Professor of Management Practice
Ambitious entrepreneurs dream of growing their businesses and achieving success. But are they measuring the right metrics to ensure they are on track? A recent survey conducted among 85 ambitious growth entrepreneurs – all members of the Vlerick Entrepreneurship Academy – has revealed that many overlook essential growth measures that can profoundly impact the long-term sustainability and prosperity of their businesses. Surprisingly, only 6 out of 10 entrepreneurs consistently measure employee and customer satisfaction. Roughly half measure product quality, and just a quarter track innovation in their pipeline. Yannick Dillen, Professor of Entrepreneurship at Vlerick Business School, delves into why these measures are crucial and how neglecting them could be detrimental to the growth of your business.
Why do so many entrepreneurs seem to be obsessed with traditional growth metrics?
Entrepreneurs are often preoccupied with easily quantifiable metrics like revenue and profit. While these financial indicators are undoubtedly important, they only provide a partial picture of a business's growth and success. Many more intangible factors can indicate growth, such as employee satisfaction, customer satisfaction, product quality or innovation efforts. Neglecting these equally critical growth measures can lead to blind spots. And over time, they may hinder a company's ability to thrive and innovate.
Research by the Vlerick Entrepreneurship Academy shows that many entrepreneurs overlook growth measures such as employee and customer satisfaction, product quality or innovation. Professor of Entrepreneurship Yannick Dillen delves into why these measures are crucial and how neglecting them could be detrimental to the growth of your business.
Four out of ten entrepreneurs do not measure employee and customer satisfaction. Is this surprising?
One of the survey's key findings is that only 60% of the entrepreneurs consistently measure employee and customer satisfaction. This is a striking insight, as the satisfaction of both employees and customers is integral to long-term business success. Satisfied employees are more engaged, productive, and loyal, contributing to lower employee turnover rates and a healthier work environment. Satisfied customers are more likely to become repeat buyers and sources of valuable feedback. Failing to measure these aspects means missing out on opportunities for improvement and growth. Without feedback from employees and customers, entrepreneurs may not fully understand the obstacles or areas for improvement within their business, ultimately limiting their growth potential.
Product quality and innovation efforts seem to be neglected factors too. Why are these so important for measuring company growth?
Product quality is the cornerstone of a company's reputation and long-term viability. Yet approximately half of the surveyed entrepreneurs do not consistently measure this factor. A business producing high-quality products or services is likelier to enjoy customer loyalty, positive reviews, and word-of-mouth referrals. Ignoring this metric can lead to quality degradation over time, which can be detrimental to customer satisfaction and, consequently, to business growth.
Innovation, on the other hand, can be considered the lifeblood of sustained business growth. Yet only a quarter of the entrepreneurs in the survey track the number of innovations in their pipeline. Innovation drives competitiveness, expands product lines, and opens new markets. Failing to measure innovation can lead to stagnation, making it difficult to pivot in response to market changes or take advantage of emerging opportunities.
What might be the reason that many entrepreneurs are neglecting these metrics?
Measuring employee and customer satisfaction, product quality, and innovation is admittedly more challenging than tracking revenue or profit. These metrics are often intangible, and their impact may not be immediately quantifiable. To measure these intangibles, entrepreneurs can employ a range of methods, including surveys, feedback mechanisms, quality control processes, and innovation pipelines. Investing in the right tools and systems to collect and analyse this data can provide invaluable insights and guide strategic decision-making.
What is your main takeaway from the survey results?
Business growth is not solely about the numbers on a financial statement. Entrepreneurs must broaden their perspective and consider the intangible factors influencing their success. Neglecting to measure employee and customer satisfaction, product quality, and innovation in the pipeline can have serious consequences for a business's long-term growth.