At this point, you should be thinking about your business in terms of core activities (systems) that your business performs to build and deliver valuable products and services to your Customers. For a refresher on thinking about the core activities of your business, read our article here.
The next important piece of optimizing your business for better outcomes is to understand and identify the key attributes of each activity. We will talk about each of these key attributes with an example of a core activity of onboarding a new customer.
The first key attribute to consider is defined as inputs. Inputs are the pieces needed to execute the activity and are brought in from other sources. Let’s think about our example of onboarding a new Customer. For our example, we’ll also define our business as a gym and our customer has purchased a personal training package in addition to signing up for our gym.
The inputs needed to onboard this new customer would include things like an information packet about gym hours and amenities, gym policies, our branded water bottle that we give to all new customers, a calendar of availability for the first training sessions, and information about the training package. This is not meant to be an exhaustive list but includes some of the things you would expect to see as inputs into onboarding our new customer.
Process steps are another key attribute that includes everything your business does to complete the activity of onboarding a new customer. They define the order in which the different steps of the activity occur and can include details on who performs each step.
In our gym, we might define our onboarding process to start immediately after payment is received from a new client. Use a process narrative to write out the steps.
- Clear the payment through the credit card processing system
- Once payment has cleared, provide the new customer information packet and Jim policies guide to the new customer
- Highlight the gym hours and customer service number in the information packet for the customer
- Bring up the personal training schedule and find a time that works for the customer to have the first session
and so on until you have defined all of the steps that comprise this activity.
Outputs are another key attribute defined as the things that come out of your process steps as a result of going through the process. Outputs are one of the fundamental reasons a business exists. Any business takes inputs and through their process creates outputs that are more valuable to the business’s customers than the inputs. Outputs are oftentimes connected to the value your customers perceive that your business offers.
Back to our gym and our onboarding process, the most important output from this process is an educated new customer. At the start of our onboarding process, the customer knew very little about how our gym operates and what they need to do to get the full value of the product they have just purchased. Once a new customer has gone through the onboarding process, they are now educated on when they can use the gym, who to contact for help and how to contact them, and they know how to schedule their personal training sessions and have the first session on the calendar. The scheduled session would be considered a second output of our onboarding process.
By moving this customer through our onboarding process, we have added value to their world and move them closer to reaching their fitness goals. It is by creating these more valuable outputs that our business generates revenue and happy customers.
Our fourth Key Attribute is one or more metrics. Every core activity that we define should have at least one metric that helps us understand the health of that activity. The metric is something that we can measure that will give us insights into how our activity is performing.
If you’ve ever been through training on goal setting, you’re quite possibly familiar with the SMART acronym. SMART is an acronym that defines characteristics you should keep in mind when setting goals. The same acronym applies to defining metrics for your core activities.
S – specific. This means that your metric is specific enough that nobody in your business is unsure what it means or what it’s measuring. For example, if I defined a metric of “happiness,” that’s not very specific and could mean a lot of things. Happiness of who? Happiness when? To make this a more specific goal related to our example I could define a metric of “happiness of our customer after the onboarding process.” There is no question of what I’m trying to measure and what that metric tells me.
The second part of Specific is to define what “good” is. There are different ways to do this depending on the properties of the metrics that you define. For example, if I have a five-question survey that I give to customers to measure their happiness after the onboarding process and each question is a scale of 1 to 10 with 10 being the best, I could define “good” as a cumulative score of 45 points or higher with no single score lower than eight. Again, this is very specific, and nobody should be confused about what I’m measuring and what’s good/bad.
M – measurable. This means that I can actually measure the metric that I defined. If, for example, I said I was going to measure the level of endorphins in our customer’s body to see if they’re happier after our onboarding process, this is not really measurable in our gym. I can, however, measure Customer satisfaction with the onboarding process by having them complete a short survey at the end of the process.
A – achievable. You want to make sure the metrics you define are realistically achievable. If I defined a metric specific to how fast we scheduled our first training session with our customer and said every session must happen within 24 hours of the customer joining our gym, I’m going to be disappointed. Realistically, this is not an achievable metric because many customers will schedule their first session further out than 24 hours.
R – relevant. The metrics that you set should be relevant to the activity that you’re trying to measure. For example, measuring a customer’s weight loss is a useful metric for understanding the effectiveness of your training programs but doesn’t have anything to do with your onboarding activity. Make sure the metrics that you define are specific to the activity that you are analyzing.
T – timely. Make sure that the metrics you define are clearly defined at or for a specific time. We talked about this a little bit related to S or specific also. What you don’t want is a metric identified as “customer happiness”. Customer happiness when? Customer happiness for how long? Each metric should be clearly associated with that point in time in your activity. Customer happiness after onboarding.
You could do combination metrics specific to time also. Customer satisfaction before onboarding versus customer satisfaction after onboarding as an example. In any case, make sure that any metrics you define are related to a specific time in your activity.
Our last Key Attribute is Desired Outcomes. Ultimately anything we do in our business (and personal lives as well) we do because we are looking for specific outcomes. We talked earlier about outputs that define the “what”. Outcomes define the “why”.
Defining why you’re doing something gives you a deeper understanding of your activities in your business. It is also entirely possible to get the right outputs but not get the outcomes from your business activities that your business needs for long-term success. Companies can have millions of dollars in sales and still go out of business. Likewise, companies don’t need perfect outputs to reach great outcomes (McDonald’s cheeseburger anybody?) Defining your desired outcomes and aligning them across activities will help you achieve greater long-term success.
In our gym example, we defined two important outputs of our onboarding process; an educated new customer and a scheduled session for personal training. Why do we want these? We want an educated new customer so that they don’t hurt themselves, have unrealistic expectations, and so they don’t trash our gym. We want the first session scheduled because we know only through putting in the work will the customer see results and getting that first session scheduled makes them more likely to do the work and more likely to get the results they are looking for and be happy with our service.
By having these defined desired outcomes, we can now make sure our core activity has all of the right ingredients. These outcomes can also help us define some of our metrics. We said we wanted to make sure new customers don’t hurt themselves. Are we giving them the right information, so they know how to use the equipment without injuring themselves? Do we need to change part of our process, provide safety training, or include additional support as part of their membership? Do we have a metric that tells us if we are achieving this outcome or not?
Now that everything is defined, we have a much better understanding of what we need out of our activity and how we are doing today. This becomes the foundation for improvements to our business to either scale larger or improve our efficiency and reduce costs.
Read our follow up to this article here on about understanding the relationship between all of these attributes and how you can use them to identify inefficiencies in your business and make the improvements needed to grow and scale.
For your core activities, identify the key attributes of each activity.
- Process Steps
- Desired Outcomes
If you’re looking for extra guidance on how to apply this or other tools in your business, you can book a 15 minute call with me for $95 here.
If you have a bigger need, please email me and we can discuss how I can best help you Optimize for Outcomes.