I have written many posts about Key Performance Indicators (KPIs) and KPI implementation, and it’s something that can fill people with horror, and engender visions of grey people lurking around corners with clipboards. In reality, of course, it’s not about Big Brother, but KPI implementation can give you real visibility of what’s happening in your business.
If you don’t know how to get started, then this five-point list may help:
Decide what you want to measure
You need to have a goal in mind, obviously, so it may be to cut costs, save time, increase sales, become more efficient – whatever. Let’s assume here that you want to reduce the number of people telephoning your customer service desk, so that becomes your goal.
Decide what will determine success and failure
Obviously, given our goal, the sign of success will be fewer calls, and the sign of failure will be more, increasingly agitated, calls! However, we need to be a bit more specific, and goals and the criteria for success must be measurable – otherwise none of the subsequent steps will work!
A good rule is to always have a quantity and a timeframe in any goal or success criteria. So in our example here, we might say “I want to reduce customer service calls by 10% within three months.” So now we have a clear goal, and a clear set of criteria for success or failure.
Create and implement the KPI
The KPI itself needs to be a measure that relates to the goal, so in this case it’s obviously the number of calls taken on a daily basis. You may want to summarise this information each week, and compare it with the previous week, so you have an indication of progress toward the goal.
Measure the performance
You need to do this, because it gives you a progress report, as it were, of how you are doing. For example, if you are one month into your three month timeframe and nothing has changed, you can still potentially salvage the goal by putting some other process into place.
Report and analyse the results
This is the outcome of the exercise, and in our example here, it will simply consist of a report stating that calls have been reduced by a certain amount, and this will either have met the target, or not! Nice and easy, in this case, but with the concept of continual improvement in mind, you may want to go around again and set another goal.
Of course, the analysis of this metric can help you analyse other aspects of the business – it isn’t just stand-alone. Clearly, in order to reduce customer service calls, you must have an alternative; people don’t just stop ringing because you’re counting their calls! So the reasons may include improved service, so fewer complaints, or perhaps customers are having their queries answered elsewhere by another initiative you have put in place – something on the website perhaps.
So, although we have looked at a very simple example, you can easily imagine a more complex goal. If your aim was to increase traffic to your website, for example, you may have several criteria for success – more visits, more conversion, more blog comments, more orders etc. Each of these criteria might in turn have more than one KPI associated with them, so the process of measuring, reporting and analysing becomes much more integral.
So the sixth step is to do something with this information, but that’s for another day!
Please talk to me if you are wanting to look at KPI implementation in your business, call me on 01438 832724 or fill in the contact form here.