Women at the Helm - Planters Development Bank

The good news: you can get everything that you want…eventually. But because SMEs have limited resources (bydefinition), it first becomes an issue of priorities. Youhave to know what is most important to accomplish atthe moment. Then that’s where you focus your metrics.As the person on top of things, your job is to digestthe business situation and decide on what your prioritythrust should be for now. Perhaps (as an example) itis the stabilization of your cash flow—maybe the 15thand 30th of the month has always been a source ofstress, and you want to fix this before proceeding withanything else.You can only get a predictable cash flow if youhave predictable sales. So how do you get a morepredictable sales pattern? This is where the strategy partcomes in.One possible strategy: find a way to make your businessfit into a subscription model. Subscription implies aregular, periodic cash flow. Perhaps you can arrangefor a regular auto-debit from your clients’ credit cardsor bank accounts. This way, you get to benefit from avirtually habitual buying behavior.Fine. So what metric will help you implement such astrategy? Well, we can start with the simple: number of netsubscriptions gained. You may want to set a target that’sbased on how much cash flow you need. For instance,“Gain 1,000 subscribing clients by the end of the year.”Now that you have your strategic objective, you cannext translate this into an implementation timetablethat you can monitor via metrics. How? Perhaps set atarget of, say, gaining 100 net additional subscribersper month. Henceforth, you evaluate your performancebased on how well you achieve this goal.Okay, that was easy. Now let’s get into a bit more of a challenge.Monitoring product qualityIf you manufacture products, then you will have toknow a bit about how to evaluate quality in youroutput. This typically involves spotting defects and,generally, minimizing the number of defects per volumeof output. Large-scale manufacturers tolerate justfractions of percents in defects. Smaller manufacturers,unfortunately, do not have the automated processestypically needed to attain such near-perfection. You can,however, aim for minimizing defect rates as a goal.Start by clearly defining what a “defect” is. This meansthat you have to set standards for your output. Thisis best done for you by a manufacturing expert, suchas an engineer. Once that set of standards have beenestablished, you can start monitoring by having aquality checker go through a checklist and determiningthe number of defective products made. Henceforth,every time a defect is spotted, the tally is upped and theprocess is re-studied and improved, with the objectiveof preventing that defect from happening again.Monitoring service qualityUnlike products, service quality is more difficult tomonitor. For one thing, if you yourself try to avail ofyour business’s services, chances are that you’ll getexcellent service—because your staff will be afraid ofgetting the boss mad. This means that monitoring willhave to happen even when you are not around.But services tend to be very private affairs between yourservice crew and the clients, so one option is to haveyour own clients do the evaluating for you. You seethese in the form of Customer Satisfaction Rating cardsthat restaurants regularly hand out, for instance.When designing such rating cards, make sure to createprovisions to allow them to quantify their answers. Thisis often done via Likert scales, which are scales that gofrom 1 to 10, 0 to 100, and so on. Scales are importantbecause it’s your chance to get hard numbers aboutcustomer experience.The challenge: it is difficult for customers to rate yourperformance on a standalone basis. For instance, whatwill their basis be for saying that you’re an 8 out of10? It becomes way too arbitrary. The secret weaponthat you can use: instead of asking your clients to rateyou alone, ask them to rate you as well as your closestcompetitors. This way, you can measure the “qualitygap” between you and your competitor, rather than justyour rating alone.For instance, if competitor X was given a rating of 75while you were given a rating of 80, then your qualitygap stands at +5. Your objective may now be to increasethe gap to, say +15. So, you will henceforth regularlyassess your quality ratings and have targets per period.For instance, perhaps by the following month yourcompetitor is rated at 72 while you get an 82, leadingto a quality gap of +10. Note that gap analysis doesn’tmean that your competitor’s quality is deteriorating(you have no control over that). Rather, your clients areautomatically adjusting their rating scheme to fit theperceived gap between you and your competitor. Andthat’s really what you’re after.Designing metrics for monitoring and pushingperformance need not be a difficult science. All it takesis a very clear idea of what you want to accomplish, aswell as a street-smart approach to determining whichnumbers make the most sense for you to monitor.SME | 15