Do You Know Your Critical Success Factors?

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There are so many details involved in running a company, division, or business unit on a day-to-day basis that it's easy to lose track of what you really must to do to keep the business alive. It becomes difficult to tell the difference between what's important and what's critical. The two words may sound very similar, but the distinction is one that can make or break your company.

Here is an example that explains the difference between important and critical. Ed Viesturs was the first American to climb all 14 of the world’s peaks above 26,000 feet. And he did it without oxygen. Viesturs has said that getting to the top was important, but returning to base camp was critical.

Why do so many executives, managers, and business owners have trouble distinguishing between the critical and the merely important? Simply put, they ask the wrong questions. For example, they’ll ask, ''What are my priorities?'' or ''What am I going to do to make more money than I did last year?'' The answers to these types of questions are usually an easy to complete task list that provides short-term solutions. If you want to make meaningful changes that will insure increased sales and profits in the long term, the real question you need to ask is, ''What is critical to my company’s success?'' What you’re looking for here is a maximum of two or three concrete long-term initiatives that will focus you and your employees on a process of continuous improvement.



Before deciding on Critical Success Factors, a business needs a strategic plan. This is essentially a map that plots out the path your business will take from where it is now to where it realistically can be. Properly constructed, a strategic plan will identify your business’s Critical Success Factors and articulate the precise steps you need to implement that plan.

A strategic plan that isn’t customer-driven has nothing to do with reality and will almost never get implemented. In the unlikely event that it does, there’s a good chance that it’ll do more harm than good. Trying to put together a strategic plan without substantial input from Core Customers is just plain dangerous. And without feedback from Core Customers, you won’t know which Must-Have Customers to go after.

(Just a reminder about the definitions of Core and Must-Have Customers. Core Customers are your company’s most loyal customers, the ones who love you and are willing to pay a fair price for your product or service. Must-Have Customers are people who could become Core Customers, but they currently do business with the competition.)

After my presentation to the Wedding and Events Videographers Association Expo, Ande Martineau, one of the owners of My Wedding Film, posted the following on the WEVA Forum.

One of the things that was discussed in the seminar was to ask our clients questions about their experience with us! Bob gave suggestions as to what to think about when formulating questions. It was great!!! So yesterday I sent out an online survey to 100 of our past and current brides. I've already gotten back quite a few responses, and it’s very empowering to read their answers. It will affect the way I market and how I continue to develop our style of editing. Now instead of guessing what I should be doing to stay one step ahead, I just have to read what my brides say and know what I need to work on, how they found us, why they booked us, etc...
Depending upon the size of your company, there are several ways to conduct research to get the answers you need. A large company with deep pockets could use a full-service research company to do telephone surveys. A medium size company might use one of the web-based interactive surveys. And the owner of a small business would get on the telephone and call current and former customers. But no matter the size of the business, the questions are similar, whether your company sells products or services.

Let’s look at an example of how the creation of Critical Success Factors works. Jane is the president of a regional company that provides computer repair services to home-based businesses. She wants to increase the company’s sales and profits by offering same-day computer repair services to businesses with 100-250 employees that don’t have an on-site computer technician. To determine if there is a need for this service, she hires a research company to contact the owners of 100 business with 100-250 employees in her four state region. Some of the questions in the survey include:

  • What types of computer services do you currently purchase?
  • Why do you use your current computer services company?
  • Do you ever need same-day computer repair?
  • Do you pay a premium for that service?
  • For guaranteed same-day service would you pay 10% more, 20%, more, 30% more?
  • Would you pay a yearly retainer to have same-day computer repair?
From the answers, she determines that company owners would be willing to pay a yearly retainer to have same-day repair service. Based on this feedback she decides that testing the business expansion plan is realistic.

Now she needs to determine her Critical Success Factors. After looking at all of the important tasks she needs to do, she decides that the critical items are creating a profitable fee structure, developing a way to track customers’ satisfaction to make sure the promised service is being delivered, advertising this unique new service to Must-Have Customers through direct mail, and developing a way to hire new technicians with a strong customer service orientation as the business grows.

Fast forward five years. Jane’s sales and profits have grown through the creation of a reputation for do-it-right-the-first-time same-day computer repair service. At the request of many clients, she is considering assisting companies when they want to upgrade their computers and software. This will entail the analysis of Critical Success Factors to determine what it will take to profitably offer this service.

To keep your company on the road to sustained, profitable growth you need to check how you’re doing continuously. Ideally, the Critical Success Factors should be stated in a way that can be measured and continuously tracked. If you’re on the road to achieving your goals, give yourself a pat on the back. If you’ve been waylaid or aren’t making what you consider to be satisfactory movement toward your goals, you need to analyze what is stopping your progress, remove the roadblocks, and continue on your journey. When you accomplish the first set of Critical Success Factors, determine what you need to do next to increase sales and profits. You’ll be glad you did.

About the Author

Robert Gordman is President of The Gordman Group (www.gordmangroup.com). He is the author of The Super Sweet Spot: Building Sustained Profitable Growth and The Must-Have Customer: 7 Steps to Winning the Customer You Haven’t Got, which was named one of the ''10 books you should have read in 2006'' by Ad Age magazine. His clients have included senior management of Fortune 500 companies including Berkshire-Hathaway Retail, IBM PC Company US, IBM PC Company Canada, Kmart Corporation, KPMG, Saks Inc., VF Corporation, Weight Watchers International, and Whirlpool Corporation.
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