Tips for KPI Planning

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Key Performance Indicators (KPIs) are a universal business measurement tool. A basic question for any business is KPI Measurementhow do you effectively perform KPI planning to maximize govern the value and results you provide to the organization? It’s a busy answer. It involves specific actionable steps for teams.  I’ll answer the question by looking at KPI characteristics, KPI types, and then KPI tips.

KPI Characteristics

  • A statistic that measures your performance
  • A measure of success against stated business goals
  • “Key” signifies importance or top tier when compared to other performance indicators
  • There can be one to many KPIs depending on the business industry, stakeholders, and business goals
  • KPIs can be set a macro or individual team level within a business
  • KPIs can be measured on any time interval (by minute, hourly, daily, monthly, etc.) depending upon the data collection for the metric and the value it provides at specific intervals.
  • The KPI definition should contain the specific measurement scale

KPI Types

There are many classifications for indicators. I like to group indicators as leading or lagging. These two terms are more commonly used in financial or economics discussions. But they have good meaning and relevancy in KPI discussions as well. In this context, a leading KPI is a measurement that can be used to predict with some reasonable confidence, future results.  Whereas a lagging KPI is used to measure and state the results of events in the past.

Examples of lagging KPIs

  • Average order value – This metric shows the average amount of a placed order. It is used to measure the amount of money customers spend per transaction and is a reflection of the sales, marketing, distribution, and quality errors of your business.
  • Items per order – This metric shows the average number of items for each sales transaction. It is used to measure the success of cross sell attempts to a customer.
  • New versus returning visitor – This metric shows the percentage of overall customers to your business that are new versus existing or repeat customers. It measures the overall effectiveness of your sales and marketing spend on promotional activities.

Examples of leading KPIs

  • Hold time – A classic call center metric. Hold time is a leading KPI because longer hold times will result in fewer sales as more customers drop from the sales queue.
  • Conversion rate – In a store environment, whether physical or eCommerce, the conversion rate is the percentage of customers that buy a product who entered your store.  The conversion rate is a leading KPI for the total number of orders that you will process in a given time period. If your conversion rate and customer volumes are within consistent marks then you can use the conversion rate to forecast sales for an upcoming time period.
  • Open rate/Click through rate – These two metrics are commonly used in email marketing campaigns. They are a leading KPI for the number of orders that may be processed in a given time period. If your emails have a consistent range of click through rates, and you know your typical conversion rate then you can use this metric for sales forecasting.

KPI Tips

Most organizations are already operating with KPIs.  Here are some takeaways for KPI planning for your organization:

  • Make sure the process to gather and distribute the KPIs is easy. If your team has to spend hours collecting and distributing the metrics then eventually the system will create unnecessary strains on the workers which could lead to reporting delays. You either won’t have the KPIs or you won’t use them because you can’t rely on the numbers.
  • Where possible, align management on the same set of KPIs. Teams that area aligned to the same or complementary metrics will work more collaboratively and have a greater chance for success.
  • Align KPIs with business goals. This is really a no-brainer because its a key characteristics of a KPI. But it serves as a reminder that as you create a KPI you should ask if this metric provides a measurement of business goal attainment.
  • Use both leading and lagging KPIs so that your team can be proactive in anticipating results as well as reactive in resolving issues.
  • Limit the number of KPIs to keep the system simple and usable. If you look at a sheet with 20 performance measures listed then the volume of data can be overwhelming for decision making.  Create your KPIs in such a way as to truly have “key” performance indicators.

Photo Credit: http://www.flickr.com/photos/spacesuitcatalyst/ / CC BY-NC-SA 2.0

Uses for Google Voice

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Update: 11.26.09 – I have added an update to the original post. It is found at the end and notated by gray font.

I signed-up for Google Voice thinking that it was intended as a tool for consumers to consolidate multiple phone lines into a single number. I was also lured by concept of having Google Voice serve as a conduit for mobile phone calls to avoid the rules and restrictions that mobile phone carriers place on ‘out of network’ calls. After spending some time with Google Voice, I’ve come to the conclusion that the best use of this application is for business and not personal use. Some individuals may still find good utility with Google Voice, but I think it’s real value-add is for business.

For individuals, the idea of consolidating multiple phone lines is becoming a problem of the past. Many from the Gen Y or Millennial generations will never pay for a home phone line. A mobile device may become their only number. With the FCC’s Local Number Portability rules, many people may never need to change numbers either. For the Boomers and Gen X individuals,  Google Voice may be either too geeky or just not worth the time to bother. Who wants to tell others they have a new phone number unless they have to. While it’s not overly difficult, it just creates a “to-do” that you can avoid. It recently took me three tries to get my mom and dad to update their cell phone address book with a new number I gave them. Giving them a new number and trying to explain Google Voice to them would require a lot explaining.

It could lead also lead to phone number confusion. Think about this scenario: You give your Google Voice number to your mom. She updates it in her mobile device address book. Then you call her from mobile device, not using the Google Voice dialer. She doesn’t answer the phone because now the number on her caller ID is unknown to her. I know that mobile devices can store multiple phone numbers for each entry. But I’m not sure I want to take 10 minutes to explain it to my mom. Besides, I know she’d end the conversation with ‘Why did you do this again?’.

But….

Not all is lost with Google Voice. In fact, I think this service has tremendous potential for a few business processes:

  1. Customer service organizations for businesses that use a remote work force. Setup a Google Voice number that will ring the customer service agent that is actively on duty. As a shift changes, update the profile of downstream numbers that Google Voice will ring.
  2. Business users that split time between the field and office. In this case, the field personnel could list both their mobile and office direct line behind the Google Voice number. The clients then only need to call one number to find their assigned agent. This could have application in the construction, insurance, or real-estate industries.
  3. On-call staff such as IT support or medical professionals. If each on-call team member has their own mobile device then you can manage where a central numbers forwards to by managing the downstream Google Voice call list.  This process removes the requirement to rotate an on-call device or for a central call center to look-up a phone number for the person on call. They can always use the same number.

What would be a great new feature for Google Voice? To control the order in which downstream numbers are dialed. In the current setup, all downstream numbers are tried simultaneously. If you could control the order of ringing, then this would allow for further business process features related to on-call or customer service numbers.

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I did check the Google Voice terms of service related to commercial use and did not see that commercial use, such as the ideas I listed above, is prohibited. It should be open to help some organizations with call management as-is. So if you’re in a line of work that requires you splitting time between the office and field or if you operate in an on-call group, think about getting a Google Voice number.

I’m still playing with this application, thinking it might have application for me. I may even give my number to my mom. Maybe she’ll like the idea of dialing a single number to locate me.

Do you see application in other ways than what I have listed?

Update 11.26.09 – After I wrote this article,  I setup my Google Voice account in the following arrangement:

– A business group for my co-workers and office numbers.

– All other groups for personal contacts.

Google Voice allows you to setup a distinct voice mail and ring sequence for each of the groups. This worked really well for me because I defined three phone numbers within my main setup (Home, Mobile, Office). So my the numbers in my address book associated to business will ring the mobile and office numbers while other numbers will ring the mobile and home numbers. This is an extremely useful feature because it allows me to segment calls based on the source.

The other nice surprise was that my mom liked it.  She liked the concept because she no longer has to dial multiple numbers looking for me. That’s a good thing. When mamma’s happy, everyone is happy.  Smile…..

Still using a watch?

My watch battery died a few weeks ago. I don’t have another functioning watch and buying a replacement battery isn’t on the top of my to-do list. So the watch has been sitting in my home office collecting dust. Now, after living without it for a few weeks and always knowing the time when I needed it, I’m wondering if I still need to wear a watch. Short of trying to make some fashion statement, which doesn’t happen with a Timex and I’ve never been accused of being fashionable, the utility of the watch seems to be dead.

Here’s a list of all the places I’ve been able to get the current time in the past few weeks:

  • Computer calendar program reminder pop-up
  • Computer clock in the tray
  • Desk phone
  • Mobile device
  • Neighbor
  • Television channel info bar
  • Automobile dash
  • Satellite radio
  • Wall clock
  • GPS
  • Oven clock
  • Microwave clock
  • The dog (Yes, he eats on the sixes and he knows the time)

What about you? Do you still wear a watch? Do you use it if you wear it?

Do companies really use the Marketing Concept?

I recently looked over the maturation and development of marketing philosophies. The most current philosophy is called the marketing concept.  It assumes that for a company to be successful, it must determine the needs and wants of specific target markets. With this information the company aims to satisfy the customer better than the competition. The main objective for marketers that follow the marketing concept is to make a profit through customer satisfaction. Marketing Concept

I reread that statement and thought about it. I like the ideal. It makes sense to me. It’s about good business. Give the customer something that will benefit them at a fair price. But how many marketers do you know that are truly looking to a make profit through customer satisfaction? Is the ideal of the marketing concept too good for human nature? At the end of the day are companies seeking to make a profit any way they can at the insistence of their shareholders?

What companies are the most respected companies by consumers? Are these the companies that rank the highest on the J.D. Power and Associates consumer surveys? I’d like to think that many of the companies at the top of consumer survey rankings are there because they truly do look to make profits through customer satisfaction. It’s a mindset that must be weaved into the culture of the business and must be accepted and encouraged by top management and shareholders.

It’s helpful to look at some of the other philosophies and theories to gain a perspective on the marketing concept.  Here’s a look at the other theories:

The Production Concept

Assumes that consumers are most interested in products at low prices. The marketing objective of the production concept is low cost production, mass distribution, and market share. This philosophy was most prevalent from the industrial revolution to the 1920’s.

The Product Concept

Assumes that consumers are most interested in products with high quality, performance, and features. In other words, they look for the product that provides the most utility to them. The marketing objectives are to improve the quality of the product and to add additional features. This type of philosophy tends to result in marketing myopia because innovation for new products ceases to exist. Companies that use this philosophy are looking for niche audiences that value the utility of their product.

The Selling Concept

This philosophy first became prevalent in the 1930’s as competition in mass production was increasing. Companies needed sales to keep up with capability of the manufacturing process. The selling concept assumes that consumers are not likely to purchase a product unless they are aggressively persuaded to do so. The marketing objectives in this model are to sell, sell, and then sell some more. This model does not actively consider customer needs and satisfaction or at least not as a primary concern.  The marketer is focused on selling the product any way they can.

So where are we today? Is the marketing concept widely used? Or are many companies still using the selling concept?Are you a marketer? If so, what’s the motive behind the strategies and tactics you use to put products in front of customers?

Photo Credit: http://www.flickr.com/photos/nathalie_magniez/ / CC BY-NC-ND 2.0

Six communication tips for teams with remote workers

It’s not uncommon these days for work teams to be separated by large distances. My current work team, composed of five people, spans three states and four cities. A common challenge with remote workers is to learn to communicate efficiently. The challenge increases when you throw in a few different time zones, different work schedules, and varying communication styles.

Email provides many advantages for remote workers but also creates many stumbling blocks that become communication inhibitors. Back in January I posted my thoughts about about how to not use email in your company. Those communication tips were mostly focused on email use for individuals.  Group communication is just as much a challenge to maintain, and individuals tend to rely on email more than it should be used because of its convenience and ease of use. Her are a few of the dangers of email, not just for remote workers, but for all work groups.

Email communication dangers

  1. It lengthens decisions. How long does it take you to reach consensus or resolve issues via email?
  2. It loses focus on the original intent. Just like projects are subject to scope creep, so are emails. As people add their thoughts, opinions, and questions the scope of the email becomes greater.
  3. It creates ‘versions’ of the message that the distribution list must manage. If you’ve ever checked your email only to find 10 or more messages on the same thread then you have experienced this. You can move down to the last email sent in the thread and try to work your back up to see all of the individual threads or spawned threads to different a distribution list. But this creates management overhead to try to keep up with the conversation.

So what’s a remote workforce to do? Email should have a part in the overall communication plan.

How does your team communicate?
How does your team communicate?

But to create better communication that will help the team be more successful and connected consider these tips:

Communication tips for remote teams

  1. Use emails to send notifications and ask questions (limit the number of questions per email to no more than three). Don’t use email to try to reach decisions. If you need to make a decision then you need a phone call or meeting depending on who needs to be involved.
  2. Email threads should be limited to three messages. If your notifications require more clarification than this, then the language is not clear or the subject matter is complicated enough to warrant other forms of communication.
  3. Limit the use of attachments in email. Just as multiple email threads creates versioning issues, so do the number of attachments in email. Try to use team rooms, network links, or collaboration software to manage document versions.
  4. Use video chat to promote remote team cohesiveness. There are plenty of tools now for video chat and portable cameras are relatively inexpensive. If your team members are remote, get’em each a camera.
  5. If possible try to meet in person quarterly. This may not always be practical or within a budget. But teams that meet together, stay together.
  6. Hey yo! Pick up the phone! In a communication world driven by email, text, and instant messages, you can still reach out and touch someone.

Communication is never easy. It requires work. It requires attention. Remote workers don’t have the option to walk to each others cubes or offices. So find time to communicate. As Rollo May said, “Communication leads to community, that is, to understanding, intimacy and mutual valuing.”

Photo Credit: Joe Mabel