A baseline is a written estimate of what your business would most likely achieve over a period without the partnership. It is the single most important number in any performance arrangement, because every payment is calculated against it. If it is too low, the partner is paid for growth that would have happened anyway. If it is too high, real progress looks like failure. This guide sets out a practical method using records most Canadian businesses already keep.
Step 1: Choose the result you are measuring
Pick one or two results that sit as close to profit as your records allow. Common choices:
- New customers in a period, with a precise definition of "new"
- Revenue from new customers, which captures order size as well as count
- Gross profit from new customers, which protects against growth bought with discounts
Revenue from all customers is tempting because it is easy to read, but it mixes the partner's influence with things they never touched, such as your existing accounts reordering. If you use it, say so and accept that attribution will be looser.
Write the definition in full. For example: "A new customer is a business or household with no invoice in the preceding 24 months, whose first invoice is above $300, excluding warranty work and related companies." The shared growth scorecard is where these definitions live.
Step 2: Pull the history month by month
Export the chosen result by month for at least the last 24 months. Accounting software, a CRM or a booking system will usually produce this as a report. Put it in a simple table: month, count, value. Then check it against a second source if you have one. If your accounting software and your CRM disagree by more than a little, find out why before going further. Usually it is a timing difference (quote date versus invoice date) or a definition difference (existing customers counted as new).
Step 3: Mark the unusual events
Go month by month and note anything that pushed numbers up or down for reasons unrelated to ordinary marketing. Typical entries:
- a single large contract that won't recur
- a competitor opening or closing nearby
- a price change, a product launch or a discontinued line
- a staff shortage that forced you to turn work away
- a weather event, a strike or a supply problem
- a government program opening or closing that changed what customers bought
That last one is easy to miss. For a home-improvement firm, for example, an energy-efficiency rebate opening or closing can shift demand for months at a time. Note the event and its dates, and decide together whether to exclude the affected months or adjust for them.
Step 4: Account for seasons honestly
Compare like months with like months, never January with June. Canada's seasons are not gentle, and they affect very different businesses in opposite directions. A snow-clearing contractor in Winnipeg peaks when a patio furniture retailer in Kelowna is quiet; an accounting practice in Toronto is busiest in spring, while a Halifax tour operator's year is built on summer.
The simplest fair method is a same-period comparison: the baseline for a given month is the average of that month in the previous two years, adjusted for any unusual events. If the business has grown steadily for years, you may also agree an expected underlying trend, so that ordinary momentum isn't credited to the partnership.
Step 5: Work an example
Here is an illustration with made-up figures for a hypothetical services business.
| Month | Two years ago | Last year | Notes | Baseline |
|---|---|---|---|---|
| March | 22 | 26 | Normal | 24 |
| April | 28 | 41 | Last year: one-off contract worth 12 customers | 28.5 |
| May | 30 | 29 | Normal | 29.5 |
| June | 25 | 18 | Last year: two technicians on leave, work turned away | 25 |
How the baseline was set:
- March and May are simple averages of the two years.
- April removes the one-off contract from last year (41 − 12 = 29) before averaging with two years ago: (28 + 29) ÷ 2 = 28.5.
- June uses only two years ago, because last year was artificially low. Averaging it in would have made the baseline too easy to beat.
Then imagine the partnership period produced 27, 33, 34 and 31 new customers. Against the baseline, that is +3, +4.5, +4.5 and +6. Those differences are what a results-based arrangement would be built around, under whatever terms the agreement sets. Without the adjustments, April would have looked like a decline and June like a triumph.
Step 6: Decide what the partner can influence
Attribution rules belong in the baseline discussion, not in a later argument. Ask:
- Do referrals from long-standing clients count? Usually not, unless the work specifically targeted referrals.
- Do customers who first enquired before the partnership started count? Decide a cut-off date.
- What about a large account your own sales team was already pursuing? Name it and exclude it if appropriate.
There is no universally correct answer. What matters is that the rule is written down, both sides understand it, and it is applied the same way every month.
Step 7: Write it down and test it
A baseline is finished when someone else can reproduce it. Record the definitions, the data sources, the months excluded and why, and the calculation method. Then have a second person, perhaps your bookkeeper, recalculate it from the raw reports. If they get the same numbers, it is ready to use. If not, find the difference now.
Keep the document with the partnership agreement. If anything changes during the term, such as a new location, an acquisition, or a major price change, restate the baseline in writing at the time, on the same basis, rather than arguing about it later.
Common mistakes
- Using the strongest recent year as "normal". It sets a target the business couldn't hit on its own, which is unfair to the partner and discouraging for you.
- Using the weakest year. It pays for recovery that would have happened anyway, which is unfair to you.
- Measuring in a system nobody trusts. Results should come from records you already rely on.
- Ignoring margin. If growth comes from discounting, revenue can rise while profit falls.
- Changing definitions quietly. Any change should come with a restated baseline and both signatures.
Where this fits
The baseline is built during the readiness review and becomes part of the scorecard for the Growth Partner Program. Even if you never enter a partnership, a clear baseline makes every marketing decision easier, because you can finally tell what moved the numbers. If you'd like help building one, see the fixed-fee consulting options, or read the companion guide on why partnerships break down.
Frequently asked questions
How many years of history do I need?
Two full years is a sensible minimum for most businesses, because it lets you compare the same months twice. Three is better if one of the years was unusual. With less, the baseline needs wider caution and more frequent review.
Should the baseline include price increases?
It should account for them. If you raise prices by 6%, revenue rises even if nothing else changes, so either measure customer counts or adjust revenue for the price change. Write down which approach you chose.
What if my records are incomplete?
Use what you can verify and note the gaps. A smaller set of reliable numbers is better than a complete set built on guesses, and the gaps tell you what to start recording now.
Can the baseline change during a partnership?
Only by written agreement, and only for reasons both sides accept, such as a new location opening. Any change should restate past figures on the same basis so comparisons remain fair.