Ep #211 CEO Series: Know the Score

Running a business is like playing a game and every great game keeps score. A CEO knows the numbers and uses them to make decisions and celebrate progress. In this episode I share the tools that a CEO uses to measure Key Performance Indicators (or KPIs) and why they are so important to creating a beautiful business. 

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Transcript

Sari  0:00  
Welcome to your Food Business Success. This podcast is for early stage entrepreneurs in the packaged food industry ready to finally turn that delicious idea into reality. I'm your host Sari Kimbell, I have guided hundreds of food brand founders to success as an industry expert and business coach, and it's got to be fun. In this podcast, I share with you mindset tools to become a true entrepreneur and run your business like a boss, interviews with industry experts to help you understand the business you are actually in, and food founder journey so you can learn what worked and didn't work and not feel so alone in your own journey. Now let's jump in!

Sari  0:49  
Are you keeping score in your business? Are you measuring what really matters when you are in business? It is like playing a big fun game, and no game would be complete without keeping score. But are you measuring the right things? If you're even keeping score at all. Hello and welcome back to the podcast. I am continuing the CEO series, where I am diving deeper into things that a CEO is and what a CEO does. So I want to give you some things to think about if you are in a place where you know you need to become the CEO of your business. And maybe, just to back up, we need to say a CEO is the Chief Executive Officer of your business, and one of the key roles that you play, if you're going to take on this role, is that you are keeping the vision alive. And as we talked about last week, you are constraining your activities so you are keeping your "employees" following, making sure that they are staying, sticking to that vision for the business, that 10x goal. And there's lots of different terms for that. I was recently reading something that he called it the wildly important goal. Could be the BHAG, which is what Jim Collins uses. The big, hairy, audacious goal. Whatever it is, it's something really compelling. It's something really emotionally resonant with you and you're like, let's go after this really big goal. It's something that's going to motivate you, get you up off the couch. Have you constraining, uncommitting, setting priorities and taking big, bold action. Okay, so I just wanted to kind of set the stage so you have constrained. You have your vision. Now, let's talk about the necessity of keeping score, of measuring your progress. What you will often hear in business is a term called KPIs, or key performance indicators. Sometimes it might be called a dashboard or a scorecard, but the idea is that you are actually monitoring progress, and you are measuring it. I'm not sure who said it, but there is a common phrase that we use in business. What gets measured gets managed. Just by the very act of you putting focus, putting your brain's attention onto these data points, this information that you will inherently put more effort into them, because we all want to win. Many of us are competitive, and it's not about competing with others. In this case, it's about competing with yourself. It's about winning the game of business. And it is a game. I highly recommend that you look at it like that. We put so much seriousness into it. It's like, this means everything. This is my whole self worth. This is all the things. And we got to like, take a step back and say, this is a game. This is a thing that we get to do. And not everybody is going to opt in to play this game. In fact, most people won't. And if you make it a little bit more playful and you measure it, we keep score in games so that we can measure our progress. Again, we're not measuring against anybody else's game, that's not running a beautiful business. And I talked about that in the Episode 208, so I all of this under the context, the framework of having a beautiful business, and when you compare yourself to others, you will inevitably despair, and it's a miserable place to be, so I don't recommend that. But what we want to do is set up a dashboard that is measuring KPIs, and you get to decide what those KPIs are that is based on your particular vision, your particular priorities, whatever you decide are the three main priorities we talked about that last time that you need to have three and only three priorities that funnel up, that are helping you to go after that big 10x goal. And then underneath that, you have your activities. So typically, your KPIs are going to measure your activities. And I was recently reading or listening to Cal Newport's book called Deep Work. Highly recommend it. It's great book. But he was talking about, you know, the how? How do you implement? How do you create a great business? How do you do the strategies, right, the priorities? And he talked about keeping score and that you want to measure two things. What we often measure though is only one part of the picture, so that is what's called a lag metric. So a lag metric might be sales. It might be follows on your Instagram or Tiktok. Another lag indicator might be customer reviews or customer satisfaction, repeat purchases, things like that. And we want to measure these things because they are really important to see like, is what we're doing effective? But the problem with only measuring lag metrics is that the thing has already happened, and so it's too late for you to make changes. And so what we also want to measure are lead metrics, lead measures that these are things that you are taking control of. You are taking action. They are an activity, and you are measuring what you are doing, the actions you are taking, and then you're able to compare and see, does the activity that I'm doing, is it increasing? Is it changing the lag metric? So let me illustrate this with a couple of examples for you guys. Let's say you're going to run lead ads. You guys know I love lead ads. You can get the full lead ads course inside the Holiday Ready Bootcamp. And I highly recommend you do that. Zach Buckler came and spoke to our group, and then also you get his whole course in there. So I love lead ads. I talk about them all the time, but basically it's a specific kind of ad that you are running on meta, so for Facebook and Instagram, so you run this type of ad, you're putting effort into, this is what you can control, the amount of money that you put into the lead ad, the content, the images, the video, the audience, the cohorts, things like that. The people that you choose to show the ad to, the length of time,on and on, right? The number of lead ads that you run, these are things within your control. And so measuring, is it working, right? Playing with the AB testing, being a scientist, trying different things. So these would be something, if you're going to run a lead ad, any kind of ad, you better be measuring it because otherwise you're just sinking money into something that you don't know is it going to work. So then what you would want to do is, that's an area that you do measure, right? So you say, we're running three lead ads. We're putting this amount of money in them, and then the lag measure is how many people sign up on, actually click it and get onto your email list. Now you might actually want to, there's almost a couple of phases here, right? Because that's only the first part of the lead ad. Or the whole point of this activity is yay, we're getting people on our email list. Okay, so now we're measuring that, and we're seeing, we're tweaking and seeing, oh, that one doesn't work. Let's shut that one off. Oh, this one is working really well. Let's add some more budget to this. Then we're getting more people on our email list, and we all know, if you don't know I'm going to tell you, that email has a 40 to 1 ROI, so it's a really good place to put your precious resources of time and money. So building up your email list, I highly recommend.

Sari  9:59  
And then we want to measure, okay, let's measure that customer journey's progress, and do they actually buy, right? Great and awesome to get people on your email list. But does that welcome series that they now get, does that actually get sales? And so then you're going to have to tackle, okay, where we're going to measure things like open rates or unsubscribes, and where is it that they do click versus where are they falling off and not clicking at all? And that way, then you can say, well, maybe I need to increase the discount, maybe I need to rework this copy, maybe I need to change the content, maybe I need to adjust the subject line. So we want to measure these things. Now, I am not suggesting that you get like super in the weeds, you know, on tiny, tiny details, but a KPI dashboard does need to be that. It is a dashboard, and it's something that you know isn't going to take a lot of time, but if you're going to be investing money into something like lead ads, you better get some results in sales. Now, we don't want to just be like, switch, switch, switch, switch. We need to give things a little bit of time to work themselves out. But again, you're putting money into these things that you want to definitely be measuring it, because your brain will trick you. Your brain will convince you, it'll kind of like, lump a lot of information in together, and they'll tell you, oh, it's working amazing. Yeah, maybe you're just going to focus on the number of people that you got in and you're not actually looking at like, well, did it actually create sales? Because that's why we do these things. You are in business to create sales. We don't want our brains to give us information that's not true, and it will all the time. It'll skew your perspective and your information all the time. So you might think, you might overestimate its performance, you might underestimate its performance. You really need data to be able to make good decisions. So let me give you another example. Let's say that you want to increase your followers on social media of some kind, or you want to increase views or comments, like what you decide what's most important to you, and so you're going to post daily, and you're going to do reels and carousels, and you're going to decide, right, whatever you're going to do, maybe you're going to post stories. So we want to do things very intentionally with some kind of end goal in mind, we want to increase our followers by a 1000 or by 50% or whatever it is. You create the number, and then we get to work and we start measuring it. And so maybe you're going to say, I'm going to do 30 days of regular posting. Maybe you're going to post five times a week.

Sari  13:06  
As you scale your business, you are entering a whole new frontier that you have never crossed before. And I don't know about you, but if I was going to cross something that I've never done, or hike a big, tall mountain that I've never climbed before. I get a guide, and I want to invite you to a very special CEO Conversations that we are having the 17th and the 19th of September. They're totally free, and they are executive level coaching from me for you to get your scaling questions answered. Bring it on. Bring me your questions, your issues, your problems. Where are you getting stuck? Where are you not sure what decisions you need to make, and let's handle it. Let's solve your problems. Let's get your questions answered, and I will help you make decisions so you can take the next action. It's totally free to attend. You can come to one or both calls. It's so helpful to learn from others as well as get your own coaching. Go to masteryourbiz.co to register. It's right there at the top of the page. I'll also put the link in the show notes, and let's have a chat. Let's get your CEO questions answered.

Sari  14:29  
Okay, so now you want to measure that, are you actually posting? That's a big deal if you're actually following through. And then we want to measure like, does that increase followers? Does that increase engagement and views, and you can also measure like you can take a look and see what's actually working, right? Is it the reels? Is it the single posts? Is it partnerships, on and on, stories, things like that. So you want to be really mindful and intentional because you may realize that, like social media maybe isn't where you want to put your energy, and that's okay. Every product's a little different. Company's a little bit different, but we want to do these things intentionally. Oftentimes as business owners, we just are like, well, somebody said I should do this, and somebody said I should do this, and somebody said I should do that, and you can't do everything, right? That's what we talked about last time. You have to constrain but then let's measure it, because it may be that after three months, you're like, actually, this isn't working. I'm going to change up my tactic, my activity, still trying to meet that priority, right? And the priorities can change, but we don't make quick changes on those things. All right, so I could go on and on about it with examples. Let's just take one more. Maybe we'll do a wholesale example. So let's say you create a whole list of places that you're going to go visit to try to sell your product into, so different stores. So you create what's called a CRM, customer relationship management. And it can just be as simple as a spreadsheet. You fill out all the buyer information. You get as much information as you can in this and then you ideally go make an appointment, or you decide whether you're going to stop by and when, etc. Okay, so now we're going to start measuring the effectiveness of that, and we want to be thinking like a scientist, right? You're going to have your cell sheet, you're going to have your sample product and a bag, and you're going to have all the key information that you need. And then you're going to go start, maybe you start with like, five stores. And then we want to say, well, what's working? Did the pitch that we were making, the price point, the actual product itself? What kind of feedback did we get? Did we get any? We want to see, like, where is it that we can say, yes, this is working really well? Or where do we need to maybe make some shifts? So we want to be evaluating that, and then you're also going to want to be having the follow up tracking as well. The lag metric would be how many new stores you get the product into. The lead metric is the things that you can affect. It's, you know, the way that you communicate with buyers. It's the time of day that you go in, it's the type of samples, it could be your cell sheet, the type of follow up that you do, right? And so these are things that you can measure and evaluate and make shifts. And then hopefully you will start to see higher performance in that lag metric of new accounts opened. Okay, so how do you create an actual KPI report dashboard? I've seen them be super fancy, you know, lots of different tabs and spreadsheets and things feeding into like a big dashboard, I just keep a simple spreadsheet. I try to keep it basic. I have everything that I'm trying to measure on the left hand side and then going the other way, are dates of each week, and I measure weekly, and I think that's really important, that as part of your role as a CEO, and this is CEO time, that you are sitting down and you are taking a look at these metrics and getting data to make decisions. We don't want the time to be so infrequent that we can't make shifts and like have an effect on that lag metric. So things that I want to measure on the left, dates going across, and then I freeze the left hand column so that I can kind of keep scrolling over, because this will go on and on and on. But it's really interesting to see, to measure, like for me, I would measure how many new subscribers to the email list, and we look at where they came from. So maybe a lead ad, maybe YouTube, maybe a link from this podcast, and then we also are tracking purchases made, and where they came from. So we can see, like, what, you know, there's that lead metric and then the lag metric, and that it's as simple as that, right? 

Sari  19:32  
And I think being really mindful of not getting too in the weeds with tiny little things, but taking a little time to look at the actual numbers, and one of the really important purposes, I think, of a KPI or scorecard, is that you are actually measuring progress made. And I know I harp on this, but because you guys don't do it, we need an opportunity weekly to celebrate our wins, to see our progress and when we make progress, no matter how small we want to keep going, a scorecard reinforces motivation. Imagine you were just playing a game on and on and on, but you weren't measuring anything. You weren't measuring progress. Am I winning or not? Like you would give up. And that's what happens with a lot of businesses and business founders, is they don't measure anything, then they make broad assumptions, not based on data, that it's not working, and they're frustrated, and they give up. So we know as humans that we need to measure our progress, and so a scorecard, a KPI can really help with those like and I literally want you to physically celebrate, like high five yourself, raise your arms in the air, give yourself a hug, wink at yourself like great job. We saw some activity. And these things are slow at the beginning, you are trying to push a rock, a big boulder up a hill, and it takes a lot of effort to get that going. Over time, it gets easier, and you'll start to see that kind of inertia, overcoming inertia, and getting the flywheel going on this but it does take time, so we need to be measuring our small wins. We need to be celebrating and that's why every Wednesday inside Fuel, we are celebrating our wins. We put a post up. We say, tell us your wins. This is an opportunity for you to pat yourself on the back, to get congratulations from others, because I know it's not quite the same when you're by yourself looking at your computer to be like, good job, yay, you made progress, right? It feels so much better to like, have other people cheering us on as well. So I highly recommend, if you can build that in, have some accountability buddies, create a little community, come join us inside Fuel, celebrate your wins. And of course, it also helps you make decisions. It helps you change things up, using actual data, using real numbers, so that you can see is this true or not, because as I already said, your brain will lie to you. We'll try to prove whatever hypothesis, whatever theory. And if you're feeling down, if you're feeling like it's not working, because you're not looking at actual numbers and where you're making progress, your brain's just going to be like, yep, it's not working. Let's just give up. Let's shut it down. And so some things you are going to want to shut down. We talked about constraint last time. And case in point, I, you know, started doing video on YouTube, and so you might be watching this on YouTube with the actual video of me recording this podcast, and I wanted to do an experiment that is an activity that supports an overall strategy for me of increasing email subscribers, of getting new customers. I am a business. Of course, I want to offer incredible value and invite you to come into my world and let us help you inside Food Business Success and the programs that we offer. So I was like, I'm going to make an investment. I had heard over and over again how important having video and not just the audio was, and so I want to test it. So we did 10 episodes, I guess this is the 11th where we did video, and I invested in somebody to help me. I found a who, because I knew that I was already editing my own podcast, and that was time consuming. And so I did not want to do the video, and I knew that hiring a who could make it so much better, which is important visually, to have a more compelling kind of video going on than just like the single straight on, Zoom video. So I went ahead and found somebody on Fiverr. She created some different templates. She was doing the editing, I will say, some mixed results, I think just in pure being very transparent and candid. It was over time, I felt like it was interesting. The work started out really great, and then I felt like it declined. But I also was measuring that, because that's just a thought, right? That's my brain maybe telling me some stories but certainly the number of times that I had to go back towards the end and say, hey, I need you. You didn't catch this. I need you to fix this, do this. So that was actually becoming more work for me, which is interesting. But really what I wanted to measure is, does our watch time go up? And are we getting more people, getting the checklist that's below, or getting  the different things that we offer, and some things are easier to measure than others, but in any case, we want to be measuring things, and so it's fascinating to go and look and see has our watch time increased, and this was not a small investment. I should know this number off the top of my head, I'm going to go look right now. So I have spent $1,700 to date on the editing, paying somebody to do these videos. There has also been an increase of time on my part and a little bit on my VAs part to execute these videos. So there has been a time increase. There has been definitely a financial investment increase. So what's interesting is that it's a mixed bag. There have been some episodes that have received a lot of views, a lot more than we were getting, and then there's some episodes that are about the same when we didn't do actual video, we just had the audio, and some that even have less than kind of the average. And so it's interesting. I'll be honest, I don't know exactly what my decisions are yet. I don't know that I have enough data. I think we started doing this, I guess in July is when we started. And so I want to measure it a little bit longer but I also want to figure out ways that I can reduce the cost, because the ROI on it definitely is not there as far as a financial return and it is getting people, some of you, as you're watching on our email list, so that you can start engaging with me more and learning more about the programs and the value that I create and that our team creates in Food Business Success, and I recognize that my business and maybe your business as well, we have to be in the long game a little bit. We have to know that there may not be like this immediate return on investment, and I'm okay with that, but I'm not okay continuing to invest the financial resources. And I also want to figure out how to reduce the time resources that I am spending on last minute edits or last minute updates. And so I as a CEO, am now going to spend some time really saying, how can I reduce those time and money costs? How can we make this more efficient? How can I get my VA to support this more and maybe it's also finding a different person on Fiverr that's less expensive. I purposely wanted to start with somebody in the US that spoke English. She was a little bit more expensive and I do like supporting women owned businesses and individuals. And so that was a value decision that I made but I get to reevaluate that now, right? And so it's a little bit of a mixed result, and that I do want to continue doing video where I can, but I also want to be mindful of the investment, of the cost, because the ROI is definitely a longer term, and not sure that right now anyway, that it's really meeting the level that I want it to, to continue with the paid services. So that's just an example of how you might go about making decisions, and you might need more information, but it helps you to start forming hypothesis that are based on facts, and to be able to start making decisions. So being able to make data driven decisions as a CEO is super, super important. To wrap it up, you need some kind of dashboard. You need a scoreboard, a KPI report that you are looking at and checking in weekly, ideally, that you are putting on your CEO hat and you are evaluating what's working and what's not in your business. Don't forget that you can grab the CEO Checklist over at foodbizsuccess.com/CEO. And this will break down like, what do you need to be doing when you put on your CEO hat weekly? What are the activities that you need to be doing? So go and grab that checklist, get on our email list, and you'll get to start learning all about what we offer and how I can support you to become a CEO. And the Master Your Business program is really the program for you if you want support on this, if you want to understand what it is you need to measure, if you need to make sure your financials are in good working order and that you actually understand your numbers. Because just looking at numbers without really understanding it can be problematic. So if you are resonating with like, I want to become the CEO in my business, you got to check out masteryourbiz.co and you can apply. It's an application program. And if you're listening to this episode when it comes out live in September, we are enrolling now for our 2025 cohort, and we have some amazing bonuses that we're going to start in Q4. So October. So you get all of those bonuses for free. So it really is going to behoove you to go and apply now, and let's get on a call, you and I can chat about it more and see if it's a good fit. So don't delay. Take action. That's what a great CEO does. They take action on the things that resonate with them and are going to help them get to the next level in their business, go, start keeping score, and until next time, have an amazing week!

Sari  
The smartest thing you can do as an entrepreneur is to invest in a who to help you with the how to speed up your journey and help you skip the line. When you are ready for more support and accountability to finally get this thing done, you can work with me in two ways. Get me all to yourself with one on one business coaching, or join Food Business Success, which includes membership inside Fuel our community of food business founders that includes monthly live group coaching calls and so much more. It's one of my favorite places to hang out, and I would love to see you there. Go to foodbizsuccess.com to start your journey towards your own Food Business Success. 

Sari  
This whole becoming a CEO thing can be a little daunting, especially if you've never done it before, and you are just so focused on being the maker of your product, but your business requires you to step into the role of a CEO, but if you want help, I have a CEO checklist that you can go and grab for free. Go to foodbizsuccess.com/CEO. This will help you to understand what you need to be doing each week when you put on your CEO hat, the more you can make time to work on your business and not just be in your business, the faster you will be able to grow and scale and create the business you love.