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 as compared to the goals. Some also name them “key success indicators” or “KSIs”.
There are two important characteristics of all KPIs. They have to be:
1) Quantifiable.
2) In the areas that are critical for the company.
The second feature above is quite crucial as this process is about measuring what matters to the company the most, but not everything. This is a trap some companies fall into. When this happens, the whole process turns into a chaos, taking much more management time than necessary, ending up with everybody questioning its necessity. There are numerous measurable indicators, but not all are “key” to the business.
For the measurements to be meaningful, the KPIs should not also change on the road unless that change is really necessary. Consistency here allows meaningful period-to-period comparisons.
In the direct selling industry, the indicators that lead to success can be first categorized by dividing the field organization into two segments as “new” and “not-so-new” direct sellers. This is important 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 on the way to success. Examples are: New recruits, order size, number of orders, number of home parties, activity rate, attrition, promotions to higher ranks etc.
In today’s world, the whole industry is being transformed through “digitalization”. As Amway’s President, The Americas Candace Matthews put it, “We need to make sure we’re as innovative in the online space as we were in the offline space.” This means adding the “digital KPIs” into the picture has already become a necessity. So, what as a company, you would like yourself and your field organization to do on the digital platforms have to be determined. And then, the performances need to be measured against them. The process here is very similar to measuring KPIs in the “real” world, but the variables are quite different naturally.
KPIs make up an invaluable set of performance management tools. But alongside this, they can also very effectively be used in focusing whole organization’s attention on areas that really matter to the company. The increase to be gained in team spirit and motivation through sharing the targets and the progress with all those who are involved is a big plus.
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 it, how would you manage it?
