Are You Sure You’ve Selected the “Right” Core Customer Metric?
During my keynote presentation at IIR’s 2008 Linkage Strategies Conference in Miami, I invited the audience to participate in a sort of informal “survey” regarding successes and failures experienced in connection with putting the Voice of the Customer (VOC) to work.
I asked how many felt their organization had successfully selected and implemented a core measure of customer loyalty, and more than half of the 200 in attendance raised their hands. However, when I asked how many clearly had been able to show how their organization’s loyalty metric is linked to financial or other key business outcomes, only three attendees raised their hands.
In earlier posts at this site, we have tried to argue that an effective Core Customer Metric should provide a valid leading indicator of changes in revenue, market share, customer retention, and other business performance measures. This requires demonstrating the link between the CCM and such business measures. So it seems a little ironic that, while a majority of managers attending the Linkage Strategies 2008 Conference believe they have the “right” Core Customer Metric in place, less than 2% have validated it through linkage to business results.
Yet, this is very similar to what we found in results of the 2007 Maritz Voice of the Customer Challenges survey of managers in Blue Chip companies. The survey found that:
- Seventy (70) percent of the managers we surveyed reported having developed an effective method of “selecting the right customer survey metric for their organization and business.”
- However, only thirty (30) percent of these same managers reported having developed an effective method to demonstrate “the link between customer survey measures and financial and/or other key business results.”
Managers and executives may all agree that they’ve identified the best CCM for their organization because it “makes sense” or because other organizations have found it to be effective. An organization might even be tempted to select a CCM that is “in vogue” in the latest management circles or business publications.
However, at some point, no matter what their stated beliefs or commitments, executives and shareholders will demand evidence of the “bottom-line” impact of customer loyalty. They will want proof that investments in and efforts to measure customer loyalty, for the purpose of making relevant process and quality improvements, actually contribute to growth in revenues, profitability, and other financial and market outcomes. This means that the link between an organization’s Core Customer Metric and key business results must be established.
Has your organization successfully linked its core customer metric to business results? How did you do it?
If not, what barriers are preventing this?
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One Response to “Are You Sure You’ve Selected the “Right” Core Customer Metric?”
March 11th, 2008 at 12:48 pm
Randy, I agree that a Core Customer Metric is the primary method of linking customer engagement to key business performance results. I’m curious, why aren’t more organizations talking about core customer metrics with their customers?
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