Small Businesses Report Benefits of Real-Time Data
According to a new survey, frequent metric tracking and sharing data with staff can benefit companies of all sizes. Few small businesses use these tactics, however, and those that do have another surprising thing in common.
- By Lindsay Stares
- June 1, 2016
It's a bit of conventional wisdom that you can't manage what you can't measure. In other words, if you're not tracking your goals and your key performance indicators (KPIs), you won't know whether your strategies are working.
Is this true? It certainly sounds right, and many large enterprises have embraced the idea of becoming data driven -- but what about smaller enterprises?
Geckoboard provides dashboard software that facilitates KPI tracking, so naturally the staff wanted to understand how tracking KPIs benefits businesses. Not satisfied with guessing whether tracking metrics was helping its clients grow, Geckoboard commissioned a survey.
More than 250 owners of small and midsize businesses from across the U.S. responded, and the result is the "2016 Small and Medium Business (SMB) Growth and Metrics Survey."
The first thing to notice in the survey data is that, as you might expect, tracking KPIs has an important effect on the success of these businesses. Furthermore, not only does tracking have an effect, but how often a business checked its data is significant.
A full 92 percent of respondents who track metrics in real time reported meeting some or all of their goals in the last year; 50 percent met all their goals. Compare that to companies that didn't track metrics in real time: only 24 percent of those met all of last year's goals.
This makes sense -- companies that are checking metrics more frequently have the opportunity to react quickly to any change. For example, if customer retention starts to drop, a business can review the training of its customer service staff; if the number of new customers rises sharply after a promotion, the marketing team can repeat their success.
Despite the benefits, only 14 percent of the survey respondents currently monitor key metrics in real time. Only 9 percent of business leaders reported that they personally viewed real-time data.
Another factor the survey examined was transparency around data. Respondents claimed to believe in sharing information with staff. In fact, the three top factors cited as contributing to business growth were clear objectives for all employees, sharing information about business performance, and widespread awareness of key metrics.
However, 6 percent of businesses said they never share KPI data with the staff, and another 17 percent said they only share this data with employees quarterly or yearly. Obviously, some of these enterprises may not be practicing what they preach.
If both real-time KPI tracking and sharing data are so beneficial, why aren't all the businesses jumping to implement these strategies? One answer is lack of capacity. Among businesses that reported only tracking KPIs monthly or less frequently, 94 percent have fewer than 50 employees. All of the respondents who only share KPI data with staff quarterly or yearly (or never) have fewer than 100 employees.
There's one more factor to consider, though. Both real-time metric tracking and sharing data with staff members were more prevalent practices among companies with younger leadership.
Younger leaders were more likely to track real-time metrics: 33 percent of those tracking in real time were under 35 years old and 58 percent were under 45. Only 13 percent of leaders 55 or older reported tracking data in real time. Older leaders were also less likely to share data with their staff: 80 percent of companies that didn't share data were led by people 45 or older.
The results of this survey support the idea that measurement is good for business. No matter what size the business is, it seems more frequent, more transparent use of data will lead to business growth. Younger leaders are embracing modern strategies such as real-time KPI tracking, so we should expect adoption of real-time technologies to increase as more digital natives move into leadership positions.
We asked Geckoboard CEO and cofounder Paul Joyce what he thought was the most important take-away from the survey.
"I think it's that if companies want to grow quicker, they need to take a step back from the data and identify what their key metrics are. Once they've identified those metrics, it's important to constantly track and communicate progress against these goals to the whole team.
"For too long businesses have been distracted by big data and tracking vanity metrics that make them feel good but don't drive growth. Ultimately, many business owners have been overwhelmed by data and forgotten the basics of identifying important metrics. Those that spend the time to identify their key metrics -- they will grow quicker."
Were there any results that surprised Joyce? "I think the most surprising result was the finding that a younger generation of entrepreneurs between 25 and 45 are the ones who are the best at identifying, tracking, and communicating key metrics. You would have thought their more experienced counterparts would be the ones to have identified this issue. However, it is clearly the younger generation of business leaders taking the lead in tackling the overwhelming volume of data to improve performance and ultimately their bottom line."
More facts from the survey can be found in this infographic from Geckoboard.
Lindsay Stares is a production editor at TDWI. You can contact her at email@example.com.