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.
For
example:
On-time
Delivery
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.
Lead Times
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
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
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.
You can download my book "Leading to Success" from Amazon Kindle
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