Key success factors (also referred to as KSFs) refer to one of the crucial strategic tools. Correct understanding of the key success factors is a good base for a well-structured company differentiation.
Although key success factor refer to a different concept as key performance indicators (also referred to as KPIs), these two are in fact intertwined. As long as the monitoring system is properly set up, the management monitors the effectiveness and efficiency of operations with key performance indicators, designed based on the key success factors.
Key success factors are key to proper development and execution of strategy.
Let’s name most obvious key success factors for shoe industry in order to understand what this concept is all about – i.e. quality, price, comfort, branding & marketing, style & aesthetics, design & fashion, reflectance of the customer’s style, technology etc.
Not all key success factors are of similar importance for the target group.
Luxury shoe brands will most likely differentiate based on key success factors such as:
- Brand image
- Unique design
- High quality (production, material)
- Reflectance of the customer’s style
… while casual/sport shoe brands focus more on:
- Reasonable price
- Brand image
- Sponsoring athletes
Once a manager understands key success factors, he/she understands why for example a shoe giant Geox, that technologically revolutionized the shoe industry with its breathable shoes, has dominated the casual shoe brands for years. Furthermore, also expanding to casual clothes segment seems rather logical and much wiser decision as luxury shoe brand segment penetration.
Often key success factors have some critical level of acceptance. The company needs to respect it in order to ensure its existence on the market. Often, these factors relate to security, regulation, privacy, ethics, quality, price etc.
Once critical success factors and key success factors are defined, they should be supervised on a regular basis. Strategy is a living thing, especially if its build mainly based on intangibles such as image, brand, trends etc.