Tracking What Matters with Dashboards and Scorecards

As you know, you can’t just buy a new car and not perform routine maintenance on the car like replacing the oil and window washer fluid. If you did, the engine would cease up and the car will die. Well, the same thing will happen in a business. If you don’t watch your most important gauges things will start to blow up. Therefore, it’s important you have a solid tracking system in place to ensure all the parts of the business are operating smoothly.

Another thing to keep in mind is that some numbers you may want to keep to yourself, but others you should communicate to your team members. Everyone wants to know the score, and they want to know what winning looks like. Can you imagine going to a basketball game where there was no scoreboard? It wouldn’t be as much fun, since most people would lose count after the first few baskets. The same thing goes for your team; they need to know the score, so make sure you have a visible scoreboard or dashboard. Not only does it show you where you are, it also shows your team members what is expected of them. 

I even like to involve team members in getting me the numbers. This helps you, and it helps them feel part of the success of the business. A win-win for everyone!

FREE: I've included a download of how to create Dashboards and Scorecards here

What do I Track?

I have found, after many years running businesses, that I like to categorize them into four categories: Team, Marketing, Customers, and Financials. You can typically get all the numbers you need from your financial statements (i.e. Income Statement) and your system. Here is a summary of what I like to track:

Team:

• Goals
• Core values

Marketing:

• Monthly marketing spend
• Cost to acquire a customer
• ROI (return on investment) for each of the marketing initiatives you have going on

Customers:

• Top five customers with largest spend per month
• Top twenty-five customers sorted by lifetime spend
• Lifetime Value of a Customer

Financials:

• Net profit
• Gross revenue
• Monthly operating expenses
• Marketing expense percentage

Tracking Your Team

You should have a consistent meeting rhythm with your team. If you start to drop off your meetings, you will find that your team will start to lose focus and start slowly going in a slightly different direction. You may not see any significant issues for a month or two, but then you will slowly see changes in behavior at the business. It may start with some team members coming in late, not smiling as much, lower customer satisfaction ratings, the business starts to become untidy. These are all warning signs that things are not as they should be in the business. 

How do you prevent disharmony, disinterest, and dissatisfaction at your business with your team members? A regular rhythm of team meetings, from the daily check-in to the weekly one-to-one team meetings, to the monthly team meetings. The good news is as your business grows, your meeting time shouldn’t; in fact, it may go down. As you hire more team members, you will eventually hire a business manager, and one of their roles will be to do the team member one-to-ones with those who report to them.

I cannot emphasize enough that without routine and thoughtful interactions with your team members, things will start to deteriorate. The solution is to—above all—make your commitment to have regular meetings with your team members. Take each of these opportunities to review the business’s core values, yearly and quarterly goals, and where you’re at on that day. To really help motivate your team, they need to know the score. In the upcoming section I will cover the items that I like to share with my team to motivate them to do better.

Tracking Your Marketing

You always need to be growing in any business. You will have customers come and go—some will move away, others may need solutions you don’t provide. You always want to be growing your business, and as we discussed earlier, marketing is how you bring customers in. Therefore, you want to have a mechanism for tracking your marketing efforts.

Marketing can easily turn into a black hole of spending, since many marketing tactics are very hard to quantify a ROI (return on your investment). The ROI is very important. If you don’t receive more profitable business to offset what you spent on a particular marketing initiative or campaign, then you are losing money, and that is just bad business. We would never rent a 5,000 sq. ft. business in Manhattan for $80,000/month if we could only make $70,000/month in revenue, so why do so many businesses spend thousands of dollars on print ads and other marketing initiatives and not know if they are making at least that much in profit to the business?

The key point I want you to understand is that you need track the amount you spend on a marketing campaign and connect it to the profit of that procedure, not the revenue. If you spent $5,000 on an ad in a glossy lifestyle magazine promoting cosmetic injectables and you get ten customers paying an average of $500 each for their treatments, you are not even—you actually lost money seeing those customers. Why? Because you typically give half of what you charge to the drug company to buy their injectable product. In that example, your actual profit on those ten customers is only $2,500 (10 x $250 injectable cost), not $5,000. 

Remember, those marketing sales representatives are professional salespeople, not professional marketers. Their number one goal is to sell advertising and get paid a commission. Their main goal is not to help you, but to help them. Now, in some instances, you may actually get someone who sees the big picture—that if you make money, then you will keep buying their advertising. But those people are far and few in between.

What numbers do I like to track for marketing?

• Monthly Marketing Spend - You need to know how much you spend each month on all of your marketing campaigns, and also how much you spend on each one. You need to have a monthly budget and stick to it. It is typically a percentage of annual sales, divided monthly. So, if you have an annual business revenue of $900,000, and you allocate 20% of your total revenue to marketing, you will spend $1,500/month ($18,000/12 months) on marketing. You’ll want to know this number and track it monthly. This number will be identified on your Income Statement (we’ll cover that later).
• Cost to Acquire a Customer - Once you know how much you spend on marketing, you can divide it by the number of new customers you get in a month to see your actual cost to acquire a customer. In the previous example, if your monthly marketing budget is $1,500 and you got twenty new customers in a month, your cost to acquire a customer is $75 ($1,500/20). You will want to track this from month to month, because it can identify if a marketing program is working or not. You will get the number of new customers from your electronic medical records system, or it may require a team member to calculate it.
• ROI (Return On Investment) Marketing Spend - You want to know for each of the marketing initiatives you have going how much it cost you and how much profit you generated from that marketing initiative. From the invoice, or details of the Income Statement, you will know the cost of the initiative. Calculating the profit will require a report that outlines the customers who found you through that marketing campaign (as identified when they booked), and calculating the profit for the procedures they had done. The report of the customer procedures will be accessed through your electronic medical records system.

Tracking Your Customers

It is sometimes tough getting customer data. Your electronic medical records system is the best place to look, and it will probably include several pre-configured customer reports. I like to keep it very simple; I want a monthly report of the Top Five customers who spent the most in the business, as well as a listing of the Top Twenty-Five customers who’ve spent the most money since they’ve become customers. Remember the 80/20 Rule? The Top Twenty-Five are my top 20%, so I want to know who they are. As well, the monthly Top Five will help me to see what is happening in the business and who my rising stars are. These rising stars could be headed to the Top Twenty-Five list.

From the Top Twenty-Five, you can see another metric I like to track, and that is the Lifetime Value of a Customer (LVP). A customer may only come in for a $500 procedure, but if they like the results and your business, they will keep coming back. It’s not uncommon for the LVP to be $10-$20,000. These are your biggest fans, and you need to know who they are!

Tracking Your Financials

I know most of you probably had your eyes to glaze over during financial accounting class in college—if you even took it! However, you can’t just depend on your team for information. You need to link the money coming in and out to the performance of the business. This is also where business embezzlement occurs. I’m sure you’ve all heard of businesses where thousands of dollars went missing over the years. This happened because the owner or business manager was not watching the numbers.

Don’t worry, you don’t need to be an expert in financial statements, but you should know the basics. There are typically three financial statements you will want to be aware of.

• Income Statement, which compares your revenues and expenses to see if you are going to make any money. This is where you find your net income, gross income (bottom line), and profit.
• Cash Flow Statement, which shows you how much money you have in the bank. 
• Balance Sheet, which compares what you own to what you owe. This statement is reviewed annually and doesn’t contain much unless you have significant assets like machinery or a building.

The numbers I like to keep track of every month are Net Profit, Gross Income/Revenue, Monthly Operating Expenses, and the Marketing Expense.

To help clarify some the terminology used when creating financial statements, I want to give explanations of some common terms. For most non-accounting people, some of these terms are confusing, and if you are in the healthcare field, you have most likely long forgotten about these terms. 

Gross Income/Revenue vs. Net Income/Revenue

Many people confuse Income or Revenue with Profit. This is a big mistake, since Gross Income is the total revenue you bring in from the procedures and services you offer, but it doesn’t take into account any expenses of the business. Once you deduct your expenses, like rent, payroll, marketing, insurance, etc. you get your Gross Profit, which is closer to what you get to take home. Net Income is often used in exchange for Net Profit; it is the total revenues you make minus the COGS (cost of goods sold, which includes buying product to resell or use in your procedures). You can use Income and Revenue interchangeably; however, some CPA’s have preferences. I like to call it Revenue, even though on an actual financial statement it’s called Income.

Gross Profit vs. Net Profit 

Profit is profit, right? No, not really. I’m most concerned with Net Profit, since that is the closest to what I get to keep. Net Profit is Gross Income minus COGS and your fixed and variable expenses (i.e. payroll, rent, insurance, accounting/legal fees, marketing costs, etc.). Whereas, Gross Profit is more of an accounting term where it is calculated by deducting only COGS from your Gross Income (but doesn’t include all the other expenses). Just remember, you still need to pay Uncle Sam! So, it doesn’t include any taxes you need to pay. 

Operating Expenses

When you run any business, you are going to incur costs to do so. These costs are called Expenses. There are two types of expenses. There are Fixed Expenses, which don’t change from month to month, like rent, monthly insurance premiums, marketing and payroll. Then you also have Variable Expenses, which do change from month to month and can include: credit card fees, bonuses paid, injectable product purchases, office supplies, etc. For the most part, your monthly Operating Expenses should be very consistent and shouldn’t change very much. I like to know this number. I know for my clinic, which does about $1.1 million/year, my monthly operating expenses are on average $25,000/month. That includes rent, payroll, insurance, and buying supplies. 

Marketing Expense

As I mentioned previously, the Income Statement lists all the income (or revenues) and expenses of the business. One number I like to pick up in the expense section is the Marketing Expense. I like to know how much we are spending and to make sure that the money spent is getting us new customers.

Where do I get the numbers for my Financial Statements dashboard? I get them from the Income Statement, which comes from my accountant or bookkeeper. You are going to get these once a month and usually only when all the statements and invoices have been received. This typically occurs one to two weeks after the actually previous end of the month. 

Dashboards

Now that we have a listing of the numbers to track, I need a place to track them! Some people use a simple Excel spreadsheet and then post the public numbers either online or in the business for everyone to see. If your business uses team communication software like Slack or Microsoft Teams, these are good tools to post them so everyone can see them and also react to them. With those tools, anyone can add comments and emoji’s (i.e. happy face, sad face). It makes the dashboard, and all team communication, much more interactive. As well, you can do it the old-fashioned way and make a poster and post it in your lunchroom.  

You will use these numbers whenever you have a meeting, whether it is a team meeting, or a one-to-one meeting with individual team members. Remember, everyone wants to know the score! 

Here is a simple dashboard created in Microsoft Excel:

Please note: you may not want to communicate all of the above to your team. You may choose to keep the increase in profit to yourself and instead publish the “new weigh loss customers” goal, since these are very profitable procedures and will most likely get you to the “profit” goal.

 How to Start?

You need to come up with 3-5 items that are the big “dominos” for your business (eg: 5-star reviews, AP, Inventory, Increase of Profit, # events, # deposits, pipeline, etc..). These are items that actually track a lot of sub-items. Once you do that, you need a way to visualize them. If you use Microsoft, you can create something with PowerBI (this usually is included with a Microsoft Office license), you can use specialized software, or just something like Excel. Most software options are crazy expensive, but Cyfe.com is reasonable (and it comes with a “TV mode” so you can have it running on TV’s in your organization), it starts at $19/m. Alternately, what I do for one of my companies is I have the branch manager post the key numbers every Monday morning in the group “Slack” (slack.com) channel for everyone to see (& comment). She gets these numbers from our CRM and accounting system. Having the dashboard/scoreboard numbers available to each team member is very motivating and lets them know where they are in relation to the companies’ goals.

Dashboards and Scorecards are a critical part of any successful business. They are even more important if you want to have a business that runs without you, or you want to see at the highest multiple.  

I hope this gives you some ideas on how to make the most out of your team meetings. Everyone has a different business, so use these as a guide and take any “nuggets” you feel will work for your business.

I've also included a download of how to create Dashboards and Scorecards here

Additional Resources: