Ep. 198 A Health Checkup for Your Business
Although Covid has has us focused on our physical health, what’s the condition of the health of your business. Joe Pici will help you understand how and what to measure for what you measure will improve.
Get ready for an unfair advantage over your competition. This is The Sales Edge podcast. Where globally recognized sales expert and trainer Joe Pici helps you sharpen your skills for booking more appointments and closing more deals. And now here’s your host Joe Pici.
Joe Pici (JP):
Hey team, welcome back to The Sales Edge podcast. Today we’re going to learn the importance of having metrics and how we measure those in our business. Peter Drucker once said “what we measure will improve”. So welcome to The Sales Edge, this is your host Joe Pici and this is podcast number 198. It’s hard to believe isn’t it? You know, we want to thank our sponsors which is Pici and Pici which is a speaking, coaching, training, consulting firm. Specializing in recapturing lost revenue, getting in front of your target market, improving communication skills. And SellMoreVirtually.com, which is our membership platform. Every Thursday night, I’m out there speaking, coaching, and training our members how to get better, how to recapture lost revenue. Also tremendous downloads and interviews and e-courses.
I was just on a three-day road trip. So great to get back on those road trips. So great to get into those. You know, we’ve been doing live training all through the covid deal, but we haven’t had a lot of companies bringing us in. And and I was just up in Georgia, Baxley Georgia and I had a number of things I did up there was, working with one of our great Executive coaching clients Randy Crawford, who is the CEO of Appling Health. And then the next day I worked with his upper level management team on conflict resolution, better communication skills.
And then on the third day, I was up there. I did sales training for the Baxley Chamber of Commerce. And so but I’ll tell you what had an impact on me. Working with those Health Care Professionals, they’re the upper level management for Appling County Health Care, and they also had a couple on Entrepreneurs in there that we’re big into the healthcare. But the thing that coming up over and over again, in their conversations in their training. What’s the importance in knowing their patients numbers, of course, they were talking about health numbers, but it just it got me to thinking and you know, it’s a four and a half hour drive back. I finished training. There are at five o’clock on Friday night and got on the road.
As I’m driving back, I started to think about, you know, the importance in the doctors, the healthcare people knowing their patients numbers. But what about business? You know, are we measuring our business metrics constantly because, it’s vital that we do that. Recently, I’ve been reading some articles about business owners, entrepreneurs, up or upper level management people and they keep saying it’s frustrating to know you’re capable of more but you can’t seem to achieve it. Have you ever felt that way? You know, perhaps what you’re looking to accomplish, what you’re working towards, is very slow to materialize. Whatever your motivation the overall goal for any business is to be successful, to be profitable.
Your performance measurement is a way of tracking what goes on in your business. It’s vital to improving the weak points without undermining your business strong points. Choose the right metrics and you’ll be on your way. You know, I know for us the clients that we have that collect and measured data, seem to consistently grow. Of course, what you do with the data is very important. But under performance measure, these are measurable metrics, this tracks your business. You know, Peter Drucker also said if you can’t measure it, you can’t improve it. It’s really hard to improve something if you don’t have baseline measurements.
So this is a way of tracking what goes on in your business. Day to day, week to week, month to month, year to year. You know Roger Creager once said “without measurement we don’t know if there is improvement and we don’t know what is meaningful”. So there’s a real strong reason behind metrics. I know here at Pici and Pici, when Joe and Dawn Pici learned the importance of measuring, quantifying, It changed the game for us. We were we were able to logically look at what we were doing, measure it, quantify and then work on improving it. So there’s a many way of places in your business that you can measure many things. You can measure your marketing, marketing metrics. And you know, do you have the right strategy, you know, and you always know if you have the right strategies are you capturing more leads is your brand growing?
You know, and then your sales metrics. We’re going to get into that more because there’s many things in sales about you know, your revenue and and your closing ratios, the appointments and the calls. But these are all things to track. About your social media, your social media marketing and how is that being are you evaluating that? How about your financial metric?
Many many years ago, Dawn and I got into a partnership with a gentleman, the partnership eventually broke up not because of any other reason but, we were just heading in different directions and what we wanted to do and accomplish in our business lives. But the one thing I learned from that guy I’ll never forget this every Monday. I had to drive to Jacksonville, Florida and he drove for a couple hours too and he made me, this was a root canal. But he taught me how to read actuaries. I want you understand. I didn’t even know what I meant. But every every Monday we were looking at Excel sheets on our numbers and there were times we didn’t like what we saw. But I’ll tell you one thing it taught me. You better know your numbers financially. It has caused me every day to go into our business account, to go into our business credit card, to look at every expense, every investment, every deposit. You’ve got to know your numbers. I keep a profit and loss ledger on everything I do.
This last trip. I just went on, okay, now the client paid all of the expenses. You know, but I still kept a running tally on my mileage and and I know how much money came in, did we come out of pocket? It’s so important, you know your numbers. And then data, you know, you every company should be collecting data. And there’s you know, when you look at data data is the information that is important to your company. So it a little bit more detail on things to measure. Here’s a few things you may want to really hone down.
What products and services are being purchased by your clients? So what is what are the most popular or the most driven products and services that people are buying from you? That’s an important thing. When I look in our business at the multiple things we do. I’m always tracking. What do people hire us for the most? How about you? Do you know which products and services people most likely and are purchasing from you?
Next. What is your net profit margin? You know, it’s funny because I always assume people know what that means, but it’s not how much money that comes in. It’s how much money after expenses are paid. Everything goes out. How much money do you keep, does your company keep? That is your net profit. So if a product sells for $1000 and it costs you 500 dollars to manufacture and it costs you $100 to market it and it costs you a packaging and shipping and what is left is $200. That is your net profit.
The next is gross revenue. What is the gross revenue that’s coming into your company? These are important things. You see because when you start looking at taxes, you start looking at the what you have to pay out. It’s important to know what gross revenues are being generated.
Your next is your sales growth year to year. This is important number, very important number. So what money, what were our sales in 2020 and then what are our sales in 2019? We compare 2019 to 2020, now then we start comparing it to what’s happening in 21.
Here’s another one. What is the cost, number 5 of client acquisition? What does it actually cost you to get a client? Because that’s important. It is so important to know, you know, what does it cost me to generate that client in the door? Whether it’s whether you’re doing traditional advertising, whatever the cost is you need to know that number.
How about this client retention? What is your client retention percentage? Who stays with you year after year?
Another one is how is your client satisfaction? This is your promoter score. You know, you’ll see this a Google keeps it. There’s ways that people can give a score, you know, and I was just again with this big health agency. And the way a lot of these agencies are working in hospitals, are working, based on their patient satisfaction is how they get the reimbursement dollars from the government.
Another one is how many qualified leads that you getting every month? And where are they coming from? And which lead generation mechanism is working best for you? These are important things to know.
Now number 9. What is your lead-to-client conversion rate? So you get a lead whether its outbound, whether social media, with pay-per-click, a referral, it really doesn’t matter. But from the time you get that lead, what is your ability to convert that into a client? What which would be a closing ratio.
How about this one number 10? How about your website traffic? Are you tracking that are we tracking hits on our website? Are we tracking downloads? I know for us when somebody downloads something off our website, we’re alerted. And I immediately can contact that person. You know, it’s the same thing with LinkedIn. Are you paying attention to views on LinkedIn? Are you paying attention when people actually look at your LinkedIn profile? That is data.
How about employee retention? Are you tracking what your employee retention is? Statistics say that if you lose a good employee that’s going to cost you minimum of one and a half years of his potential salary to replace that person. And so are we tracking these things? This is important data.
Specific to sales, because that’s what I do. Here’s some of the things I may recommend. I know what we do. We’re always tracking. We have 22 ways of generating leads. So we’re tracking where they’re coming from, how we get them. Then we track how many outbound calls Joe makes, actual dials. We track how many of those calls convert into meetings or course stories?
We track how many of those course stories convert into formal proposals. We track how many of those proposals move into contracts and deposits. And so these are things in sales and when I’m managing or coaching a sales team, I like to get these things on a slide deck and pull them up. So we have a visualization of real metrics. You know, you can only improve what you metric. So effective organization management is based on the foundation of effective measurement because, measurement determines what management or ownership will do. The data allows Joe and Dawn Pici to make decisions. So if you’re the head of a department, if you’re the manager of a department, if you’re the head of a company, if you’re the CEO, the CFO, if you own a company, you can only make your decisions based on information.
You get what you measure. Listen, you get what you measure. Most individuals and organizations don’t get what they want because, they don’t measure what they want. Okay, they measure things but it’s really not what they want. If you measure the wrong things folks you’re going to take your company further away than what your mission is and your strategic goals.
Wrong measurement triggers wrong activities. Wrong activities generate wrong results. No matter how you execute if you execute in the wrong direction. I remember like when I was young and it’s way back in the old days when he used to have NFL Today, know before ESPN. And and I remember the guy played defensive end for the Minnesota Vikings. Might have been Jim Marshall, that’s not bad for a memory. And oh fumble there was a fumble and he picked up the ball and went the wrong way and all his teams were yelling. Stop. Stop. Stop. You’re going the wrong way. If you measure the wrong things, you’re going to go the wrong way. Performance measurement is a lot more than tables of numbers and scorecards. It’s about perception, understanding, and insight also. In the end, when measurement is done well, it can have an enormously positive and transformational impact on your organization.
The context of measurement will largely determine its effectiveness. When measurement is used for the purpose of improvement rather than, make judgments or place blame. And what it’s focused on the right measurements it’s truly going to reveal what you’re looking for.
You know in the book by D,r. Spicer. He identified performance measurements he gave about 17 of them. I’m going to give them to you. It’s a really good read. The name of the book was “Transforming Performance Measurement”.
Number one, measurement will direct behavior. So when you have your measurements, you can alter the behaviors of your team.
Number two, measurement increases the visibility of performance. Who is performing on the team, who’s not performing on the team? Which teams inside of a company are performing better?
Number three, measurement focuses attention. So when you have a measurement you begin to focus your attention on improving that area.
Number four, measurement clarifies expectations. So when you’re measuring it truly reveals, can we hit the expected goal?
Next, measurement enables accountability. I think that might be my favorite. I’m not sure. I think what’s lacking in business today is accountability, but you can only hold people accountable if you have data and measurement.
Number six, measurement increases objectivity. So it’s not good feelings. It’s not something you’re not shooting from the hip, you have real data
Number seven, measurement provides the basis for goal setting. So as Joe and Dawn Pici are measuring everything it allows us to forecast even bigger goals.
Number eight, measurement improves execution. I know that when you are measuring and you see the gaps are the areas of improvement, you can improve those areas to execute better.
Number nine, measurement promotes consistency. Consistency creates momentum.
Number ten, measurement facilitates feedback. We all need feedback, but that measurement is feedback to us.
Number eleven, measurement increases alignment. Everything gets vertically aligned. I was I was up and like I said Georgia, I’m working with business owners I was talking about is everybody in your company on the same page? Do you have a lineman?
Number twelve, measurement improves decision-making. Remember the wrong data creates the wrong decision. Proper data creates good decision.
Number thirteen, measurement improves problem solving.
Number fourteen, measurement provides early warning signs. It’s sad that so many businesses go out of business because they didn’t know along the way where things were getting off kilter. I want to know right now. That’s why I measure every day because I don’t want to wait two weeks, three weeks, four weeks, to find out that our numbers are not what they should be.
Number fifteen, measurement enhances understanding. If everybody understands, these are our metrics, this is what we are evaluated on.
Number sixteen, measurement enables prediction. When I have my baseline measurements, I can do forecasting and predicting on where we’re going.
And number seventeen, measurement will motivate. Because people see numbers, they see the tracking, the question is, are we measuring? And I’m not putting you on the spot and putting all of us on this button. Are we measuring, what are we measuring, and what are we doing with the data?
So hopefully this has been a value to you. If you’ll do me a favor, you know, we’re giving out a we have two ecourses has that we’re giving out. We’re going to have a drawing. These ecourses normally are $200. We’re going to give away for one dollar.
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Thanks for listening. New episodes will air each Tuesday and Thursday. So make sure to subscribe wherever you listen to podcasts and give us a five star review. The Sales Edge is sponsored by Pici and Pici Incorporated. A firm which provides training, consulting, and keynote presentations. Empowering corporations and individuals to attract and retain quality clients, for higher revenues and growth. Make more money in sales, speak with Joe in person by calling 407 947 2590 or visit www.piciandpici.com