Monday, April 20, 2009

Performance Management in practice

Anybody that has studied Southwest Airlines will know that devising a strategy can be easier than executing one. Many airlines have tried to copy Southwest. Few have succeeded. Southwest know how to execute.

I realise this piece may look like a deviation from my general posts about marketing communications. But getting high performance marketing is a team effort. You need highly motivated, talented and hard working people to deliver on any marketing strategy. It requires leadership and management.

I posted last week about performance reviews. These are critical to executing strategy. The most difficult part of performance reviews is getting the objectives right at the beginning of the year. In fairness, getting them right takes a bit of time and usually a few drafts.

I wanted to show the the process I use.

The starting place is clarifying what exactly you want done and how well you want it done. One way to figure this out is to ask yourself what would you do if it were you doing the work yourself. And to what standard would you do the work. When you know what you want, next step is to figure out an objective way to measure this performance. Involve your team member. Get very specific and agree (1) the output itself (2) how it will be measured (3) when this will be measured and (4) by who.

I'll use a typical 'Direct Marketing Exec' role as an example.

Let's say it is January and one of your team members manages your direct marketing activity. Let's assume you need 100 sales each month to hit targets. Assume also that you know from experience that your direct marketing activity needs to generate 250 sales leads each month to create these 100 sales. Finally, let's assume that you know you need to target 5,000 people each month to generate 250 leads.

Objectives for the Direct Marketing Exec might be something like this:
  1. His overall objective is 100 sale a month. Often the big objectives are not fully under the control of the individual. He may be relying on the sales team to close the sales. This is why it makes sense to have a few other sub-objectives which would be fully under the individual's control. I believe it is important to include the overall objective though, as this the real output objective the business wants.
  2. A sub-objective might be to get the actual campaign out, by a specific date each month, targeting 5,000 people.
  3. Another sub-objective for him might be to drive up response rates to 7% by 31st March. So currently, 250 leads from 5,000 people is a 5% response. To meet this objective, he would need to generate 350 leads from 5,000 by 31st March.
  4. Another sub-objective might be to drive down the cost-per-piece. So if it currently costs €3,000 to target 5,000 people, the cost-per-piece is €0.60. His objective might be to drive the cost down to €2000 per 5,000 people, costing just €0.40 per piece.


Nick McGivney said...

This sounds like the ultra-polite version of the Alec Baldwin speech in Glengarry Glen Ross. You know the one I mean. I'm so glad I don't have to hit 250 leads :)

(Although, now that I think of it...)

Paul Dervan said...

you ever see the simpson's version of that scene? Alex Baldwin character asks homer what (expensive) watch he has, and we see homer has a watch drawn on his wrist...lovely.

nice creative thinking on the mcdonalds ad by the way.