Small but significant indicators of business growth> CEOWORLD Magazine
When it comes to metrics, key performance indicators (KPIs) are deeply rooted in business management. From the boardroom to the front line, leaders and employees at all levels are focused on achieving a set of recognized outcomes or goals. In addition, they regularly receive quantitative comments on their achievements against the various key performance indicators adopted by their company, their function or their team. Basically, KPIs allow a business to gauge precisely what its name suggests: performance.
More generally, KPIs indicate metrics companies use to assess performance against strategic, operational, and customer-centric goals. The most common largely revolve around two types of financial goals: turnover and profitability. A third class of key performance indicators can also be described as measures of asset efficiency. Asset Efficiency KPIs allow companies to assess the performance of a variety of other assets critical to business success, cash flow, real estate investments, engagement and employee retention, to measures focused on the quality of products, services and customer experience.
Ultimately, all KPIs generally share the same defining and common characteristics that make them valuable to businesses. Namely, they are evaluative in nature and allow companies to measure how successful they are against their stated goals and priorities. When the performance of KPIs is insufficient, companies invest enormous efforts in determining why and implement targeted solutions to ensure that the desired performance threshold is reached.
Although KPIs have become a valuable tool for companies to guide them in the best way to ensure the goals and objectives achieved, they can often cause companies to lose sight of their most valuable asset: their customers.
Internalize the problem
Take for example the company you work for and the KPIs you personally run and ask yourself the following question: If your company has increased its performance on these KPIs by> 10% from target, who would benefit from the bottom line, your business or your customers? The answer is inevitably your business.
This is the growing conundrum of KPIs. They concern the business, not the customer. But let’s not be too simplistic, given that many companies have built customer KPIs into the way they run their businesses. 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. Don’t these examples show how businesses today are listening to their customers and raising their voice as part of their business strategy and operations? Maybe, but not really.
Why customer KPIs are not enough
Customer-oriented KPIs are in fact always KPIs. As such, they are more about business goals than customer goals. Or more specifically, they are metrics that reflect more of what the company values than what a customer values.
Let’s make another argument that assumes that your customers do in fact – at least to some level – care about customer KPIs. In some cases, customers will want to do business with companies who are willing to do whatever it takes to delight them. Doing business with a company that seeks to create happier customers reduces risk and can help protect customers’ most valuable products – their time, attention, and / or money. When a business cares about what its customers think and is ready to take action to ensure it delivers products, services, and experiences that lead to other happy customers, that’s a good thing. . And the world needs more of this.
But, at the end of the day, do these customer KPIs really reflect what your customers really value? Or is it more about helping your business understand how well it delivers its stated value.
Create reciprocal value between the brand and the customer
Did you know that the average human being behaves like a customer less than 14% of their time? That’s why cherishing this little window is essential to create mutual value, ensuring that your business connects authentically with customers, so that they are happy, recommend friends and come back.
Consider a recent article by Forrester, which essentially leads to the same conclusion. Namely, these customer value metrics will become central to business dashboards and predictive of business outcomes. This gap has been clearly recognized, by the companies themselves, and comes with a mandate to measure success from a customer and business perspective. But it also raises the fundamental question of how.
Find out what customers want: CPIs
Enter customer performance indicators or CPI. Unlike KPIs, KPIs are about the customer. They are quantifiable measures of how well a business – any business, regardless of industry – is performing against the goals most important to the customer. Unlike KPIs, KPIs are not business-centric, they are people-centric and empower customers to function, thrive, and succeed as individuals. CPIs incorporate a multitude of measures, including:
- Measures that functionally benefit customers: like saving time, saving money and expanding options.
- Measures surrounding emotional benefits: such as feeling good, finding motivation, and reducing risk / anxiety.
- Measures against social goals: such as helping others, connecting with others and finding a sense of belonging.
By researching over 175 well-known brands, we’ve found that companies that help customers achieve these types of goals have greater potential for growth. Most importantly, when companies perform well against CPIs, we can predict, with a very high rate of accuracy, the value – in this case, in dollars – that companies can expect to receive in return.
It is somewhat surprising that this is the first time that CPIs have been identified as quantifiable drivers of activity. After all, embracing a value trading model can mean achieving a level of reciprocity that consumers and businesses don’t even realize they have the power to create – together.
Written by David Robbins. Did you read?
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