In a world awash in digital data, defining and redefining the metrics that matter to your business is essential to keep pace in today’s rapidly changing marketplace. In a recent discussion with some of my Acceleration Economy colleagues, I was spouting off about what digital metrics I thought will matter the most in the future and they challenged me with “ok smart guy, give us the list!” So, with the philosophy that making predictions is really the process of thinking more deeply about a subject and perhaps inspiring others to do so…here we go.
Defining the Metrics that Matter
Let’s start with a framework that will help you define the right metrics for your business. The framework I use most often is a variation of the “Flywheel Effect” popularized in Jim Collins’ seminal book “Good to Great”. The concept is to start with the core digital data that is created by the flywheel of how your business makes money. In essence, focus on the metrics that reflect the direct interaction between your customers and your company. Most often these are some combination of new customer growth rate, retention, and growth of existing customers and margin. Most companies today are well beyond this definition stage and you may be as well. At the same time a re-examination, I’d suggest quarterly, of the metrics your business measures and how broadly they are distributed is a good best practice to adopt. Ok so on to the predictions…
Digital Metrics to Measure in 2025
- Customer Usage. While metrics that reflect customer satisfaction, customer success or customer advocacy like NPS can be helpful, they can also obscure the early signals of customer dissatisfaction. SalesForce.com has been a leader in cloud-based CRM and other enterprise applications for over a decade. As SF.com’s business grew they invested heavily in a customer success team. This group was focused on customer renewal and upsell as the primary metrics that mattered. Over time they found however that these metrics were not predictive of customer retention. What they discovered was that customer usage was the metric that predicted customer retention. With this newfound insight, the company shifted how they compensated their customer success team to customer usage and found that retention rates rose. Where you are able, start to track metrics that reflect how much, or how little, your customers are actually using your product or service. Customer usage will become a key metric that matters by 2025.
- From Interest-to-Invoice. Most organizations have a clear line of sight into the metrics that measure quote to cash: how many quotes are going out and how many of them are we closing. A key metric to measure in 2025 will be “interest-to-invoice,” which broadens the lens to measure your marketing, sales, and customer retention efforts so you can adjust as needed. Given the silos in many organizations today, critical data on how prospects are engaging with your marketing, on your website, or with your sales teams, is disconnected from data on quotes and sales wins. Not unlike customer usage, measuring and connecting the digital data from initial prospect interest to reflect the full customer continuum will allow you to steer your marketing and sales more effectively.
- From Digital Transformation to Business Model Transformation. Every business today is generating an enormous amount of “digital exhaust”, much of it going unused. Within this data may be signals of a new business or new business model. In the manufacturing market, we are seeing traditional industrial manufacturing companies develop new business models, built around on-demand or manufacturing-as-a-service models. Disney+ created a multi-billion dollar business in a matter of months, by leveraging its extraordinary library of content and delivering it as a digital subscription service. Amazon took its largest expense, a massive and growing investment in technology, and turned it into a profit center by creating AWS. Mining digital data for new business opportunities or new business models will become a key competitive advantage by 2025.
- Your Customers Jobs-To-Be-Done. Your customer probably has a good sense of the job they can accomplish when they buy your product or service. The reality is, however, your customer has a broad range of jobs to be done that relate to your product or service. At thomasnet.com we did digital surveys to better understand the range of related jobs users had when they were sourcing suppliers on our platform. Turns out there were over 263 related jobs to be done when it came to supplier sourcing! This data became our guide for product and feature development, which led to a growth of 2X in registered users over the next 18 months. Data on the jobs-to-be-done related to the core product or service a company offers will become a key digital metric that matters by 2025.
What metrics that matter do you think will be key by 2025? I’ll revisit these in 2025 to see if my predictions come true!
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