What is your favorite metric to predict future business?
I met a marketing director at a meetup at the start of the year. You know when meetups were in person. She asked me what metric I would recommend is the most important one to track to indicate future business.
It was actually a trick question.
And to be honest in my eagerness to please I wanted to respond with the one I like. And add that I don’t like tracking one. I like to track at least two, where the second adds shape or counterbalances the other. Like tracking both customer lifetime value and churn. But that’s for another newsletter.
The truth is it truly depends on your business. It’s unique for you.
This marketing director worked for a B2B business with a long sales cycle. She needs to communicate something to the Sales team to show what she is doing today support their future sales. Trends in revenue and margin can change over the time. A predictive value of revenue a year and half out, well, is too far out. Focusing on something closer lets her impact the trend today.
For her it is sales calls generated from marketing. You could call this marketing qualified leads (MQL). She can point to how many sales calls are booked this month, as both a target and a predictive indicator of future revenue. This is because she knows the long-term trend. And she knows if the number drops, then she can look at what they are doing today that needs to change to bring it up again next month or next week.
It reminds me of an example often cited in entrepreneurial circles. Of restaurants owners who track reservations to help them with buying fresh food supplies and setting staff rosters. (Or at least before shutdowns, though an equivalent could be pre-booked curb side orders.) But they don’t just buy for the reservations. If they know that typically reservations are 25% of their business, they extrapolate from there.
Which is why are near term MQL metric is important too. If we can use something near term that is solid to predict future outcomes, we can use it for future planning as well. Sales calls book might help us understand our future needs for closing salespeople and future marketing content.
What is the metric that you can measure today that helps predict future business? Does it have a prominent place on your marketing dashboards?
PS. All the best for the holiday season. Wishing you joyful connections, whether they be in person or virtual. As the Grinch learned long ago, it is about heart to heart, even in this year where it might not always be hand in hand.