As a business owner and consultant, one of my favorite phrases has been “how do you know?” For example, I might ask a CEO of a business that I’m consulting with about their overall level of employee engagement and after they give me their subjective assessment, I typically spring the follow-up question “how do you know?” The purpose of my question is not to put that person on the defensive, but merely to help clarify the data upon which a person’s conclusions were formed.
The question “how do you know” is one I apply to my own business on a regular basis. For example, I might reflect on the overall health of my business and give it a letter grade of a B+ or an A- suggesting there is always room for improvement. When I drill down deeper on the evaluation, however, and ask how do I know it’s an A- and not really an F-, I start to define the metrics upon which I can more objectively forge my opinion, worse yet I find many metrics that are lacking.
Let me give you an example from a small business client of mine that brought me in to increase customer loyalty. Now the obvious starting point would be to determine the loyalty of existing customers and to look for market segments such as highly loyal, merely satisfied, and even dissatisfied groups. So I did the obvious and asked for a current assessment of customer loyalty. The business owner responded, “I think we have a pretty loyal customer base.”
You guessed it, I then responded “how do you know.” His reply was, “I see a lot of the same customer faces in here on a regular basis.” Now it gets annoying to keep asking the same question over-and-over again so I simply varied my “how do you know” question and challenged his follow-up response by saying “which faces, how frequently?” Without belaboring the point further, suffice it to say, we needed baseline data on customer loyalty before we could even begin to know how or with whom to improve it.
Not being a person who loves numbers as much as I do people or ideas, I have come to understand the critical importance of metrics in business. In fact, I see many business owners make one of three mistakes when it comes to collecting helpful data to answer their important “how do you know” questions:
they rely on subjective feelings and collect very little data
they feel helpless to collect data because they don’t have an optimal measure, or
they collect so much data, that it can’t be analyzed meaningfully
To that end, I offer the following challenge to you! Take one “how do you know” question that is begging for data. Realizing that the need for perfection can paralyze action, what is a beginning way to collect some data? Not the perfect way but “a preliminary way.” How can you keep the data collection process and the data outcome on your radar, so you can use the data to answer your critical question?
It can be as simple as evaluating how quickly your team responds to your clients’ email by having a staff member create a log for the time/date the email was received and the time/date the response was sent (obviously tech solutions are much more ideal) but if email response times are important, even a basic manual approach to collecting performance data is a big step in answering the question “how do you know” how quickly you responded.