The Most Important Business Metric You Can’t Ignore

How do you know your product provides value?

If you’re like most companies, you rely on metrics like revenue, customers acquired, and customer retention to judge this. It stands to reason that if these and the other typical metrics look good, your product is successful.

Or not.

These metrics matter, but for something like product value, you can’t rely on these abstractions.

Revenue tells you someone paid for your product—that’s all. Large companies and business-to-business companies have sales and support structures that can mask whether a product truly delivers value.

What happens when the numbers tell you everything is great, and yet you find competitors surprising you?

They release one high-value, cutting-edge feature after another.

They show up where you never saw them before. Your tried-and-true clients are evaluating others for the first time in years.

You used to know who the key players were, but up-and-comers are starting to surprise you.

That’s how it begins.

This is what it looks like when you start to lose your competitive edge. Every leader works hard to get to the crest of the wave and stay there as long as possible. Most companies will find themselves facing the trough at one point or another.

How do you stay on top? One of the best ways is to always have the real story about your product’s value.

Your Customers’ Outcomes

Your customers are seeking specific results, and your business exists because you promised to help them achieve those results. Do you know what those results are? By this, I don’t mean what your marketing says you provide.

It’s just you and me here, so let’s be candid. Do you have at least three stories, from three different individuals, at three different companies, that you can tell right now, that communicate how their work is better because of your product?

It would look something like these reviews I pulled off of Amazon for a 4-blade push reel lawn mower—you know, the old-fashioned kind powered by the person doing the pushing:

• I was so anxious before mowing ... Had let things get a little beyond where I would have liked. Was actually excited about this mower when I ordered it, and I rarely allow myself to feel excited. Now that I've used it and gotten the back yard somewhat in check, I feel relief!

• [S]uch a good workout like I said, and it makes me really enjoy mowing the lawn.

• My kids think it’s cool to use so they don’t mind mowing the grass[.]

• So far so good. This was simple to put together. I absolutely love mowing with this.

• I'm really loving the fact I don't have to ask or depend on someone else coming over to take care of the yard before it gets over grown. The upkeep of the yard is my responsibility anyways and it's nice being able to accomplish that on my own.

• With this, I might, MIGHT, sneeze once. Because there’s no gas exhaust fumes blowing up into my face, there’s no huge kick up of whatever I just mowed: dirt, grass, whatever. So my point is, you really might not be allergic to grass. You might be allergic to gas-powered mowers. If I could cure my food and pet allergies this easily . . .

When you ask for feedback without constraint, you will hear things you never expected. The lawnmower example shows us:

•    Relief from anxiety about yard upkeep

•    Engages kids in yard chores

•    Independence

•    Sense of accomplishment

•    Improved allergies (!!)

If you were to look at the value most lawnmower manufacturers talk about, you would see things like mower width, handle height, bag size, and other attributes of a lawnmower. These help someone choose the right product, but a product that does what it says it does is the bare minimum of what you offer (I presume).

The value your product brings lies in its impact on the people who use it.

When choosing products, your customers may compare features. Yet more powerful than features are outcomes. When outcomes are clear, you can finally say with confidence whether your product is truly working—or not.

What Is a Business Outcome?

A business outcome is the aftereffect of delivering your core value.  

For example, the outcome I’m aiming for with my business is helping clients execute their strategies. (The most positive studies show that only 30% of Fortune 1,000 companies deliver on their business strategies. Some sources have this number as low as 10%.)

One of the core tenets of my company is that I build my business on my customers’ outcomes. Many consultants will track the work they completed for you, but that doesn’t mean you get the outcomes you need or expected. Nor does it mean that you can keep good results going once the consultants leave. More on that in my article titled When the Consultants Leave: Why Your Transformation Isn’t Going as Expected.

Let’s look at a real-world example that is a little more complicated than using a lawnmower. Some years back, I worked as a consultant for a technology company. We were helping one of our financial clients bring in a new DevOps practice. Their primary responsibility was to ensure that the applications the bank made available to its customers were delivered to market quickly and were as reliable as possible.

Part of the overall consulting gig included my company’s DevOps software package. Our software did everything DevOps software should do; it monitored applications and the resources they used. When you compared the features of the two products, you would have trouble determining which was better.

However, when used side by side, one product stood out. The winning product (not the one made by the company I worked for, by the way) was the one that understood how people wanted to work together.

At any point in time, a DevOps team will include a variety of people from multiple disciplines. Who is involved depends on what signals are being detected. The winning product knew who to contact at any given time if it saw something brewing. And it knew who not to contact.

Our client wanted to use our competitor’s product, so naturally, I asked why. I also asked them to describe what the world would look like when the product functioned perfectly. The answer surprised the team. The customer didn’t want their staff to interact with any DevOps software any longer than absolutely necessary.

Our client said that a great outcome was that their DevOps teams were working on innovating the business, not sitting in front of a screen, on Tiger Team calls, or engaged in anything else related to handling problems. They wanted the people who worked at the intersection between the business and the customer to be innovating better ways to serve the customer. Imagine that—they wanted their teams to be looking at the horizon and growing the business as much as possible.

Remember earlier when I talked briefly about metrics? One of the metrics my company measured for its DevOps product was user engagement. Product owners believed that the more time someone spent in their product, the more they liked it, or the more it helped them achieve their goals. (As a former designer, I can tell you that time spent using a product could simply mean the product is hard for customers to use, so tasks take them longer.)

In the case of our client, our own metrics drove us in exactly the wrong direction.

We didn’t know our customers—but we thought we did. When the customer feedback came in, I think the word “flabbergasted” was used by our leadership.

Well-defined customer outcomes should be the heartbeat of your organization. As your primary measure, knowing what your customers want as a result of using your product—the outcome—is the value you should be measuring. This outcome is the real reason you’re in business. If I oversaw that DevOps product, I would make sure my metrics included how much time my product gave back to its users. I might even be able to help them innovate their DevOps practice and stay ahead of the competitive curve.

Staying On Top

When you are continually in touch with the outcomes your customers are looking for from your product, you are staying in tune with their needs as they change. Keeping your finger on the pulse of their business helps you avoid the disruptive “resets” companies often face every five to seven years—those secret retreats, strategy overhauls, and ripple effects of confusion and mistrust that leave lasting scars.

Instead of relying on periodic reinvention, treat industry awareness and customer understanding as everyday business hygiene. The simplest way to do that is to stay focused on the outcomes your customers expect to gain from using your products.

When you build your success on getting your customers where they want to go, your business is anchored to the realities your customers are experiencing. A valuable consequence of this is your ability to see changes happening and respond to them before your competitors do.

How to Get Your Customers’ Business Outcomes

To get your customers’ business outcomes, all you need to do is ask open-ended questions. Specifically, you are going after how things would be different if your product worked perfectly.

Here are a few things you might consider. Look beyond things like getting results faster and working more efficiently, and consider what they can do, only because they have your product. These can be new things your product allows, for example, visibility into new areas of business or connections between cross-functional partners.

In our DevOps example, people wanted to time back.

In the lawnmower example, people might have said they wanted to end the procrastination.

If people’s answers seem out of the blue to you, your product area may be changing. This happens all the time, especially as new technology becomes available. For example, AI is reshaping how people work; people will be adapting to this technology for the next several years, at a minimum.

This is a great time to ask more vision-related questions, like where they see their business in a few years. You can then partner with your customers to craft products that both help them transition and fulfill their needs as they stabilize.

Changing Your DNA

This shouldn’t be a one-off exercise, but a new way of working.

In 2013, I was working to bring design thinking into an area of IBM. We had standard metrics we were to measure for the overall program. To make this transition personal, I met with each of the six VPs in my organization and asked them what they wanted to see when the transformation had taken root. Most of the answers were the same, akin to better products faster and with fewer iterations.

There was also an overall sentiment of culture change. The VPs didn’t want organizations that needed to constantly emphasize design; they wanted design built into how their teams worked. To do this, I embedded cultural outcomes into our internal evaluations of the business.

Alongside things like burndown rate, defects, and critical situations, I started tracking new information such as direct customer interactions, leadership attendance at these customer meetings, and other activities that would ensure changes to the ways teams interacted with each other and customers. This focused our attention on the activities needed to reach those internal outcomes. It also helped us get to better products faster because we were hearing directly from customers on a regular basis. We could capture those outcomes that no one on our team could foresee.

Once you establish customer relationships, it is important to maintain them so you can go back and validate that you are on the right path. Work this information into your regular reports.

If that seems like too much of a reach, you can start with something like 3 real customer meetings a quarter. From there, you can work customer feedback into your regular measurements and reporting. I’ve never seen an organization dismiss a mountain of data pointing towards success.