Methods To Evaluate BSC Performance
When cleaning contractors think about measuring performance, three metrics come to mind: profit, revenue and customer retention. Each of these are lag measures, meaning they show how you did in the past. They look back over a period of time (month, quarter or year) and describe your performance in a specific area. The issue with lag measures, however, is they don’t typically predict how you will perform in the future. Additionally, lag measures don’t often tell you what you should be doing now to help improve future lag numbers. To better predict future performance and give your team an idea of what activities they should focus on now, you need lead measures.
What Is A Lead Measure?
A lead measure is a target or action you can accomplish that will help you hit your lag measures. According to the book, The 4 Disciplines of Execution, “a lag measure tells you if you’ve achieved the goal, a lead measure tells you if you are likely to achieve the goal. While a lag measure is hard to do anything about, a lead measure is virtually within your control.”
In short, a lead measure is a micro-goal you can accomplish that will help you hit your bigger picture goals. Lead measures are often daily or weekly goals that are closely associated with activities you can control. You can affect the outcome of a lead measure with very specific actions in a short amount of time. Here are three lead measures you would be tracking.
Lead Measure #1 – Daily Cleaning Hours
While company profit is a great lag measure, hours spent cleaning each night is the greatest predictor of profit. Therefore, having hours budgeted for each job — and monitoring those budgets on a daily basis — is the most effective way for you to manage monthly job profitability.
This lead measure will allow your team to make changes quickly, meet goals on a daily basis, and predict monthly profitability with a high degree of accuracy.
Lead Measure #2 – Customer Feedback Scores
Customer retention can make or break you as a cleaning contractor. It is important to know how you can ensure customer retention before you lose customers.
One way to aid in retention — a lead measure of sorts — is to perform regular customer meetings (monthly is ideal) where you receive a performance score. This score, if honestly given, should be an accurate predictor of whether or not you will retain the customer in the long run.
Lead Measure #3 – Sales Pipeline
How can your company consistently hit year-end sales goals year after year? One lead measure that could accurately predict year-end results is the amount of potential revenue in your six-month pipeline.
If your company has a 25 percent sales closure rate, then you want two-times the annual goal in your six-month pipeline at any given moment. If the close rate stays consistent, this lead measure should accurately predict year-end sales results.
Jordan Tong is a BSC consultant and founder of Elite Business Coaching, in addition to being a third-generation owner of Frantz Building Services based in Owensboro, Kentucky. For more information on his coaching services, visit www.elitebusinesscoaching.net.
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