How to Measure Customer Focus
Business-to-business (B2B) organizations are increasingly seeing the benefits of becoming more customer-focused and its resulting positive impact on customer loyalty and revenue growth. However, for many organizations that initiate this transformation, the concept of “customer focus” can seem abstract at best. How can an organization actually tell if it is becoming more customer-focused over time?
Setting the right metrics can help make the concept more “real” for an organization. Best-in-class organizations choose metrics based on key gaps between the customer’s experience and an organization’s goals of becoming more customer-focused. Having worked on customer issues across many diverse industries, we find that best-in-class organizations should think in terms of three different types of metrics:
- Historical Perception: Backward-looking metrics that measure a customer’s subjective perception of their interactions with the organization. An example is “Customer Satisfaction,” which typically is based off a five-point scale and captures how well a supplier has performed on fulfilling customer expectations on lead-time, delivery, and other dimensions based on past transactions.
- Future Behavior: Forward-looking metric that captures attitudes about what a customer is likely to do after an interaction with the organization. An example is Net Promoter Score (NPS), which is based on the question, “How likely are you to recommend our company’s products or services to someone?”
- Descriptive: Metrics that capture observable characteristics of a customer’s interaction with an organization. Examples include response time, willingness to collaborate, easy to do business with, etc.
Each Metric Plays an Important Role
Best-in-class, B2B companies should measure all three metrics. Each is a different lens through which to view the customer experience. Historical perception and future behavior metrics are useful barometers for the organization as a whole, while descriptive metrics are the levers that drive positive changes to the customer’s historical perception and future behavior. Descriptive metrics must tie closely to key gaps that a B2B company has with its customers, identified through voice of customer research. For instance, a recent client found that responsiveness and level of innovation were key problem areas for its customers. Therefore, descriptive metrics across the organization to measure responsiveness and innovation, such as average response time or number of active innovation projects, were important to assure the client was progressing on those dimensions.
Once the metrics have been chosen, best-in class organizations should also have plans in place to monitor the metrics and create accountability to the metrics across the organization.
Best-in-class, B2B companies also create detailed plans for tracking and improving metrics. First and foremost, they appoint a metric owner to track data over time. For metrics that are new to the organization, the metric owner must often build a baseline of data for the metric, especially if the metric is not currently measured. From there, these owners set a data collection process and track the metric on an ongoing basis to identify trends over time and improvement areas. Most importantly, organizations have a plan for carrying out metric feedback on a day-to-day basis to ensure improvement occurs.
Finally, best-in-class organizations create accountability among all stakeholders in the organization for improving those metrics. As part of this process, a clear communication plan of the metrics and how each metric ties directly to each employee’s role and function is critical. To assure employees focus on these metrics, the best organizations also incorporate those metrics into their incentives structures, such as performance reviews and compensation/bonus determination.
Becoming more customer-focused starts with understanding your customers and their needs at a deep level. However, without the right metrics to measure progress, B2B organizations will have a difficult time mobilizing their teams to deliver and improve customer experience. Strong metrics act as levers to motivate change to customer impediments, and overcoming these impediments will help make suppliers more customer focused.