ACCA Strategic Professional · Advanced Performance Management · Performance hierarchy
Brightwater Telecom has set a CSF of 'retaining profitable customers'. The management team is selecting KPIs to monitor this CSF. Which proposed KPI is most appropriate as a measure directly linked to that CSF?
The best KPI is annual churn rate among the highest profit-contribution customers, because it directly quantifies whether profitable customers are being retained. Staffing numbers, capital spending and press releases measure inputs or activities rather than the outcome described by the critical success factor.
- AAnnual churn rate among customers in the top two profit-contribution bandsCorrect
- BTotal number of staff employed in the call centre
- CCapital expenditure on network equipment as a percentage of revenue
- DNumber of press releases issued per quarter
Explanation
A KPI should measure the achievement of the CSF directly and be quantifiable. Churn among high-profit customers measures retention of profitable customers. The other options measure inputs or activities that are not clearly linked to the CSF.
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