The KPI setting to achieve Amazon team growth and business growth has the following 3 characteristics.
1. Focus on process assessment
The assessment of team members should focus more on the process rather than the results. This is a bit like the popular OKR system setting concept abroad. Set a feasible goal one by one, and this goal may require more efforts to achieve. As a team leader, in addition to caring about whether the indicators have been met, you also need to control the execution process of employees. For example, some operators have achieved good sales performance by selling large quantities outside the station through discount promotions, but they are actually losing money. In this way, even if the KPI indicators are completed, it is not meaningful.
2. Flexibly adjust KPI
As mentioned before, the KPI indicators of the team are not static, but need to be flexibly adjusted according to the goals of the specific development stage. For example, in the early stage of the team, it is usually more important to pay attention to “quantity”, that is, the growth of the overall sales of the store is regarded as an important factor. Later, when the team develops to a certain stage, it pays more attention to “quality”, and sales gradually become unimportant, and gross profit and ROI will be regarded as key factors.
3. Eliminate “vanity indicators”
A good data indicator is a ratio, which should be simple and comparable. The KPI indicators set by the team should not be simple numerical values, because they may be “vanity indicators”. “Vanity indicators” are just a monotonically increasing function and cannot reflect the causal relationship between results and operating methods. In addition to making yourself feel good, it has no guiding significance for making wise business decisions and taking actions.
For example, in terms of operations positions, the overall sales of the store are typical “vanity indicators”, while the corresponding “profit margin”, “ROI”, “gross profit” and “inventory-to-sales ratio” are key indicators.