Only If You Measure, You Can Manage
Sounds very much like a cliché, doesn’t it? I couldn’t agree more! Even in an industry like direct selling where managements sit on a wealth of data, we see many companies with no meaningful performance measurements.
All business entities, including direct selling companies need to measure the progress towards their goals after determining them. “Key performance indicators” or as often they are called “KPIs”, are the means for these measurements. They help an organization understand how its performance is doing against the goals. Some also call them “key success indicators” or “KSIs”.
There are two important characteristics of all KPIs. They have to be:
2) In the fields that are critical for the company.
The second point is quite crucial as this process is about measuring what matters to the business the most, but not everything. This is a trap not so few companies fall into. When this happens, the whole process turns into a chaos. It takes much more management time than necessary, ending up with everybody involved questioning the necessity of working with KPIs. There are numerous measurable indicators, but not all are “key” to company’s success.
For the measurements and comparisons to be meaningful, the KPIs should not also change on the road unless that change is really necessary. Consistency allows purposeful period-to-period comparisons, which is a must.
Segmenting the Field and Determining Variables
In the direct selling industry, the indicators that lead to success in sales can be first categorized by dividing the field organization into two segments as “new” and “not-so-new” direct sellers. This segmentation is crucial because most often, these two groups behave quite differently. The definitions of these groups (that is, until when you will call a direct seller, “new”) will depend on the strategic goals and how the company will prefer to see and treat them.
After categorizing the field network, these two groups’ performances will need to be measured according to various criteria, each being important to succeed. Examples are: New recruits, order size, number of orders within a given period, number of home parties, activity rate, attrition, promotions to higher ranks etc.
For quite sometime now, the whole industry is being transformed through “digitalization”. Some companies are well aware of this and actually leading this transformation, some are not even following it. Digitalization requires addition of “digital KPIs” into the picture. So, as the first step, companies need to determine what they want to do and also what they want their field organizations to do on the digital platforms. And then, the performances will have to be measured against them. The process here is very similar to measuring the KPIs in the “offline” world, but the variables are quite different naturally.
KPIs make up an invaluable set of performance management tools. But alongside this, they can also be very effectively used in focusing the whole organization’s attention on areas that really matter to the company. Achieving this can bring efficiency to many areas. And a big plus is the increase to be gained in team spirit and in motivation through sharing the targets and the progress with all those who are involved.
In this industry, almost all performance indicators are easily measurable and we have the technology at hand to make those measurements real time. It is a matter of picking the right indicators for the company, defining them well, consistently measuring, and stepping in immediately whenever the tendency is not as expected.
If you don’t measure, how would you manage it?
Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting firm in Canada specialized in providing services to direct selling firms. WDS Consultancy is a proud Supplier Member of the Canada DSA. It is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.