Here’s how an online travel company set out to develop a complex metric to keep decisions made by the business development team aligned with strategy.
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Key performance indicators are critical tools for evaluating how effectively a company is executing strategy and for making optimal decisions. When KPIs are well chosen and well defined, they help everyone focus on the particular business results that matter the most. They can gauge the combined impact of a diverse mix of resources — individuals, teams, products, or the business as a whole — and they can reveal the extent to which those resources are adding value. They can also provide a powerful tool for senior management to influence behavior in the field at scale.
But constructing KPIs that get to the heart of the activities that are most significant in moving the company toward its goals, and that meaningfully reflect performance, can be devilishly hard. In many ways, the search for a comprehensive KPI is the corporate equivalent of chasing down the theory of everything.
A spring 2022 MIT Sloan Management Review article chronicled Agoda’s quest to find the right performance metrics for our business. We have continued our efforts to identify a KPI that could give greater consideration to a companywide alignment of strategic goals while enabling us to adapt to rapid changes in the business environment. We wanted to better account for the range of external factors that lay beyond our control.
In this article, we aim to provide insight into how we worked through our own challenges, in order to provide some guidance to organizations with similar ambitions.
Wanted: A Comprehensive KPI for Business Developers
Agoda is a global marketplace where hotels, airlines, attraction providers, and other organizations can sell inventory to customers. The business development team supports those partners, helping them grow their businesses on the marketplace. The team ensures that the relevant products are available at the requested quantity and at the best price in order to generate more bookings and revenue for us and our partners.
We needed a KPI that could measure how well business developers were delivering on their mission and be implemented as a predictive tool to help them make optimal decisions. This involved very complex, disparate sets of variables for a variety of products, such as accommodations, flights, events, attractions, and more.
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“The MIT Sloan Management Review is a research-based magazine and digital platform for business executives published at the MIT Sloan School of Management.”
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