Follow up: How to measure your services and establish KPIs
In retrospect, covering off metrics, KPIs and SLAs in 500 words (three minute read) is not an easy ask. Some of the feedback I had on my last blog post, was that it’d be good to include some real-world examples of metrics being turned into KPIs being turned into CSFs.
Before we start, I’m going to assume that you are reading this because you’re a decent human being and that you read my last blogpost. (if not, read this first. Also, how dare you!)
In this post I’ll be taking metrics for a fake company who’s product is sending emails for their customers. Let’s call them EmailCo. We’ll be using those metrics to then create key performance indicators and critical success factors.
Let’s begin by assuming that this EmailCo want to establish some critical success factors. They want to measure their ability to send emails and send emails to the appropriate recipients.
Metrics that EmailCo have for January, could look something like this…
- Number of emails processed — 45,000
- Number of emails delivered — 38,500
- Number of emails bouncing back (failing) — 6,500
- Number of unsubscribes — 300
- Number of emails opened by recipient — 35,000
- Time to open emails (seconds) — 400
- Device used to open emails
Android — 5,000
Windows Phone — 300
Other — 4,000
I think that’s a good start. As you can see, these numbers are simple numeric values. EmailCo has some great statistics in relation to their product!
Now that EmailCo has all of these sweet, sweet metrics, how do they turn the numbers into KPIs? Let’s see…
Some examples of KPIs that EmailCo would be interested in or find useful could be…
Number of emails delivered / Total emails processed = Email delivery rate %
Number of email bounces / Total emails processed = Email failure rate %
Number of emails delivered / number of emails opened = Email open rate %
Number of emails delivered / number of unsubscribes = Unsubscribe rate %
Device used to open emails vs time to open = Most responsive devices
From using the above calculations, EmailCo could work out just how well it delivers it’s products.
Email delivery rate —85.55%
Email failure rate — 14.44%
Open rate — 90.9%
Unsubscribe rate — 0.007%
Most responsive devices — 1st Desktop, 2nd iOS, 3rd Android, 4th Other and 5th MacOS
These KPIs are baseline figures. They should be used to establish tolerances and create CSFs.
Tolerances (Or SLAs) could be…
EmailCo will keep email failure rate below 10%
EmailCo will deliver over 90% of emails
EmailCo will process 100% of unsubscribe requests
Tolerances should be based on customer’s expectation of the service and reported on and/or alerted against.
Finally, we have Critical Success Factors. EmailCo would use these very high level figures to give an executive summary of how well their product is meeting it’s utility. Some examples of CSFs for EmailCo could be…
Email delivery rate/Unsubscribe rate = Deliver emails to relevant recipients
Email delivery rate/Open rate = Deliver emails with relevant content
Using metrics, EmailCo have developed two really useful CSFs. They can now report on their businesses ability to “deliver emails to relevant recipients” and “deliver emails with relevant content.” Not only will EmailCo now understand how well their service is performing, but they’ll have an insight into the quality of the services their customers are paying for.
In conclusion, metrics, KPIs and CSFs allow businesses to measure the performance of their services and business processes against pre-set tolerances (Or SLAs). These insights will then help make informed decisions, about where either services or process are performing, and where improvement is required. I hope this clears up any questions, but if there are more, get in touch!