Maintaining focus is key for business success, especially during a crisis. KPIs (Key Performance Indicators) can help you and your business maintain (strategic) focus. We’ve made a list of the most essential KPIs, so stay focused and read on.
Using KPIs means measuring performance, and, before you start doing that, there must be an understanding of the strategic focus of your company. There are three general strategic focuses a company may employ:
This strategy focusses on supplying a standard product that meets customers’ needs without customization at the lowest price possible.
Includes custom or niche products or specialized services delivered to its customers.
This strategy focusses on delivering world-class customer service.
Each strategic focus has KPIs that are beneficial to that type of focus. We’ve listed two of the more important KPIs per strategic focus, helping you maintain focus, now and after the COVID-19 crisis.
A cost-focused strategy has KPIs consisting of cost measurements to keep production and delivery costs to a minimum. Of course, without letting go of your and your customer’s quality standards. It’s essential to focus on the costs of the entire process, not just a single area such as manufacturing or purchasing. The whole company must be cost-conscious to be a leader in a cost-focused market.
It’s much more cost-efficient to get things right the first time.
For any company to be successful, producing a reliable product or delivering a reliable service, is essential – especially for companies that want to be cost-focused leaders. Reducing manufacturing costs can yield significant savings, but those savings may be negated if the product quality drops and warranty service is required. Similarly, providing free re-work for a professional services company is a considerable cost, so it’s much more cost-efficient to get things right the first time.
New products in pipeline
The key to the success of a product-focused strategy is to have as many new products in the pipeline as possible. This means that a pipeline measure is an essential KPI to stay focused on your product-focused strategy.
Long vs short pipeline
Computer technology has a very short pipeline life, as new products may become outdated within 6 to 12 months. On the other hand, the development of pharmaceuticals can take years. Each example is on the opposite end of the spectrum, but both illustrate how important it is to have a full pipeline. Short pipeline life means replenishing the pipeline often because new products will become outdated quickly. Long pipeline life means a full pipeline because you must have products to sell while other products are in development. Another long pipeline consideration point is that some products may lose promise before being completely ready. Other products in the pipeline will need to be able to absorb those losses.
Time to market
How fast can you bring a new product from R&D to market? In business, it’s important to reduce the time between the two as much as possible by improving efficiency. A measure of cross-functional cooperation can lead to interesting results and have a large impact on improving the overall time to market.
Customer-focused companies tend to have a small number of products or services they sell. This allows employees to be very familiar and informed of all products and/or services sold by the company. Customers expect a higher level of knowledge from these companies so that employees can speak intelligently about the products or services in which they sell. This is why it’s important to develop a KPI to measure how well employees know the products and/or services you sell.
If a company doesn’t understand who their customers are, how can that company properly service them?
If a company doesn’t understand who their customers are, how can that company properly service them? This is why successful customer-focused businesses are very keen on gathering as much customer data as possible, such as demographics and buying habits. By understanding (potential) customers you can gain a competitive edge and outperform other businesses – so measuring your company’s performance in this area is key to stay focused.
Don’t plan a trip without a map
As said, KPIs can help you and your company maintain (strategic) focus. It’s important to know that, before defining the appropriate KPIs, you need a strategy first. On the other hand: executing a strategy without any KPIs (or the wrong KPIs) can be compared to planning a trip without a map. You may get to your destination, but you’re more likely to end up lost and with no clue on how to get back on track.
Last but not least: some of these KPIs may be simple to define and measure, and others may be more subjective. Our expert business advisors can help you with determining both. Contact us if you need our support.
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