Tuesday, June 8, 2010

Operating metrics vs. Financial metrics

Many businesses spend large periods of time collecting data and producing detailed reports at the end of each month, quarter or year, containing pages of financial metrics while ignoring operating metrics. There is a profound difference between operating metrics and financial metrics.

Operating metrics are those inputs that drive the financial outcomes.

While financial metrics definitely provide useful measurements of business performance, it is all historical information by the time they are produced. Operating metrics on the other hand provide scope for continual learning and improvement.

Concentrating on operating metrics to improve customer satisfaction by reducing wait times, producing better quality products, providing exemplary after sales service, can all increase customer loyalty, which in turn is likely to increase the value of the customer to the business.

A by product of measuring and improving these operating metrics often results, in this example, in an increase in sales, which will in turn take care of the financial metrics.

Ivy Business Consulting can implement programs to measure and improve operating metrics across all business disciplines.

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