Tag Archives: Trends

How Do You Establish Performance Metrics? Three Guidelines

Situation: A CEO wants to establish baseline metrics to evaluate company performance, and guide both planning and operations. Without baseline metrics it is difficult to compare the impact of options that the company faces. What are the most important areas to analyze, and what do other companies measure? How do you establish performance metrics?

Advice from the CEOs:

  • Start with the basic divisions of the business. As an example, take a company which has three arms to its business – products that it represents for other companies, products that it distributes, and custom products that it manufactures to customer specifications.  
    • For each of these lines track gross revenue, profit net of direct costs, FTEs necessary to support the business, number of customers, net profit percent, net profit per employee and net profit per customer.
    • Calculate these metrics on at least a quarterly basis for the past 2-3 years to set a baseline and a chart of historic trends.
  • Once you establish a baseline, chart current performance on at least a quarterly basis and look for trends and patterns.
    • Where is your greatest growth and greatest profitability – not just on a global basis but in terms of profit per customer and profit per employee?
    • If you’ve included your full costs including the costs of the FTEs to support each business, then the analysis should show you where you want to invest and what it will cost you to support additional investment.
    • Do a similar analysis of costs per line to further support investment analysis.
  • This analysis will help to evaluate whether it is better to purchase another rep line, or whether you would be better off investing the same funds to grow custom business.
    • Similarly, it will demonstrate on what kinds of customers and products you want your sales force to focus to grow profitable business and will help you to establish objectives based on anticipated revenue or profit per new customer that sales closes.
    • Finally, it will highlight potential vulnerabilities such as the impact of the loss of a key customer in one portion of the business.

How Do You Best Leverage Networking? Six Suggestions

Situation: A company is actively marketing to prospective clients and also engages in networking. They want to assure that they are up to speed with current trends in marketing. What are best practices for following up on marketing or networking contacts? How do you best leverage networking?

Advice from the CEOs:

  • Timing is everything. A prospective client may or may not have an immediate need for your product or service, but may develop a need in the future. Assure that you have a program that provides ongoing follow up via:
    • Social Media
    • Phone calls
    • Emails
    • Regular personal follow up
  • Initial follow up should be rapid. Ask for permission to follow-up and set the time frame when you meet a new prospective client. Ask how the prospect prefers for you to stay in touch. Do they prefer newsletters follow-up via social media, or personal follow-up?
  • Draft letter, email and social media communication templates ahead of time so that rapid follow-up is easy.
  • Use an electronic or print newsletter to stay in touch with prospects. Social media have become an increasingly important way to stay in touch with networking contacts.
    • Basic newsletters are usually 2-3 pages, or a one pager with links to see full articles.
  • Look at contact management software: for example Salesforce.com or ACT.
    • Basic sales and marketing subscriptions from Salesforce.com start at $25/user/mo. for up to 5 users, or $65/user/mo. for a complete customer relations management (CRM) system.
  • Quality of collateral is important. It is a face of your company. High quality collateral should have a consistent look and feel, and should remind the prospect why they were interested in you and your company in the first place.

But We Don’t Produce Anything Measurable! Seven Metrics and Tactics for Service Companies

As a service company we find it challenging to measure project profitability and client satisfaction. What measures and metrics do you find most useful?

Advice from the CEOs:

  • For billable services: utilization percent defined as (hours available for service delivery)÷(billable hours)
    • Include in the denominator both billable hours and customer good-will or preventative maintenance hours. The latter, while not producing current income, are an investment in future income.
    • Set up audits for service needs, especially future needs, when working with customers. This will help you to stay abreast of changes in the service environment and to plan accordingly.
  • For fixed budget projects – measure budgeted vs. actual expenditures by project.
  • For fixed-fee services: a fraction expressed as: (income per customer company) ÷ (cost in hours for that customer)
  • Customer audits and surveys. Options
    • Exit “pizza party” with the client – may produce tainted results. While this builds customer good-will and may provide qualitative feedback, it should be supplemented by more objective measures.
    • Mailed survey – from 3rd party with a prize for responding.
    • Email follow-up from 3rd party that directs you to the 3rd party site to complete the survey.
  • Ambassadorial CEO visits to the top contact person in key accounts
    • Opportunity to learn about the customer’s present and future needs, staffing plans, business and strategic direction. Helps to anticipate changes in the competitive landscape.
    • The more your business relies on recurring revenue, the more important these visits are.

Key Words: Service Metrics, Project Profitability, Resource Utilization, Customer Satisfaction, Business Trends