Key Performance Indicator for New Business Development

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  • Topic: Lagging indicator, Measurement, Leading indicators
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  • Published : May 11, 2013
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KEY PERFORMANCE INDICATOR FOR NEW BUSINESS DEVELOPMENT

MOHD KHAIRUL FAHMI BIN ABD HAMID
GP01636
STQK 6144 PENGUKURAN PRESTASI ORGANISASI
DR NUR RIZA MOHD SURADI
FAKULTI SAINS DAN TEKNOLOGI
UNIVERSITI KEBANGSAAN MALAYSIA
BANGI

1.0INTRODUCTION

Most agencies employ measured and well managed approaches to the functions of accounting and information technologies. A common question regarding the business development function is: How do we know if we are doing well?

Managing business development for success begins with measuring it, and while there are no measurements that will accurately predict success across all agencies. Key Performance Indicators (KPIs) are measurements that reflect the health of an organization, and for our specific purpose, the health of its business development system. They connect the firm’s goals and strategies to its activities and outcomes, keeping management informed of overall health (past, current and future).

2.02 different types of KPIs:-

2.1Lagging KPIs
Historical measurements that look back to determine it success was achieved. Financial measures are lagging indicators; they prove how well the firm has performed.

2.2Leading KPIs
Activity or task-based metrics that are measured early and can be influenced to affect future outcomes. Leading indicators have the predictive power of success. They are measured today to determine if goals will be met tomorrow.

2.2.1Other Measurements: Metrics That Contribute to Leading Indicators
A lagging business development indicator such as a new client obtained is a pure result or outcome. A leading indicator such as the closing opportunity is both an outcome and an activity. Some leading indicators are pure activities, but usually leading indicators are the sum or reflection of such activities, and merit some of these activities merit as measurement as well.

3.0MEASURING THE WRONG THINGS

3.1Written Proposals
Proposals are often seen as a step in the sales cycle, when in reality they are a tool and nit a step. Further, they are a grossly overused and misused tool. Writer of this article have wrote an article in August 2004, that most written proposals need never exist. Their purpose is confused with that of contracts: the proposal should be the words that come out of your mouth, and the contract is the written document. It is merely one in a series of commitments.

Contracts signed are a valid lagging indicator of business development success. A signed contract means a new assignment secured. Writer mentioned that the largest, most widely shared agency business development problem is the over-application of resources against early-stage buyers. At the top of the list of wasted resources is the writing of proposals for people who are not buying.

3.2Meetings
Many agencies measure business development activity and implied future success based on a loose metric of meetings with prospective clients. 3 important lessons on the subject:- * Getting meetings is not difficult

* The number of meetings obtained is no accurate indicator of business development success to come. * Most meeting are expensive.
If you measure meetings, you will get more meetings, at a significant cost. The easiest way to increase your volume of meeting is to meet with people that you really should not. If you target meetings as an indicator and begin to measure them you will find the quality of those meetings decreases at least proportionally with the increase in their quantity.

3.3Weighted Sales Forecasts.
A weighted sales forecast is the value of an opportunity multiplied by the likelihood (percentage) that the opportunity will converted into an engagement. Sales figure are lagging indicators, measured after the fact. Attempting to project a lagging indicator is like trying to guess on Monday what Tuesday will look like...
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