Why are Metrics Important?
Metrics are the units by which we measure success. We usually think of metrics in a business setting, but they apply to our personal lives too. Mark Manson does an excellent job describing how we use metrics to evaluate ourselves (warning: this Mark uses some NSFW language in this post). Examples of personal metrics an individual might value are monetary wealth, or for the altruistic souls, social impact. Examples of business metrics are profit margin and customer satisfaction score.
Goals vs. Metrics
The goal is the result you want: $10,000/month in online sales, or an average rating of 9 on your customer service surveys.
The metrics in these cases, respectively, are monthly online sales in dollars, and survey scores.
Why are Metrics Important?
Without metrics, you can't accurately define or reach your goals.
When I meet with prospects, I always ask what their goals are. A true litmus test in knowing if a prospect is serious about improving their marketing efforts lies in the answer to this question. If they haven't thought specifically about what their goals are, they are not ready to tackle a major marketing initiative. For example, if a prospect says, "I want to increase sales," I ask, "by how much?" If they don't have a percentage or dollar amount in mind, it's time for some introspection.
Once you have a specific goal in mind, metrics help you break down the steps you need to get there. When a prospect says "I want to increase sales by $10,000/month, now we're getting somewhere.
Let's say this prospect currently brings in $30,000/month. A $10K increase is 33%.
We know that the average customer value for this prospect is $2,000/mo. So we need at least 5 new customers a month.
Next, we can look at their lead to close rate, which is 50%. We need at least 10 additional leads/month.
And finally, we look at the conversion rate on their website, which is 2%. We need at least 500 additional unique visitors a month.
From here, we can develop a content strategy that drives traffic to the prospect's website, and identiy ways to increase conversions.
Metrics in Action
We have a client who is obsessed with metrics, and that obsession has paid off. When he met with us the first time, he knew exactly what his cost per lead was and how much he wanted to reduce that cost. From there, we put together a budget and a plan to utilize content marketing and organic SEO to reduce his cost per lead. Since then, he's cut his cost per lead in half. Not only that, the client is always looking for ways to improve his strategy and increase lead generation. Needless to say, it's been a great partnership for both sides.
Which Metrics Are Important?
That is the question you should be asking yourself. The truth is, some metrics are important, and some aren't. And the metrics that are important to you might not be important to me.
I mentioned introspection earlier. If you find yourself frustrated, either in your business or in your personal life, take a step back and think about how you're evaluating your success. The example that Mark Manson uses in the post I referenced above is guitarist Dave Mustaine from the hugely successful band Megadeth. Despite his success, Mustaine considers himself a bit of a failure, because he was kicked out of another band (you might have heard of them). The metric he used to measure his life (in this case, his success vs. the success of the band that booted him), made for a goal that was impossible to achieve...by anyone.
Benchmarks can be a good thing. Comparing your numbers to the industry leaders can shine the light on what your focus should be. But if you're a startup who defines success as becoming the next Google, you're probably in for a future of heartbreak.