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Managing Sales/Revenue through Key Performance Indicators

Recruit sales personnel; remunerate at a certain level, set a target and expect results! Can’t be simpler than that! Still one observes many organizations not getting right results. Why? The answer is simpler – Its either the employee’s skill sets or his performance is below par.

manoj's blog on measuring revenue through KPIs

In the recent times, not only is it difficult to get good personnel but also getting them to perform and hence it becomes imperative for any organization to have measurability of performance and a clear strategy to improve the same. Measurability of performance and appraisal strategy is the key to an organization’s success. More and more organizations have started looking at the measurability of performance and have a strategy in place to award the performing team members (linking performance to incentives and growth in the organization). This strategy goes a long way in linking the performance of each if its personnel with the objectives of the organization and their personal career goals work as motivation to up the ladder in terms of performance. This also ensures return on investments (ROI) on the manpower bill of the company.

While some organizations are aware of Key Performance Indicators (KPI) as a concept, the usage of the same is of concern. Many commit the mistake of just focusing on end results and not the process of achieving the same. What is often missed out by most is the fact that sales has a systematic cycle and if followed rigorously, it would result in achievement of the sales objectives. The sales cycle hence becomes critical to measure to ensure meeting of the overall targets. For e.g. a FMCG company with a key objective of market penetration would be able to manage the same by measuring the following parameters;

  1. Number of Retail Outlets Visited
  2. Number of Retail Outlets Activated
  3. Number of Retail Outlets with Repeat Orders
  4. Number of Retail Outlets where Branding was done

By measuring these steps in the sales cycle with a clear focus and well defined targets one would be able to ensure meeting of the overall objectives.

We all know that human resource is a key resource and a performing human resource is the real human capital it holds!

Manoj Mankani

Manoj Mankani

manoj@nimble.in
Delivery Head

 

 

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Increasing your company’s efficiency: BPR or ISO?

This afternoon, I was in a meeting with a director of one of the prominent manufacturing companies of Kenya. It being a business development meeting, I started explaining him the various consultancy services through which we assist the organizations for their growth and expansion. Since Business Process Reengineering (BPR) is our forte, I started explaining him the various aspects of BPR and why it is important. The discussion took an interesting turn when client asked me how ‘BPR’ is different from ‘ISO’ and why they should choose ‘BPR’ over ‘ISO’. Here is what I explained to him

ISO is the standard which sets out the generic criteria for quality management. The term ‘generic’ implies that these standards are applicable to any organization, irrespective of the products or services it produces or sells. An ISO certification also enables the company to assure its customers that it has all the necessary instruments and methodology in place to deliver quality goods/services. On the other hand, BPR methodology comprises of developing the business vision and process objectives, identifying the processes to be redesigned, understanding and measuring the existing processes, identifying, designing and building a prototype of the new processes. Unlike ISO, the improved processes designed through BPR are very specific to the company and caters to the individual needs of that particular organization.

ISO is a quality assurance tool which assures clients that company has produced the products in a proven way. It also provides tools – like handling customer complaints, non-conformity handling etc. which assures that the product is of quality. The real question is whether it is good enough to produce quality goods today? When competition is out to beat you on cost, quality and delivery time – it is vital that organizations change, modify, reorganize, out-source; find new sources of supplies and similar changes in the organization. ISO does not require organizations to do anything like this – it is meant to safeguard interests of customers and does not assure organization remaining competitive.

ISO focuses on incremental change and gradual improvement of processes. It is a good starting point to improve organization culture and bring in process thinking. However, my experience shows that organizations just think of it as a necessary evil to remain in business and do not take full advantage of the system advocated in ISO. Such a culture, hinders organization’s growth – with TOP MANAGEMENT finding it convenient to assure themselves that all is good since ISO certification is still active!

On the other hand, BPR seek radical redesign of processes leading to innovation in products and working of the organization. BPR requires considerable efforts and backing from the top-management of the company, and allocating skilled resources to the efforts. It produces major changes in terms of organization structure, culture, individual’s roles and interdepartmental dependencies. BPR is the need of the day where it enables the company to not only produce quality products/services but also to remain competitive in today’s market. The decision can be either but the company should take the decision accounting the readiness of its people, resources and top management!

Karnika Yadav

karnika@nimble.in
Country Head, Kenya


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In B2B marketing, knowledge of your “customer’s customer” is critical, but not in B2C. Why?

           Early this year, I started working on a new project wherein I was given the task of developing the strategy for one of our clients, who was into the business of trading hardware products. Since I have worked in trading industry earlier, I though it should not be a difficult task. But, to my surprise, as I started working on it, I realized that this project was quite different from my earlier projects; reason being that this client was doing business in B2B market space while my earlier clients were in B2C market space. There is a clear distinction in the way the sales and marketing strategies for two have to be developed. While in B2B markets, knowledge of your customer’s customer” is critical but same does not hold true in B2C markets.

The competitive edge which this knowledge provides can be attributed to below mentioned factors.

Firstly, it enables the businesses to bundle their products. When various products/services are bundled together into a package and presented to customer, they usually result in higher customer satisfaction and less disgruntlement from uncoordinated services. The knowledge of customer’s customer will enable the marketer to develop the best possible bundle that serves the customized needs of not only his direct customer but also his customer’s customer.

Secondly, this helps the businesses to move higher in value chain and become a solution provider and not just product/service provider. Today many companies are successfully transforming themselves from product manufacturers to solution providers. E.g. UPS, offering ‘supply chain solutions’; IBM combining it’s ‘hardware, software, business consulting and IT services’ into complete solutions. Becoming a solution provider increases the companies’ business by manifolds. The solutions can be developed and successfully marketed and sold to potential customers only when businesses have knowledge of their customer’s customer.

Last but not the least; it brings the seller and the buyer on the same platform. The buyer in B2B market is a sophisticated shopper who may have more in-depth knowledge of the firm’s product/services. The buyer clearly knows what he/she is looking in product/service that will completely satisfy his/her customer’s need. If seller and buyer talk the same language in terms of advantages to the end customer, the seller will definitely be able to close the deal.

On the other hand, B2C, Business to Consumer, marketing comprises of the marketing activities that are aimed at serving the end consumers. The marketing strategy should be designed to aggressively and rapidly convert shoppers into buyers. The customers in B2C marketing are more emotional buyers unlike customers of B2B marketing who are more rational buyers. Therefore, in B2C marketing, the promotional ‘P’ of marketing mix should be based more on analyzing and targeting the emotions/needs of the immediate consumer.

Karnika Yadav

karnika@nimble.in
Country Head, Kenya


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Challenge for Profit 1 – Measure & Record

Human beings get motivated by challenging goals. Yet this method of motivation is not much used in many organizations. Setting goals and achieving them requires measurements – Goals without measurements are like dreams and wishful thinking. Getting employees to set goals or even record data requires competency in interpersonal skills.

What to measure?

An organization is an entity transforming inputs into saleable output (tangible or services) using processes. Clients pay for the output delivered to them when it meets their requirements regarding quality, cost, performance, safety etc.

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Measurements can therefore be done specifically for each of the three blocks above. If you have not yet developed a good measurement system, it is best to start at the Output Block, since it directly impacts the customers.

Be clear about objectives

Measurements help in recording data to establish base line. How much product or service is being produced in a unit of time – which can be a shift, day, a week, month, quarter or a year. Knowing the production rate, we can analyze performance trends, performance variations with season, within various teams, within shifts etc. Base line can also be used for bench-marking performance with competitors. It is usual to create ratios of output by dividing it with number of employees or with capital employed or with floor area employed (for example sales per square meter in a retail store) etc. Once these ratios are established, it is easy to set goals to improve them over a reasonable challenging time frame. Providing these challenges to employees provides them with adequate freedom to innovate, show their skills and use  their in-depth ground level knowledge.

Employees will usually come out with many suggestions about how improvements can be done.

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Management Role

Management’s role is to establish priorities for improvements. It is obvious that those improvements which are less costly and would produce immediate benefits be taken up immediately. Necessary change management and execution techniques should be used and teams formed with management constantly providing support and review. Keep in mind that improvement requires time of employees and if they are already overworked, it would not be possible for them to deliver the expected goals. It is management’s role to provide resources and support – this requires a definitive mind set of the higher management who should decide whether or not they value a culture of innovation, growth, challenged and engaged manpower or wish to continue business-as-usual.

It is vital that once management decision to go for measurements is taken, the projects which are easy and quick are attempted in those pockets of the organization where positivity and team-work is better than average. Once results are shown and communicated to all in the organization, it sets the pace for fence-sitters to join the organizational efforts to make the organization a place worth working in.

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V K Mehandru

vkm@nimble.in
CEO