The Three Most Important KPIs

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The Three Most Important KPIs

• Presented by
• Ronald J. Baker, Founder
• VeraSage Institute

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A Gedanken
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A Gedanken

• Continentals KPIs
• On Time Performance
• Lost Luggage
• Customer Complaints

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What you can measure you can manageThe
McKinsey Maxim
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Scottish proverb You dont make sheep any
fatter by weighing them.
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The only way to look into the future is use
theories since conclusive data is only available
about the past.Clayton Christensen, et. al.
Seeing Whats Next
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Whats Your Canary in the Coal Mine?
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Constructing A Theory

• Observation (How do you know?)
• Categorization (Rank whats importantOccams
  Razor)
• Prediction or Explanation (So what?)
• Confirmation/Falsification (If not, revise, start
  over)

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Key Predictive Indicators

• Economist Classifications
• Lagging (unemployment, prime rate)
• Coincident (PI, Mfg/trade sales)
• Leading (Mfg new orders, bldg permits)
• (www.conference-board.org)

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Lagging Indicators (Effect)
Leading Indicators (Cause)
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KPIs

• Most importantly KPIs define success the same
  way the customer defines success

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Its 1241 a.m Do you know where your package
is?
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FedEx Service Quality Index (SQI)

• Hierarchy of Horrors
• Right-day late-service
• Wrong-day late-service
• Complaints/Traces
• Missing points of delivery
• Invoice adjustments requested
• Missed pickups

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FedEx Service Quality Index (SQI)

• Hierarchy of Horrors
• Damaged packages
• Lost packages
• Abandoned calls
• International SQI

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Walt Disney World KPI for loyalty to resorts.
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(No Transcript)
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Net Promoter Score (NPS)

• Typical company loses half customers lt 3 years
• The Ultimate Question How likely is it that you
  would recommend this company to a friend or
  colleague?
• Dell had highest NPS
• www.netpromoter.com

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3 Types of Customers, 1-10 Scale

• Promoters (P) loyal enthusiasts (9-10)
• Passives satisfied but unenthusiastic, easily
  wooed by competition (7-8)
• Detractors (D) unhappy customers trapped in a
  bad relationship (0-6)
• P D NPS

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From Worst to First, Gordon Bethune
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When were looking for goals for an entire
company, we make sure our employees know what
were going for to get the planes on time, not
to aim for a certain return on investment. Goals
such as certain equity or debt ratioswork fine
for accountantsBut when it concerns the whole
company, we need a companywide goalsomething
that employees can immediately identify. Gordon
Bethune, CEO, Continental Airlines, From Worst to
First Behind the Scenes of Continentals
Remarkable Comeback
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This is one of the most common problems in
businesses. Businesses fail because they want
the right things but measure the wrong thingsor
they measure the right things in the wrong way,
so they get the wrong results. Remember? Define
success the way your customers define
it. Gordon Bethune, CEO, Continental Airlines,
From Worst to First Behind the Scenes of
Continentals Remarkable Comeback
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Harris Interactive poll, N 23,000

• Only 37 have clear objectives
• Only 10 felt org holds people accountable for
  results
• Only 10 success measures tracked
• Only 10 clear, measurable, deadline-driven work
  goals
• Only 20 fully trusted org
• Only 13 high-trust, cooperative relationship
  with other groups/depts

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Why CPAs Lose Customers
My Accountant just doesnt treat me right
Ignore them
Fail to cooperate
Let partner contact lapse
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Why CPAs Lose Customers
Dont keep them informed
Assume they are technicians
Use as training ground for new team members
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Why People Select CPAs
Interpersonal skills
Aggressiveness
Interest in the customer
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Why People Select CPAs
Ability to explain procedures in terms the
customer can understand
Willingness to give advice
Perceived honesty
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What Customers Want

• Invest in new areas of our business
• Help us think/develop strategies
• Be proactive w/info in our industry
• Meet with us to brainstorm
• How do we compare to others
• Suggest things we should be doing

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Firm-Wide KPIsVelocity
Turnaround Time (TAT)
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Firm-Wide KPIsCustomer
High Satisfaction Day (HSD)
Value Gap
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Customer Existing Value Created Existing Revenue Yield Value Gap
XYZ 2,500 1,000 1,500




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Customer Potential Value Potential Revenue Value Gap
XYZ 5,000 2,500 2,500




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Thank You!
Versage website/blog www.verasage.com
ron_at_verasage.com Phone [phone] Twitter
_at_ronaldbaker