Why just having a customer performance metric is not enough. Every…
Why just having a customer performance metric is not enough.
Every company that’s serious about driving a customer transformation agenda has some way to measure their success. No news there.
Often this takes the form of a performance dashboard tracking improvements in customer experience over time. Though a dashboard can consist of both lead (tactical e.g. number of complaints) and lag (strategic e.g. NPS) measures, it’s the latter that tends to be the number that personifies the customer within an organisation.
These metrics are not new. They’ve long existed in the darkest depths of a marketing shared drive, but get newfound status once identified as key overall business performance indicators. Before long, these numbers are generating vibrant discussions in boardrooms, executive forums and appearing on senior management performance scorecards. Okay, so now people care. Phew! What took so long?
The problem of starting with a number
While it makes perfect sense to set up a performance dashboard to track the customer experience delivery, a problem can occur when the customer dashboard inadvertently becomes the strategy itself.
In other words, the metric is embedded, the targets are set and the employees are on board, but often the strategy to move this metric remains inconveniently missing. The goal is to move the metric by, say, 10%, but after that there’s an awkward pause – “what’s the plan, how do we move it?”.
If this is the case in your company, you should probably start getting concerned, especially if this metric is on your own personal performance scorecard.
Do you have a gap in your customer strategy?
If this sounds like you, the first thing you need to do is ask how clear your company’s customer strategy is? You need to be 100% honest with yourself – increasing your customer metric is not a strategy in itself.
If your only strategy is to move the metric that measures your strategy, then you’re likely to run into problems. While it can take 18 months or more of tracking data and dozens of monthly board papers before the penny drops, the real problem began the day you prioritised your customer performance metric over your customer strategy.
The main issue is that when the metrics are the strategy, the conversation centres on the number and not the customer. This obviously isn’t a good starting place for any company with customer centric aspirations. While passionately discussing these numbers often feels like the right conversation to be having, and admittedly they often create some very lively conversations, it is redundant to discuss a number if you’re not clear on what moves it, and moreover what you are actually doing to move it.
When ‘noisy’ data creates ‘noisy’ conversations
Starting with a number ultimately risks generating a ‘cycle of inaction’, whereby small, often statistically insignificant movements in data consume precious senior management airtime, which would be better used deciding what work needs to be done in the first place.
A further challenge is that small movements in data are often difficult to account for, especially when there is no obvious trend. It’s noisy data. We tend to congratulate ourselves for the month-on-month positive jumps, but often sweep the negatives under the carpet, while crossing our fingers that we finish the performance year on a positive.
Unfortunately, noisy data just creates noisy dashboards that lead to noisy conversations and ultimately confusion. Meanwhile, the customer gets ignored and can’t get a seat at the noisy table.
Are you asking the right questions?
Permission to rewind slightly? The ‘cycle of inaction’ sounds harsh doesn’t it? Particularly as it feels like there are activities or initiatives underway which, in theory, should ‘move the dial’ on your customer dashboard. Maybe ‘inaction’ is a little unfair. What we’re talking about here is not to suggest that there isn’t valuable work going on, but that the limited and precious time that decision makers have to discuss their customers should be weighted to a genuine discussion about customers, and not only the outcome measure.
Spending more time understanding your customers is more likely to equip you to make the right decisions to improve your customer experience than expecting this to retrospectively fall out of a conversation around a dashboard.
Perhaps worse than a ‘cycle of inaction’, is when last-gasp quick fix solutions are called for to solve long-term systemic issues (not wishing to be overly cynical, but this coincidently tends to happen towards the end of the performance year). If you recognise this kind of behaviour in your company, it’s a pretty good indicator you don’t have a strong customer strategy and instead you’ve created a dashboard culture around your customer. In other words, there’s a risk your company is asleep at the dashboard.
Is there a simple answer to a complex question?
Firstly, we need to recognise that getting serious about your customers is always harder than it seems. Putting aside the usual challenges of culture, competing business siloes, tensions between commercial and customer outcomes and good old-fashioned lack of time and resources, let’s try and keep things simple.
Simple is good, simple is faster, simple is better, we all get that. But let’s not confuse producing a simple customer dashboard with over simplifying the answer and practical response to what is frankly a deceptively complex question. That being, how do we make our customers happier?
How we’d love this to be as straightforward as the question appears. And how we’d love to be able to formulate a simple action plan in response. The reality is that moving a simple metric is rarely as simple as it sounds.
Generic data in, generic answers out
The overall strategic metrics used to measure the health of our customer relationships are deliberately generic. Some would describe them as blunt. There are many valid reasons and pros and cons for this that we don’t need to go into here.
However, when you work back from a generic number, you tend to get more generic numbers. Consequently, your insights are often generic too. Generic insights can be fine if they suggest areas to explore in more detail if you have the time, budget and support (i.e. patience from senior execs). But when the immediate appetite is more for the ‘blueprint’ as to how to improve the number within a short timeframe, things start to unwind rapidly.
For example, when the insight coming back from the data is as generic as something like ‘just get the basics right’, then this can leave people feeling understandably frustrated. The obvious next questions are, “which basics in particular?” and “which are the most important ones to be fixed?”. This is where people very quickly start to ask more complex questions that the simple metric can’t answer. The diagnostic capabilities of strategic customer tracking programs can be limited. Inevitably this eventually leads to frustrations with the dashboard and we’re back to square one.
Dashboard is an indicator, not an answer
We’re not recommending you tear up your customer performance dashboard, nor that it shouldn’t be a critical tool in your custom transformation program. We’re just suggesting that a dashboard should be complementary to your strategy. Don’t expect a strategic dashboard to perform the role of a comprehensive strategy and don’t expect it to tell you what specific actions you need to prioritise next.
If your customer conversations centre on a monthly strategic metric than the actual customer, it’s likely you have things the wrong way around. If you can recall an annual strategic NPS target, for example, but not articulate a plan of how your company is going to achieve it, then it’s likely you need a better customer strategy.
Ultimately, your customers should be driving your strategy and not just be a number on a dashboard.