Links to previous articles in the series as well as links to articles regarding important KPIs to run a business, can be found at the end of the article.
The current series of articles focuses on the important KPIs every business must monitor. I have written articles regarding this very important issue over the past few years. However, the current series presents the KPIs in a concise form, easily expanded, when required.
This is part V of the series, with two more to follow. This article will present the KPIs under the responsibility of Quality and Marketing managers.
Annual and special KPIs will follow at the end of the article.
The Quality Manager
Quality and Human resources are the two most important issues for every business, especially at times of growing competition. However, these issues are often neglected or the least attended to. Some small and medium size companies do not “waste time” on quality management. Other companies regard the quality manager position as a minor position, which is not part of the management board. However, can a company succeed without adequate quality management?
Quality management’s final goal
A quality managers’ aim is to make sure that all customers receive their orders of the quality they asked for. Not necessarily perfect quality, but the quality agreed upon and paid for.
In some companies, employees who do not work in the quality department, think that quality issues concern the quality department and not themselves, even when they are the operators who manufacture the products.
Customers who repeatedly purchase the company’s products are, by definition, satisfied customers. They provide business to the company and livelihood to the employees. Satisfied customers are a clear and easy goal to identify with and to engage employees. To achieve this goal, quality managers must implement quality culture throughout the organization.
First KPI – Customers’ complaints
Customer complaints KPI Monitors the volume of customers’ complaints. The KPI provides the best information regarding what happens to the product from the point a customer places an order to the point of delivery to the end user. Problems may be found at the raw material stage through to the manufacturing process, packaging, and transportation. Quality issues may happen due to problems no one is aware of. Good quality products may have left the business site in good condition but reached the end customer damaged, which might indicate problems in the delivery process. There is no better way to learn about these problems but to monitor and analyze customer complaints.
Second KPI – Serious complaints
Serious complaints regard issues that may cause the customers immediate danger. For example: glass in food items. These complaints must be monitored separately. Serious complains occur mainly, but not solely, in the food, drugs and medical equipment industries, such as implants manufacturers.
The required KPI value for serious complaints is ZERO.
How to monitor complaints?
X = the number of customer complaints during a set period.
Y = the number of products sent during the set period
KPI is measured: X / Y * 1,000
The sum indicates the number of complaints per 1,000.
Always refer to the number of complaints arriving at the company within the period you set, not when the defective products were manufactured.
Third KPI – Successful external audits
Quality managers are also responsible for meeting the demands of external audits such as ISO standards and FDA as well as quality inspections and audits initiated by the customers.
The authorities conducting the external audits usually distinguish between critical issues that may ban the company from selling its products or even cause it to lose its FDA license or ISO certification, and general corrective actions the company is required to implement before the next audit.
Fourth KPI – Cost of Quality
The definition of quality cost KPI looks at the company costs to achieve the required quality and the cost of not achieving it. An excellent presentation, prepared by Shaul Faigenbaum presents this subject very well.
Digital Marketing
Small companies, with a limited budget, may prefer to apply the advantages of using digital marketing at high cost, whereas large companies usually operate the digital marketing under their own general marketing department. Digital marketing enables the company to implement a number of KPIs and a wide range of analyses. Digital marketing managers are responsible to investigate, learn and improve the results.
The main four KPIs of the digital manager
- Leads or purchasing volumes KPI
Companies that concentrate their activities on creating sales will monitor the number of leads. i.e., User Inquiries.
Online stores will monitor the monthly financial value of the actual sales. - Average cost per lead KPI
This KPI monitors the sums of money the company spends to achieve the lead or percentage of the expenses from the total sale volume of the store. - Percentage of sales vs entries KPI.
From the total entries, what percentage resulted in purchasing or registration for membership, per landing page of the store site? For example, buying an item or registration for site activities. - Financial value of sales vs entries KPI
How much money did the online sales generate? For example, if we sell online tickets to the theatre, how much money, on average, did the online buyer spend in total? - Exposure
Exposure to the company’s brand can be monitored as well. However, it is a complex process. The most important KPIs I recommend are the four KPIs above.
Special thanks to Yorai Ronen, (972-50-5425257) Business Excellent Marketing Manager and an expert on Digital marketing who helped me focus on the important main KPIs.
Marketing manager
In my previous article I discussed the responsibilities of the marketing manager. I presented a definition of the difference between marketing and sales managers’ responsibilities in which marketing managers are responsible for creating market demand and sales managers are responsible for supplying the market demands.
It is important to distinguish between the two disciplines and allow marketing managers to focus on creating market demand.
Marketing managers are responsible for managing the digital marketing and for achieving the marketing goals. They are responsible for the above KPIs.
A question: if marketing managers are responsible for creating the market demand and sales managers are responsible to for supplying the demand, who is responsible when sales are down?
There can be an overlap of responsibilities between the disciplines and sometimes this is a grey area. However, responsibilities must be clear- cut and understood. Sales managers are responsible for sales and their KPIs reflect their clear responsibilities. Sales managers plan the ways to meet the company’s sales targets, but the targets are achieved in cooperation with marketing managers.
Performance is normally measured by looking at the end results and though the results of a marketing manager’s performance can only be seen in the future, their objectives must be monitored.
Marketing KPI: Public awareness of the brand
Since the principal role of marketing is to create public demand, marketing managers must understand the public. They must know how people think and behave. Marketing manager’s performance is therefore monitored according to the level of familiarity with the company brand. The results of this KPI are not obvious like sales KPIs, because it relates to people’s minds. A measuring system uses surveys or focus groups.
Testing people’s awareness of a brand can be done in two ways: via assisted awareness or via unassisted awareness.
An example of testing via unassisted awareness may be that while testing the level of the Israeli public familiarity with the Ozem brand, a focus group is asked: “Which is your preferred food manufacturer”? No brand names are suggested, and it is therefore an unassisted test of awareness. However, when the individuals are asked “Which food company do you prefer: Ozem, Tnuva or Straus?” the test uses assisted awareness.
This KPI, like other KPIs, may be divided into secondary KPIs, such as testing public awareness of a family of products. In any case, the CEO must be informed, once a month, of the public familiarity status of the company’s brand.
Summary and recommendations
Companies may consider different emphases on quality and marketing issues, but the KPIs presented above are applicable to all companies.
Marketing managers are responsible for four KPIs which they may cascade down the managerial line and to the employees.
Quality manager’s KPIs:
- Customer complaints
- Serious complaints
- Successful external audits
- Cost of Quality
Digital marketing manager’s KPIs:
- Leads or purchasing volumes
- Average cost per lead
- Percentage of sales vs entries
- Financial value of sales vs entries
Marketing managers’ KPIs:
- Public awareness of the brand (assisted and unassisted)
Note: When recommended values are not mentioned, (for example, serious complaints - zero complaints) use the base line of when you start to measure and set your goals accordingly. Set a time to reach the goals.
Links to previous articles in the series
- Important KPIs to run a business – part I: The KPI reports CEOs Regularly measure
- Important KPIs to run a business – Part II: Human Resources and Finance
- Important KPIs to run a business – part III: Supply Chain
- Important KPIs to run a business – part IV: Operation and sales
Links to articles regarding important KPIs to run a business
- Important KPIs to run a business – part I: The KPI reports CEOs Regularly measure
- Important KPIs to run a business – Part II: Human Resources and Finance
- Clever marketing VS wise consumers: How does packaging affect consumers?
- Fair Marketing's JUST Eye Fashion
- Improving Company Performance, Profit and Strength by Working with New Targets
- TERMS OF USE AND PRIVACY POLICY FOR BUSINESS EXCELLENCE WEBSITE
- 4 Important Performance Indicators to Know
- Blue Ocean Sales Strategy
- Our Work Method - Targets and Indicators as a tool to help Improve Profits and Performance
- Is the CEO connected to the shop floor?
- How to generate commitment to perform
- Are You Aiming to Be Number 1 in Your Market?
- Statistical Quality Control – What Is It? How To Use It? – The Last Chapter from My First Book
- How Much Are You Willing to Pay for Good Service, or How to Improve Your Customer Service
My First Book: Manage! Best Value Practices for Effective Management