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Making Key Performance Indicators Work for Your Business

written by: Sylvia Cochran • edited by: Jean Scheid • updated: 7/26/2011

KPI measurement tools allow a business to appraise its approach to providing a service, marketing goods or engaging in any other type of activity. The easy adaptability to virtually any business environment makes these tools a favorite of project managers. Can you use them to monitor performance?

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    KPI for Beginners

    “Call center workstation Every business assigns performance standards to its various tasks. It does not matter if the company is primarily service oriented or manufactures widgets. Increasing productivity, customer service, customer satisfaction and -- ultimately -- revenue is at the heart of these measurements. KPI tools point out problem areas in an organization and also identifies likely waste issues.

    They do not pull any punches when it comes to letting the management team know that the workforce is not performing as anticipated. Choosing the right measurements is up to the seasoned project manager who, in conjunction with the executive team, decides which aspects of the organization’s performance to focus on. In some cases, industry standards prescribe which benchmarks to use for appropriate measurements.

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    Examples of Measurement Tools

    Remember, it is the flexibility of KPI tools that makes them so effective. One size does not fit all for proper data collection and evaluation! For example, marketing companies measure effectiveness differently than help desk supervisors.

    Client makeup: The marketing company needs to know how many new clients it attracted in a given period of time. It evaluates the demographics of the new clients as well as of those who chose a different marketing professional. It is possible to discover whether the marketing company lacks appeal for a certain demographic, gender or even product line.

    Revenue: Do the clients consist primarily of smaller accounts? There is nothing wrong with making money by servicing multiple small accounts; however, the marketer needs to know if there is a reason larger accounts seem to pass over this business.

    Effectiveness: The marketer measures the business’ effectiveness also by how well the client does in the aftermath of an ad campaign. Sure, the marketing company gets paid when the campaign is successfully created and implemented, but if it is ineffective, there is little chance of getting repeat-business from this particular client. Measuring the effectiveness can be done in concert with the client’s profit numbers, stock price, product sales and also self-reported data.

    The help desk manager has different KPI tools that matter to the business. In this case it is the relationship between revenue, customer satisfaction and labor costs. Measurement tools, as outlined by Metric Net, include:

    Cost per contact measurements. How much does it cost to staff the help desk? Examining this cost and comparing it to industry standards quickly reveals if the company is losing money with its help desk setup.

    Customer satisfaction surveys. It can be tricky to assess customer satisfaction via the survey process. Effective help desk workers may not have the interpersonal skills needed to score very high on customer surveys, even though they score well on other metrics. Nevertheless, this tool lets the project manager evaluate the company’s ability to train workers in the art and science of client interactions. It also hints at systemic problems, such as a company’s unwillingness to empower help desk workers to issue credits or resolve issues without escalating the call to the supervisory level.

    One call resolution. If the customer has to call back, the problem behind the initial contact was not solved. Ideally, each customer should only have to call once to get a technical issue fixed, billing question answered or service turned on or off. Agents who frequently fall short of the one call resolution metric may lack the training needed to get the job done; they may also lack the authority from management to resolve the calls as needed.

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    How to Choose KPIs Wisely

    Call center managers perpetuate the myth that call abandonment rates matter when it comes to customer satisfaction metrics. Surprisingly, industry insiders consider these tools obsolete and cost-raising. Choosing the right measurement tools not only provides the project manager with data to monitor and chart, but also points to accurate readings of its clientele. In the same vein, marketers would be unwise to focus on client demographics if their primary stock in trade is the marketing of only one type of widget. Client success will be the driving metric that determines success or failure of the marketing company.

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    It is clear that KPI measurement tools are pivotal when it comes to determining the efficiency of a business. At the same time, honing in on the wrong metric can cost the company quite a bit of money. Moreover, there is the danger of measuring the right data but drawing the wrong conclusion. Is customer satisfaction truly low because of many abandoned calls? Or, is the fact that one call resolution is virtually impossible -- because of management’s rules with respect to customer credits -- that has customers complaining?

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    Sources