In a not too distant past, the more it was invested (time, money, effort, etc.), the higher was the ROI (Return On Investment). Currently, the best management practices prioritize the maximum of results with the minimum possible capital spent, and the metrics have earned their space to perfectly support it. However, many leaders still make crucial mistakes in this regard.
The metrics illustrate the company’s performance in numbers as well as help you measure each action performed. They also help you determine behaviors and trends that are on the rise, making it possible to evaluate each activity in real-time.
Among the data generated, we highlight the key metrics to track the performance (strategic, tactical, and operational), the return, and market opportunities.
This is vital to the smooth running and growth of the company. Therefore, managers cannot fail. Following are the top 3 mistakes leaders make when analyzing metrics and what you can do to prevent them.
Three errors made by leaders on metrics
Nowadays, you can find the most diverse ways to consume content, such as text, videos, and podcasts, to name a few. Each of them brings interesting tips, but usually, they talk about the market in a general way. Therefore, it is essential that you adapt them to your business so that each action is really useful.
Now check out the three most common mistakes made by leaders on metrics.
1 – Give too much importance to the theory
Of course, it is essential to have some data that illustrates the current market and to understand how the scenarios can help in the main decisions of the company. However, more important than that is to develop actions that will generate positive results.
For instance, let’s say that the landing page conversion rate for companies of a particular segment is 2%. Often, what is done is to try to reach this goal by simply reproducing the actions mentioned in the contents consumed on the internet, as if they were a cake recipe.
In this way, the manager is only reproducing what others have already done, resulting in nothing of note. Remember: The fact that it has worked for another business does not mean that it will work for yours
On the other hand, even if they are not strictly followed, these metrics may be necessary to give you a parameter to think about differential actions for your business which could increase the chances of exceeding the benchmark by 2% and standing out from the competition.
2 – Obsession with only one or a few metrics
Another mistake leaders typically make concerning metrics is focusing on one or a few of them and transforming them into a mantra for the company, without deepening the analysis to understand what the metric is really indicating.
An indicator is only a warning sign – a classic example of that is a car dashboard warning light. It does not explain the error and actions that should be taken, but it warns you that there is something out of the ordinary with your car.
Without a broad understanding of the metrics, actions and projects will be erroneously prioritized and/or poorly designed.
To give an idea, when you track some metrics, it’s generally related to one of these aspects:
- General market
- Your segment/industry
- Specific situations of your company.
Thus, it is almost impossible to make a well-informed decision based only on the first metric analyzed. As we know, a lot of decisions are made by combining metrics with intuition and knowledge of the day-to-day business.
For that reason, it is important to question the relevance of the metrics and other analyses which must be made in order to have a better understanding of a particular behavior. Due to time constraints, choose the analysis that will most help you in the decision-making and also use your knowledge and intuition for greater assertiveness. After all, no one knows a company better than its owner.
3 – Let pre-judgments affect key decisions
It is natural for human beings to judge before they knowing all the facts so they can do everything in order to make decisions quickly. In ‘Influence: The Psychology of Persuasion, Robert Cialdini calls it a mental trigger. Perhaps that metric that is not the most interesting is the one that will bring the best results to the business. And do you know why that happens?
Because all our decisions are made, first in the unconscious, and only then come to consciousness, they are usually accompanied by a rational justification. To build this rationality, you have to look at all metrics first and then after prioritizing the most relevant one. Perhaps that one which that, in the first moment, at first did not seem is not even the most interesting will be could be the one that will provide you with will supply information to maximize the results for your business.
At this point, it is convenient to analyze each one of them cautiously and free of any bias – which will require an effort (yeah, I know it is hard), since it is natural for the human being to judge before making a closer observation.
An excellent way to minimize biases and prejudgments is by sharing your the analyzes and discussions with coworkers with different backgrounds. That is what will prevent leaders from making mistakes concerning metrics and bring out the best outcomes possible: better management and exceeding results.