The 6 Most Important Metrics for a Growing Business

For those of you running, or hoping to run, or trying to run, growing and profitable businesses, there are only six metrics that you should be looking at:

Customer retention – What percentage of your best customers are you retaining? Thriving organizations retain more than 85% of their best customers every year.

Employee retention – What percentage of your top people are you retaining? You should be well above 90%.

Revenue per customer – Are your customers spending more with you each year? This metric should be increasing every year.

Profitability – Is your profitability increasing even if your revenues are not? This metric should be increasing every year.

Customer base – Is your customer base growing (meaning you have more customers this year than you did last year)? This metric should be increasing every year.

Vitality index – What percentage of your revenues come from products or services created in the last three years? World-class organizations have a Vitality index of greater than 30%.

How are you performing against these metrics?

The Operational Elegance Index

In a previous post, I introduced the concept of Operational Elegance. Here is an assessment I have created called The Operational Elegance Index. This Index helps you assess how you can accelerate growth and maximize profitability.

Andrew Miller-The Operational Elegance Index

After you have completed the assessment, I would love to hear your feedback on its’ usefulness and discuss how I might be able to help you raise your Index score.

Accelerating Growth and Building Business Wealth

I have partnered up with my friend and colleague Phil Symchych to provide you with strategies on how to accelerate the growth of your business and build more business wealth. Read our practical and applicable insights in the documents below.

Three levels of Operational Transparency (Andrew Miller)

Three steps to building business wealth (Phil Symchych)

Two Questions that will change 2016 for your organization

Many organizations have a challenge prioritizing initiatives. Here are two questions that will help you find the most important priority for the year:

  1. What is your ideal future state?
  2. What is the fastest and most effective way to reach it?

Once you have answered the two questions above, you will have identified your one priority. Then prioritization becomes easier. Does the future initiative you are proposing allow you to achieve your ideal future state faster and more effectively than what you are currently doing?

Let’s use this real live client example. You are a $250 million organization and your ideal future state is to grow your customer base by at least 10% and increase the retention of existing customers. That answers question #1.

So what is the fastest and most effective way to grow the customer base and retain current customers better? In this case, it was identifying the organization’s ideal customer. Who would most benefit from what this organization had to offer and would be willing to pay for it?

Once we identified the ideal customer (the target market), we implemented strategies to attract and retain them. Every idea and initiative tied back to attracting and retaining that ideal customer group. Results were a growth in the customer base, an increase in customer retention, higher revenues, and increased profits.

This will be one of the concepts I cover in more detail in my free workshop on accelerating growth.

Finding your one priority allows you to focus your entire organization on the opportunity that can offer the greatest impact in the quickest amount of time. How did you answer the questions above?

Why Cost Centers Should be Extinct

In this day and age, can any company afford to have a department or division that doesn’t contribute to the top- or bottom-line? The concept of a cost center makes no sense. “Let’s develop a department where we incur costs and have no ties whatsoever to improve the overall financial performance of the organization. We will have no financial measures that help the overall company improve.”

So here’s where you say, “But not all departments can be tied directly to the financial performance of the overall organization!” Wanna bet?

IT departments may have developed some great new technology tools to manage information in the company. Couldn’t that be commercialized and sold?

Call center representatives, who talk to customers ALL DAY LONG, could be trained on all of your company’s offerings and help identify new customer needs that can be filled with those products and services.

Repair people and technicians can be trained to provide better solutions to customers when they are in the field. Procurement departments can negotiate better relationships with key suppliers. Finance departments can find more cost effective ways to report on financial information.

And any department can contribute new ideas to help with customer acquisition and retention, or revenue growth, or increasing profitability.

I think you get the point. Creating cost centers is an out-dated idea that needs to become extinct. Are you one of the people giving it CPR to keep it alive?

Is your operational excellence function acting like King Midas?

I just delivered a teleconference to operational excellence executives and told them four ways to create a thriving operational excellence function in their organizations:

  1. Act like King Midas. Everything the operational excellence department touches should turn to gold. The job of an operational excellence department is to make the organization better, not support it.
  2. Lead Them Through the Tunnel. Show the organization the light on how to better prioritize so that only the best strategies and ideas are being worked on.
  3. Be The Fountain of Youth for Ideas. A thriving operational excellence function is the constant source of new ideas and new opportunities. It helps make the intrinsic extrinsic by identifying best practices and key pieces of information and figuring out how to share and replicate it across the organization.
  4. Be a Jack of all Trades and Master of All. An operational excellence department needs to prod, poke, and provoke. It needs to be part strategic adviser, part therapist. Part provocateur and part voyeur. It needs to see things differently and provide new insights and perspectives.

A thriving and valuable operational excellence function will help the organization generate revenue, attract and retain customers, identify and implement new ideas, and maximize profitability. If your operational excellence function isn’t doing that, then you are doing something wrong.

Winning Less Than 50% of RFPs? Here’s why…

Most of the organizations I talk with and work with have a RFP win rate of no more than 30%. That means that for every three RFPs they respond to, they only win one of them. Sounds familiar? And we all know how much effort goes into the submission of a RFP response.

Here are three reasons why your RFP win rates are so low:

  1. You respond to too many RFPs. You have no way of identifying a good opportunity vs. a bad one, so you respond to everything. I recently worked with a client to reverse this problem and the results were immediate – higher win rate, higher revenues. All because they focused on those opportunities they had the best chance of winning and that afforded the largest growth opportunities.
  2. Too many people touch the RFP response. If you mapped out all the people that contributed to the submission of a RFP response, I bet it would look like a spider’s web. There’s no way all of those people are adding value and enhancing the response. I helped a client look at their RFP response process and helped them realize that, on average, 25 people touched a RFP response. I also helped them realize less than half of those were adding any value. Submission effort went down and win rate went up after implementing some changes around this.
  3. You don’t know what the customer really needs. Many organizations read the RFP document and respond to what is asked for. Don’t let the potential customer define your solution. You are the expert. You have done this before. Ask a lot of questions. Set up a meeting to find out their objectives. This can be extremely effective when done before the RFP ever comes out. I have helped a few clients be more proactive in this area and not only did they win more RFPs, but those RFPs were bigger than originally planned because my clients engaged in a discussion with the customer around THEIR objectives. Thus, they were able to offer better solutions than what the customer had originally envisioned.

Increasing your RFP win rate requires a different mindset and approach to what you have done before. In my first meeting with one client I told them that if they wanted to win more RFPs, they had to respond to fewer of them. I thought the executive was going to kick me out of the office. 12 months later, they had doubled their win rate and grown revenue by more than 10%. That is the reason why this is so important!

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