Real-World Calibration: Is your subscription business operating off an accurate picture of reality?
When I was in the Air Force I was an Air Traffic Controller at a Radar Approach Control facility in California that served 5 civilian airports in addition to our own military base. Given that we couldn’t physically “see” the aircraft we were controlling, it was critical that the radar image blip we saw on our screens corresponded to the actual position of the aircraft in the sky. This was particularly true for one position which was used for mobile deployment training and focused on the final 10 miles of flight.
The problem was that the radar that used for that position tended to “drift” over time causing the radar image of the aircraft on the screen to no longer represent the actual position in the air. You can imagine the catastrophic consequences of controllers giving pilots instructions based on a picture on the screen that didn’t represent the actual position in the air!
To combat this radar “drift” we would have to regularly calibrate the radar which required aligning it to a known, fixed target. Let’s call it a fixed point of truth. When this was accomplished the radar would display an accurate picture of reality.
What does this have to do with your business pursuits today?
Everything. We all tend to have business radar “drift” in our understanding of the true state of our own business and the markets that we serve. But the most practical impact of business radar drift is that you will not be seeing and acting on an accurate picture of reality. We all have seasons of “irrational exeburance” causing our vision to be closer to hallucination, and find ourselves doing more projection than validation. This means your consequent direction and decisions could have seriously negative business impact. After all, how can you make wise decisions to move forward if you really don’t know where you are?
How do you spot the warning signs?
Your branding has drifted when your message no longer resonates with your target market, which you can see when your website bounce rate increases and visitor/lead ratio decreases. Your marketing has drifted when the messaging doesn’t catalyze action which shows up when CTR (email click through rate) decreases and website traffic declines. In sales, drift can be identified when forecast accuracy slips, wins decrease despite pipeline, and deal size declines.
So what can you do in today’s fast moving, rapidly changing marketplace to make sure you have an accurate picture of reality? Here are a few thoughts:
- Identify your fixed points of truth to align your business radar to. The things that don’t move, that are always true (Core business principles, best practices & key metrics). What are yours? A tremendous resource in this area is anything and everything by David Skok at www.forentrepreneurs.com. Here is a great place to start with best practices and key metrics: http://www.forentrepreneurs.com/saas-metrics-2/
- Take regular steps of “real-world calibration” to insure that you have an accurate picture of reality. What are you doing to calibrate your business “radar”? (ex: web traffic, lead flow, deal size, close ratio)
- Evaluate periodic “crashes” for traces of radar “drift” . Is an inaccurate picture of reality a significant contributor? (ex: sales post mortems, forecast to close ratio, >20% swings in marketing metrics)