When defining metrics we might want to use as KPIs, it’s important to look at both Outcome and Performance.
Let’s take a look at the difference.
Outcome Metrics look at things that are already done. Outcome Metrics tell us either how well something went or how much trouble it’s in. These are called trailing indicators because they take a look after the performance is done.
Great examples of Outcome Metrics are growth metrics. Things like:
- Growth in the number of sales closed this month over previous month.
- Growth in Monthly Recurring Revenue (MRR).
- Growth in Website Unique Visitors.
- Growth in Facebook Engagement
But don’t think that only Growth metrics are Outcome Metrics. A lot of metrics are outcome metrics.
Performance Metrics are different than Outcome Metrics in that Performance Metrics measure the activities and behavior that lead to outcomes. Let’s take a look at that.
Let’s say we’re looking at the Growth Metric of Number of Sales Closed this month and we see it’s up over last month. What activities and behaviors do you think might explain that?
Here are a few suggestions:
- Average Calls of Contacts per Lead in the month – On average, the more times we contact a Lead and provide values, the more often we’re going to close a sale.
- Number of leads generated – It stands to reason that if we have more leads in our pipeline, we’re going to generate more sales. Right? I hope. If the universe is still turning on its axis. (And 2020 is over. May it rest in peace.)
- Number of Quotes Generated – If we’re not asking for the sale, we don’t make the sale (also, btw, coffee is for closers).
All of these measures and metrics are looking at activity, or performance. All of these elements of performance lead to the outcome of “Sales.” So if you’re looking at the trend of these activities, you can “know” something about the Outcome Metric “Growth in Sales.”
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Performance Metrics Predict Outcome Metrics
Ok, actually, you don’t strictly know anything about the Outcome Metric “Growth in Sales.” But you sure can predict it.
If you and your team have more leads, are providing more value, and are offering more proposals, are you going to make more or fewer sales. Yes, more. Please and thank you.
And that’s the point. If you’re keeping a close eye on Performance Metrics – and if you’ve identified the correct Performance Metrics – it’s just about as good as keeping an eye on Outcome Metrics because the one is a great predictor of the other.
Pretty cool, yeah?