and highlighting areas for improvement. – Andrew Saladino, Kitchen Cabinet Kings
10. Determine The ROI On Expense Items
Ask yourself what the ROI is on bottom-line revenue when looking at expense items. Professional services often spend time on tasks that don’t really matter to the client or don’t get communicated. Ask yourself—from a customer standpoint—what matters, what you spend your time and money on and whether the ROI increases the bottom line or customer experience. – Givelle Lamano, Oakland DUI Attorneys
11. Take External Factors Into Account
Changes in consumer behavior and market trends can all affect metrics, making them appear better or worse than they actually are. By taking external factors into account, leaders can gain a more accurate understanding of the data and adjust their strategies accordingly. For example, a decrease in sales may not be due to internal issues, but rather a shift in consumer preferences. – Adam Preiser, WPCrafter
12. Compare Your Metrics To Those Of Peer Companies
Context is important. When analyzing company metrics, you want to set them against comparable metrics (if or when known) of peer companies, rather than companies outside your industry or that are much larger or smaller than yours. Otherwise, you’re not getting good information, and if you’re basing strategic decisions on that information, you could lead your team astray. – Andrew Schrage, Money Crashers Personal Finance
13. Pay Attention To The Source(s) Of Your Data
It’s important to ensure that the data being analyzed is accurate, reliable and relevant to the specific area of the business being examined. Leaders should consider the methods used to collect the data, as well as any potential biases or limitations in the data set. By paying attention to the source of the data, it is easier to make more informed decisions. – Pratik Chaskar, Spectra
14. Use Metrics To Set Goals For Each Team Member
Don’t forget to set micro-goals, or rocks, for each team member when reviewing company metrics. These small key performance indicators should culminate in support for larger company goals. If you’re not hitting your marks, you can check each team’s metrics and identify where you need to improve. – John Turner, SeedProd LLC
15. Avoid Analysis Paralysis
It’s easy to get bogged down in data and metrics, but leaders need to remember that they can’t analyze everything. Focus on the metrics that matter most, and don’t sweat the small stuff. Doing so empowers leaders to be more agile and responsive, as they can swiftly pivot and adapt their approach based on the key metrics that matter the most. – Abhijeet Kaldate, Astra WordPress Theme
16. Take A Holistic Approach
Leaders must use a holistic approach. Focusing solely on short-term financial metrics without considering the long-term impact on employee morale, customer satisfaction or reputation may result in skewed outcomes. Understand the interconnectedness of various metrics and how they collectively contribute to the overall health and success of the company. – Candice Georgiadis, Digital Day
17. Don’t Be Afraid To Drop Projects If The Metrics Dictate It
It’s important to keep in mind that metrics can change based on the situation. For instance, if you start a podcast with a goal of getting a thousand subscribers in a quarter, but you only get 50 over two quarters, it’s okay to end the show and remove the metric. Successful business owners know that their metrics are essential for determining if an experiment is worth their time. – Chris Christoff, MonsterInsights
18. Work To Identify Trends
Business leaders should remember that data is prone to change over time. In other words, you shouldn’t use a single analytics snapshot to guide your entire marketing strategy. Reviewing the data consistently and identifying trends among your audience will help you make informed, data-driven decisions. – Daman Jeet Singh, FunnelKit
