It’s easy to get focused on numbers that make you feel good, but don’t do much to drive real business results.
Take sales, for example. If you close a ton of sales but price too low, or bring on the wrong customers who increase your operational costs and decrease employee morale, it’s a recipe for disaster.
Your organization might also get excited about some of the most visible metrics, which are good for top-line but don’t add up to much profit.
A client recently asked us to help them accelerate the number of events their facility hosts each month. They’re a private club. It became quickly clear that their events business – basically food & beverage – was about a 15-20 percent margin business. Highly visible and nice to fill the rooms.
But membership is an 80 percent margin business.
The rest of our meeting, as you would expect, started focusing on a very different objective.
Top line doesn’t matter unless it’s driving profit. Sales don’t really matter unless they’re driving long-term relationships with the right customers that maximize margin opportunity.
Focus on the right numbers. There aren’t that many of them. Nothing else matters nearly as much, and the right decisions across the entire business will get you there faster.