Key Business Indicators
Transcript:
Stephen Semple: Hey, everyone we are going to talk about Key Business Indicators. I’m Stephen Semple. I’m a Wizard of Ads Partner from Toronto, Ontario, was just down here attending a Young Writers Workshop that was actually, one of the instructors was my buddy here, Gary.
Gary Bernier: Hi, Steve. I’m Gary Bernier. I’m also a Wizard of Ads Partner, and yeah, Steven and I were down here for the Young Writers Workshop, and today, we’re going to talk to you about key business indicators. Steve, pretty much everybody measures revenue. They look at their month-end revenue, which happens at the end of the month. They look at this month versus last month. Maybe they look at this month this year versus this month’s last year.
Stephen Semple: That’s a pretty bold maybe.
Gary Bernier: Right, but revenue is what you and I refer to as a trailing indicator.
Stephen Semple: Yeah. What Gary means by trailing indicator, and this is where everybody gets caught, is, if you think about the sales cycle, there’s you get a lead, and there are all of these things happen which result in a sale, so it’s the very last thing that happens, and it’s … Hey, sales are important, but it doesn’t tell you where you’re going or where the problems are. It just tells you where you’ve been. I know you’ve developed some really awesome indicators that we can all use for helping us get a better idea where we are in our business, so where should we start when we want to start thinking about that?
Gary Bernier: Right, and a couple of weeks back, you did a segment on executive dashboards, and this is some of the information that we put into those executive dashboards. You mentioned the tools, but this is some of the data that we then pull out of our customers’ sites and feed into those tools to build those executive dashboards.
Stephen Semple: Yeah. When you’re doing an executive dashboard, what you want to do is, you want to figure out six or eight items that you’re measuring and keeping an eye on that you can actually impact that give you a good indication of the health of your business, and most definitely a couple of those indicators you want to be much more leading indicators, not, so that you can start making adjustments of course or identifying problems long before they arrive.
Gary Bernier: Right. One of the things that people talk to us about is the measurement of marketing, and yet we do these bonding campaigns, and we use the radio. We’ll use billboards. We’ll use television, and we’re putting a bonding message out there, but yet we want to measure our results. This is why the leading indicators become so important to us is, how do you know whether the message that you’re running is actually being heard and doing something?
The first leading indicator that you can look at is your web traffic, because most likely today, if you’re doing a radio ad, you’re closing with, “And visit dub dub dub whatever dot com,” and so people are then driven to the website to pick up the phone number, or the directions, a little bit more information before they either pick up the phone and call you or come in, right?
Stephen Semple: Let’s face it today if it’s a major purchase, so if it’s something that has any sort of significant dollar value or emotional investment into it, what are people going to do before they come to your store or give you a phone call or do any of those things? They’re going to go to your website. The stats show that. It’s like 80% of people visit the website before making a purchase.
Gary Bernier: Right, so if your marketing is driving to your website, your first leading indicator is your direct search and your organic search numbers. We track and log those numbers as our leading indicator, so if those numbers are going up, is that a good …
Stephen Semple: I would think it’s a good thing.
Gary Bernier: It’s a good thing. That means there are more people getting to your website, so if you drive and direct search, one of the bonuses these days is, that’s the number one dial that you can influence in improving your SEO rate, so if the bonding campaigns that you’re running are driving your direct search number up, that’s helping you twice, because your SEO rankings are going to go up as well, which means more traffic to the website.
Stephen Semple: The website. Yeah.
Gary Bernier: Your organic search and your direct search numbers moving up, staying the same, or going down, is one of your leading indicators because that’s usually the first touchpoint for a new prospect coming into the business. Right?
Stephen Semple: Yeah, and we’ve seen over and over again with customers where we launch a new marketing campaign, and very shortly after that new campaign, or addition of a campaign, or the expansion of a campaign, we see a lift. We see a lift in direct traffic, but that’s the important thing is, is that you want to just not be just looking at your website traffic, but it’s direct traffic. What’s the difference between just regular traffic and organic and direct traffic?
Gary Bernier: Okay. In analytics, if you actually pull up your own analytics, you want to go down to where it says “acquisition,” and you want to look at the acquisition methods. It’ll break them out for you. Direct search is when somebody types in your URL and comes directly to you. There really wasn’t a search that took place. An organic search will happen when somebody’s maybe typing in “air conditioning” and coming to you, or your company name, but not with the dot-com on it, and launching your site out of the search results. Direct is when they come directly to you, and the organic search is when they’re doing the search to come to you. Again, those are the two numbers that if you’re doing a big marketing campaign, those two numbers should see a lift.
Stephen Semple: Okay. Lift those. Okay, so that’s the very early leading indicator. What else would you recommend people take a look at as a good leading indicator?
Gary Bernier: All right, so from your website, you may have a form that they can fill out to engage with you, but most likely these days, we see people put their 800 number, their phone number there, and what you’re measuring then is the number of calls that are coming in, so you want-
Stephen Semple: how many people pick up the phone and give you a phone call?
Gary Bernier: When I say that, I mean all the phone calls. The easiest thing to measure is your total call volume. Don’t worry about the breakdown, the wrong numbers, the … Don’t worry about any of that. Just watch the overall call volume, so if there are more people coming to my website, in theory, there should be more people picking up the phone and calling me.
Stephen Semple: Right.
Gary Bernier: Right? I’m trying to watch the ratio of my web traffic to my inbound phone volume to make sure that my website’s doing its job and that people are actually making that small leap from the website to my phone.
Stephen Semple: Okay, so we want to track inbound phone calls. We want to track web traffic, but how do we reconcile this whole situation of, if we’re creating a campaign that’s a more relational, less transactional, campaign, that in fact we actually might have calls dip a little bit? Couldn’t that happen as well?
Gary Bernier: That really depends on what style of marketing, so you’re talking about when we start working with a new client, and they’ve been doing a previous style of marketing.
Stephen Semple: Right.
Gary Bernier: Right?
Stephen Semple: Yeah.
Gary Bernier: Yeah. Yeah, so transactional marketing, or a transactional campaign, typically has a big offer in it and is driving people to that offer so that when you put a direct offer out there, yeah, you’ll see a spike, but what you’ll see right after it is, you’re going to see a big dip, because usually they’re time-limited, so they have no sustained.
Now, when we’re doing the bonding or the bonding campaigns, what we’re looking for is, we want that, and again, we use the trends, that you talked about in the other video, because what we want to see is, we want to see the trend moving up, moving up, moving up, moving up. We want to see an increasing amount of volume come into the website and an increasing amount of volume come into the phone center continuously. The reason, and why do we use the T-12 for that?
Stephen Semple: Well, it’s to take out our seasonality. What I’m hearing, though, is that really, the important thing is, okay, so we’ve now got two leading indicators, take a look at direct traffic to your website, organic traffic to your website, you want to see that lifting. You want to call your shot on your expectation of telephone calls. Really, that’s a lot of what this is, is setting your expectation and seeing if that expectation gets met, so what’s the next thing that we would potentially track in that?
Gary Bernier: You’ve got your web traffic. Then you’ve got, like I said, your web forms and phone calls these are leading business indicators. That’s to let you know if your website’s working. Well, now you’re into the middle of your business. Now, you’re firmly into your sales cycle.
Stephen Semple: So we’ve got that, so those are the ones would be your lead acquisition indicator.
Gary Bernier: Those are what we call the leading indicators. That’s at the beginning because that tells you if the marketing’s doing its thing. It’s driving more traffic to the web. It’s driving more phone calls. Now, if all of that traffic’s coming to the business, it’s about conversion.
Stephen Semple: Right.
Gary Bernier: Right?
Stephen Semple: Right.
Gary Bernier: This is about your … In the middle, it’s about measuring your sales conversion rate.
Stephen Semple: Right, and making sure that that’s healthy and then what pops out, in the end, is sales.
Gary Bernier: Are sales.
Stephen Semple: Right, so in the ideal case, you’ve got some key measurements you’re going to look at, which are your leading. You’re going to have some key measurements that you’re going to look at around sales conversion, and then, of course, we’re always going to track the sales that pop out on the other end, but if you can grab three or four things that are really key and keep your eye on those, then you know whether your business is healthy.
Gary Bernier: Where, well it helps you is, well, we’re filming this around the middle of July, and so you’re in the middle of the month. Are we on track? If you know where your leading indicators should be for the middle of the month, am I on track with my web traffic? Am I on track with my phone calls? If I’m on track with my web traffic and I’m on track with my phone calls, and my conversion rate stays the same, then by the time I get to add up all the sales, I should be in a good place.
Stephen Semple: Right. Well, and the other neat thing is, is that the earlier you figure these things out, the better the chance is that you can actually make a difference in the month or in the quarter or whatever period you’re in, but the other thing that’s really cool that both Gary and I have experienced when these things are put in place is, business becomes much more predictable, especially with businesses that have a little bit of a longer sales cycle, because now what starts happening is, is if, let’s say, for example, you have a three-month sales cycle, that leading indicator can start giving you a bit of an idea of what is your sales, what’s the delivery of your product or service going to look like three, four, five months down the road? It becomes a really great tool for the running of your business, and quite frankly, making your business a lot more predictable.
Gary Bernier: Yeah. Yeah. Taking a lot of the unpredictability out of your business.
Stephen Semple: Yeah. Anything else? Anything else you want to, that you think the listeners need to know when we’re talking about key indicators?
Gary Bernier: No. I think, again, they should go back and watch your earlier video on the executive dashboard, get those tools, get these numbers that we’ve talked about here and start plugging things together.
Stephen Semple: All right. Awesome. Thanks for your time and interest in this video on Key Business Indicators.
