Metrics

Metrics
As described in the previous section, Metrics are measures of quantitative

assessment commonly
used for assessing, comparing, and tracking performance or production. Simply put,
it takes whatever Measure in the organization’s data and applies calculations and
comparisons to them. Measures, in turn, are the raw numerical data. Any data item
that can be subject to the four basic arithmetic operations is considered a
measure. This is an important distinction, as data can come in many forms, and even
if a piece of data is purely numerical, it does not automatically mean that it is a
measure. For example, Employee Codes can be purely numerical to denote hiring
order. Even if it is purely numerical, it makes no sense to add up Employee
Numbers.
Metrics come in a wide range and can vary between companies and industries. There
are some
that are industry standards, but more often than not, they are customized to an
individual company’s
specific needs and outcomes. Executives, and managers, in particular, use them to
create strategic and tactical decisions in order to achieve their goals. Because a
metric can come from nearly any data point in an enterprise, its ability to state a
quantifiable target, and the company’s position in relation to that target at any
given point in time is one of the most important characteristics a metric should
have.
Generally, executives and managers seek to have a dashboard, where different Key
Performance
Indicators are gathered in the same place. These are specific metrics that help
measure a company’s
success. This helps simplify analysis and opens up discussions in strategy meetings
by having a single
interactive page displaying all the relevant metrics.
Commonly Used Metrics
Sales vs. Targets – one of the most universal basic metrics. It simply shows the
difference between actual sales numbers against the target figure. If the Sales
Figure is below the Target Figure, then something needs to be done.
Current Period Sales vs. Previous Period Sales – used as a measure of sales over
various periods of time. Due to economic forces like inflation, Sales Figures are
usually expected to grow over time to counter act it, however, it still depends on
the targets set during the planning meeting usually done near the start of the
company’s year. Examples include Year-to-Date Sales vs. Year-to-Date Last Year
Sales and Year-on-Year Sales Analysis.
Sales vs. Returns – when a product that has been sold is returned at an unsellable
state (rat bites, packaging is too deformed, water damaged, etc.) it will
automatically count as a loss to the company. This metric will allow the company to
monitor how much of the products sold actually get delivered without issue to its
customers. Too many returns on a particular product make and model might point to a
problem from the supplier/warehouse/delivery process or too many returns from a
particular customer might indicate a problem with that customer. This is separate
from the Returns vs Target Returns metric.
Sales vs. Invoice – for large companies, the sales process is more than just the
face-to-face exchange of money and goods between two parties. In this way, we can
think of the Sales numbers as the “expected sales” value, while the Invoice numbers
are the “actual sales” value that will count towards the company’s profits. There
is usually a time difference between the time an order is placed and the actual
billing of said order. Because billing will only be counted for actual
goods/services delivered, there will be instances where only partial billing will
be done while the remaining goods/services will be delivered on a later date. This
metric will help keep track of those partial billings so that 100% fulfillment can
be achieved.
Truck Utilization – distribution companies deliver products from their warehouse to
their clients. Using a truck for deliveries represent an expense in terms of labor,
vehicle maintenance, and fuel. Each truck has its own rated dimensions and maximum
weight rating. This metric will help maximize how each truck is used: making sure
that it is close to full capacity (in terms of dimensions and weight) and have
routes that will serve the most customers coming to and from the distribution
center.
Customer Segmentation – knowing the customer is one of the quickest ways to expand
a business’ earning potential. This metric will enable the business to know which
of their customers make up the bulk of sales. Customers can be segmented by Gender,
Age, Location, Industry, etc. Knowing the customer segmentation and the performance
of each segment will help create a more focused marketing campaign.
Hiring Rates – Hiring Managers and Staff are usually evaluated at the rate they are
able to process applicants from initial interview to final contract signing. This
metric will help them monitor applicants and how they get past each stage of hiring
to figure out if new hiring practices should be relaxed or be more stringent.
Occupancy Rate – measures the rate at which rooms are reserved in Hotels. This
helps the management figure out just how much of their rooms are used by customers.
At the same time, if expressed as a function of time, it will help determine lean
and peak seasons for the business, which helps set expectations and help ease
preparations when a sudden influx of occupants appear.
Service Level Agreement – SLA’s are used in IT Support Organizations to keep track
of support tickets and team utilization. It gives an idea of how effective the
organization is by getting the number and kind of tickets (from low priority to
show stopper) and the average response time. Each kind of ticket has its own window
wherein it will need to be solved. An effective organization is one where each kind
of ticket is resolved within this window. Any misses will open up discussion on
what exactly happened and what will need to be done to avoid such misses in the
future.
Lead Summary – a marketing campaign will have different ways to generate leads when
trying to drum up interest on a product and/or brand awareness. Methods include
internet ads, television ads, print ads, on-premise events, etc. Knowing which
method yields the most responses will help focus company resources in the method
with most impact. These metrics will typically be expressed from the Top Level,
that is, the total number for the whole company. They can then be drilled down to
multiple levels. For example, the Sales vs. Target Metric can be drilled down to a
Per Brand level to evaluate the performance of account managers, then drilled down
again to Per Item to see which items or SKU (Stock Keeping Unit, pronounced “skew”)
are actually turning a profit.

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Metrics

As described in the previous section, Metrics are measures of quantitative

interactive page displaying all the relevant metrics.

Commonly Used Metrics

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