Do you know the leading indicators in your sales and marketing funnels? They are different for each business. Perhaps it’s how many sales calls made, to how many appointments, to how many closes? Every company has an X-Y-Z formula. If you own a website, it might be how many views, to how many click-throughs, to how many purchases? For others, it might be how many people know about your product, to how many have purchased your product, to how many are consistently returning customers?

If you aren’t looking at the right metrics, you simply aren’t going to succeed. The real question is, do you know what’s vital? At the different levels or departments in the organization, are your leaders and teams focusing on the most profitable parts of the business in order to make it grow and prosper?

All too often, I hear entrepreneurs saying, “We grew 20% of our top line this year.” And I always ask them, “That’s great, but how’s your bottom line?” And inevitably, they respond that those numbers are the same – up by 20%. So, you had to work 20% harder to make effectively the same money? That’s bad business. You’re not focusing on the right things!

You’ve got to figure out the most Vital Factors of your business, and concentrate the majority of your resources on those factors, in order for any strategy to succeed. You want your ratio of X-Y-to-Z hone in on the most important parts of your business. Once you know that ratio, you can create a real economic engine and precisely measure whether that engine will create sustainable profitable growth and competitive advantage.

Because your X-Y-to-Z is different from your competitors, you’re gaining a significant advantage by putting a primary focus on the things that make your business unique, specialized, and most effective. You aren’t wasting time, talent, or money on the parts of your business that will give you the least return – you’re discovering and utilizing the best, strongest, and most profitable assets. That’s more than sensible. It’s smart.​

The X-Y-Z ratio defines your utilization of key resources; what you have, what you need, and what you want to achieve. What’s yours?