The Idea Behind Having One Core Metric
How many numbers or metrics should you be looking at on a daily basis? In any business, there are literally dozens or even hundreds of numbers you could look at. The answer is simple: One. Your business should revolve around just one core metric.
Of course, you should still regularly examine all the other metrics that tell you whether your business is running well or not. However, the business itself should revolve around just one, sometimes two numbers. No more than that.
==> Which Metrics it the Core Metric?
The metric you want to look at most is the metric that most closely correlates to your company’s growth.
In other words, let’s say you run a business providing email solutions. You could look at numbers like your number of subscribers, your total traffic, your conversion rates, number of emails sent, etc.
Rather than focus on any of these numbers however, you focus on the one number that you know most accurately reflects your company’s growth: The number of free trial users you’re getting.
You know that if you’re getting more free trial users today, your company’s revenues will improve next month. Other numbers could indicate strength or weakness in specific areas of the business, but this one core metric reflects the health of the company as a whole.
==> The Benefits of Focusing on Just One Metric
Why focus on just one metric?
First, it allows you to predict problems. If your core metric number is going down, you’ll know trouble is coming. It’s much better to anticipate problems with a core metric than to wait until it actually affects your revenue numbers.
It gives you a tangible metric that you can work on with your team. You have a standard to measure all your efforts against. You know when you’re successful and you know when you’re not.
Finally, you don’t have to spend time figuring out whether you’re doing well or not. If you have to correlate a dozen numbers to figure out if you’re doing well or not, it’s tempting to just skip over that process. If you’re just looking at one number, you’ll be able to track your progress on a daily or weekly basis.
==> Applying This Concept
Figuring out your core metric number takes time. It’s not something you can simply guess at. Instead, it’s something you have to notice over time.
You can apply this concept to your teams as well. Give each team in your business a core metric to measure their success by. Your operations department might have a core metric tied to cutting costs, while your marketing team might have a core metric tied to customer acquisition for example.
Discover your core metric as soon as you can in your business. It’ll help you steer your company in the right direction much more consistently.