How Are You Balancing Between Qualitative and Quantitative Measurements?

Knowing what information you want or need is only a part of the solution. You also must determine how you will measure it and what it will mean. In a previous article, we discussed the importance of moving at the speed of change. Information and analysis are necessary to act quickly in an informed way to keep pace with the shifting landscape we now find ourselves in. Capturing data in multiple ways becomes critical to ensure you can enact educated strategies that can be successful.

Most people have heard that there are quantitative and qualitative measures. Let’s define each of those here for purposes of this discussion.

Quantitative Measures

These are measures that most people are very familiar with. These are the numbers we see on regular reports each day. These include sales metrics, whether it is performance to plan, forecast, or last year. Your results around average order value, conversion, transactions, profit, or customer service scores are all quantitative metrics. The prefix ‘quant’ comes from Latin meaning: how much, as much as, how many, how great, an amount. Quantitative measures are numeric.

Qualitative Measures

These are metrics that are more difficult to determine or define easily. They come from direct feedback, interaction, and observations. This is a much harder set of metrics to capture and analyze. The prefix ‘quali’ or ‘quality’ comes from Latin meaning: of what sort, of what kind, how constituted. Qualitative measures are behavior-driven. These tend to be true leading indicators of the business trends.

If you are familiar with the Four Disciplines of Execution, you likely have heard the terms ‘lagging measures’ and ‘leading measures’. These, much like quantitative and qualitative metrics, are critical to understanding the impact they can have on how you engage with your information and initiatives. Below is a quick overview of leading and lagging indicators.

Lagging Indicators

Lag measures are just as they sound; they lag behind the activities that have already occurred. They report the outcomes. Any report you view on a screen or report you read on paper is most likely a lagging indicator. It shows you the results, and thus can no longer be influenced. These are typically easier to access and track.

Leading Indicators

Lead measures are largely behavior-driven and harder to obtain since they do not come from reports. These are measures that would be designed to be predictors of the outcomes (lag measures) that you have for your business. Measuring the actions or behaviors of your front-line associates and leaders can provide insight into what the expected outcomes should be. For example, if you want to improve your conversion measure (lag indicator), the leading indicator might be the number of customers your associates speak with or have a meaningful engagement with while shopping in the store. You can see instantly how that can be a more difficult piece of information to capture.

While a lag measure tells you if you've achieved the goal, a lead measure tells you if you are likely to achieve the goal. - 4 Disciplines of Execution

Diving into leading and lagging indicators will be a subject for a future article, but for our purposes now, it was important to at least define those as you think about what resources you may need to define the most important measures of your business in the current climate.

Something in the Middle

Leading and lagging indicators are the polar opposites of measurements. I do believe there is something to be considered in the middle. There are a group of metrics I would call middle metrics – these are still lagging indicators, but they are typically behavior-driven ones that are predictors of the higher level lag measures. These would include conversion, average order value, and key drivers within a customer satisfaction survey (i.e. friendliness, speed of checkout). I offer this cautiously, as they cannot be substituted for true leading indicators, but they can be considered metrics that will influence the ultimate outcomes you are looking for.

As an example, if you are measuring and want to improve your overall customer satisfaction score (OSAT or Net Promoter), you may want to see each of the levels I am describing. The OSAT score itself is the lagging indicator. A middle indicator would be what is identified as your key drivers. These could be associate friendliness, availability of product, speed of check out, etc. These are determined in conjunction with the survey data you collect from your customers directly and have high correlations to the overall satisfaction rating given.

The truest leading indicators are not something you can capture in a report. These would be (using friendliness as the driver) the observations from a manager or peers as to how often associates smile at customers. Or do they offer to assist everyone in a courteous manner? Are customers smiling after interacting with team members? These can be measured, they can be observed, and should be a leading indicator that associates are acting in a friendly manner. Using the middle measure of friendliness scores should, over time, help move your overall satisfaction score.

Employing a balanced approach to incorporating qualitative and quantitative measures, along with some leading and lagging indicators, will ensure you can have the best look at your business and the behaviors that drive results.

In the next article, we will look at how you can put these to work for you and the steps necessary to have a successful reporting and measuring strategy for your business.

How do you currently use qualitative and quantitative measures? How will those need to change?

I also recently discussed this topic and some of the ideas from this series of articles with Graeme Grant , CEO of Blueday, on their webinar Measuring Store Performance in Turbulent Times: Defining Your Key Metrics for 2020 and Beyond.

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