As the old management adage goes, “you can’t manage what you don’t measure.” The pervasiveness of this doctrine has left most companies swimming in Key Performance Indicators (KPI’s), dashboards, and reports. However, is all this performance measurement actually leading to better performance? Yes it is, and much more, but only for those with the right approach.
Improving your pricing is critical to your organization’s success. There are five key attributes to consider when striving to derive and measure Revenue Management strategies.
Performance-enabling metrics that drive improvement creates a sustainable organization and must be…
• Clearly Defined: Before a metric can be adopted, internalized, or acted upon, it must be clearly defined so that it is universally understood. Ambiguous metrics will derail your performance measurement efforts;
• Actionable: An informative metric tells you what is happening; an actionable metric tells you why it is happening. The former is nice to know, the later incites action to improve;
• Timely: Refreshing the performance measurement frequently is vital to enabling an actionable response. If the metric is updated late, then the metric is of little value to those proactively seeking improvement;
• Relevant: The metric must be tailored to fit the target audience and aligned with outcomes they can control. In addition, the metric must also be compared to a baseline in order to effectively (and fairly) gauge improvement;
• Communicated: The definition, intent, and output of your performance measurement effort must be clearly communicated to all relevant stakeholders. Communication and alignment are prerequisites to driving action and accountability.
In today’s business environment, most companies are investing significant resources in performance measurement. Improving what you measure and how you measure it can go a long way in improving the return on your performance measurement investment.
For more details on measuring pricing uplift, see our previous blog on Five Steps to Measuring Performance Uplift.