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Why defining Critical Success Factors (CSFs) are the first step to creating great KPIs

  • Writer: David Ledger
    David Ledger
  • Nov 19, 2024
  • 5 min read

The concept of CSFs is not new – developed by a research team at MIT’s Sloan School of Management, early references to its use go back to 19791


What are CSFs and how best can you define them?


Critical Success Factors are the key areas or elements that an organisation must excel in to achieve its mission and strategic goals. These factors are essential for the success of a business and require special attention to ensure high performance.

Critical Success Factors reviewed

  1. Definition: CSFs are the limited number of areas in which satisfactory results will ensure successful competitive performance for the organisation. They are the few key areas where "we must execute on" for the business to flourish and for the manager's goals to be attained.


  1. Purpose: CSFs help organisations focus their efforts on building their capabilities to meet these key areas. They guide resource allocation, provide direction for strategy development, and serve as a basis for performance measurement.

  2. Characteristics: CSFs are typically:

    • Limited in number (usually 3-8)

    • Actionable

    • Essential for achieving overall goals

    • Applicable across the organisation or to specific function/ role

  3. Types: CSFs can be industry-specific, strategy-specific, environmental, or temporal (related to internal organisational needs).

  4. Identification: CSFs are usually identified through a process of analysis involving interviews with key executives, surveys, and industry analysis.

  5. Causality: One of the strengths of CSFs is the ability to integrate them with a Balanced Scorecard framework.2, 3  It should be possible to link each CSF with several (if not all) of the Balanced Scorecard framework perspectives below;

    • Financial

    • Customer Satisfaction

    • Learning & Growth

    • Internal Processes

    • Employee Satisfaction

    • Community & Environment

An example of a great CSF and why 


An example of a great CSF as it relates to the airline industry is "Timely arrival and departure of planes".  


It illustrates how a seemingly simple CSF can have far-reaching implications for an entire company's business model. This CSF impacts nearly every aspect of an airline operations. It requires coordination across multiple departments & functions, and it influences strategic decisions (e.g., fleet management, route planning)


This CSF also has a strong impact on the Company's Balanced Scorecard framework, as seen below;


  1. Improves Customer Satisfaction: On-time performance directly impacts customer experience and loyalty.

  2. Drives Operational Efficiency: Delays can cascade, affecting multiple flights and routes.

  3. Impacts Cost Management: Delays lead to increased costs (e.g., fuel, crew overtime, compensation to passengers).

  4. Provides Competitive Advantage: Airlines with better on-time performance can attract more customers.

  5. Ensures Regulatory Compliance: Many countries have regulations and penalties related to flight delays.

Measurements and Line of Sight (Root Cause Analysis)


A concise and comparable KPI can be created, measured and reported - in this case % On Time Performance (OTP) as illustrated below




  • It has the benefit of also being able to be used for comparative performance on multiple dimensions

    • Geographically (Globally, regionally down to an individual Airport)

    • By Route

    • vs Competitors

    • Over time (trend)

 

  • It allows for roll up and root cause analysis (deep dive)

    • Variance & trend analysis

      • Geography, Plane type, Route, Pilot, Competitors, time of day...

    • Causes of delays

      • Technical, weather, air traffic control....



What is an example of a great CSF for a Commercial Pharma Rep?

 


While rather more wordy than the airline example, the CSF outlined above has many of the elements considered critical to driving performance (and how we might consider measuring that).

 

Breaking this CSF Statement down forces you to consider each element

What do we mean by;

  • Planning

  • Execution

  • High Quality interactions

  • Impactful Content

  • Channels

  • HCP Segment & Persona

  • HCP accessibility & channel preference(s)

Additionally, while this CSF does not talk about individual Customer frequency of engagement, that could also be added to the CSF as follows;


How can you create a simple KPI that would allow you to measure all of the above in a similar way to the airline example?

  1. First start with clear definitions of what you mean by each bullet point in your CSF Statement

  2. Next consider if each of these can be clearly measured

    1. Can planning be measured?

    2. What is our definition of quality?

    3. Are we including all channels when we measure execution?

    4. Are we able to define and measure impactful content?

    5. Are we accounting for accessibility and /or channel preferences?

    6. What does competitive level mean and how will we reference that?

  3. Set expectations (targets) so the metric can be measured as a % achievement vs target

  4. This enables you to set a single metric and compare this across Reps, Teams, Divisions, Countries

 

Who hasn't seen this KPI?


While this is one of the most commonly used KPIs across industry (often referred to as Coverage@Frequency), it falls short on several levels! Through better definition of the CSF, as outlined above, it can be significantly improved.


So, let's explore how.

 

How could this KPI be improved to address the new CSF??


Below is a checklist of ways to improve the often used % Coverage@Frequency KPI seen in Pharma to measure Sales Representatives promotional activity;

 

  1. Consider what is currently included in the measure above and what is not?

    1. Likely it is only Face to Face (+ Virtual), so other channel interactions are not included in the metric

    2. Likely it does not differentiate on the quality of the interaction

      1. Specifics of the Content shared (vs Planned) not defined

      2. Quality of that engagement with the content is not defined

        1. Measurable by # times specific content has been shown

        2. Measurability by the # of Customers who have seen specific content >= defined # of times

        3. Measurable by the duration of the interaction (e.g. time on page)

        4. Measurable by content clicked (e.g. Email)

    3. Impact of the content shared is not captured

      1. E.g. HCP Feedback – direct and indirect

  2. Consider ways to define the gaps identified above and address these by

    1. Setting targets (frequency) for specific content to be shared per HCP/ Segment/ Persona/ channel (timebound)

    2. Define expectations for time on page for key message execution

    3. Define expectations for # Key messages per interaction

    4. Define expectations for HCP Feedback (e.g. to be captured by the Rep and/or via surveys)

    5. Define clear customer journeys and provide the relevant content to support these across channels and then measure their execution in the primary and adjacent channels

  3. Remove any Metrics that reward for bad behaviour (perverse incentives) - especially if they are part of an incentive/ remuneration program!

  4. Gamify and reward Metrics that encourage the right behaviour to drive your CSF

  5. Demote the (secondary) metrics you can “drill down” to (Root cause), ensuring the primary focus is just the few KPIs you really need the business to focus on. This applies to dashboard visualisations and incentive & compensation programmes.

  6. Ensure time trend data is also available for KPIs (and their secondary metrics) so behavioural changes can be monitored over time. These should be easy to find and interrogate when required if a KPI is off target, but do not need to be the primary focus for performance management reporting.

Where is your organisation today?

Below are a few examples of outdated KPIs still seen in practice and more advanced KPIs that Companies have applied to drive mindset shift and behavioural change across the Customer facing sales teams.


Arguably, only one of the innovative metrics is required to measure and compare Representative achievements of the new CSF, with the others being used for root cause analysis. Which one would you prioritise? Feel free to leave a comment below :-)


Other CSFs and KPIs for different roles


First Line Sales Managers (FLSMs) and Brand Managers should also have specific CSFs and KPIs defined relevant to their role and responsibility.  In future articles, I will articulate CSF’s and KPIs that will help serve both roles, providing insights that have strategic application for marketers, as well as coaching and capability building application for FLSMs to support their direct reports.

 

  

1 Rockart, J. F. (1979). Chief executives define their own data needs. Harvard Business Review, 57(2), 81-93.

2 Kaplan, R. S., & Norton, D. P. (1992). The Balanced Scorecard—Measures that Drive Performance. Harvard Business Review, 70(1), 71-79.

3 Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. Harvard Business School Press.

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