In another “back to basics” post, I’ve recently been doing some work on building a reporting dashboard for one of my clients. The challenge they faced was that whilst they are data-rich, the ability to achieve their business goals was being clouded by the amount of data available. The solution to this was to create metrics that drive desired customer outcomes to meet business goals. In order to do this, we needed to understand what was required to achieve the outcomes and goals and what to measure. I started with 2 questions, what are KPIs and SLAs and why are you using them?
In it’s simplest form, SLAs are designed to measure the service provided to a customer. For example, a typical SLA might be speed of answering the phone in a call centre. SLAs are invariably operational, and to keep things simple, I split them into two buckets. Firstly, efficiency – speed, time to deliver a task, time to complete a task. Efficiency SLAs help us measure the reliability of our delivery. Secondly, consistency – quality of task delivered, completeness of task, lack of need to repeat a task. Consistency SLAs help us to measure the effectiveness & ownership of tasks.
KPIs generally focus on the success of a business to achieve business defined goals. For example, a typical KPI might be to increase customer retention by 10% this year. Again, I split KPIs into two buckets. The first is growth – revenue, customer base, retention, market share. Growth KPIs show the trend in business financial success, and thus are highly scrutinised by shareholders and investors. The second is engagement – customer satisfaction, NPS, Customer Effort Score, advocacy, loyalty. Engagement KPIs help predict customer behaviour and indicate future growth trends. Both types of KPI are heavily linked.
So in the simplest form, when the correct SLAs are met and measured (for efficiency and consistency), KPIs (for growth and engagement) will be achieved. Simple! But even for those that are rolling their eyes at this oversimplification, many business have fallen into a common trap, measuring what is easiest to measure, rather than what should be measured, resulting in the business focusing on the wrong core metrics. I first came across an example of this within the aviation industry many years ago.
Imagine if you will, you’re mid-flight on a long haul trip, you’ve had a couple of drinks, a hearty meal and are dozing as you watch an in-flight film. At this point, you’re handed a customer survey to complete. At this point in your experience, you have no idea whether the flight will arrive on time, whether your baggage will turn up and whether your onward connection to your hotel was properly booked. The airline insisted that this was the right point to measure their overall experience, as they wanted to get maximum level of responses to feed their business KPI around customer satisfaction. Irrespective of whether the score ignored key aspects of the customer journey, the business based decisions on the outcome of their flawed KPI result.
Once you’ve got the SLAs right and properly associated with KPIs (no point in having SLAs that don’t directly contribute to a KPI), how best do you get the team (over)achieving on them? Objectives that incorporate SLAs & KPIs (as long as the team can influence the result) are one obvious choice. But in my experience, making the number public within the whole company (or for the bolder amongst you, publishing to customers) acts as a great rallying call. When it’s visible, discussed and communicated from the highest level, people will unite around achieving the SLAs.
My final comment relates to setting KPIs & SLAs. This needs to be done at a senior level, because the performance you set needs to be linked to your strategy. Anything that doesn’t link to the strategy is not a KPIs and should not have associated SLAs (of course, there will be many more operational metrics to track!) Keeping the company-published SLAs and KPIs to a manageable amount will also keep them top of mind for everyone. And when setting the number, think strategically – what is the customer & business desired outcomes that you are aiming for? So if you want 75% of customers to be retained each year, you publish that goal, and set KPIs to increase exponentially from your current level. The same applies for SLAs – if you want to answer all customer emails within 15 minutes but are currently achieving 2 hours, don’t set the SLA to 1 hour, but set it to 50% within 15 minutes, then keep moving the bar toward the goal of 100% within 15 minutes.
KPIs & associated SLAs should be our beacon towards business success, so going back to basics, it may well be worth reflecting on your business, department & teams SLAs (& KPIS) to confirm if they truly drive your business (& customer) goals.