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What Is A Balanced Scorecard? Everything Business Owners Should Know

A balanced scorecard can help you gauge your performance and position your company for success. Learn more about what balanced scorecards are here.

If you sell products or provide services, how do you know they're meeting the needs of your clients? How do you know your business is fulfilling your objectives? That's where a balanced scorecard is helpful.

A balanced scorecard is an important performance and finance tool that gives you an overview of the necessary tasks you need to perform and the strategy in which they fit. It can help ensure you're on the right track and position your company for success. Reviewing your balanced scorecard allows you to gauge whether your company is meeting its goals.

Learn more about this tool below to use your scorecard to its full potential.

  • What is a balanced scorecard?
  • When are balanced scorecards necessary?
  • Balanced scorecard perspectives
  • The benefits of a balanced scorecard for businesses
  • Balanced scorecards for business success

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Graphic: What is a balanced scorecard?

What is a balanced scorecard?

A balanced scorecard is a strategic management and performance framework that provides structure and a detailed view of upcoming tasks. It's an important tool that provides all the information you need to see how your daily operations are going.

Your business has many moving parts, and you need to make sure that all those moving parts work together to accomplish a common goal. It's easy for people to get lost in the day-to-day shuffle, which can make them forget what they're working towards.

The balanced scorecard approach can support your business in various ways. For example, you can use the scorecard to remind yourself of the tasks you're trying to accomplish. You can also use the scorecard to ensure daily tasks align with your organization's overall goals. Additionally, this tool is good for prioritizing marketing tasks based on when they're due and tracking KPIs, or key performance indicators.

The goal of this strategic tool is to provide you with a balanced view of your performance. It's a holistic system that can help you manage your strategy. It'll give you a framework within which you can operate, ensuring there's a visible connection between the projects you produce and your company's objectives.

When are balanced scorecards necessary?

There are several situations where balanced scorecards might be necessary. Here are a few balanced scorecard examples that demonstrate their use.

To keep track of key performance indicators

This tool can make it easier to stay on top of your KPIs, allowing you to keep track of them over time. As a result, you can see where you're outperforming your goals, where you're meeting them, and where you're falling short in marketing your products.

To determine if your strategic initiatives align with your goals

If you need a tool that can help you see if your strategic initiatives align with your company's goals, a balanced scorecard may be what you're looking for. This framework can divide resources, schedule your employees, and track your expected results.

To enhance communication at your organization

You can also use a balanced scorecard to enhance communication throughout your organization. For example, if there's a disconnect regarding financial performance across different departments, you can use a balanced scorecard to address some of the most significant issues.

To compare customer and stakeholder value

With a balanced scorecard, you can compare customer and stakeholder value to the performance of your company. You can figure out what's working well and what isn't, and you can even use it to increase customer retention.

A balanced scorecard can provide vital information you can use to track the success of your company over time. It can help you achieve better productivity, enabling you to get more out of your resources.

Balanced scorecard perspectives

There are 4 perspectives (also known as legs) that are integral to traditional balanced scorecards. This includes financial, internal, learning, and customer perspectives. These 4 areas ultimately work to measure performance and promote efficiency.

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Graphic: Balanced scorecard perspectives

Financial perspective

You need to keep an eye on your financial measures. How much money are you spending on different projects? How much revenue are you generating from specific undertakings? You might need to compare the money you spend on a project to the revenue generated by it. This can help ensure you get a balanced return on your financial investment.

Internal perspective

You can also use this scorecard to look at the effectiveness of your company's internal business processes. Do you think your company is working toward one common goal? Do you think your employees are happy?

You can use this framework to review your employee retention rate. If your employee retention rate is dropping, a balanced scorecard can help you figure out why and determine what tools to use to convince employees to stick around.

Additionally, you can use this perspective to analyze the efficiency of your daily operations, ensuring you're not wasting your resources and that internal processes are smooth.

Learning perspective

Do you feel you're staying on top of the latest technological developments in your field? Do you think you're getting the most out of your human capital and infrastructure? By knowing more about your company and industry with the learning perspective, you can stay one step ahead of your competitors.

Customer perspective

You can view your organizational performance from the perspective of your customers. For example, you may want to review your customer satisfaction rate to see if it aligns with industry standards. If it doesn't, it's time to figure out how you can make your customers more satisfied with your brand and products.

You can use a balanced scorecard system to ensure you meet your marketing goals. Different perspectives are available, and it's helpful to look at your company through these 4 lenses to determine what you can do to improve your performance.

The benefits of a balanced scorecard for businesses

There are several significant benefits a balanced scorecard can provide for your company. They include:

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Graphic: Benefits of a balanced scorecard for businesses

Better planning

A balanced scorecard can make it significantly easier to plan. For example, you may wonder what type of project you should work on next. Or, you might not know how to divide your resources. Fortunately, you can use a balanced scorecard for strategic planning and figure out what to do in order to accomplish your goals. By doing so, you can ensure you split your resources according to the needs of your company and existing resources.

Aligns employees with larger objectives

A balanced scorecard can help align your employees with larger goals. For example, your employees might be trying to determine how their daily operations fit in with the rest of the company. If you can show your employees how their efforts contribute to the company, they'll be more motivated to meet your strategic objectives.

Improved communication

You can also use a balanced scorecard to improve communication throughout your organization. Many employees work remotely, and communication is more critical than it has ever been in the past. Sometimes, keeping all your team members working toward one common goal can be challenging, but improving how you communicate can help you overcome several obstacles.

Facilitates reporting

A balanced scorecard can also facilitate reporting. How are you going to measure the marketing performance of your company? If you use a balanced scorecard, you can figure out what the most important KPIs are. Then, by looking at those KPIs, you can see where your business is meeting its goals and falling short. This will make it easier for you to make adjustments that can position your company for success in the future.

These are just a few benefits you should keep in mind. Even though it may take a bit of practice, a balanced scorecard can ensure your company is working toward one common goal.

Balanced scorecards for business success

A balanced scorecard may be the tool you're looking for if you want your business to succeed. This essential tool can be used to measure website performance, customer satisfaction, and more. You can also use this tool to ensure you're getting the most out of the resources you have at your disposal. Additionally, the framework is valuable for improving the internal infrastructure of your business and streamlining communication. Like other tools, learning how to use a balanced scorecard effectively and correctly may take some time.

To maximize the benefits of a balanced scorecard, ensure you have the best marketing tools within reach. Mailchimp provides you and your team with in-depth, easy-to-read reports that give insight into your audience, campaigns, and more. With access to comprehensive and digestible analytics reports, you can create better marketing campaigns across different channels.

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