The measures every business should consider using
Measuring business performance can lead many leaders down a rabbit hole of key performance indicators and self-built measurement techniques. Before you know it management are confused in a world of their own making with formulas and weighting clouding the reality of how well or how badly their business is performing.
Below are some of the basic, but effective measures leaders should have at their finger trips. I recognise they aren’t always easy to adopt or populate with data but they should become the desired aim of any leadership team.
- Customer Base Health
Customer retention and churn (000’s of customers, % of base retained or lost and total value of customers retained or lost).
Customer win and win-back (win-back means those customers identified as being at risk of leaving who are retained through engagement efforts). Again look to include the numbers, percentages and total values.
It’s also worth doing this type of methodology for employees too.
2. Customer Satisfaction
Break down your customer base using your customer feedback. If you’re using Net Promoter Score (NPS) then calculate the numbers, percentages and values of customers that can be identified as promoters, passives and detractors.
3. Loyalty & Depth of Relationship
Here, it’s worth looking at customer tenure i.e. how long they’ve been a customer and how many products or services they have with you. The larger the group of portfolio customers the better… unless of course your servicing costs to revenue ratio is out of whack.
4. Customer Servicing
Examine the cost of servicing your customer base and managing any complaints or queries. Use the number, percentage and value methodology to show the scale of your complaints.
Again split out the cost of managing complaints and the cost of resolving any complaint.
For customer contacts count the number of inbound contacts you’re receiving. Work to break this down by channel and calculate the cost per channel for servicing each contact. This will help you understand which channels are becoming too costly and which new channels provide opportunities to save money.
Work with your data teams to understand the number of calls that are being deflected through better product development and service design. It’s also worth recording the total cost of servicing per customer and also per customer segment.
But why the number, percentage and value format?
I’ve often sat in meetings when someone says ‘40% of our customer base are promoters’. The immediate next questions are ‘well how many customers is that?’ followed by ‘how much is that 40% of the base worth in revenue terms?’
Often the questions are linked so it’s worth having the answers up your sleeve and built into any business performance spreadsheet.
There’s always more
Of course there are many other measures you could consider but this will give any leadership team more than effort food or data for thought.
To learn more about how we can help your business measure the right things for the right reasons and help you be successful visit www.strategyactivist.com
