Christopher Wren (CR): Now I really want to focus the last 10 minutes or so of our presentation on how do we know what our performance management targets should be and how do we set targets. One of the things that we see more and more is a kind of ad hoc method of setting targets. When I am in front of a group of people, I often ask, how do you set your targets? One of the things that I hear again and again is that leadership seems to be seemingly just randomly taking targets.
I have seen this happen time and time again someone will say well how are we doing this year? Well, let’s improve by 10% next year. How are we doing this year? Let’s improve by 20% next year. There is really no rhyme or reason to how we set targets for various measures. So as we get better at selecting our measures and validating the data, I hope that we stay with target setting as the next logical step in the process of maturity and measure.
Connection Between Outputs and Outcomes
So let me show you this model. What this model is basically demonstrating is the connection between outputs and outcomes. In other words, on the left using the logic model flow you will see various outputs in a retail environment. So let’s picture a drug store for instance. So the outputs will be how the store looks, and you can measure that. The merchandise selection, you can measure that. Our associate’s performance, we can measure that, customer service and the checkout process all are very measurable at kind of a tactical level.
The question really is how do the outputs on the left impact the real results on the right, which will be our real measures of success. The measures of success in the retail environment would be likelihood to recommend, how likely are you to recommend this retail store to a another customer, frequency of recommendation, how often do you recommend the store to someone else, wallet share, which would be if you do shop at a drug store what percentage of the time you shop at that drug store and finally how often are you going to come back to that store and buy again. So those are the outcomes.
Where to Invest to Get Higher Outcomes?
The question is where to invest and where to put your money on the left to get higher outcomes on the right. Do we want to invest in the merchandise? Do we want to invest a customer service training, and what should the targets be for those outputs to get those outcomes?
And right now there is not a lot of science in many environments between the left and right. We are not sure where to invest next. We are not sure what the target should be on the left to drive the best possible results on the right and this is something that you can only answer through an evaluation process. So scorecard target setting really needs to go back to evaluating what’s working and what has the greatest impact. You know the shorthand of course is biggest bang for your buck, where are we going to get biggest bang for our investment.
What Metrics and Targets Should Be on the Scorecard for a Juice Bar Franchising Company?
Creating a comprehensive scorecard for a juice bar franchising company involves identifying key metrics and targets that align with the company's strategic objectives and drive business performance. The scorecard should encompass various aspects of the franchise operation, including financial, operational, customer, and employee perspectives. Here's a breakdown of the metrics and targets that should be included in the scorecard:
-
Sales Revenue: One of the primary metrics for measuring the performance of a juice bar franchise is sales revenue. Tracking sales revenue on a daily, weekly, and monthly basis provides insights into the overall financial health of the franchise. Targets for sales revenue can be set based on historical performance, market trends, and growth projections, with the goal of achieving steady revenue growth over time.
-
Profitability: In addition to sales revenue, profitability is a critical metric for assessing the franchise's financial performance. Metrics such as gross profit margin, net profit margin, and return on investment (ROI) can help evaluate the efficiency of operations and the effectiveness of cost management strategies. Targets for profitability should aim to maximize profit margins while ensuring sustainable business growth and franchisee profitability.
-
Customer Satisfaction: Customer satisfaction is essential for building brand loyalty and driving repeat business in the competitive juice bar market. Metrics such as customer feedback scores, online reviews, and Net Promoter Score (NPS) can measure customer satisfaction levels and identify areas for improvement. Targets for customer satisfaction should be set based on industry benchmarks and franchise-specific goals, with the objective of delivering exceptional service and quality products to customers.
-
Store Performance: Monitoring store performance metrics such as foot traffic, average transaction value, and sales per square foot can provide insights into the operational efficiency and effectiveness of individual franchise locations. Targets for store performance should be tailored to each location's unique characteristics and market conditions, with a focus on maximizing sales and profitability while minimizing costs and waste.
-
Inventory Management: Effective inventory management is crucial for minimizing waste, reducing costs, and ensuring product availability at juice bar franchises. Metrics such as inventory turnover rate, stockout frequency, and order accuracy can help assess the efficiency of inventory management processes. Targets for inventory management should aim to optimize inventory levels, minimize stockouts and overstocking, and improve order fulfillment accuracy.
-
Employee Productivity: Employee productivity plays a vital role in delivering high-quality service and maintaining operational efficiency at juice bar franchises. Metrics such as sales per employee, labor cost as a percentage of sales, and employee turnover rate can measure employee productivity and engagement. Targets for employee productivity should focus on maximizing sales performance, reducing labor costs, and fostering a positive work environment to attract and retain top talent.
-
Franchisee Satisfaction: Franchisee satisfaction is essential for the success and growth of the franchising company. Metrics such as franchisee satisfaction surveys, franchise renewal rates, and franchise profitability can assess the satisfaction and performance of franchisees. Targets for franchisee satisfaction should aim to provide ongoing support, training, and resources to help franchisees succeed while maintaining alignment with the franchisor's brand standards and values.
-
Marketing Effectiveness: Effective marketing is critical for attracting new customers and driving sales at juice bar franchises. Metrics such as customer acquisition cost, marketing ROI, and social media engagement can measure the effectiveness of marketing campaigns and initiatives. Targets for marketing effectiveness should focus on maximizing ROI, optimizing marketing channels, and increasing brand awareness and customer engagement.