How’s business? What you measure matters! I recently read a great article by Edmond Lau via Quora, titled “Pick the right metric to incentivize the behavior you want.” In this article Lau reviews Jim Collins’ story in Good to Great, regarding the importance of measuring the right metric.
Lau elaborates on the story of Walgreens’ CEO, Cork Walgreen, in his decision to measure the profit per customer visit, rather than the profit per store (which was a standard metric for their competition at the time). For Walgreens, this increased their stock price from $1 per share to a whopping $562 over the course of 25 years. Because they changed their paradigm to something outside of the industry standard, they realized significant increases in their revenues. By taking that information and choosing to purchase properties on convenient corners, Walgreens thereby increased the convenience for each customer which in turn directly impacted the revenues generated. Walgreens chose not to be just “good” but “great” by thinking differently about their business model and the metrics utilized to measure their successes.
At APPRO and CERRON, we utilize a variety of different metrics in our business. Take for example, my role in marketing which measures the number of people who read a blog post such as this, or how many people visit our website, which begins the process of client contact in the form of calls, emails and appointments. This article had me considering Lau’s statement, “…but the choice of the actual metric to focus on significantly influences the actions we take. The right metric aligns team efforts toward a common goal, that if achieved, increases the success of the product or organization; the wrong metric leads to efforts that might be ineffective or, even worse, counterproductive.”
What we measure, and don’t measure, truly matters, as Lau points out:
“Similarly, when setting metrics for ourselves, we should ask ourselves: If you could pick one and only one metric to systematically increase over time, what metric would have the greatest and most sustainable impact on you and your team’s effectiveness?”
At APPRO and CERRON, we pride ourselves in providing property solutions for our customers since 1987. One metric we measure and which drives our business, is the number of satisfied clients we have served and our repeat customers who continue to work with us year after year. Feel free to give us a call if you are reviewing the metrics in your business plan and find that a change in space is a possible solution. We would be happy to help walk you through an analysis to see if a change might make sense for you and your business. Contact us today!