There are dueling aphorisms about business metrics:
“What gets measured matters”
“Not everything that can be counted counts”
As solopreneurs, we have to determine for ourselves how to measure the success of our efforts. Most of us know that a robust word-of-mouth referral network and consistent thought-leadership activities help keep new clients coming, but it can be difficult to measure the effectiveness of a wide range of marketing activities. And it’s tempting to measure what we do rather than what the outcome of that activity is. Having the right metrics means you are getting useful, relevant feedback as you are working toward a goal, so start with the outcome you want and work backward from there.
Outcome metrics (number of new clients or new clients, revenue, etc.) are used to judge whether your marketing efforts are effective; they are concrete, meaningful and directly related to the profitability of your business.
Activity metrics (number of social media posts, networking meetings attended, etc.) show you whether you are doing the things that you believe will result in the outcome you wanted; they keep you accountable for taking all the steps required. If you aren’t meeting your outcome metrics, look at your activity metrics and see what needs to be changed.
A useful analogy of the distinction between these two types of metrics is that an activity outcome might be “I will work out every day”, and the outcome metric could be “My clothes still fit”.* As anyone who has started a new habit knows, the best way to make a habit stick is to connect it to an outcome you want.
Since outcome metrics measure results, you need to consider what success looks like for you and your business. While everyone’s situation is different, most solopreneurs’ outcome metrics include:
- Annual revenue. Even if you aren’t aiming for a million-dollar business, you need a revenue goal to stay focused and to ensure your expenses are covered.
- Number of clients. Depending on one client for most of your revenue is a recipe for failure. If you don’t have a diverse set of clients and prospects, you are at risk of seeing your income drop to zero.
- Number of repeat engagements. It takes work to acquire a new client, and clients who only engage you once can’t sustain a business.
Other outcome metrics might include number of referrals, number of speaking engagements or average profitability of projects.
Once you know what outcomes you want—and want to measure, activity metrics can help you evaluate the success of your efforts. Make sure that each activity has a clear connection to an outcome—three new clients, 25% increase in revenue, or doubling your referrals, for example. Activity metrics you might use include:
- Number of networking events attended and, more importantly, number of contacts followed up with afterward
- Number of social media posts written and, just as importantly, number of comments and shares for each post
- Number of subscribers to your blog or followers on social media
- Hours invested in marketing efforts each week—at least twenty hours/week for a full-time business
For both outcome metrics and activity metrics, make sure that each measurement is meaningful and that you can take actions to change the number. Measuring something beyond your control is pointless; you have to take accountability for the action required to improve any of the metrics.
Are you finding it hard to come up with useful outcome and activity metrics for your business? Let’s talk!
* This analogy came from an AIIP Info Pro Cafe. AIIP members can see the recording of this Info Pro Cafe here.