ITPEC IP April 2024 Question 84
With the purpose of increasing the number of contracts concluded, salespersons in Company A’s sales department began an activity to make proposals for plans to customers. A key goal indicator (KGI) and key performance indicator (KPI) are to be set as indexes for achievement of sales activities. Which of the following is the most appropriate combination of KGI and KPI in this activity?
Explanation
KGI: No. of contracts concluded, KPI: No. of proposals — the goal is more contracts, and the activity chosen to reach it is making proposals.
A KGI (key goal indicator) measures whether the final goal is reached; a KPI (key performance indicator) measures the process that leads to the goal, so it can be tracked and acted on along the way. The stated purpose here is to increase the number of contracts concluded, so that count is the KGI. The means is making proposals to customers, so the number of proposals is the KPI: if proposals rise, contracts should follow.
Answer (b)
Why not others:
- •(a) — the KGI is right, but sales amount does not measure the proposal activity; it is another result, not the process the salespersons carry out
- •(c) — makes the proposal count the goal and sales amount the process indicator; proposals are the means, and sales amount is a result
- •(d) — swaps the two: contracts concluded are the goal (KGI), and proposals are the activity leading to it (KPI)
Key rule: Take the KGI from the stated purpose and the KPI from the activity chosen to achieve it; the KPI is the leading measure of the process, the KGI the result.
Business Strategy Management · AI-written, may contain errors
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