A metric is simply anything that can be measured. A useful metric is something that you and your team believe in. And an effective metric motivates your team, drives additional net profit, and ultimately grows your business’s mission.
Contrary to popular belief, a metric doesn’t have to be anything formal, or standard to business or industry. In fact, as a service professional within the adventure travel industry, I all too often see owners focus on the wrong metrics. This strains employees, frustrates owners, and leaves money on the table.
One common misused metric is user days. User days is often a gauge of business growth and even a way to compare how “successful” your operation is to others – Even to the point where it drives managers and owners mad.
User days might be easy to track, readily available, and comparable to others but if your mission is to provide customers with an incredible once-in-a-lifetime experience, reduce your carbon footprint, and to pay your guides above-market wages, then is user days the right metric to focus on? Probably not!
Rather, the right metrics might be customer reviews, miles driven with an electric vehicle, bonus dollars paid to guides, and of course net profit. All of which can go way up with a drop in user days!
Consider three things when picking the right metrics for your business:
- What problems need to be fixed?
- How do you want to grow your mission?
- How can you drive more profit?
The efforts you pursue, and supporting metrics you build, is where all three merge.
Note: Growing your mission doesn’t necessarily mean growing revenues or hiring more employees. It could be expanding on sustainability initiatives, giving back to your community, maturing as an organization, or anything else you envision for your business.
So how do you arrive at the right metrics for your business? And how do you use metrics to motivate your team and drive profits?
Write out the problems within your business you want to fix, the mission initiatives you want to grow, and the amount of profit needed to afford both. Pick the main problems and mission growth efforts you want to address this year, figure how much profit needs generated, and isolate metrics that satisfy all three.
I highly encourage leaning on your team to build your business’s metrics. When team members are involved in this process, they naturally take ownership of them and hold themselves accountable.
Check your metrics! After you identify your metrics and before you do anything else. Ask yourself:
- Does each metric help manage your limited resources more effectively?
- Will the application of each metric drive more profits?
- Is the application of each metric in-line with your broader business mission?
- Is each metric in-line with your messaging to all stakeholders?
- Is the adoption of each metric sustainable long-term?
After you answer “yes” to each question for each metric, you’ll want to break each metric into smaller monthly metrics that can be tracked throughout the year. If you’re a seasonal business, you can use this monthly calendar to manage the highs and lows of your seasons. Doing so gives you, and your team, a few targets to shoot for every month which keeps everyone on track.
During the year you’ll want to check these metrics, routinely. If you have big goals, or goals that you believe will be challenging to achieve, then give yourself extra time to investigate unfavorable results and gameplan corrective action.
It is a good idea to include a third party not involved with day-to-day operations to review your metric progress. An outsider is great for unbiased analysis, honest feedback, creative thinking, and someone to hold you accountable.
This person can be your spouse or a hired professional. Clients describe this time with me as a breath of fresh air. Our meetings together are their opportunities to get out of the day-by-day grind and simply reconnect with someone that cares about them and wants them to succeed.
If you want help finding the right metrics to motivate your team, drive additional net profits, and ultimately grow your business’s mission, then hit me up. I’m happy to chat with you and discover how to do all of this within your business.