I was recently tasked with making a list of a few excellent KPIs that should be used for service organizations. There are so many good ones and so many things to measure! I couldn’t keep the list to 3 or 4 KPIs and came to the realization that there are variations of KPIs for clients based on the type of work performed, and that our internal KPIs used to manage our business are related to the client KPIs, but they also have variations. Because of this separation of client KPIs and internal KPIs, I’m going to do a two part series. This article is focused on client KPIs, and what to focus on to measure success.
I have a hard time saying that my top KPIs will automatically align perfectly with other service organizations because it really depends on the type of services being delivered. At Arke, we have 3 types of client work:
- Project Work: unique projects, with defined scope.
- Support Agreements and Retainers: which include some ‘repeated’ activities and ‘ad hoc’ customer support requests for software and services we created or ‘took over’.
- Product Operations: support for our managed software products, like FRM.
The KPIs for all 3 types of client work do vary, and they can be ‘building blocks’ to each other.
We focus on the following project work KPIs:
- Scope – the documented requirements that are known, understood, agreed and estimated by us (in either hours or dollars terms…and in client terms, it represents their ‘budget’).
- Schedule/timeline – we manage projects to milestone dates.
- Resources/costs – we measure the costs in hours (and dollars if ‘packaged’ software is included for the project) by resource type.
Yes, it is the infamous and boring “iron triangle”. It’s rare that all three KPIs line up perfectly, but clients typically want all three (all scope, on time, under budget). With project work, you can normally control two of the three factors and in almost all cases you will have an inflection point with a client where they will need to ‘pick two’ and compromise. These KPIs all relate to each other, and yes costs will go higher if a client wants significant scope on a tight timeframe.
These KPIs are ‘a must’ and ‘a minimum’ for any project. Some questions to ponder on each of these:
Scope. Did you understand the business need? Are the business processes understood? Did you break down the estimate into logical groups of work? Did you provide time for unknowns? Building scope ‘contingency’ for risks is important, especially if you have not worked with the client before. New clients will require time to ‘form’ the team and determine the optimal communication approaches.
Timeline. Is the overall timeline reasonable based on simple math? Yes there are 172 paid hours in the ‘average’ work month (and 40 paid hours/week), but assuming that your resources are perfect and will ‘earn’ 40 hours/week every week of the project is just not reasonable. Study the clients’ time allocation to the project as well…and please keep holidays, vacations, training and ‘time zone differences’ on your radar.
Cost. Is the estimate broken down into components that can be easily understood by the client and delivered? Do you have the expertise or are you required to take on training or hire premium resources to complete the work?
Quality expectations are embedded in these metrics.
These metrics are somewhat scientific and do not include ‘the voice of the customer’. Make sure to measure customer satisfaction as well. Gather feedback via formal survey or informal Q&A. Typically if you deliver all scope, on time and on or under budget your client will be satisfied :).
Support Agreement KPIs
For support agreements, the KPIs are a little different. We use the project work KPIs described above to manage our support agreement staffing, and we focus on 3 additional client KPIs for support agreements:
- “Handle” time – is the average time it takes to resolve a support request (in billable hours).
- Response time – is the length of time it takes (in business hours) to get a meaningful response to a customer.
- Customer Satisfaction – we give the client the ability to provide ratings and feedback on each support task completed.
Product Operations Metrics
For our product operations, we use the project work KPIs to manage new releases of our packaged software and new client implementations; and we use the support agreement KPIs for basic product support.
In 2013 we made strategic investments in our FRM solution and turned out several new features that were critical to compete in the Franchise Management space. This included some investment in operational data gathered for our products that support our KPIs. In addition to all the project and support KPIs above, we also measure the following for our product operations:
- Up time (of our hosted application and each module) – was it available 99.999% of the month, and only unavailable during scheduled maintenance slots?
- Number of Users – how many active (and inactive) users did we have during a specific time period, for each client?
Measure Effectively. Measure Information You Can Action.
Before you start measuring your service organization, please make sure you consider the true ‘relevance’ of the KPIs you chose….and the cost to gather the metrics. You can create expensive, beautiful graphs to highlight a KPI, but if you cannot ‘drill down’ into the graphs easily to take action, is it worth producing? Executives enjoy KPI ‘eye candy’, but please make the eye candy actionable.
Thanks for reading this, and circle back in a few weeks. The next article I share will be focused on more internal KPIs.