How to measure the success of less tangible goals

Not all goals are easy to measure. In a world where customer satisfaction, employee engagement and customer loyalty are becoming increasingly important measures of business success how do you find a way to report on these things that is measurable and tangible for both those who are required to report on them, and for those they are reporting to?

Most of the time the trouble with measures such as customer loyalty is that they are quite ambiguous and working out exactly how to calculate them is not obvious. The first thing that you need to do is decide what customer loyalty means to you. It may be the number of sales per customer, or the number of years; or you may be more interested in the amount of repeat business from customers.

For customer loyalty you could calculate it in any of the following ways:

  • Average number of sales per customer
  • Average number of years that a customer has been purchasing
  • The percentage of your customer base that is doing repeat business with you

In order to come up with a tangible measure that can be reported on you need to ensure that you have covered these 4 things:

  1. Decide on the best summary statistic for your measure. This could be a total number, an average, a percentage etc.
  2. Identify the data item that you want to apply that statistic to, so what are you counting or what average are you taking?
  3. Choose the scope of your data items so that you can define the extent of the performance area that the measure relates to and, equally important, what it doesn’t relate to.
  4. Choose the frequency at which you will measure this. This doesn’t have to match up to standard reporting. It should be often enough that it will tell you something useful and detect any issues as soon as possible, but not so often that it may give you wrong or misleading information.

This might sound simple but coming up with a measure that takes into consideration the best statistic frequency and scope of data can be difficult. however, defining this in detail at the start will allow you to easily work out what data is needed, and give you a consistent way of reporting, meaning that you will be able to measure success or areas of improvement and see the impact of any changes that you make.

Are there things you can’t measure?

Quite simply yes, there are some things that you are never going to be able to measure effectively such as innovation, culture or quality. They’re too broad and too intangible. What you need to do is look for specific attributes within those areas that you can measure and set goals as above. For example you can’t measure corporate culture, but you can measure how quickly change is adopted or how low your staff turnover is.

When you have a hard to measure concept the most important thing is to break it down into something you can measure and, using the 4 steps above, turn it into something that is much more tangible to report on and to draw conclusions from for future improvement.

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