Keep the Dandelions Out of Your Data

Last week I urged readers to take a closer look at their association’s business models. I’ll be the first to admit, that without the right systems in place, my advice might be hard to follow.

We’ve all come to appreciate the value of data in planning and decision-making. Fancy new technology makes tracking clicks, opens, and visits as easy as picking dandelions. But that’s not where the similarity ends. Much of the readily available information is more like a weed than a flower, a time-sucking distraction that takes attention away from the big picture. 

Identifying the right Key Performance Indicators, or KPIs, prevents information overload and allows you to see meaningful patterns and trends. KPIs are the metrics used to evaluate your association’s overall performance. They include the financial, marketing, membership, meetings, sponsorship, and fundraising statistics that you might present on a dashboard to highlight your organizational health.  

KPI.org describes their value like this: KPIs create an analytical basis for decision-making and help focus attention on what matters most. They are used to:

• Improve performance and achieve goals
• Focus attention on priorities
• Provide evidence

KPIs are part of an evolving toolkit of performance measurement systems. Management by objectives popularized in 1954 by Peter Drucker and “SMART goals” introduced by George Doran in a 1981 issue of Management Review are early precursors. 

Educate the Team

Despite a long history of tracking productivity, whether the task involves employees or operations, the process in many organizations is still haphazard. According to a 2018 US Data Literacy Survey, only 24 percent of business leaders were confident in their ability to read data and use it for analysis and argument.

We have the tools to keep everyone on top of their stats, but that job is often limited to a few people in the marketing or membership departments. Creating a culture where the team follows their numbers with the enthusiasm of a nine-year-old baseball fanatic, requires more than installing a new software platform.

Improving your team’s understanding of metrics is the best way to promote their value. The online marketplace is fickle. Customer preferences can change on a dime. Getting the right KPIs begins with educating employees about why each staffer’s insights are significant, assessing what is most important to monitor, and identifying the signals that indicate it’s time to pivot.

Employees who understand the distinction between lagging and leading indicators and can evaluate the dynamic between the two metrics have a leg up on developing meaningful KPIs. This process is a little like driving a car. You need to focus on the road ahead, but you won’t be safe unless you also watch the rearview mirror.

Explore the Past

Lagging indicators, as the name suggests, look backward. They are the pinstripes, stodgy statistics with a track record and a timeline. Lagging indicators are easily monitored and often used to develop goals in a strategic plan. Familiar examples include:

• The rate of membership renewals during a quarter
• This year’s versus last year’s sponsorship revenue
• The number of people who attended an event
• Or the king of stats, total annual revenue.

Lagging indicators measure what occurred in the past with a goal of predicting what might happen in the future. They answer questions about how much, how many, how often. The challenge is that this news can arrive too late for action. A focus on quantity rather than quality is another drawback.

Evaluate the Future

On the other hand, leading indicators are forward-facing. They are the punks, young upstarts that provoke questions and look to the future. The term was coined in economics to describe an impactful event that may predict a new economic trend. The stock market, unemployment, interest rates, and housing starts are all leading economic indicators.

Leading indicators are powerful. They can point to new markets and opportunities for growth or alert you to disruption before it occurs. However, because they are predictive, they are also more abstract and less reliable. The process used to identify these benchmarks is intuitive and open-ended. Member satisfaction metrics are a good example of leading KPIs.

These questions can guide you in developing leading indicators for your group.

Customers/Market Penetration                                                  

• Who are your customers, and how are their characteristics changing?
• Where are the numbers going (new versus return, by segments), and what are market share trends?
• How are customers engaging?
• What does their behavior indicate about their current and future needs?
• How and why do they value the association?
• What steps do customer segments take on their way to joining or making a purchasing decision? 

Products/Services

• What is being purchased?
• How are products/services trending up or down by customer segment?
• What types of knowledge resources and content are accessed the most?
• How does pricing strategy relate to purchase volume?

Organizational Efficiency/Operations. What are the trends for–

• Employee retention?
• Quality and performance measures?
• Productivity and technology measures?

Finance

• What is profitable or trending up/down?
• How are the financial statements trending?

Involve Everyone

Leading and lagging statistics complement each other. Leading indicators help predict what the lagging indicators will be. You need both to have a complete picture of your organizational health.

Most Association leaders are proficient in using these numbers. But it’s surprising how many other employees are not. Your KPIs will be more meaningful when everyone on the team participates in their development. Even the most junior staffers can, and should, help to identify the right metrics.

You can’t watch trends if you only look at the numbers twice a year. Build your own Geek Squad. Motivate teams across departments to regularly review their statistics. Reward enthusiasm and encourage innovation.

Consider Context

Here is an important caveat. You need to love the numbers but remember that they never tell the entire story. Balance your statistics with context and psychology. Yes, business decisions should be based on data and the more information you have the better; however, the facts you mine from your AMS need perspective to realize their full value. If statistics are the foundation, context is the framework for every argument. It provides the rationale and the wide-angle view of the issues—answering questions such as:

• How was the data collected?
• How do the numbers relate to each other?
• When you look at the big picture do the results make sense?
• How do the findings stack up against the needs?

Purchasing a home is one example of the impact context has on numbers. The sticker price is not always a good indicator of actual value. Buyers need to assess both relational and emotional contexts. They should compare the cost and features to other homes in the area. Whether neighborhood services such as schools, transportation, and businesses meet their family’s needs is another value factor. In addition, taxes and other related data figure into the transaction. The totality of information gives the home’s price meaning in the marketplace and equates cost to the buyer’s requirements.

We have the means to know our organizations and their market positioning on a granular level. But that detail can overwhelm or sidetrack decision-making. By promoting employee buy-in, finding the right filters, and using the appropriate context, you can avoid the dandelions and focus on the flowers.