How to Identify and Establish Baseline Metrics
Psychological research conducted in 2015 reaffirmed what psychologists have been telling us for years about goals and making them a tangible daily reminder.
The results of the study showed that those who write down their goals and place them somewhere they can be visually observed on a frequent basis were 33% more likely to achieve those goals.
Building a successful marketing campaign requires and necessitates the utilization of established baseline metrics and goals. When your marketing team uses baseline metrics to create foundational goals for your company’s marketing plans, the chances of you being successful significantly increase.
- Baseline Metrics Aid In Measuring Your Improvement Journey By Providing Visual And Tangible Results And Failures
- Operating Without Baseline Metrics Results In Blind Marketing Strategies
- Baseline Metrics Compare Past Performance With Current Performance
- Baseline Metrics Provide Insight For Future Goals And Success
- Baseline Metrics Are A Key Component Of A Key Performance Indicator
What Are Baseline Metrics?
Baseline metrics basically compare your company’s past performance with current performance through the use of averages and time-lagged calculations.
Yeah, we know that sounds a little complicated, but do not fear, we are going to simplify it. Basically, baseline metrics look at your past performance in any particular area or product, then compare that performance to different points in time, average out the metrics and then provide insight on how that product or strategy has performed.
How To Use Baseline Metrics
Let’s say your company developed, produced, and marketed a new product two years ago. Let’s say you are an electric bicycle company and you produced a new e-bike that has an increased range of 10 miles per charge, but that extra range comes at the price of an added 10 pounds of weight.
You know that in the biking world, riders want to strike a balance between performance and weight. Generally, bikers prefer lighter bikes, but the e-bike presents a new set of challenges for your marketing team to overcome because they are a relatively new product that has only just begun to impact the biking world at large.
To gauge how this heavier bike with extended range is performing in the market, you conduct a baseline metric analysis. You and your marketing team then look at different points in the product's life, first at its announcement and the beginning of pre-orders, then the day it went on sale, then one month later, six months later, one year later, two years later. You collect data at all of these sales points, log that data into your baseline metric, then average out the combination of the metric points.
If you are anything like us, sometimes certain things that seem complicated become much simpler when you actually see them completed, so we hope this example has helped make the concept and practice of baseline metrics easier to visualize.
Baseline metrics offer you valuable insight into how your product is succeeding or failing.
Operating Without Baseline Metrics Leads To Blind Marketing Strategies
While you may be aware of how your new e-bike is performing in the present day and time, that information alone cannot establish a total picture of how your target audience is receiving the product.
Several factors can affect the sales performance of your product. For instance, outdoor equipment sales such as bikes tend to drop significantly based on what season of the year you are presently in, with Winter months being the slowest of all and Spring and Summer months being the best.
Without implementing baseline metrics in your marketing research and analysis, it would be impractical and inadvisable to base future decisions for this product based on its performance at the current moment. In essence, you are making decisions blind when you do not have to be.
Developing and analyzing a baseline metric may indicate that sales are only slow because of the season of the year, or they may indicate that excitement and interest in the product have waned in lieu of your competitors offering new products that are similar but with more range without the expense of more weight.
Whatever it may be, without a baseline metric to guide you, it would be impossible to set goals to circumvent and mitigate the factors causing your sales decline. Therefore, it would be difficult to develop actionable steps aimed at improving the product, much less measuring that improvement.
Your Baseline Metrics Helps Determine Useful Data
You may have heard it said a time or two that if a person wants to know what the future holds, they only need to look to the past. These are beautiful words, and while they are generally reserved for discussions involving domestic and international political policy, they are relevant to every facet of life, including business.
Through the utilization of baseline metrics, your marketing team can gain valuable insight into not only how a product has performed over a preset timeframe but also how that product is likely to perform in the future absent any intervention and how it will perform with intervention.
Depending on the scope of your baseline metrics, you will uncover valuable data that will indicate and visualize for you what kind of market trend the product is experiencing.
It may resemble a roller coaster ride at Universal Studios, or it may look like a gradual decline down a valley hill to a river below, and if you are fortunate, it may resemble an upward climb to the peak of Mount Everest.
What Are Metrics?
Metrics, which are simply mathematics, are not called the universal language of the universe for no reason. Collecting this data offers you the opportunity to have a glimpse into the future that presents you with the ability to make informed goal-setting decisions.
It turns out we do not need Doctor Strange to help us travel into the future; we only need baseline metrics. We should call Disney and Marvel and let them know, huh? Yeah, you’re right, better keep this secret between us!
How Baseline Metrics and Key Performance Indicators Work Together
Key performance indicators are sets of quantifiable measurements used to gauge and analyze a company’s overall performance and future success.
It is impossible to develop and compute this data without the utilization of baseline metrics because, as we just discussed, past performance generally provides insight into future performance.
The goal of creating baseline metrics is to simply identify what goals your company needs to set in order to either maintain and increase continued growth and success or increase growth and success.
In other words, if you want insight into whether or not your goals are affecting improvement, you must have baseline metrics in place to serve as the source of your mathematical measurements.
Establishing Your KPIs
The initial goal for every business is to create a product or service that leads to success. The goals that follow that success focus on maintaining and improving that success, or the speed at which you are seeing that success come to fruition.
In order to be profitable, you must be successful, and in order to be successful, you must be willing to establish baseline metrics to gauge your performance and then input these metrics data into your Key Performance Indicators analysis to gauge your future success.
If the data returned shows a downward trend in sales, you and your team would obtain information that you can transform into goals designed to reverse the problem. While it may be difficult to learn you have a weakness, it is empowering at the same time.
Why? Because knowing you have an issue or a weakness that needs addressing means that you can develop a plan to transition that weakness into strength.
Examples of Key Performance Indicators Success
Example One: Apple
Take Apple, for example. In the 1980s and early 1990s, Apple was at the top of its game and was providing the world with technological advancements light-years ahead of its competition. Then, after some managerial communication issues, Apple began to lose its cutting edge and was eventually overtaken by Microsoft as the predominant and preferred computer for most users.
Fast forward a few years into the next millennium, and Apple addressed its weaknesses, turned those weaknesses into fuel for innovation, and introduced the iPod. The iPod led to the iPhone, the App Store, Apple Music, iCloud, and the iPad and propelled Apple to become the first company in world history to become worth more than 1 Trillion Dollars. These technological advancements have had a cascading and domino effect on the digital and technological industry.
The lesson to be learned here is that even though Apple was on the brink of bankruptcy and collapse, it managed to take a whole-hearted look at where they were failing, deliberately chose to correct its errors, and became perhaps the most recognizable brand in the world. Therefore, you should not be afraid of realizing where you are failing and should instead embrace that failure and turn it into innovation and actionable goals that will lead to future success and profitability.
For example, some of the best golfers in the world utilize this concept when on the greens and setting up their putts. When the golfer analyzes his or her shot, they will visualize a line that they want the ball to follow in order to get it in the hole in addition to how much force they will need to put behind the swing.
However, once they step up to the ball and set their feet, shoulders, and back, they do not look from the ball all the way to the hole. Instead, they look 8-12 inches in front of the ball at an imaginary point on the line they have established that they need to follow. This imaginary point just a few inches in front of the ball has become their target instead of the target that may be 10 yards away.
Why? Because if they can hit that short target on the same line, they have determined they need to be successful; with just the right amount of force needed, the ball will travel to its long-term goal.
Therefore, hitting a goal that is close results in hitting a goal that is far away. In this example, success occurred at the beginning of the swing, not the end. Because the golfer hit their first short-term goal, the long-term goal was also accomplished.
Wrapping It All Up
Your baseline metrics are only the beginning steps that need to be undertaken to track your key metrics successfully. Once you and your various teams have gained this information, you must set goals aimed at helping you achieve your target performance. To accomplish this target performance, set goals that are obtainable both shortly and in the distant future.
We encourage you to take this golfing example and put it to use inside your company. Gather your baseline metrics so that you can efficiently measure your product or company’s improvement, develop obtainable goals to aid in you achieving these improvements, and be unafraid of looking failure in the face and transforming it into fuel for success.