Dean: Welcome to the LoomView Business Intelligence Report with Jake and Jeff Wilson, co-founders of LoomView. I’m Dean Rotbart, your host for these insightful, actionable audios.
This week, in less than ten minutes, we will reveal key performance indicators for your business. These are the most important number or numbers in a business that can guide you, the business owner, and help you measure your business’s success in the execution of a plan or plans toward meeting your goals.
Starting now, Jake Wilson, thank you for being with us on this edition of LoomView Business Intelligence. Tell me a little bit more about key performance indicators.
Jake: Well, thank you very much, Dean. Key performance indicators are one of the key critical drivers for any business. The key is finding out what the key performance indicators are for your company and in your industry.
Dean: They differ if I’m in a different industry.
Jake: They very much can.
Dean: And even within an industry, they may differ between different businesses.
Jake: Yeah, it just really looks at your business model, so you really have to do a real analysis and look at what are your key performance indicators. And the big thing that most people confuse are key performance indicators with performance indicators and with key results indicators.
Dean: I’m already confused, you’re correct.
Jake: That’s great.
Dean: Take it slowly with me.
Jake: No problem. We’ll start with key results indicators.
Dean: Tell me what they are and what they’re not. Okay.
Jake: So key results indicator, and all of them are critical and unique, but they each provide a different view on the metrics in the indicators that you need. So the key results indicators are the indicators based on the past. On past actions, on past results that will give you an idea of what you can project for the future, just based simply on the past.
Jake: Performance indicators are things that actually measure your performance. What is or is not getting done? Your salesperson analysis, your top product analysis, your sales executive analysis. And it gives you just kind of an overall view. And a lot of times people confuse key performance indicators with performance indicators.
Now, the key performance indicators are the few critical numbers, the critical indicators that can be tracked, that if you keep an eye on that, that will tell you everything you need to know about what direction your business is heading. So I’d like to give you an example, if I may.
Dean: Please, I think that’s called for.
Jake: So Southwest Airlines, something, everybody’s familiar with Southwest Airlines. They’re one of the most profitable airlines right now. And the C-level executives have one key performance indicator that they work off of. But to understand what that is, you have to just take a quick look at it, how their business is built, how Southwest Airlines built their business is that every flight that’s in the air is profitable. So the sales team, the managers, the different people and the different levels of Southwest Airlines, each have their own key performance indicators that they follow so that when done, the flight is profitable.
So if a flight is in the air for Southwest Airlines, if you see it flying overhead?
Dean: It’s making money.
Jake: You know it’s making money and so do the executives. So the only indicator, the only numbers that the C-level executives use to track their performance is how many flights are in the air. And they use that as their reference. If they know they have 10% less flights in the air this week as last week, they look at what’s happening with that. Are they not fulfilling on, are they not meeting their demand? Do they need more planes? Do they need more salespeople? But it all is driven by that key performance indicator.
Dean: How did Southwest Airlines know that in the first place? In other words, how does a business come to identify that in fact, because there are other, let’s talk about consumer products companies. There may be consumer products companies where simply having the product on the shelf does not translate into profitability in the way that having a plane in the air does. So how does a company define for itself and come to recognize what for it will be the appropriate indicator? Do you want to toss this to Jeff Wilson? Co-founder.
Jeff: Yeah, this is Jeff. Yeah, I mean, that’s a fabulous question, Dean, because it is a very specific and consistent process that has to be followed to uncover that. And it takes a real attention to detail, it takes analysis, and it can take, sometime weeks, months, or years to really uncover in a specific industry or for a specific business model what the most important indicator that always will tell you the current health of the business and also there may be the same or different indicator that tells you its future health.
And Jake has really been instrumental in designing this process so that we can uncover that, I think, in rapid time. Isn’t that what you found, Jake?
Jake: Well, what we’ve looked at is, I mean, I’m a numbers person, I love numbers. I can look at a spreadsheet and I can see a whole world. So the key is not just knowing the numbers, but then being able to communicate it with the person in the company that can do something about it. And then working with them on not just getting the number, being able to utilize it, but the key issue and the most critical component of the key performance indicator, is making sure that the gathering and tracking and entry of that data is done properly. And this is where most businesses show us they fall short, is that they’re not being meticulous in gathering all the data in the timeframe that they need and being able to display it and show it to the right people in a timeframe that they can actually get it done right away and so it’s not done in a week or two or month later.
I have a suspicion that one of the values of LoomView, I’m a business owner, I’ve been a business owner for 25 years, it’s very hard for me to stand outside my own business and really look objectively. There’s nobody who cares more passionately about my own business than me, and yet in some ways, I bring biases, I bring prejudices, I bring subconscious sacred cows. I might look at a product that I think is terrific, but if you guys really crunch the numbers and analyze that you might look at it and say, “Dean, do you realize that you’re spending a disproportionate amount of time generating this? It’s not making you enough money.” You’re smelling, Jeff.
Jeff: Yeah, Dean, you and I will know this, some of our older viewers remember it, Dragnet? “It’s the facts.”
Jeff: Just the facts.
Dean: Just the facts, ma’am. Yeah.
Jeff: Just the facts, ma’am. And that’s really what we look at and that’s what Jake has described in the assessment process, is to really look just at the facts. That doesn’t mean to say that a vision and desire and ambition and heart and skill aren’t important, but an analysis have to look at the facts.
Dean: So, Jake, I can come to LoomView, you have refined this process, you can help me more quickly probably than most businesses, you can help me pinpoint my key performance indicators and then provide me ongoing intelligence that will allow me to see how I’m doing.
Jake: Absolutely. And can do it in a very quick and timely fashion because it really is mechanical for any business in an industry, once you find out what those key performance indicators are and the processes are in place to be able to gather that data accurately, it can be very quickly turned into a money maker for your business.
Jeff: This is Jeff and this may surprise Jake a little bit, because I’m going to ask him a question, but through our assessment process, we’ve designed this so that it is available and scalable for any business of any size, and typically our assessments are $297. Jake, are you prepared to make a special offer?
Dean: This sounds like the Home Shopping Network, we don’t want to sound like that. But you are prepared to make a special offer.
Jeff: I don’t know, we haven’t discussed it.
Dean: I don’t want to do this, but the point is, a business that’s listening, if they want to deploy this, they can get in contact with LoomView with you, Jake, and you can do it for them at an introductory price.
Jake: You know, if they say that they heard us on the radio show and that they will like it, we will offer a discount of the assessment for $147.
Dean: And they get a Ronco knife with it. [Laughter] $147. Guys, we need to wrap it up, we promise we are going to always keep these to under ten minutes, but we have been, this is the LoomView Business Intelligence Report with Jake and Jeff Wilson, co-founders.
Jake: Thanks, Dean.
Dean: I’m Dean Rotbart, we’ll talk again soon.