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ACCA Strategic Professional · Advanced Performance Management · Performance hierarchy

Brightwater Telecom has identified 'customer retention' as a critical success factor. Management is choosing a KPI for it. Which KPI is the most appropriate, given that a good KPI should be directly linked to the CSF, measurable and controllable by the managers being assessed?

Monthly customer churn rate is the best KPI because it directly measures customer retention, can be quantified and is influenced by the managers responsible. Revenue, share price and marketing headcount are too broad or input-based to show retention performance.

  1. AMonthly customer churn rate, with a target set in the annual planCorrect
  2. BTotal group revenue for the year
  3. CShare price at the year end
  4. DNumber of employees in the marketing department

Explanation

Churn rate directly measures retention, is quantifiable, and can be influenced by the managers responsible. Group revenue and share price are affected by many other factors and do not isolate retention. Headcount is an input and not an outcome of retention.

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