Healthy revenue and profit margins are crucial to any company. However, monitoring your bottom line is only one part of the formula. It�s essential that you determine the factors critical to your company�s success, measure those metrics and put into place a system for continually improving performance. Here are ten guidelines for helping you develop your company�s process.
Define Your Goals: Determine your measures for success. Make your goals challenging, but achievable. Do you want to increase customer retention, improve market share, penetrate a new market segment, change a perception, generate more store traffic, reduce customer complaints? Be specific and make your objectives measurable. For example, by what percentage do you want to increase sales?
Determine the Metrics to Measure Your Company�s Performance: Compile a list of factors that are important in your industry. Criteria may include:
Marketing: sales growth; market share; distribution methods; sales force size, effectiveness and training; advertising budget and effectiveness; inventory levels, delivery time; product quality; customer retention rates Production: plant capacity, locations and age; age of equipment; ability to expand capacity; skill and turnover of labor force; union relations; quality control; supplier retention; raw material sources Administrative: employee turnover, age of facilities Management: experience, depth and turnover of top, middle and supervisory managers; effectiveness of communication systems; access to information; cohesiveness of top management ranks; compensation plans; decision-making speed; strategic planning abilityTechnology/Research Development: age of R D facilities; age of production technology; production patterns; basic innovation; engineering abilities; experience of R D team; R D budget; R D project timelines
Develop Methods to Collect and Organize Data: Determine a process for tracking and reporting all relevant data. Report on trends that emerge from your findings on a regular basis.
Compare Yourself to the Competition: You can glean a lot by doing your homework, including shopping your competitors. Also check:
- Annual and 10 K reports on public companies
- Internet search engines by competitors’ names or key words
- Trade associations and publications
- Business and general press as well as press releases
- Government agencies
- Private research firms, including online computer databases
Conduct Research: When you need specific information about your customers and prospects that doesn�t exist, conduct your own primary research.
There are two types of research: qualitative and quantitative. Qualitative research is used to understand why customers behave as they do or to develop hypotheses about that behavior. Personal interviews and focus groups (a meeting of 8-12 carefully selected people) are two examples of this semi-structured type of survey. Quantitative research is a highly structured form that attempts to answer how much. Numbers can be projected to the universe that the sample represents. Telephone, online and mail surveys are examples.
Understand Your Strengths and Weaknesses: Rate your company on your developed list of metrics in comparison to your competitors. Look for clusters of strength that may give you a competitive advantage.
Focus on Customer Retention: Customer retention is a matter of business survival, as getting a new customer is five times more expensive than retaining a current one.
Work on core product and service attributes to build customer loyalty (such as treating each customer as a valued individual). Businesses must focus on such issues as instilling a helpful staff attitude, delivering on advertising promises, developing a favorable return policy and providing accurate product information. Use your success with current customers to attract new referral business, but also remember that not every customer is worth keeping. You cannot be all things to all people. Sometimes, you have to let customers go and train energies on those clients who are the best fit.
Measure Marketing Effectiveness: Effective measurement lays the groundwork for future plans, so keeping track of results is the only way to improve your marketing efforts. The key is determining which data should be collected. Your marketing results may be measured in sales (dollars or units), market share, store traffic, number of inquiries or reduced complaint rates, or other metrics. Tracking can also be based on surveys that assess customer perceptions.
Track Employees: Having top employees who are motivated is critical to your company�s success. Track the effectiveness of your recruitment methods and retention levels as well as employee satisfaction and performance.
Apply the Information: Analyze the intelligence you�ve collected, draw conclusions and make recommendations based on it. Develop a plan for seeking out opportunities to demonstrate your company�s strengths. If weaknesses are critical drawbacks to your company�s success, develop a plan for overcoming them.
Geri Stengel, president of Stengel Solutions, a business strategist. She can be reached at 212-362-3088 or E-mail
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