Gaining Control over Your Business

    This article introduces critical success factors (CSF) and key business metrics (KBM). The concept of critical success factors is that if you do a handful of things right, everything else falls into place. The concept of key business metrics is that you need to find a way to consistently measure your CSFs to see how you are doing. Each business will have different CSFs but all have them.

     Your business will have CSFs at the overall company level as well as at the function level. One executive we spoke to recently stated that the only thing he needed to know was that they were shipping product on time 96% of the time with 98% accuracy. 

    At the function level, let’s take sales and marketing as an example. CSFs may be: 1) allocate marketing dollars to activities that generate customers for less than $335 each; 2) every qualified sales lead must have at least six “touches” and be kept active for 2.5 months; and 3) customer retention needs to be greater than 90%. 

    After defining your critical success factors, you now need a means to collect data on a timely basis that can determine if they are being achieved. For the first example, you must be able to set up specific marketing campaign codes in your customer relationship management system to track the source of the lead, e.g. spring promo– newspaper ad; spring promo– radio ad; spring promo– direct mail, etc. Your accounting system needs to have the ability to track all costs relating to a specific marketing activity. By tracking the progress of leads to qualified leads to customers from one source, you can measure the cost per lead, cost per qualified lead, and finally the cost per customer to determine if the marketing activity was effective and to be used again or discarded. 

    In our example, CSF number 2 can keep your sales people motivated knowing that history has shown that on average it takes six touches (some of which can be automated) with the lead over a two and one-half month period to turn them into a customer. Management reports can be created to display the metrics so that potential leads are not overlooked. 

    Beachwood Systems can help you define your company’s critical success factors and develop the key business metrics. Sometimes data capture requires creating a custom application or simply fine tuning existing systems. The goal is for you to spend more time analyzing the information and less collecting and calculating the results.


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