This article summarizes the content from a previous entrepreneurship course I attended.

• KPI = Key Performance Indicator, 핵심 성과 지표

• Often startups either set KPIs but fail to adhere to them or do not set them at all as they rush to solve immediate problems.

• This article discusses why KPIs are important, what attributes should define a KPI, and how organizations can effectively manage KPIs.

1. Importance of KPIs

1. KPIs serve as a Guide for Continuous Growth of the company.

   • Strategy involves allocating resources realistically, making choices and focusing efforts on specific goals. KPIs help determine where to allocate resources.

2. KPIs act as an Objective Measure of Performance.

   • They indicate how well the company is achieving its goals and what needs to be improved.

2. Setting KPIs

1. What indicators should be set as KPIs?

   • Lagging Indicators = Final goal indicators (e.g., revenue, operating profit).

   • Leading Indicators = Actionable sub-indicators that lead to lagging indicators (e.g., website conversion rate, customer basket size).

   • Distinguish between leading and lagging indicators (Leading indicators are more important!).

     • It is difficult to take action based only on lagging indicators.

   • Does improving this indicator result in a significant IMPACT?

     • How much can the lagging indicator be improved?

   • Is it difficult to improve this indicator?

     • How many resources are required, and what is the likelihood of failure?

   • ⇒ Choose KPIs with high IMPACT and low difficulty.

2. How to define KPI targets?

   • Setting moderately high KPIs to motivate (e.g., IBM - salespeople with low KPIs were not afraid to make calls and enjoyed exceeding targets).

   • Setting high KPIs to drive achievement (e.g., Google - OKRs, aiming for 70% achievement).

   • ⇒ Set Achievable yet Ambitious targets + SMART (Specific, Measurable, Attainable, Relevant, Time-based) Goals.

3. Managing and Communicating KPIs

1. Can it be an actionable guide for team members?

   • KPIs should be defined for functions, teams, and individuals.

   • How do team members contribute to the team’s goals?

2. Are team members aligned towards a single goal?

   • Motivates team members (knowing where the ship is heading).

   • Helps achieve the overall team’s objectives.

2) Case Studies (Examples of KPIs)

1. Watcha

What indicators does Watcha use as KPIs, and why are they important?

• The overall KPI is the number of paid subscribers.

• Tracks retention rate and new user acquisition.

• Focusing on the number of paid subscribers rather than revenue is because Watcha aims to provide personalized recommendations across various cultural content areas in the future. Therefore, having a large number of users who find value in the service is more important for the next steps.

What efforts are being made to achieve these KPI targets?

1. Retention Rate

• Focused significantly on improving retention as it impacts monthly.

• Enhanced the quality of the Smart TV app and formed a dedicated team because users who watched even for a minute on Smart TV had higher retention.

• Conducted numerous tests and efforts, doubling the key metrics from the initial stage.

2. New User Acquisition

• Conducted A/B tests for new user acquisition, conversion to paid users, and payment conversion.

• Observed that even though Google In-app payment was more expensive, it had a higher conversion rate compared to other methods.

• Considered removing other payment options to simplify the process and increase free trial conversion rates.

• Confirmed that users preferred convenience.

How does Watcha manage KPIs internally?

• Operates as a "One-Team" structure with 118 members, focusing on overall company KPIs rather than team-specific KPIs.

• Aligns all team members towards achieving company-wide goals.

• Launched Watcha OTT in Japan in September 2020, setting goals for subscribers in Japan and promising rewards for achieving targets.

• Adjusts goals to be challenging yet achievable, making meaningful targets in the face of significant changes.

2. Market Kurly

What indicators does Market Kurly use as KPIs, and why are they important?

• For a healthy commerce business, it is crucial to have sufficient customer inflow and high purchase volume, focusing on customer health.

  • (1) Healthy customers, (2) consistently discovering good products, (3) maintaining service levels while reducing prices.

  1. Customers

     • Focus on existing customers who account for 90% of total revenue.

     • Track customer satisfaction and health: consistent purchases, increasing purchase volume, and diversity in product categories.

  2. Products

     • Existing Products: Maintain stable quality and satisfaction, ensuring higher sales month over month.

     • New Products: Keep customers engaged with new and interesting products, driving sales and providing fresh content.

  3. Operations

     1. Service Level

        • Monitor every element from product browsing to delivery and customer service.

        • Aim to maintain a specific level of service and address any issues promptly.

     2. Cost of Achieving Service Level

        • Balance service levels with costs, such as delivery costs and customer service expenses.

What efforts are being made to achieve these KPI targets?

• Segment customers and track repurchase behavior, setting precise targets for each cohort.

• Proactively address any deviations from expected purchase behavior with promotions or campaigns.

• Balance supply chain capabilities with marketing efforts to avoid overburdening suppliers and maintaining sustainable growth.

3. Wisely

What indicators does Wisely use as KPIs, and why are they important?

Ultimately aims to balance customer experience with financial performance.

1. NPS (Net Promoter Score): Measures customer satisfaction and loyalty.

   • Compare with competitors and track changes over time.

   • Break down NPS by customer experience touchpoints.

2. Number of New Subscribers

3. LTV of Subscribers: Focus on leading indicators like the number of new subscribers and their LTV over total revenue.

   • Important to understand the base of revenue growth and the cumulative sales from key customer groups.

What efforts are being made to achieve these KPI targets?

• Growth Team focuses on increasing LTV by analyzing and proposing key metrics, collaborating with other teams to implement strategies, and tracking results.

• Initially focused on NPS, new customer acquisition, and CAC, shifting to volume growth and LTV as priorities evolved.

4. Second Syndrome

What indicators does Second Syndrome use as KPIs, and why are they important?

• In the personal storage logistics business, Topline Growth (Revenue) is critical.

  • Focus on Price and Quantity.

    • Price is harder to control, so the focus is on Quantity.

  • Monitor capacity utilization to understand how much of the available space is used.

  • Aim to maximize utilization rates.

What efforts are being made to achieve these KPI targets?

• Current KPI for space utilization is around 80%.

• Evaluate the economics of each location and focus on profitability.

• Aim to attract new customers and encourage long-term use with membership plans.

• Provide benefits for long-term usage to improve retention.

5. Kmong

What indicators does Kmong use as KPIs, and why are they important?

• As an early marketplace creating a new market, the most important KPI is the total transaction value (GMV - Gross Merchandise Volume).

• The market needs to be established before generating ad revenue or commissions.

• Current core KPI is GMV.

  • Leading indicators include ROAS and ARPU to maximize GMV.

• Focus heavily on marketing to manage the return on investment and transaction value.

How does Kmong manage and communicate KPIs internally?

• Kmong has a shared KPI document accessible to all employees.

• This transparency ensures everyone can see key metrics like GMV, category-specific revenue, and operating profit.

• Teams have specific KPIs related to their functions, such as GMV for IT Agile Team and conversion rates for UX Team.

• Initially focused on reducing cancellation rates, which were over 30%, now down to 10%.