Tracking key performance indicators — in all areas of your business, not just the redemption program — is crucial to an optimized bottom line. Redemption Plus Chief Enrichment Officer, @Ron Hill, shares why. Let’s see what he has to say:
Why measure? There is an old business adage that says, “what gets measured, gets managed and what gets managed gets done”. Having forgotten the source, I found that Peter Drucker’s name is often connected to the quote. However, in the search for the true identity, I also found that some say this famous saying could date back to the 1500’s. If so, the actual phrase may have been, “if you can measure it, you can manage it”.
Enough about the actual quote, because what we’re here to discuss is “What are you actually measuring in your business!?”
A little over three years ago, Redemption Plus set out on a journey to transform our sales-driven organization into a value-creation organization, with purpose as our True North.
At the start of this journey, we talked a lot about leading indicators vs lagging indicators, and how lagging indicators can be detrimental to your business. For example, measuring sales or profit each month is a lagging indicator as it only tells us what has happened and not what is likely to happen. In contrast, a leading indicator is something like a customer’s confidence to refer to you someone else, the impact you are making on your customers or the granddaddy of them all, or how are you fulfilling your purpose!
Lagging indicators are typically “output” oriented, easy to measure but hard to improve or influence, while leading indicators are typically input oriented, hard to measure and easy to influence…
To get our team to create real value for our customers, not just sales, we had to drop our lagging metric of monthly sales growth. Why? By focusing on short-term sales growth, we devalued what we could provide for our customers long-term. Unfortunately, there were some side effects: this compromised what was also important to our customers in the short-term— their experience with us.
The rub happened because we made the relationship about us and our focus, spending less on the day-to-day work required to deliver an amazing experience. While value creation, though much harder to measure, is about our customers and that’s what we do our best to focus on today, things like regular communication are still key.
How do you continue to stay focused on your long-term goals, customer experience and day-to-day work that makes a business run? This question poses no easy answer.
Finding the right measurements is something we’re continuously working to improve. This journey has allowed us to build a team that is no longer just focused on selling sh*t (although we understand revenue is still important).
Instead, they are now a dedicated team of customer-centric individuals, who not only solve customer needs but also see unspoken needs. They gather data to be turned into insights and ultimately create “unprecedented value.”
Helping our customers fulfill their purpose, mission or strategy is much harder to measure, but the most important aspect of our jobs. It’s what the success of our business — and our customers’ businesses — relies upon.
Clearly, it is not easy to transform an organization or abandon easy metrics — like monthly sales — for ones that are much harder to track, like “Customer Experience.” But to make a real difference and set our business, and our customers’ businesses, up for success the next 20 or so years, we have no choice but to follow this new path.
Back to data and measurements We try to collect every bit of data we can, but the art is interpreting it as much as finding what data matters. We must decipher the leading indicators, not just lagging indicators, that reflect our progress. The ones that tell us we are doing what’s right for our customers and impacting them and their businesses in a positive way, not just through dollars. This challenge is not always easily accomplished.
So…what are you measuring? Are you just measuring sales and profitability or are you measuring your guests’ length of stay and repeat visits? We are confident that if you focus on the engagement of your employees and the experience your guests have at your location, then they will stay longer (spending more money and having more fun), and come back more often (creating a more profitable, sustainable customer). Tracking and improving leading indicators will guide your business to the profitability numbers that you are were looking for in the first place.
This article is by @Ron Hill, Chief Enrichment Officer at Redemption Plus. For more just like it, visit insightsempower.com. Insights Empower is a collection of thoughts & insights to inspire, educate and connect the Family Entertainment & Bowling Center industry. From the team at Redemption Plus, est. 2017