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Crystal Ball for Sale: Cheap!

Posted on March 29, 2010 , by Steve Bernstein
CATEGORIES: Loyalty Research
Map your path to revenue growth

Map your path to revenue growth: Start at the top with a leading metric then act to improve it (click for larger view)

What would you pay for a crystal ball? You can peer into the future to see your company’s future performance.  So why don’t you do it?

If you are part of a SaaS company you are probably already using Bessemer’s 5 Cs of SaaS finance. Of course SaaS companies need to be operationally excellent (there’s no reason why that comment is limited to SaaS companies). And these metrics point out that operational excellence is a company-wide discipline, not just for the data center.
That said, I’m troubled by the constant focus on lagging indicators of business measurement. Most financial metrics are backward-looking – showing you a rear-view mirror of performance. It’s time for companies put more emphasis on forward-looking metrics. Don’t just consider “quarterly sales forecasts” since those are internally generated, subject to bias, and don’t show you what’s coming 6 to 12 months down the road.
Related to my earlier post, consider instead a forward-looking measure of your most important asset: your customers.
Do you have strong relationships with your customer base? Are they evangelizing on your behalf and referring business? Do they expect to continue doing business with you? Or, are they ‘trapped’ and suggesting to their friends and colleagues that they stay away?
This is neither rocket science nor expensive. You can get these metrics in place within 1 quarter and with minimal (inexpensive) effort. Once in place, you will clearly know what the future looks like – is a hockey-stick growth curve in your near future? Or are you destined for linear (or declining!) growth? Don’t you want to know so you can plan ahead…?