There's no shortage of metrics and KPI's you can use to measure your business' progress. In fact there's so many, it's sometimes hard to figure out which ones are the most important.
Just off the top of my head, there's revenue, profit, new customers added, current account growth, revenue per employee, gross margins, net margins, and churn/retention. There's probably a dozen others you could come up with depending on whether you are B2B/B2C or a service or product business.
But if we are to truly adhere to Rocket Ship Rule #1 of Ruthless Simplicity, ideally we would have just one metric that we could use to drive our whole business.
Yup. Just...One...Metric. Is that even possible?
Yes. I call it the BOSS Metric.
What's makes a metric the BOSS Metric? It does the following:
1. Connects your company's mission to sales/revenue
2. Is simple, meaningful and relevant to every person on the team
3. It drives good, sustainable decision making and behaviors
4. It can be used to measure near term AND long term (BHAG) milestones
You can see why revenue and profit and those other metrics don't quite meet the criteria.
So how does one find a BOSS metric? Let's take a look at an example.
I've recently been working with Shane Heath of MUD/WTR. MUD/WTR makes a damn good tasting mushroom-based coffee replacement. They've been killing it over the past year. If you'll pardon the pun, they've created quite a buzz with even folks like Kelly Slater, the great pro surfer tweeting:
@drinkmudwtr really good. Better option than coffee for me :)” -Kelly Slater
But as the company is scaling from a handful of people to many more, Shane's been looking for the right metric to unify everything so it's straightforward for everyone in the company to measure progress and catalyze action.
Recently Shane and the Mud/WTR management team revisited their mission and boiled it down to just two words: "Dethrone Coffee"
That's their mission and BHAG (Big Hairy Audacious Goal). It's a big dream. It's awesome.
And it's the starting point we used to create Mud/WTR's BOSS Metric.
If you want to dethrone coffee, it's a big climb, considering 63% of adults in the US report having had a cup of coffee during their previous day
But therein was the BOSS Metric we were looking for. If MUD/WTR wanted to dethrone coffee, there would have to be more daily MUD/WTR drinkers than daily coffee drinkers.
MUD/WTR's BOSS Metric is daily MUD/WTR drinkers.
We tested this metric against the criteria I listed above:
1. It definitely connects mission to revenue. Every daily MUD/WTR drinker added will build revenue.
2. It's simple to understand, meaningful and relevant to everyone on the team. Whether in sales, marketing service, operations, or new product/flavor development, it applies to everyone. Everyone can see how they contribute to growing the number of daily MUD/WTR drinkers.
3. It drives good behaviors and decisions. For example, MUD/WTR is a DTC subscription business. Focusing on daily MUD/WTR drinkers really incentivizes retaining customers and reducing churn. If they just focused on new customers without minimizing churn, the number of daily MUD/WTR drinkers would not rise fast enough, and other metrics like customer LTV would go down.
4. You can definitely use this BOSS Metric for long, medium and short term goals. Shane estimates that capturing 1% of coffee quitters would work out to 330k daily mud drinkers. That's what he's setting as a 5 year goal. With that set, he can then break down milestones to get there, and see if there are ways to bend the curve to get there faster (i.g. distribution in grocery stores, partnerships with hotels and spas, affiliate programs, or just increasing marketing).
Shane is seeing the whole team be energized and focused by this. It's as simple number they can put on the wall and know that if they focus on that, all good things will follow. That's the power of a BOSS Metric.
What's the BOSS Metric for your business?