Saturday, October 6, 2012

What is a perfect metric?

An article published in customer relationship management August 2012 edition was titled "in search of the perfect metric". The author starts by saying a perfect universal customer metric does not exist. The author Mr. Patrick Gibbons at Walker provides two reasons customer metrics fall short.

The first reason a metric fails is that the metric is not aligned to the business goals of the company. He notices that often it is because the metric is a popular one or one that may be touted in the literature or a book but has no connection with the business. Snce the metric doesn't track business , it often fails to predict customer tendencies.  The second reason offered by Mr. Gibbons is that the metric is not used effectively.  He suggests the employees often see a metric merely as a rating as opposed to a guide for improving the quality of decision-making.

He suggests that a metric can only be effective if the following steps are taken successfully. The first step is awareness, which required that employees must become familiar to the metric. The second step is understanding, which means that employees must understand how the  metric works and how they are use it. The third step is belief, which means that the employees need to believe that the metric is valid and will be a useful tool. The fourth and final step is action, which will never happen if the first three steps are not taken.  The fourth step translates the metric so that it will either guide some form of process improvement or will validate the successful operation of the current process.

 Mr. Gibbons concludes there is a perfect customer metric. He suggests that this is the one that aligns with your business and is put to use in productive ways.  This is where Mr. Gibbons and the Customer Institute part company. 

It is the belief of the Customer Institute that there is no perfect customer metric.   We believe that no metric can capture all aspects of every customer being measured.  The metric can become a major measurment trap.   Management will eventually believe that the metric is everything.  This will lead to additional metrics when that perfect metric shows negative results. If/when those secondary results continue to show decline then more metrics will be added.  Eeventually you become surrounded by metrics and have lost sight of the customers in the maze of numbers.

The bottom line is there is no perfect customer metric!  I don't believe that in my lifetime we will develop a metric that totally captures the customer.   When that day comes, if it ever comes, businesses will easily be run by robots and at that time all the customers will most likely be robots.


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