Bake measures: how to use business measures to get closer to your customer
‘Measurement is like gravity. It pulls our attention and action toward a centre, toward the most important things we should improve.’
Measures and metrics aren’t often viewed as a key enabler for a business to become more customer-centric. In fact, it is often one area that is overlooked or underestimated. Yet studies suggest that measures are paramount when it comes to building a more customer-centric organisation:
“In the best customer-centric companies, employee incentives and customer metrics are all truly aligned to drive customer profitability. These metrics are very serious, and have the same rigor and measurability as other financial measures in the organisation.”
Source: Making customer centricity pay in good times and bad. Lessons from Ten Leading Companies. booz&co, 2010
For those companies who realise the importance of customer focused measures, and choose to put the customer at the centre of their measurement framework it acknowledges something significant:
- The strategic impact customers have on their business
- The business’ willingness to adapt to customer needs
- A readiness to invest time and effort in gaining the insights that will build strong customer relationships
The challenge however is building measures that create the right focus and support a customer-centric way of working.
“Managers will be motivated and equipped to cultivate a customer-centric culture if they know if and how it impacts results, so organisations should ensure they establish and track the link between culture and customer impact.”
6-ways to build a customer-centric culture, Harvard Business Review, 2018
So how do you build measures that create a greater external focus that ultimately brings your customer closer to the business? In this post, our performance measurement experts share 3 tips for doing just that.
1. Start with defining simple, clear customer-centric outcomes you can measure
Establishing the right customer-centric measures requires clarity on precisely what impact we expect the customer will have on strategic success. Don’t start with how customers feel about the organisation or your products. Instead focus on the impact they have on your business because of how they feel – that is the result that you are trying to impact.
To do this, initial rigorous debate at an executive level should dive into questions like;
- ‘What type of relationship do we need with customer segments to drive our future sustainable success? (include the commercial contribution of each segment to overall business success)
- ‘What behaviours should we be driving in the organisation to help us win and develop these important relationships?’
- ‘How will we know if we’re making a difference?’
Take questions such as these and use methodologies like PuMP to ruthlessly prioritise and design the performance measures that reflect these questions.
Tip: Select no more than 3 measures as a starting point for driving customer focus in conversations.
2. Force the customer focused measures into your cultural hotspots
Measurement sends a powerful cultural signal about what’s most important to a business. It therefore creates an innate focus, and an understanding of how an individual and team is contributing to the business’ desired outcomes.
For true customer-centric change to occur:
- Messages around the ‘what’ and ‘why’ of the customer-focused measures (the organisational intent) should be transmitted regularly, loudly and consistently through all layers of the organisation, and to encourage a dialogue on outcomes.
- Ensure continual honest feedback through the measures - how well is/isn’t the business progressing towards customer-centric outcomes. A powerful and effective starting point for this feedback are ‘cultural hotspots’ – ways of working or processes in the business e.g. commercial reviews and team meetings, where an assessment of key-customer focused measures can easily be incorporated alongside standard product performance to give a more rounded view of what’s driving the strategy and success to date.
- Incorporate customer-centric outcomes into a core measurement dashboard where they sit alongside the usual financial and product-centric metrics. In doing this, you can paint a fuller ‘diversified’ picture of performance - helping people see the business from new perspectives and widening the discussion and emphasis for the actions they then initiate.
The most critical cultural hotspots will be mechanisms like budgeting or brand planning cycles. Incorporating customer-centric outcomes as critical planning drivers within these hotspots will ‘automatically’ drive a fundamental shift in how the business organises itself to deliver on the strategy. This is undoubtedly harder to achieve initially, but eventually this approach is what will ‘bake’ the change into the underlying fabric of the organisation.
To learn more about cultural hotspots and how to leverage them in your measurement framework, watch our video series on how to change a workplace culture. Access it here.
3. Aim to be practical rather than perfect
Changing a measurement framework can be unsettling. It takes courage, continuity and conscious choices to let go of metrics that demonstrated historic successes and take a chance on what will feel like new ways of working – this can be uncomfortable and testing for many.
The key is not to expect too much, too quickly – you can still drive quick wins and success with what is practical and achievable. Just remember:
- Perfectionism will hold you back
Businesses who do expect perfection, will fail to recognise the journey and shifts they are needing to make and therefore won’t provide the time or focus to allow the change to embed.
- Changing measures reflects a desire to change our ‘habits’
New habits take time to form. In fact, on average, it takes more than 2 months, before a new behaviour becomes a habit (European Journal of Social Psychology, Phillippa Lally, 2009). So, give people the time they need to practise a new way of working and build confidence so that the ‘new’ can become the ‘norm’.
- Trends take time to mature, look for patterns not data points
Meaningful data tells a story. It can take around 8-12 data points before we secure a statistically relevant data signal about a shift in the underlying performance. Knee jerk reactions to every new set of results is not productive or helpful. Instead, look for the patterns and what’s occurring in the business drivers of the metrics.
- Measurement alone isn’t enough
If we want to change our results, we must first change ourselves. If measures are not mirrored in the mechanics and mindset of a business, it’s likely you are setting yourself up for failure. Therefore, over time make sure processes, systems, rewards and every aspect of the business begin to align to what you are seeking to influence and achieve.
- Leaders must walk the talk
Leaders embracing and illustrating a customer-centric way of working is paramount, but so too is their continuous reinforcement and focus on what is being measured, why that is the case and how the business is progressing with the fulfilment of those measures:
“[The approach used by Disney] illustrates the principle that business leaders promote the value that customer-centricity creates. Disney makes use of a simple leadership framework that links the delivery of business results to customer satisfaction and measures that satisfaction via two key indicators: ‘propensity to return’ to a Disney experience and ‘propensity to recommend’.”
Leading and governing the customer centric organisation, McKinsey
Choosing the right customer-centric measures demands strategic clarity at an executive level, however for true change to occur these measures need to live, breathe and influence business culture. Good measures galvanise the organisation, signalling how we can all contribute to greater levels of success.
Want to know more about using measurement to enable customer-centric ways of working? Our case study for Volkswagen Group shares the theory in practice. Find out more here.