In Australia in 1860, two men, Burke and Wills, led an expedition as ambitious as the Lewis and Clark expedition in North America. But this one ended in tragedy.
After weeks of exploration, the main expedition arrived back at the base camp only to find that it was deserted. There was a sign carved on a tree that read “DIG 3FT NW”. The sign meant that they should dig three feet northwest from the tree to find the provisions that were buried there.
The provisions were there, the signs were there, but Burk and Wills did not understand what the signs meant and so they died a horrible death from thirst and starvation.
In business, entrepreneurs are like explorers. Lewis and Clark were successful. They survived. Burk and Wills were not. They died. Who do you want to be like?
This same tragedy gets repeated with businesses today. The way to survive it there, but business owners fail to read the signs. Those signs are called key performance indicators, or KPI’s. If you are not measuring you are not managing. Make sure that you are measuring right things the right way. For example, if a customer is worth $10,000 a year and average lifecycle is 5 years, then they are worth $50,000. So if it costs $1,000 to get a new customer and $200 per year to retain them it is a great deal. There are several KPI’s here. Cost of acquiring a customer, cost of keeping the customer, sales value of the customer per year, lifecycle of the customer. And notice that it costs 5 times to win a new customer verses keeping a customer.
What are the activities that must take place in the marketing and sales cycle that can be measured? Advertising cost, number of responses to advertising, appointments set, requests for quotation, number of sales, sales revenue. These are all opportunities to measure what is going on in your process. Develop meaningful targets at each stage in the process and compare them to your current performance. If your people are not meeting these KPI’s you need to find out why. These are signs that your business needs improvement.
You have an advantage that Burk and Wills never did. They did not have someone that they could ask to help them understand what the signs meant. You do. There are coaches that you can ask for help. The signs are there, and KPI’s can be set up so you can measure right things the right way, and avoid the equivalent fate of Burk and Wills.
Keith Center is an accredited associate of the Institute for Independent Business and certified Guerrilla Marketing Coach. Over the past 30 years he has done work for small and large organizations such as Toyota, IBM, GE Capital, Fujitsu, International Harvester, and Digital. Growing sales volume, a liaison between corporate and university research, raising over $16M in funding for one organization.