Evaluating the Performance Metrics

Evaluating the Performance Metrics

Lynn Thornton

Northcentral University

Evaluating the Performance Metrics

In today’s economy, businesses should be able to demonstrate the efficiency and effectiveness by the use of metrics and any other processes and standards. However, to be effective in every action, the business competitiveness and sustainability of the companies of their market, it is important to have the right appropriate and functioning metrics for measuring effectiveness. Finally, in this paper there will be a discussion on the importance of metrics, discuss five metrics to measure innovation, discuss five metrics to measure the marketing strategy, and recommends the appropriate metrics for the company. (Solcansky, Sychrova, Milichovsky,

Metrics

Importance of Metrics

        The importance of metrics is to see the levers of innovation for the driving behavior and to help quantify, compare and interpret own performance. For instance, 3M and Google have used the noteworthy 10% of employee’s time is dedicated to experimentation with new opportunities. (Kaplan, 2013)

Five Metrics of Measuring Innovation

        In the framework of innovations metrics, the best solutions create simplicity from complexity that assumes there is successful innovation results from the synergies between complementary success factors. Furthermore, there are 92 metrics for innovation but there will be coverage on five of them. Kaplan said that there were three main categories of metrics that were used the most often and they are return on investment, organizational capability, and leadership. The return on investment address two measures and they are resource investments and financial returns. ROI gives innovation management fiscal discipline to help justify and recognize the value of strategic initiatives. Next, organizational capabilities focus on the infrastructure and process of innovation.  For example, the capability provides the focus on the initiatives that are geared toward building sustainable approaches to invention and re-invention. Third, leadership address the behaviors that the senior managers and leaders must exhibit to support a culture of innovation within the organization. For instance, P&G uses the organizational capability input metric focused on the percentage of external sourcing of ideas and technology as a way to drive it Connect and Develop strategy for their open innovation (Kaplan, 2013). Fourth, there is the impact on brand and image which is the idea that they accelerate the acquisition of customers, contracts, and clients. It is measured by the “rate of new customer acquisition and sales to new customers. However, it focuses on the opinion that customers have for any business. Finally, there is the impact on the culture of the business. Consequently, this means the speed of innovation project completion increases yearly, the number of people who are participating in all of the aspects of innovation efforts increases considerably, and the quality of the contribution by every member increases steadily and in time more of the people will be giving more valuable ideas and efforts in the innovation process. (Morris, 2013)

Six Metrics of Measuring Marketing

         In the process of measuring metrics for marketing, these will help businesses to quantify, compare and interpret their performance from any marketing activity. However, there are some principles that should be used in the process of measuring the marketing. For instance, if you cannot measure something then you cannot understand it, if you do not understand something there will not be any control over it, and if you cannot control something the improvements will be very scarce. (Solcansky, Sychrova, & Milichovsky, 2011)

        The main six categories that the marketing metrics fall under are the financial indicators that help with paying attention to turnover, profit margins, and profitability ratios. Then, there is measuring the market which entails the market, advertising, and the promotional share. Third, measuring customer behavior that distributes with loyalty, penetration, and the number of new acquired customers. Next, measuring the movement of customers dispenses with customer satisfaction and the ability to recognize the brand. Fifth, the measurement of direct customers which exchanges with distribution levels, profitability of provider and the quality of service. Lastly, measuring innovation to the number of new products and the brand equity. (Solcansky, Sychrova, & Milichovsky, 2011)

Recommendations

        In all of the articles that has been read, they all say that there is no wrong way to do metrics but pick them according to the business model and strategy you create. However, there should be at least one metric from each category that will be discussed. In order to have a successful transition, there must be a very strong leadership commitment and buy-in from all stakeholders. (Patterson, 2015)

New-business metrics- these metrics are related to acquiring new customers and closing new deals related to the customer targets defined in the company’s strategy. Some of these metrics include new acquisition of customers, net new deals, attach rates, upgrades, market share, and revenue. (Patterson, 2015)