Not all indicators on your scorecard are equally important for the total performance score. A good example is a pair of “Time to answer” and “First contact resolution rate” KPIs.
Is it more important to answer a support query fast or to answer it with some meaningful information that will actually help a client? General sense tells us that the balance is important in this case:
- Excellent answer that a customer was waiting for 2 weeks is not a good business practice;
- Some pointless response like “check out the manual” even if received in 30 minutes won’t make your client happy neither;
So where is the golden mean and how can we automate the calculation of the performance taking into an account these ideas? The “weight” property of an indicator will help in this case.
Learn more about how BSC Designer takes into account indicator’s weight when calculating the total performance.
Let me illustrate this idea. I created a container called “Customer Support”, and chose to calculate its performance as “weighted average.” Inside, I created two child indicators – “Time to answer” measured on a 0..48 hours scale; and “First contact resolution rate” measured on a 0..100% scale.
Now, let’s reflect on the idea of the relevant importance and set the weight equal to 3 for the “Time to answer” indicator and the weight equal to 6 for the “First contact resolution rate” (I’ve moved columns in the KPI tree to show respective weight values). In this way we tell the program that “First contact resolution rate” is 2 times more important than “Time to answer.”
Let’s check out how the performance of “Customer Support” behaves in various cases:
- For a 1 hour average answer time (equals to 97,92% performance of “Time to answer”), and a 25% first contact resolution rate (equals to 25% performance “First contact resolution rate”), the performance rate of the “Customer Support” is just 49,31%. We are giving answers fast, but we are underperforming, as these answers don’t really help to solve client’s problem.
- For a 20 hours average answer time (equals to 16,67% performance of “Time to answer”), and a 70% first contact resolution rate, the performance of “Customer Support” is 66,11%. Our answers are not the fastest ones, but they help clients to solve their problems.
Learn more about managing KPIs and specifically managing indicators’ weight in the respective section of the video manual.
Everything looks fine, but there is something that we can improve. The performance function used for “First contact resolution rate” is a linear one, in other words, for the program, changing “First contact resolution rate” from 20% to 40% is the same as changing from 80% to 100%. Any experienced executive understands that it is not what we see in the real business world. The initial improvement is normally easier, while improving from 80% to 100% is more difficult and is not possible in some cases.
To reflect this idea in BSC Designer we can change the optimization function for “First contact resolution rate” from a linear to the exponential formula “Exponential growth 2.”
The performance will grow rapidly in the beginning, then it increases slowly. The performance function can be adjusted even more precisely, and you can define the specific performance function for each value interval.
For example, you might want to use a linear function from a 0 to 40% resolution rate, and then for 40% to 100% intervals use an exponential growth function mentioned above.
The idea of the weight of a KPI is supported by some of the other modules in BSC Designer:
- There is a weight chart that can be selected for an indicator or it can be visualized on a dashboard. This chart visualizes relevant weights of indicators.
- On the “Analysis” tab there is an “Absolute weight analysis” that helps to find the most important indicators.