A strategy without the right metrics is called a wish

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I've seen a few posts recently arguing that the phrase "you can't manage what you can't measure" is a myth or bad advice. While the authors make some valid points, I worry that these articles diminish the importance of metrics in any transformation effort. 

what you measure reveals your priorities

Managing what you measure is a factual observation, like the sky is blue. Show me what an individual or an organization measures, and I will tell you their entire philosophy of life and success. What you measure is where your attention goes, rightly or wrongly. And you usually measure what you're focused on... again, rightly or wrongly. 

When an organization obsesses over customer acquisition metrics, but can't tell you customer LTV, I can predict that organization's profitability, growth rate and future prospects for staying in business (low). Those leaders are focusing on the wrong things if their goal is (I assume) to create a predictable revenue machine. 

Likewise, if an organization is drowning in a sea of metrics, it reveals that they have no strategic priorities.

"If you have more than three priorities, you don't have any." - Jim Collins, Good to Great. 

a strategy without metrics is a wish

When I ask clients how they're going to measure progress towards their definition of success, they often have no crisp answer. While the goal is usually measurable -- increased revenue and market share -- there can be a lack of clarity on what it's going to take to move the needle on those metrics. Which is a lot like a pilot who wants to fly from New York to Brazil without a way to know if he or she is flying in the right direction. 

I honestly can't think of a scenario in which the thing you need to manage is unmeasurable. There are ways to figure out metrics that are predictive of what you need to measure and manage. If you can think of any exceptions, please post them in the comments. 

So perhaps we should reframe this observation to be, "you can't manage what you haven't strategically decided to measure," or "you can't manage what you don't know how to measure." In my experience, a strategy without the right metrics is called a wish. 

Which begs the question...  

What are the right metrics? 

Right is, of course, a subjective term that depends on what you're trying to achieve. Let's assume your goal is to create a predictable revenue machine. There's a lot of talk about growth hacking these days, usually referring to marketing. But the ultimate growth hack is to fill the holes in your proverbial bucket so you don't lose customers out the bottom as fast as you pour them into the top. When you fill the holes by focusing on retention and loyalty, every new customer is additive instead of replacement. And these customers buy more from you and refer you to others. Ta da! Your predictable revenue machine, which costs a lot less than a sole focus on acquisition. 

So... how do we measure this? I won't go into too much detail here, but here's where I'd start: 

Strategy metrics.

Yes, I'd start with strategy, not with CX repair. I don't believe you should be down in the weeds of "find and fix" before you've set your future-state vision for your priority customer (which is, by the way, contrary to a lot of CX maturity advice out there.) Strategy helps you prioritize which holes to fix, for whom, and how to fix them in a way that is aligned to your strategy. 

Strategy metrics are outcome-based.

They're anchored on what outcomes your priority customers want you to help them achieve, which are both emotional and tangible. Yes, emotional... even in B2B. How do your customers want to feel when they do business with you? This is the #1 outcome you're aiming for, which guides your brand, business and CX strategies. And remember: there's no and in brand. You have to pick one emotion or mindset that is highly motivating and differentiated enough to aim for, and that is linked to driving business outcomes (for example, feeling in control, successful, confident, a sense of belonging, important, etc etc. Every great brand anchors on an emotion, which is what we built our Value Archetypes to inform.) 

They focus on the why.

All the analytics in the world won't tell you the why behind win/loss. And they won't define the overarching why you're in business and the value you should create. You have to get that understanding up front, use it to set your strategy, then use your strategy to inform metrics and everything else (and continue to listen for the why to fill in your journey- or touchpoint-specific knowledge gaps.) 

They can help you manage an emotion. 

You can reverse-engineer everything you say and do from the emotional outcome you deliver and value you create. I call it "getting all the wood behind one arrow." What experience and business model is required to deliver that outcome? When you do this correctly, you can back into a very short set of perception metrics (7, to be precise) that are predictive of attracting and keeping customers -- and these metrics are shared across the entire business to create alignment. Then you can define the descriptive, operational and department-level metrics that will guide you on closing the gap between current-state and future-state experience. Which then guides your repair metrics and focus. 

PS. Note that strategy metrics are NOT oriented around you, and what you make and sell. Your customer is the only one who can decide whether you're creating sufficient value -- on their terms -- to justify giving you value in return.

PPS. This is all included in customer strategy: the organization-wide blueprint on how to attract and keep customers. I'll be covering this topic in my next White Board Wednesday. To get it in your inbox, click here

Repair metrics 

You are probably doing some form of this, but let's get strategic instead of boiling the ocean with a lot of repairs and metrics that may not actually be the right ones.

For which customers?

First, we have to know which customer groups are most important to your success. And yes, these are defined up in your strategy. If you're losing unprofitable customers, no big deal... which is yet another metric you should be tracking by segment, but knowing how to segment and prioritize customers isn't always straightforward in a complex business. I'll save this for another post. 

Which issues?

Identify where the holes in your bucket are for these customers, and how much revenue is flowing out of each of them as they move through the conversion lifecycle (ie. at what stage do they drop out and why).  Journey mapping is another essential tool that can help diagnose which issues and why, along with more sophisticated methods like analytics and regression modeling to understand what's driving customer win/loss.

Now let's filter these holes by how essential they are to your future-state vision. Let's say your future-state is all based on, say, helping customers feel more in control... which means you need to provide tools, information and resources to empower them. And let's say one of your holes to repair is the lack of easy information and guidance. Boom. Put this in your higher priority fixes. 

How do we measure?

Lastly, identify descriptive metrics that are linked to those holes and those positive, differentiated perceptions that we want to create. A descriptive metric for tools and resources might be how often customers access a tool, how much time they spend with it, and whether increased use of the tool helps improve their perception metric of feeling empowered and in control. 

Your navigation system: Strategy, metrics and governance

Oooh, the "g" word. I know governance is a term a lot of people don't like, so let's reframe it as "how we make decisions." If... 

  • you have numerous strategies sitting in silos like marketing, digital, IT, service, product, etc.
  • you are drowning in an ocean of metrics, none of which ladder up to shared goals and outcomes, and
  • your decision-making across the organization is also fragmented and based on different criteria....

... then hoo boy, you're in a world of hurt, as they say back in my hometown in Texas. 

I like to call the intersection of strategy, metrics and governance as the organization's navigation system. It's how effective leaders, like pilots flying an airplane, know the flight plan and the associated metrics to mark your progress. Which then allows you to more effectively make decisions, because your flight plan and dashboard are tightly integrated and boiled down to the essentials that you need to know to reach your objective. 

If these three aren't basically the same thing -- across your entire organization -- well, there's your biggest opportunity to accelerate your growth. 

We'll dive deeper into this topic on next week's White Board Wednesday. Stay tuned.