What is a critical success factor (CFS)?
Definition: Critical success factors are the most important conditions that must be met for an organization to succeed. Success is not always guaranteed, but without these key components, it certainly becomes more difficult.
There is no definitive list of critical success factors for any organization or industry.
That said, some common factors have been identified by researchers and business leaders over time and include: maintaining good relationships with customers, attracting high-quality employees, having the right product mix and pricing strategy, and streamlining operations.
Critical success factors are typically identified by top executives and business owners who take a holistic view of the company's operations and consider all aspects of the business.
How are critical success factors identified?
1. Create a strategic plan – CFSs are derived from the company’s strategic plan because it outlines high-level company goals. For a B2B cold email marketing SaaS, those goals can be:
2. Introduce features for email warming.
3. Spread into a new marketplace – Create a management solution for email marketing teams, agencies, and influencers.
4. Identify key result areas (KRA) – These are focus business areas based on a strategic plan. For example, KRA can be productivity or profitability.
5. Identify critical success factors – Based on goals and KRAs, you identify CFSs. For example, if your KRA is “to increase user adoption,” your CFS is “to improve product onboarding and user experience.”
6. Transform CFSs into actionable tasks – This is done by determining KPIs for each CFS. For example, if the CFS is “to improve product onboarding and user experience,” KPI is “to decrease churn by 10% in the next 6 months.”
And there you have it — now you have to track, monitor, and report the success and adjust your strategy accordingly.
Types of critical success factors
1. Industry-related: Team needs to track and predict industry trends to stay above the competitors.
Example: Switching to new digital marketing channels.
2. Competitive: How do customers see your business in relation to competitors, and how your brand appeals to your target audience.
Example: Establishing a new market niche
3. Temporal: Limited factors that affect a business, such as changes in the staff or a business model.
Example: Hiring 2 new UI designers.
4. Environmental: Factors that the business has no control over, such as industry regulation or economic changes.
Example: Being GDPR compliant.
Examples of critical success factors
Critical success factors vary based on the current business state, industry, and overall business goals.
In content management, critical success factors are:
- Content manager's ability to create a successful content strategy;
- Company’s ability to hire good content creators;
- Building efficient and realistic content plans;
- Competitor’s content efforts;
- Updating content playbooks.
In UX design, critical success factors are:
- The accuracy of target audience research and understanding;
- Usability and inclusivity;
- Having adequate human and material resources.
In sales, critical success factors are:
- Having a robust sales team;
- Having a product that solves users’ problems;
- Quality of leads;
- Amount of acquired contacts;
- Customer relationship management.