It seems like such a simple question: What should you be doing to grow your business? And even more importantly, how can you know if what you’re doing is working?
The answer is in the numbers.
I get asked all the time what numbers I track–probably because I’m always going on about knowing your numbers. Honestly, it depends on your goals.
For example, I don’t track social followers. Right now, I’m not actively trying to grow my Facebook page or Instagram reach, so don’t spend any energy keeping track.
I am putting a focus on sales though, so I do track my daily sales figures, email list growth, and affiliate income.
Focus on the Right Things
In an interview with Matt D’Avella, James Clear (author of Atomic Habits) claims that too much focus on the numbers can be detrimental. He likens it to sports.
In every sport, the goal is to get the best score, but the players don’t spend all their time looking at the scoreboard. Instead, they focus on playing their best. When they do that, the score takes care of itself.
That’s true in business as well.
When you focus on doing the right things and doing them consistently, the score (your personal success factor, whatever that is) takes care of itself.
I think something is missing in this oversimplification though.
The score is what tells you if you’re doing the right things at all, or if you’re way off base (just to keep that sports metaphor alive). If you’re not paying attention, how will you know if you’re winning or not?
If you never look at the score, how can you possibly know if your blog is driving traffic or if the only person reading it is your sister? How can you know if your sales page is converting well or if only a fraction of a percent of your visitors to buy? How can you know if your email list is growing or shrinking? If they open your emails or just hit the delete button?
All of those things are directly dependent on you doing the right things consistently over time, but it’s the numbers that indicate how effective your actions are.
On the football field, the players have coaches to tell them what plays to make, and how to improve their performance. It’s the coach’s job to know how each action can be improved. In business, even if you have a coach to guide you, it’s still up to you to understand how your actions affect things like your profit margin and your cash flow.
You Control the Input, Not the Outcome
There are two types of numbers every business owner must know: Lag indicators and lead indicators. I believe what James Clear is saying is that we often put too much focus on the lag indicators, and not enough on the lead indicators.
In a nutshell, lag indicators measure the results, lead indicators measure the actions that drove those results. Here’s an example.
Let’s say you want to grow your Instagram following from 1,000 to 10,000 by the end of the year. You log in every morning and take a peek at how many new followers you gained yesterday.
That’s your lag indicator. It tells you what happened. You can’t go back and change it. It’s just a snapshot.
The lead indicator, on the other hand, is whatever action you took yesterday to gain new followers. Maybe you followed a few new people, commented on a few posts, or shared your Instagram with your blog readers and invited a connection. Those are the actions that matter and James Clear is right on this bit.
If you spend all your time studying your lag indicators (the number of followers you have) and no time at all looking at or focusing on your lead indicators (the actions you take) then you won’t reach your goal.
But it’s also true that if you spend all your energy on the lead indicators without paying any attention to the lag indicators, you may not get the results you expect. You can double-tap every photo in your Instagram feed, but will it result in more followers? Probably not, so counting up all those hearts doesn’t make sense.
Lead and lag indicators are partners. Prioritizing one over the other will slow your progress. You want to use them in tandem for the best results.
Choosing The Right Lead And Lag Indicators
Deciding where to put your focus can be one of the toughest choices for small business owners to make. We want to do all the things, to try all the strategies, to enjoy all the growth.
But there are only so many hours in the day, as they say, so something has to give.
Start by deciding on your goals. This is your lag indicator. Do you want to earn $100,000 this year? Have 10,000 YouTube subscribers? Get 30,000 visits to your blog each month?
Whatever your goal is, make it concrete. Notice I didn’t ask if you want to increase your revenue or grow your subscriber list or blog more often. None of those things can be measured, and lag indicators must be quantified. Otherwise, how will you know if you’re succeeding?
Once you know your goal, then it’s time to look at what actions affect that goal. This is your lead indicator. These are the things you do to drive that lag indicator number in the right direction.
For example, my goal this year is to grow my email list by 500 people every month. I track that growth every day by making a note of what my current list size is. It takes about 3 seconds to log into Active Campaign and jot the number down, and that lag indicator tells me if I’m on track or not.
But that number isn’t what’s driving the results. That’s just a measure of what happened.
To reach my list-growth goal, I need to also pay close attention to the lead indicators–or the actions that create the results I’m looking for.
Lead indicators for list growth might be:
- Booking podcast interviews
- Blogging frequently and consistently
- Participating in bundles or giveaways
- Updating links on my social profiles
- Hosting a webinar or a challenge
- Creating new opt-in incentives
- Updating old blog posts with new content upgrades
- Sharing my best opt-in offer on social media
If I’m not quantifying these lead indicators, setting goals for their completion, and taking the action required, then I won’t reach my list-growth goal. My lag indicator–the number of subscribers–will show it.
Now it’s your turn. Tell me in the comments below what numbers you track in your business and why.
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