KPI: Overhead per Customer

22 07 2009

If you are trying to measure management improvement, how about looking at Overhead per Customer (or per transaction).  This should be a decent indicator in terms of management and overhead scalability.  If we are doing a better job of managing the business we should see some increased returns in the management function.

  • If the trend is increasing, we should be discussing the scalability of the organization.
  • If the trend is decline, is it for the right reasons?

While you are at it, you might also include cost of sales per transaction.  This one is perhaps a little more debateable in that we don’t want to artificially manage this number.  Reducing the number of sales reps, may drive down the number.  Reducing compensation plans may chase away our better sales reps.

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Categories : KPI, KPI Library, Operational Performance Management, Performance Management, Scorecard & Dashboard

Key Risk Indicator (KRI): Customer Abandonment

1 07 2009

How often do you look at the indicators that a customer is thinking about leaving you?  Do you have a process around this, or do find yourself saying “why did this customer leave us?”

What are the possible indicators for a customer leaving:

  • Time between purchases
  • Decrease in volume
  • Time to Pay bills
  • Increase/decrease in calls to customer servicce
  • Temperature of calls into customer service
  • Longer sales cycles
  • Time between customer visits

Some of these may be difficult to quantify, but are well worth understanding.  I would venture a guess the cost to replace that customer (including lost opportunity value) is less than the effort to put a process into discussing customer abandonment.

If you have stories on how you track customers, or customers you lost and how you should have known, please share them.


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Categories : Analytics, Customer Value, Key Risk Indicators (KRI), KPI, KPI Library, Operational Performance Management, Process Improvement

KPI Library: Profit per Employee

14 06 2009

If you are looking for a productivity or effectiveness KPI, a sure place to start is revenue per employee (unless you are in the public sector).

  • It is a straight forward calaculation
  • It is easy for every employee to get their heads around
  • It is a measure of scalability
  • It is a crtical measure for long term success
  • It triggers great conversations about the health and direction of the company

It has one primary weakness in that it is a lagging indicator.

Similar metrics to this are Revenue per Employee, Expense per Employee, Expense per Sale, Profit per Transaction, Profit per Customer.


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Categories : Analytics, KPI, KPI Library, Operational Performance Management, Performance Management