What Are Performance Levers? - Definition & Examples

Instructor: Artem Cheprasov

Artem has a doctor of veterinary medicine degree.

In this lesson, we'll define something known as performance levers. You'll then identify numerous different types of performance levers. Finally, we'll go over how/when some of them are used.

Improving Performance

A business can improve its performance in many ways. For example, it can commit to the right types of resources. Perhaps this means hiring additional personnel or training existing personnel.

In other instances, the business can employ novel strategies to improve its performance.

Both resources and strategies are a part of building and engaging, something known as performance levers. In this lesson, we define this term, identify numerous examples of performance levers, and explain how/when some of them are used.

What are Performance Levers?

The term performance lever refers to a condition, strategy, or capability that enables long-term, ethical, and exceptional performance to occur. By extension, this means that such performance levers can be used to improve business performance and profitability when called upon.

Examples of performance levers include:

  • Strategic pricing
  • Customer value management
  • Vendor management
  • Customer segmentation and offer design
  • Sales force effectiveness
  • Overhead management
  • Multi-local competitor strategies
  • Marketing ROI

Let's go over a few of them in a bit more detail.

Strategic Pricing

One type of performance lever is strategic pricing. The strategic pricing performance lever is often built and pulled by experts and a dedicated internal team that works to figure out the best pricing strategy.

It's used to improve profitability in instances when off-the-shelf software or general pricing formulas aren't going to cut it. If your business faces unique customer expectations or a unique competitive environment, then general strategies like this may not optimize your business' profitability, and the need for a dedicated team of experts becomes clear.

Sales Force Effectiveness

Another key lever is sales force effectiveness. It's obvious that an ineffective sales force is going to harm the bottom line. Thus, this lever is built and pulled by properly equipping and empowering the sales team to make the right decisions. This could mean many things, including:

  • A smaller focus on automation in sales-driven strategies.
  • The integration and cross-collaborating of sales, marketing, and customer service.
  • Harvesting external and internal data to get a better understanding of your customer base.

Customer Segmentation

On the note of knowing the customer base, this helps us segue into another important performance lever, customer segmentation and offer design.

Through your use of the sales force effectiveness lever, you'll discover that not all customers are created equal. This is your opportunity to pull the customer segmentation lever. Design specific offers that will appeal directly to unique groups of individuals by:

  • Dividing your market into meaningful segments.
  • Targeting segments with profit potential in mind.
  • Investing adequate resources (time, money, personnel) to match the needs of each target segment.

Multi-Local Competitor Strategies

These target segments may be partly influenced by local dynamics. This is where multi-local competitor strategies, another performance lever, comes into play.

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