Numbers don’t lie. The FIVE metrics that determine the health of your company (No, Sales isn’t one of them).

Numbers don’t lie. Stop asking your team what problems they are experiencing and start instead focusing them on analyzing the numbers to TELL them what the problems are. To effectively track the health of your organization you must attend to specific metrics that will give you a temperature of your company:

  1. Conversions. Step 1 — How many leads/referrals are you getting? This will tell you about your marketing effectiveness. Set an expected number weekly and track it. Step 2 — How frequently are those leads being converted? Drill this down to specific employees and departments and regions. Who are your high sales performers? Who needs attention?
  2. Customer Retention. How many customers are leaving? Why? Do you know? This assessment will tell you about your quality of service as well as the skill of the leader in the Department. Establish a standard — look at it in the first 3 months, the first year and then long-term. Start investigating if your numbers are over the established % at any of those intervals and fix the problem.
  3. Employee Turnover Rate. What SHOULD it be per your industry average? What do you WANT it to be? At Sample Supports the industry average turnover rate is 46%. I personally start to be concerned if we are over 25% — it may mean we are losing talent. I equally become concerned if the number is under 10% — it means we are not eradicating the low performers. At Samples World Bistro the industry average is over 80%. I start becoming concerned if we turn over more than 90% of the team in a specific timeframe (perspective, eh?). Whatever your number is, focus on it and manage it. High turnover indicates you may not be recruiting correctly, stayboarding consistently and training employees in the right way. Low turnover will affirm that you are establishing the right kind of culture of accountability in your company that you are hoping for.
  4. Labor Cost. Every employee should be accounted for within revenue allotments — there should be no rogue payroll costs. Monitoring the labor % will tell you if your team is skilled and pulling their weight. Low labor costs let you know that you have a skilled team that can stand on their own — it is a reminder that your training is working. It can also mean you are understaffed (throw in an overtime metric for fun). High labor costs can mean that your managers aren’t running a tight ship or that turnover is causing problems.
  5. Net Margin. Are you growing enough? Are you growing too fast? Are your labor cost metrics accurate? Are your expenses in check? Looking at the net margin amount and % will tell you if you are walking a steady line toward success. How much do you need to make in a net margin to keep doing all the things you want to do? Start here and work backwards.

Why is there not a sales metric? If you focus on these five metrics and improve them then you WILL improve your sales and revenue numbers by default. You can’t have a good net margin if your labor cost is off. You can’t have a solid labor cost if your team is paying out too much in overtime because of turnover. You can’t experience growth if you have poor customer retention. You can’t increase your revenue if you aren’t providing an amazing service that brings people through the door. You then need a team that can sell (convert) the people that come knocking at your door.

How often should you look at these metrics? As often as possible. I personally look at these metrics on a weekly, monthly, quarterly and annually basis. I live, eat, and breathe these spreadsheets.

Focusing on these five metrics is the way I track all things awesome as well as indicators of major dysfunction.

Coach your team to look at the metrics and use them as guiding forces in their decision-making processes. Don’t ask them what the problems are — train them to tell you what the numbers mean about their team performance and outcomes. Focus on the numbers and the path will be clear.

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