Hummingbird’s 2021 research initiative revealed that Metrics Masters have the best understanding of their company’s customer journey, keeping their fingers on the pulse of analytics. These data experts do the most measuring, compiling the most information. They want to understand how many leads convert to sales, what kind of return the latest ad spend generates, and how successful their organization actually is… based on the numbers.
If you remember, Brand Believers and Disengaged Doubters were the other groups among the marketing decision makers we surveyed. Brand Believers are enthusiastic about the benefits of a strong brand while Disengaged Doubters are less likely to think about branding often or base their marketing communications on brand strategy.
Although we found that Metrics Masters focused more strongly on the numbers, we also discovered that all the organizational leaders share a common focus when measuring the success of their organizations.
In this post we’ll take a closer look at what that focus is — revenue, return on investment (ROI), and growth — and why a holistic focus is a more accurate picture of business success.
Organizational Focus When Measuring Success
It’s no surprise that Metrics Masters keep their sights set on ROI and conversions. They’re the numbers people, and they’ll always have the data to prove their position.
But other organizational leaders also zero in on components with numbers. Perhaps it’s because of how easy they are to measure. Here’s a picture of what executives often concentrate on:
Revenue – Every business leader is keeping a watch on revenue. It’s the top line on your Profit and Loss Statement (P&L) — how much money your company is bringing in.
ROI – ROI is a top priority for businesses of all sizes. How much revenue has your initial investment into the business generated? How much did your most recent rebranding or the latest marketing campaign generate?
Growth – Is your organization growing year after year? If so, how much? Bottom line — did you make more this year than last? Has your team grown, too?
It’s easy to understand why an organization’s leaders might stop here when trying to understand whether their company is hitting the mark. It’s important to know the numbers. But numbers don’t tell the whole story; and revenue, ROI, and growth aren’t the only measures of success.
Why a Holistic Focus Contributes to Greater Success
At Hummingbird, we believe a holistic focus offers a greater opportunity for success.
Let’s say your company focuses on ROI for particular tactics — a rebranding, a digital marketing campaign, a targeted mailing. And last year, every short-term initiative delivered more than you expected. Immediate sales exceeded expectations, and enough leads came in to fill the sales funnel. We’d call those wins, and in theory… BIG wins.
But let’s think about the tactics where ROI can’t easily be measured — consistent content delivery that adds value for your audience, employee bonuses that keep them happy with their work, networking opportunities that strengthen relationships with clients and potential clients. The ROI on these strategies isn’t a specific number, but if your organization is winning in these areas, those are also BIG wins.
“If you look at traditional organizations that are publicly traded on stock exchanges, their definition of success is very narrow. It’s quarterly profits that are happening now — that’s it. Their measure of success is not the long-term health, viability, share value, or survivability of an organization.”SHIFT314
So, what is the solution? We’re not advocating throwing out the numbers or skipping out on reviewing revenue, ROI, and growth. We’re suggesting keeping an eye on those while also looking at a bigger picture when determining your company’s success.
Sometimes as organizational leaders, you may have a hard time defining what success truly is, and that’s understandable. Here’s what we’ve learned about it at Hummingbird.
Our clients who are most successful are looking holistically at their overall success, and they attribute it to success at every level… in every department:
- Sales – The lifeblood of any business, sales contribute to a company’s growth. What’s the closing rate for your sales department? Is it improving over time?
- Marketing – Marketing strategy contributes to growth with a strong plan for realizing a business goal or marketing objective. Only time, money, and imagination can limit a company’s marketing tactics.
- Human Resources – One of the most important departments in any company, human resources’ success in attracting, hiring, training, and retaining employees impacts the entire organization.
- Customer service – With every customer interaction, your company must deliver on its brand promise — the value or experience your customers can expect whenever they interact with your company. Successful customer service contributes to brand loyalty.
- Operations – The backbone of any business, operations ensures the company runs efficiently at every stage.
Our most successful clients don’t just look at marketing’s success at driving leads because the picture is much broader than that. Conversions and loyalty depend on:
- The sales team being able to close
- The employees being happy and, therefore, fulfilling the brand’s promise
- Customer service issues being resolved quickly and well
- Operations running smoothly.
All of these things combined are a part of a company’s success, not just marketing driving leads to sales. Marketing can do their job perfectly and drive a lot of leads, but if the ball is dropped in the sales cycle or later in the cycle of fulfillment, there is a failure, and overall sales numbers will reflect that.
That’s why a holistic focus is so important.
What EBITDA Is and Why It Matters
A holistic view of success also includes a company’s EBITDA multiplier. EBITDA often falls at the bottom of the list of company priorities, but when we’re thinking holistically, it ranks a lot higher.
“EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization and is a metric used to evaluate a company’s operating performance. It can be seen as a loose proxy for cash flow from the entire company’s operations.”Corporate Finance Institute
Why use the EBITDA multiplier as a measure of a company’s success? Because it contributes to the bigger picture, providing a broader view of an organization’s value.
Revenue, ROI, and growth are important numbers to keep in mind when evaluating your organization’s success. But remember to keep EBITDA in mind, too, as you widen your lens for a broader view that includes every level of your organization.