Click to read the original article for details. There are many discussions about KPIs, but not many about marketing KPIs. Marketing KPIs have their own particularities. KPIs are a culmination of modern management. In any multi-level, highly specialized operation system, only KPIs can conveniently verify individual results. The household contract responsibility system, such as "contracting" or "commission" systems, does not require KPIs, but they cannot scale up. However, every so often, when a large enterprise collapses, strategy and KPIs are the two "culprits." From a macro perspective, strategy is criticized; from a micro perspective, KPIs are blamed. This can be a formula for criticizing collapsed large enterprises. Whoever collapses, this formula can be applied to them. In fact, KPIs are scapegoats. When the enterprise is in good times, KPIs are a booster. Everything goes smoothly, and momentum amplifies strengths (long-board effect). When the enterprise is in adversity, KPIs are the chief culprit. The more you do, the worse it gets; without momentum, the short-board effect takes over. In the marketing field, KPIs are built on two premises: one is result decomposition, such as sales volume; the other is process decomposition, such as work processes. Finally, key processes are captured to form KPIs (Key Performance Indicators). In practice, some emphasize result indicators, others emphasize process indicators. Regardless of emphasis, they are based on the following logic: completing the process naturally leads to the result. Emphasizing results can easily lead to sales overdraft or "pulling up seedlings to help them grow." In marketing, achieving this in the short term is too easy. Any experienced salesperson can do it effortlessly. This article will not discuss this topic; it is not worth it. The key to applying KPIs in marketing is combining them with marketing logic. Marketing KPIs have two major characteristics: First, results can precede the process, for example, policy-induced inventory loading. Therefore, judging the process by results may be problematic; Second, there is a "time lag" from process to result, and if the process accumulation does not reach a qualitative change from quantitative change, the effect is hard to achieve. How to do marketing KPIs? Many enterprises no longer assess sales volume (results) but focus on assessing the process. However, many enterprises also encounter problems: perfect process, but no sales. This problem, excluding deliberate factors, is mainly due to insufficient KPI reducibility. The keyword of this article is KPI reducibility. Some frontline employees even believe that process and results are conflicting, and doing the process delays sales. This is also due to insufficient reducibility of KPI assessment. To do KPIs well in marketing, they must be perfectly integrated with marketing logic. Usually, the main reasons for failure are: First, insufficient KPI reducibility. From the process perspective, KPIs are a reduction after process decomposition, but after doing KPIs well, they may not be reducible, resulting in the strange phenomenon of process without results. Second, the reduction cycle is too long, and results cannot be seen in the short term, leading to doubt about the process. Because there is always a "time lag" from process to result. Third, the "minimum operation unit" for reducing process to results: the more people involved in the operation unit, the harder the reduction. These three issues are the three aspects of implementing KPIs: closed-loop operation system, minimum operation cycle, and minimum operation unit. Fourth, insufficient momentum: KPIs are done well, but the critical point from quantitative to qualitative change is not reached. Therefore, KPIs should not be viewed merely as individual work. Let's first discuss the reducibility of KPIs. When I was in elementary school, I did something that left a deep impression and I still think about it often. I took apart an alarm clock at home. Before disassembling, I carefully observed its structure. But after disassembling and reassembling, there were extra parts, and I couldn't figure out where they belonged. Naturally, the reassembled alarm clock never worked again. Fortunately, my family didn't notice, or I would have been punished. Sales KPIs are like disassembling and reassembling an alarm clock. Disassembly is decomposition; reassembly is reduction. All marketing work in an enterprise is a system (the alarm clock). For assessment and management needs, it is split into individual tasks (parts). However, these individual tasks may never be reassembled into a system (the alarm clock). Every KPI is done well, but sales are not achieved. Because as a result of KPI decomposition, people see individual indicators one by one, and they may not understand the logical relationships between indicators. Therefore, to make KPIs reducible, I propose a closed-loop operation system. A closed-loop operation system includes not only KPI indicators but also the logical relationships, rhythm, and critical points between indicators, thus forming a closed loop. Completing a closed-loop operation system should be reducible to results. A closed-loop operation system must conform to marketing logic and be tested in practice, not just decomposed at a desk. Of course, a closed-loop operation system can also change. For example, when developing a new market, one set of KPIs may be used; for incremental growth in a mature market, another set of KPIs should be used. Because the marketing logic for new and mature markets is different. However, enterprises are accustomed to "cutting feet to fit shoes," forcing one system onto all situations. The second concept is the minimum operation cycle: the shortest cycle from KPI work to forming sales. There is a "time lag" from process to result, and this lag period is a "window period." The window period can be as short as a few days or as long as months or even years. During the window period, work is done, but there are no sales yet, so doubts arise: "Is what we are doing right?" Once doubt sets in, work may deform. From process to result, feedback is formed. The faster results appear, the faster feedback reinforcement is. Lvyeyuan is a god-level enterprise in the agrochemical industry. Each salesperson averages 200 on-site meetings per year. Apart from rest time, it is basically 3 days with 2 meetings. Meetings are just a form of sales promotion. Although Lvyeyuan does not have a KPI system, employees know that their closed-loop operation system has only three actions: trial (demonstration, yield measurement) → dissemination → meeting-driven sales. For a single market, the cycle of demonstration, yield measurement, dissemination mobilization, and meeting-driven sales is long. However, they are carried out in parallel. With an average of 2 meetings every 3 days, the average operation cycle per unit is not long. In comparison, Lidu's immersive experience cycle is longer. Many worry about how Commander Tang withstands the pressure when Lidu salespeople are not assessed on sales volume. There is a trick: before starting immersive experiences, Commander Tang first completed a round of "sealing altar" activities. The success of the "sealing altar" activities gave him enough confidence to withstand sales pressure for a longer period. Liu Xinhua from Uni-President China Holdings once said that as long as the operation process is appropriate, the transition from result-oriented to process-oriented assessment can be completed within two months. For FMCG, the minimum operation cycle generally does not exceed two months. Because assessment is usually monthly, which is also the salary payment cycle. If the minimum operation cycle can be controlled within one month to form an operation closed loop, and achieve consistency between basic work and final performance within one salary measurement cycle, that is optimal. If the minimum operation cycle cannot be controlled within one month, try to control it within 3 months (one quarter). Otherwise, based on the judgment cycle of grassroots personnel, they may not consider the consistency between basic work and sales. The third issue is the minimum operation unit: how many people form a closed-loop operation system. Why is the household contract system more effective than the people's commune? Because the family is a relatively small operation unit, second only to the individual. I call it the minimum business unit. Modern society has strict division of labor. After system decomposition, A does basic work, and B reaps sales. It is like A sowing in spring and B harvesting in autumn. If A's basic work is attributed to B's sales, then A's enthusiasm for basic work will be greatly reduced. Although China has entered an industrial society, agricultural thinking is still deeply rooted. Factory division of labor has strict on-site management. Sales work, however, is difficult to manage on-site, or the cost of on-site management is high. Therefore, if basic work based on division of labor cannot form a closed loop within a smaller operation unit, then very strong on-site management capability is needed. Forming a closed loop in the smallest operation unit: one person is the smallest operation unit. The more people, the greater the difficulty of reduction after decomposition. The minimum operation unit in marketing, regardless of which KPI is assessed, ultimately completes the three links of "awareness, transaction, and relationship. " In the past, awareness was the responsibility of the marketing department, while transaction and relationship were the responsibility of the sales department, making the entire company a minimum operation unit. Now, some enterprises have upgraded the sales department to a marketing department, and salespeople are "airborne marines." Airborne marines have the ability to independently complete awareness, transaction, and relationship, naturally forming a minimum operation unit. Airborne marines, regardless of how many people are combined—1 person, 2 groups, 3-person teams—can be a minimum operation unit. With the minimum operation unit, KPI reduction is completed within a small unit, reducing disputes. The last issue is momentum: only when the critical point is reached does momentum form. Dao gives birth to one, one gives birth to two, two gives birth to three, and three gives birth to all things. "Dao gives birth to one" is from 0 to 1; "one gives birth to two, two gives birth to three" is quantitative change; "three gives birth to all things" is qualitative change. Before reaching the critical point, high input, low output. At the critical point, 99 degrees plus 1 degree is qualitative change. Reaching the critical point is qualitative change, and qualitative change forms momentum. With momentum, everything goes smoothly. Marketing KPIs differ from other fields; momentum is very important. Therefore, KPI indicators are not just numbers for measurement, but numbers with a sense of value. The minimum operation cycle is about forming a closed loop in the shortest time. The critical point is about forming momentum in the shortest time. These are not included in the KPI indicators themselves. Marketing KPIs are far more difficult and complex than those in other fields. Source: Teacher Liu's New Marketing