A Cheat Sheet for Busy Managers and Leaders: Service KPIs
Measures in service businesses have some fundamental differences from those found in manufacturing or production businesses. Below we discuss Service KPIs (Key Performance Indicators) in the following context:
• What is a service business?
• Why measure Service KPIs
• How service businesses differ from a widget factory.
• Four steps to measuring the seemingly unmeasurable
What is a Service Business?
People usually associate Service Businesses with those that have a retail facing customer service offering. Actually, the definition is broader than that:
• One where the product or outcomes are less tangible than other goods.
• Businesses where work is performed, or expertise is offered.
• Often are information based.
• Can be temporary in nature – for example, when you buy a lamp, you keep that good for some period of time – perhaps indefinitely. When you buy a massage, you pay for the service, and afterwards all that is left is your memory of the service.
• Service sector businesses are growing much faster in advanced economies than are the manufacturing and/or resource sectors.
Why Measure Service KPIs
• To know how your business is doing, and how to improve it.
• To build a business case for a course of action, or more resources.
• To figure out the impact on customers or clients.
• To improve objectivity, and reduce reliance on opinion and rumor.
• To establish accountability amongst teams or team members.
• To celebrate success.
How Service KPIs Differ From Other Business KPIs
• There are typically longer cycle times in service businesses.
• There are more complex process maps in most cases. There may be many more boxes, and many more decision points. As such quality metrics become less clear.
• The criteria for success and progress is more subjective.
• There is usually a need to go beyond numbers, and to also use descriptive qualifiers.
Four Steps to Establishing Service KPIs
1. Identify Desired Results.
2. Identify Behaviors That Drive Those Results
3. Quantify and Qualify both results and behaviors and actions wherever possible.
4. For each metric establish the BATT.
Identify Desired Results When Establishing Service KPIs
• In a manufacturing setting, you count how many widgets you make in a given time period. Your Service KPIs should be based on the ultimate desired outcomes of your efforts. Sometimes, this can only be measured in years or maybe even decades; which is why you need to also look at process, activities and behaviors.
• If you are having trouble identifying your results or outcomes, ask the following questions:
• Who are your “customers”, and what do they expect from you? Do not get caught up in a retail definition of customer. A customer is anyone who relies on you to provide them with something.
• If you got hit by a bus, who would notice, and what would they miss?
Identify Behaviors That Drive Results
If your outcomes or results are several years removed from what you do every day, then you must determine the steps that lead to those outcomes:
• What are the behaviors, actions or activities you think might drive the results or outcomes you produce?
• What is the change or effect of those behaviors?
Quantify & Qualify to Establish Service KPIs
• Quantify – Sometimes, you will be able to count the output of your results, actions or behaviours. Typical Service KPIs fall into the categories of: Cost, Cycle Time, Timeliness
• Qualitative – In most cases, your Service KPI will be harder to count. In these cases, you need to evaluate or judge the output or behavior:
– Quality or satisfaction. What is the perceived quality, or level of satisfaction of the service provided?
– Sometimes a descriptive statement can take the place of a hard metric when establishing Service KPIs: Describe in detail the desired outcome, and then Compare against current performance.
BATT
• Baseline – what has performance historically been. The baseline (as well as Actual and Target) can be:
• a hard metric
• a perceived level of satisfaction
• a perceived level of performance
• level of quality.
• Actual – what is the current performance?
• Target – what is the desired performance?
• Timelines – over what period of time are these things measured?
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