As far as metrics are concerned, Key Performance Indicators (KPI) are deeply engrained in the management of businesses. From the boardroom to the frontline, leaders and employees at all levels are focused on delivering against an acknowledged set of outcomes or goals. Moreover, they regularly receive quantitative feedback on their achievements against the various KPIs that their business, job function, or team have adopted. At their core, KPIs allow a company to assess precisely what the name suggests—performance.
More broadly speaking, KPIs indicate measurements companies use to gauge performance against strategic, operational, and customer-facing objectives. The most common largely revolve around two types of financial objectives: revenue and profitability. A third class of KPIs can also be described as measures of asset efficiency. Asset efficiency KPIs allow companies to gauge performance across a host of other assets critical to business success, from cashflow, real-estate investments, employee engagement and retention, to measures of that are focused on the quality of products, services, and the customer experience.
At the end of the day, all KPIs generally share the same defining and common characteristics that make them valuable for businesses. Namely, they are evaluative in nature—and allow companies to measure how well they are delivering against their stated goals and priorities. When KPI performance falls short, businesses invest enormous amounts of effort to determine why, and implement targeted solutions to ensure the desired performance threshold is achieved.
While KPIs have become an invaluable tool for businesses to help guide them in ways that best ensure goals and objectives are met, they can often lead businesses to lose sight of their most precious asset—their customers.
Internalizing the Issue
Take for example the company you work for and the KPIs you personally execute against and ask yourself this question: If your company increased their performance on these KPI by >10% over the target, who would benefit from the outcome, your business, or your customers? The answer is inevitably your business.
This is the growing conundrum of KPIs. They are about the business, not the customer. But let’s not be overly simplistic, given many businesses have integrated customer KPIs into the management of their business. Take for example, customer KPIs such as Customer Satisfaction (CSAT), Net Promoter Score (NPS), Customer Effort Score (CES), or countless other derivatives of similar KPIs. Aren’t those examples of how companies today are listening to their customers and elevating their voices within the strategy and operations of their businesses? Maybe, but not really.
Why Customer KPIs Aren’t Enough
Customer-oriented KPIs are in fact still KPIs. In as such, they are more about business goals than customer goals. Or more accurately stated, they are measures that are more reflective of what the business values than what a customer values.
Let’s make the other argument that assumes your customers do in fact care—at least at some level—about customer KPIs. In some cases, customers will want to do business with companies willing to do what it takes to delight them. Doing business with a company seeking to create happier customers reduces risk and can help to safeguard customers’ most precious commodities—their time, attention, and/or money. When a company cares about what their customers think and is willing to take steps to ensure they are delivering products, services, and experiences that lead to other delighted customers, it’s a good thing. And the world needs much, much more of this.
But, in the end, do these customer KPIs really reflect what your customers truly value? Or are they more about helping your business understand how well it’s delivering its stated value.
Building Reciprocal Value Between Brand and Customer
Did you know the average human being behaves as a customer less than 14% of their time? That’s why it is critical to treasure that small window to create reciprocal value, ensuring your business authentically connects with customers, so they are happy, refer friends and return.
Consider a recent article from Forrester, which essentially drove to the same conclusion. Namely, that value-for-customer metrics will become central to company scorecards and predictive of business outcomes. This gap has clearly been recognized, by businesses themselves, and brings with it a mandate to measure success from the viewpoint of the customer as well as the business. But it also begs the fundamental question of how.
Uncovering What Customers Want: CPIs
Enter Customer Performance Indicators, or CPIs. Unlike KPIs, CPIs are about the customer. They are quantifiable measures of how well a business—any business, regardless of industry—performs against the goals most important to the customer. Unlike KPIs, CPIs are not business-centric, they are human-centric, and allow customers to function, thrive, and succeed as individuals. CPIs incorporate a multitude of measures including:
- Measures that benefit customers functionally: such as saving time, saving money, and diversifying options.
- Measures surrounding emotional benefits: such as feeling good, finding motivation, and reducing risk/anxiety.
- Measures in respect to social goals: such as helping others, connecting with others, and a finding a sense of belonging.
In conducting research across 175+ well-known brands, we found businesses that help customers achieve these types of goals stand to have greater growth potential. And most importantly, when business perform well in respect to CPIs, we can predict, with a very high rate of accuracy, the value—in this case, dollars—businesses can expect to receive in return.
It’s somewhat surprising that this is the first time CPIs are being identified as quantifiable drivers of business. Afterall, embracing a model of value exchange may mean reaching a level of reciprocity that consumers and corporations don’t even realize they the power to create—together.
Written by David Robbins. Have you read?
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