Hi,
Thanks for your post. Please note that KPIs are usually used to measure performance rather than determine a best figure by themselves.
For instance, if you want to find out what is the best cash discount % to reduce bad debts yet maintain profits, you may choose to first implement a strategy based on numerical analysis and measure over time.
For instance, let’s assume the following hypothetical example:
In January 2013 you have implemented a 10% cash discount to incentivize customers to cash in and avoid the possibility of bad debts.
In June 2013 you have measured total bad debts KPI and reduction in bad debts KPI and identified that you have actually reduced bad debts by 20% (please take into account any other relevant factors). Let us assume that profits remained the same.
In June 2013 you increase cash discount to 15% to try reducing even more the bad debts rate but your KPI analysis may show that although bad debts decreased, your profits have suffered.
Another analysis may be relevant here to identify what affects the organization more – the particular % of bad debts or the profit that has been lost.
Please note again that this was a hypothetical example to try illustrating one of the ways KPI analysis could be used in this situation.
Oana Boteanu | + | July 6, 2013 at 4:02 pm
×
Sign in to comment Please, register (there is a button 'Become a member of WinningKPI community') in the right sidebar or sign in to leave comments. It is free and more - you will have scores for each comment you post.
Manage your KPIs with BSC Designer software