KPI: what they are and why to use them
Kpi – Key Performance Indicators – are tools of various kinds that are used to monitor the progress of a company towards its marketing and business objectives.
In other words, the Kpis are used to understand if the enterprise is working and is becoming a strong reality with a defined identity.
However, they do not refer to turnover, but are mainly oriented towards the customer, the employees and the relationships between these two entities.
The first – and best known – of these tools is the Customer Statisfaction Score (CSS): it is an expedient to verify customer satisfaction in the use of a product.
It’s simply provided with numerical scales (or other scales) to evaluate the product or service offered.
This methodology is very much based on the emotions and mood of the user at the end of the action, which can therefore be influenced by many factors.
The second valuable tool is the Net Promoter Score (NPS), which measures how much customers are inclined to advise the company to other users.
Unlike the CSS, Customer Statisfaction Score is less influenced by emotions, because it focuses the attention of the interviewee on an action, an intention.
According to the answers collected, the users are divided into three categories: the promoters, those more inclined to advise the service, the denigrators, that will not lead to the acquisition of new customers, and the passive ones, that are not oriented towards neither of the two categories mentioned above.
A study revealed that more than a third of users appreciate a company that responds immediately to any problems, even if that answer does not match an effective solution of the issue.
This concept is called First Response Time, and can be translated into the use of a chatbot or automatic responses via email to comfort the customer ensuring that an expert team is already at work to solve his problem.
Directly connected to this concept is the Customer Retention Rate. that is, essentially, a company’s ability to maintain the attention and loyalty of a customer for an extended period of time, which can be calculated on a weekly, monthly or annual basis.
Another very important instrument is the Servqual. It consists of requiring users to evaluate their usage experience in relation to their expectations, and is based on five different factors:
- Reliability: the ability to provide the promised service in a timely and consistent manner.
- The guarantee: the skills and kindness of the employees, which help to create trust and affection for the brand.
- Tangible assets: the appearance of physical locations, website and employees.
- Empathy: the employees’ approach to clients and their inclination to take care of them.
- Reactivity: the ability of employees to offer a quick service.
Finally, the last of the main monitoring tools is Employee Engagement. A study has shown that long-term employment relationships are one of the factors which most positively influence the process of a company’s success, especially as a frequent turnover of staff represents a much higher cost.
This tool is based on interviews to be submitted to employees to explore their relationship with the world of work, their level of satisfaction and their sense of belonging to the team.
This list contains only few of the many tools available to anyone who wants to do analysis of the performance of their company.
It is of fundamental importance to understand the dynamics of a company’s affirmation on the market, since they represent a very often underestimated factor.