Most organisations especially those with a Finance Director use KPIs (Key Performance Indicators) to measure how the business is doing. Factors like invoiced sales, gross and net profit and debtors are typical.
These metrics are lagging indicators, in other words, "how did we do" and cover only actual performance. The old mantra of driving a car by looking in the rear view mirror comes to mind.
Without doubt virtually every business claims that their service to their customers is beyond reproach and many of them are, quite frankly, kidding themselves.
Because the business is being run using the aforesaid lagging indicators all the emphasis is on the metrics leading to the bottom line and usually the bottom line only.
If that is the philosophy then the drive for profitability is all encompassing and is usually to the detriment of customers and often the people in the business.
It is not just a matter of service either. Far better to devise a culture for the business that relies absolutely on focusing all activities on the needs of the customer. It is these activities that need to be measured because they are the bedrock of the business.
What then are the metrics that will enable the leader to assess the way that the business operates and what is the true level of customer focus?
There are several leading indicators as distinct from lagging indicators that can be used. Not all of them are suitable for every business but the trick is to select those that are appropriate and change them rapidly if you find that they contribute little.
This is a classic case of under promise, over deliver rather than the opposite. Delivery is becoming more and more a deciding factor in a purchasing decision especially where the customer expects the supplier to hold stock on their behalf.
Overnight delivery has become a given, weekend is not a problem and now companies are offering one hour delivery, all of which emphasises the need for excellent systems to ensure that promises are kept 100%.
Unfulfilled delivery promises indicate incompetence to the customer.
This is the time between the order being placed and delivered. Lead times are shortening dramatically and offering and beating what the customer needs brings with it competitive advantage.
Speed of Reaction
This potentially one of the most important factors in a customer focused business. There is nothing more infuriating than to request information from a supplier and then to be left hanging on waiting for an answer.
Requests for information or quotations for example should be treated like gold dust. You give poor service here at your peril.
In the same vein ask yourself how long does it take us to answer the telephone? If it is more than three rings then your reaction speed is too low.
Surveys can be a valuable source of information to show you what the customer thinks of your business, your service and your readiness to put things right when they go amiss.
I know of businesses that send a simple three-question questionnaire with every delivery and mentor the results to ensure that the customer gets what they want. Don’t worry if the response is not 100%. If you get answers from a reusable proportion of the customer base then this can still give you the information that you need.
Complaints are another valuable source of information for the business. I have heard it said that the leader should always see all complaints coming into the business so that action can be taken at a high level.
Also remember that to solve a customer’s problems is to answer a complain with style; that is, to demonstrate to the customer that you take their issue seriously and want to make amends.
All of these metrics can help to redesign the business to be genuinely customer focused while still monitoring the results via the lagging indicators.
Make sure that you select those leading indicators that truly reflect the way that you do business and if you find that one doesn’t work, then change it for another more relevant one.
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