| > | | | | another categorization. |
| KPI: the first step to do for a successful Business | | | | - Quantitative indicators which can be presented as a |
| Intelligence process. Introduction | | | | number |
| There are a lot of business intelligence | | | | - Practical indicators that interface with existing |
| softwaresthat gives you the possibility to control your | | | | company processes |
| business, from Oracle to Microsoft to SAP. In any | | | | - Directional indicators specifying whether an |
| case, before the software and the implementation, | | | | organization is getting better or not |
| there is a question a company has to answer: What | | | | - Actionable indicators are sufficiently in an |
| do we need to measure? | | | | organization's control to effect change |
| | | | | - Financial indicators used in performance |
| In this article will be discussed the definition and the | | | | measurement and when looking at an operating index |
| importance of the KPIs, who and which areas are | | | | The most used KPIs |
| involved, how to define good and bad KPIs, a | | | | The most used metrics concerns the above 3 |
| categorization, the most used KPIs and the feedback | | | | ares. |
| about KPIs from the companies point of view. | | | | Investigating on costs means understand cycle |
| Definition of KPIs | | | | time, ability to conform to market standards, quantity |
| In the question above, what do we need to | | | | and quality. |
| measure, a part of the definition of KPI is hidden. | | | | Information on product are about pipeline work, |
| A performance indicator or key performance | | | | research and development, time to market, and |
| indicator (KPI) is a measure of performance. | | | | product customization. |
| Such measures are used by companies to define | | | | A modern approach on marketing is more focused |
| and then evaluate the success of their business. | | | | on customer behaviour. Therefore some metrics |
| Before to evaluate a business and create a software, | | | | are: environmental appearance, complaint |
| the first goal to achieve is to define the parameters | | | | management, employee empathy, product expertise, |
| that characterize the specific business. After that it is | | | | and responsiveness, customer acquisition, demographic |
| possible to monitor these parameters to fully | | | | analysis applying to become customer, turnover by |
| understand the present state of the business and to | | | | segment, bad debts, profitability by segment. |
| define future actions. | | | | Specially if a company is customer focused, then it is |
| Who and which areas are involved in the definition of | | | | possible to integrate a business intelligence tool with a |
| KPIs | | | | CRM,customer relationship management software. |
| Before giving concrete examples, there are other | | | | Other examples of used KPIs are reported in the |
| elements to consider defining KPIs: who and which | | | | following research. |
| areas are involved in this bi process. | | | | Measured AreaBest-Practice KPIsOverall Business |
| The first question is who is involved in bi process, | | | | PerformanceMost profitable products, Most profitable |
| that means who can gain from that. Generally those | | | | marketplace, New vs returning customers, Most |
| are: | | | | profitable listings, Most profitable couponsOnline Sales |
| - High level management | | | | ActivitiesVisitors & conversions, Page and listing views, |
| - Communications | | | | Orders, Shopping cart, Up-sells orders Product |
| - Marketing | | | | PerformanceProduct profitability, Top sales revenue, |
| - Sales | | | | Top close ratesListings PerformanceListing turnover, |
| - Any stakeholders interested in the company | | | | Listing profitability, Listing by marketplace, Duration |
| Considering them, it is natural to see the business | | | | viewMarketplace PerformanceMarketplace sales |
| intelligence process as a common involvement of all | | | | activity, Marketplace profitability, Average cost per |
| the lines of an organization. | | | | order, Marketplace listing turnoverCustomer |
| | | | | InsightCustomer scorecard, Geographic view, |
| Since the answer to the first question, it is possible to | | | | Marketplace view, Lifetime valueCampaign and |
| guess the areas involved. The 3 main areas are: | | | | Coupons PerformanceCampaign conversion |
| - Cost | | | | percentage, Campaign activity (number per clicks, |
| - Product | | | | orders, coupon conversion percentage, Coupon |
| - Customer | | | | activity(number per clicks, ), |
| How to define good and bad KPIs | | | | The feedback of companies about using the KPIs |
| KPIs are different according to specific business. Since | | | | All those metrics are used by companies. The |
| this bi approach is very analytical and measurable, a | | | | following table says in which measure companies use |
| mandatory element is the KPIs have to be SMART. | | | | them and how they consider those KPIs important. % |
| That means: | | | | claiming to use metric% rating as very |
| - Specific for the business | | | | importantMetricFrösén et al.Ambler et |
| - Measurable to get a concrete value for the KPI | | | | al.Frösén et al.Ambler et al.Sales (value and/or |
| - Achievable, attainable to get real values | | | | volume)90918671Profit / Profitability89928580Gross |
| - Relevant to measure | | | | margin81817966Perceived quality / |
| - Timely, time-bound to define them in time frames | | | | esteem78647337Total number of |
| According the SMART definition, it is possible | | | | consumers73665924Consumer |
| to identify good and bad KPIs. If the KPI is not | | | | satisfaction72686848Market share (volume or |
| SMART, then it is a bad KPI. An example can show | | | | value)68786237Awareness67786328Marketing |
| this concept. | | | | spend66654839Number of consumer |
| A KPI like Increase Sales that is defined | | | | complaints65695745Number of new |
| as Change in Sales volume from month to | | | | consumers64575857Loyalty / |
| month and it is measured by Total of Sales By | | | | retention63646247Shareholder value / EVA / |
| Region for all region with the target to Increase each | | | | ROI63535479Customer Satisfaction63456358Brand |
| month seems a good KPI. Looking deeper into that | | | | product knowledge60554845 |
| there are other questions arising that show how the | | | | Conclusion |
| KPI is not SMART. Does this measure increases in | | | | In this article we talked about the first step to do |
| sales volume by Euro or units? If by Euro, does it | | | | when companies want to go for a business intelligence |
| measure list price or sales price? Are returns | | | | software. Before the tools, they need to understand |
| considered and if so do the appear as an adjustment | | | | what they need, what to measure and how to do that. |
| to the KPI for the month of the sale or are they | | | | There is the SMART approach to define the KPIs and |
| counted in the month the return happens? How do we | | | | then several examples of common used KPIs. If you |
| make sure each sales office's volume numbers are | | | | are in the business, check also the KPIs other |
| counted in one region, i.e. that none are skipped or | | | | companies use and if they consider them relevant for |
| double counted? How much, by percentage or Euro or | | | | their strategic goals. |
| units, do we want to increase sales volumes each | | | | |
| month? | | | | In FeroPluris we consider the definition of KPIs the |
| Categorization of KPIs | | | | first step to be fully satisfated with a business |
| As we can see from the above KPIs, it is possible | | | | intelligence software. |