Some common mistakes in measuring business development metrics.

Using key performance indicators (KPIs) as success metrics. KPIs are indicators of performance, not success. They tell you how well you do what you do, but not whether what you do is aligned with your strategy and goals. Success metrics are outcomes that reflect the value and impact of your business development efforts. They tell you whether you are achieving your desired results and creating positive change. For example, a KPI for business development could be the number of meetings or calls with prospects, while a success metric could be the number of new partnerships or contracts signed.

Defining metrics before strategy. Metrics are a reflection of your strategy, not a substitute for it. You need to have a clear and coherent strategy before you can define and measure your metrics. Otherwise, you will end up with a bunch of random numbers that don’t tell you anything meaningful or useful. Your strategy should include your vision, mission, values, objectives, and hypotheses. Your metrics should be derived from these elements and help you test and validate your hypotheses.

Focusing on outputs rather than inputs. Outputs are the results of your actions, such as sales revenue or customer retention. Inputs are the actions that lead to those results, such as customer usage or engagement. Outputs are important to monitor, but they are not actionable by themselves. You need to understand and measure the inputs that influence the outputs and how you can optimize them. For example, instead of just tracking your revenue, you should also track how your customers use your product or service and how you can increase their satisfaction and loyalty.

Mixing up retention and engagement. Retention is binary, it answers whether a customer was active within a certain time period or not. Engagement is depth, it answers how active a customer was within that time period. Retention and engagement are not the same thing, although they are related. Engagement is one of the major inputs that drive retention, along with value and trust. You need to measure both retention and engagement to understand how well you are retaining your customers and how you can improve their experience.

Confusing customers and users. Customers and users are not the same thing in most business models today. Customers are the ones who pay you for your product or service, while users are the ones who use it. Sometimes they are the same person, sometimes they are not. For example, in a subscription product, there may be multiple users associated with one customer account, or there may be users who try your product before becoming customers. You need to separate and define these two groups clearly and measure them accordingly.