The 6 things every firm should measure
Every professional services firm should be measuring their performance. Without standardising and benchmarking and comparing, you’ll have little insight into where you’re at, what you’re doing well and where you need to improve.
The problem is, as I wrote a little while back, many firms end up measuring the wrong things altogether. They analyse numbers that don’t matter, set KPIs that don’t align with their business objectives, and end up assessing their performance in a way that’s completely irrelevant to the goals they want to achieve.
To set things straight, I thought I’d provide my list of the things your firm actually should be measuring if you want it to reach its potential and become everything it could be.
1. The quality and reliability of referral sources
I’ve said it time and time again, and I’m going to say it one more time just in case there’s any doubt: referrals are the lifeblood of any professional services firm. You should be doing everything you can to identify and cultivate referrers so that your pipeline of work is always turned on. But you should also be doing what you can to measure the quality of referrers you already have.
I encourage you to do this formally. Sit back and look at who’s brought work in through the door over the past year or two. Measure how much work they were directly responsible for and figure out how good that work was: Was it enjoyable? Did it align with what you wanted to be doing? Was it profitable? Was the relationship a good one? Was it a one off or do they keep sending work your way?
Once you’ve thought about each of these, score your referrers out of 10.
Now, the most important part…. Do what you can to let those referrers who scored highly know just how important they are to you. Then see how you can strengthen your relationship with them and also how you can turn other referrers into people like them. If you can, your business will boom and you won’t ever again have to walk the streets and tout for work.
2. Feedback from clients
In my experience, a lot of firms put in a reasonably token effort when it comes to client feedback, or client listening.
Accurate client feedback is the one thing that’s going to show you exactly what people think of you: what you do well, where you need to get better and what your reputation is like in the marketplace. Over time, you can also use it to see how perceptions are changing and track this against your performance.
So do it properly. Set up a proper client listening program. Ask the right questions. Take it seriously by involving your senior partners. And, more important than anything, don’t take anything at face value - look for the qualitative responses that support any ratings you get.
3. The number of clients referring you to others
Then again, I always think deeds speak louder than words. So if clients are sending other clients your way it shows you’re hitting the mark. As a general rule, I think you should look to have at least 20 per cent of your existing client base also referring work your way. Then, like compound interest, you’ll start to see a multiplier effect where the clients they refer start referring new ones.
4. How much you helped
A lot of people think being successful means being self-interested. Nothing could be further from the truth. Sometimes building a successful business is about helping others. I think you should be measuring the amount of time you spend connecting or assisting or developing others. So don’t write this down as ‘admin’ in your timesheets, make a note of what you’re really doing. Then, when you go back to look at your last period measure the amount of time you were helping clients for free or training, coaching and mentoring staff, or reviewing the work of your juniors so that they could become better at their jobs. This stuff is all part of having a thriving practice in the long run.
5. What your clients look like
Not all clients are created equal. Quite simply, some clients are good; others are not. So spend some time periodically reviewing your client list to make sure you’re attracting the former and not the latter.
Assess the people or companies you work for. Are they loyal? Do they respect your advice? Are they ethical? What’s their business culture like?
When you work out who the good ones are, analyse why you like them and then use this as the basis for going out and finding similar ones. Put the bad ones in the departure lounge or even break up with them. It will free you up to go and find better clients and better work and, ultimately, your practice will be better for it.
6. How much fun you’re having
In the words of Cat Stevens, we’re only dancing on this earth for a short while. Much of that short dance is spent at work. So it’s important you enjoy what you do.
I always recommend you measure how much of your work your actually enjoy doing and the percentage of clients you actually enjoy working with. I also recommend that, as a guide, your number on both counts should be at least 75 per cent if you have 10 years or more under your belt.
Building a business and a career should be fun. It should make you happy. It shouldn’t only be about slogging it.
So if you’re falling short on this count, work out whether you can rejig your practice to hit that magic 75 per cent mark. And, if you can’t it’s time to tear down and rebuild or even rethink your career altogether.
If you’d like help measuring the things that actually matter in your professional services firm, get in touch.