I’ve probably had ten people in the last week ask me “what does the KPI (in your name) stand for?”.   No, it’s not our initials, nor does it stand for Knowledge, Power, Income (not sure how they came up with that one).  It actually stands for Key Performance Indicator (well, there are a few others like Kuwait Petroleum International).  Wikipedia defines KPIs as:

Financial and non-financial metrics used to help an organization define and measure progress toward organizational goals.

We at KPI Direct are firm believers in the use of KPIs or what we’ll call metrics-based management (so much so that we put the acronym in our name).  You could even go so far as to call us the metrics dorks (that’s how much we like this stuff).   So, after I answer the first question about what KPI stands for, in many cases the next question is “what is a key performance indicator.”

One of my favorite examples is found in Good to Great in the discussion of Walgreens.  One of their keys to success was the fact that they had a clearly defined central metric for their business:  Revenue per customer visit.  Every strategy, every initiative, every department strived to maximize this core metric.  Now, that’s not to say they didn’t look at many other metrics like rev/square foot, merchandising efficiency, repeat visitor revenue, etc. but all of these metrics tied back to their core metric of revenue per customer visit.  From the CEO down to the cashier, everyone knew that if they maximized that core metric, then the business would be in good shape.

I’ll admit that some of this may seem very much like consultant speak - all great in theory, but not useful. I would argue the opposite: clearly defined business metrics allow not only crystal clear insight into your business, but are incredibly practical.  Why? Because every person, vendor, or initiative now can clearly be looked at through the lens of the core metrics.  Whether you are hiring/firing, selecting vendors, or launching a new program you can carefully evaluate, measure, and manage based on your clearly defined metrics.  Believe it or not, your employees and vendors will work better when they know exactly how they’re being measured and how the organization overall is being measured.

What we hope to do over this series of blog posts is dig deeper into what are the metrics (KPIs) by which to manage a direct response business and show how clearly defined metrics make management easier.   Some of the areas we hope to cover include:

• Call Center Metrics
• Media Metrics
• Fulfillment Metrics
• LTV Metrics
• Web Metrics
• Benchmarking Metrics

This list is subject to change - feel free to share your thoughts.

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There’s a decent amount of discussion around what Seth Godin and others have termed interruption media.  For those new to the term:

Interruption media advertising is advertising based on the idea that a consumer is given entertainment, information, etc. and that is then interrupted to serve an ad to the audience, whether it’s a print ad in the middle of your Cat Fancy magazine article, a banner ad along the top of a CNN.com story or a TV spot during Grey’s Anatomy.

I’ve been thinking about this in the context of direct response TV advertising. Part of the beauty behind the half hour TV infomercial is that it is NOT interruption advertising in my opinion.  Yes you could argue that the “interruption” occurs as you’re flipping from one thing you’re watching to another but by and large if you watch a half hour infomercial you are very clearly choosing to do so.  So why do people choose to watch these often ridiculous selling pitches?  Entertainment and Education.  Who doesn’t get a kick out of the shows like the Magic Bullet or watching Billy Mays hawking another cleaning product or appliance?

So can long-form infomercials continue to be viable as viewers move more and more to on-demand entertainment?  It certainly poses an interesting question and certainly raises the bar for the marketer to both entertain and educate.  Heck, I’d love to see Comcast offer me on-demand infomercials and tell me which ones are highest ranked by viewers.  What if they could not only rate the show but also the product (if they’ve rec’d it).  The good shows would certainly rise to the top and the people with the biggest budgets but crappy products may not always be the winners.  Could be quite interesting.

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