Co-author Rick Buchman once witnessed an interesting situation that may be familiar to you:
A company’s sales weren’t good and, naturally, management was worried (imagine that).
Something had to be done, and it had to be done now. The management team thought it had the answer: “Who needs all these studies, anyway?” The managers thought the reason for the bad sales was that the company had a bad reputation with the customer. Fix the reputation and sales would go up.
But before rushing out and acting on these assumptions, the managers did something smart: They validated their assumptions with data by doing a study (another one!) of cus- tomer satisfaction - in other words, they got up close and personal with customers. When the study results came in and they crunched
the data, what a surprise! Their assumptions were wrong. Their “customers” didn’t have any real opinions one way or the other about the company or its products. Why not? Because the
“customers” they were trying to reach had never heard of the company before! Imagine management’s surprise! Not only that, but the actions the company needed to take were very different than those they may have taken based on their “bad reputation” assumption.
By going to their customers for information, the company saved a bundle of money and deter- mined what to do to gain recognition in the industry. Had the managers been using the bal- anced scorecard customer leg, they would’ve avoided the whole problem and saved even more time, money, and effort!
Walking miles (and miles) in your customers’ shoes
A trick to getting to know your customers so that you know what satisfies them and what they value is to put yourself in their shoes. Putting yourself in your customers’ shoes means more than just walking a mile in their shoes.
You must go on a never-ending journey, where you follow them everywhere they go. You want to see firsthand how, why, where, and when they use your products and services. You talk with them face to face. You visit your cus- tomers’ locations from time to time. You listento them - what they want, what you give them, what others give them. You take notes and brief your cowork- ers. Are you beginning to see why so many organizations don’t have a very good understanding of what their customers really want? It takes time, effort, and relationship building. You have to be persistent; managing your cus- tomer relationships is one place where persistence really pays off.
Managing your customer relationships becomes much easier when you take the time to do a thorough job of developing your balanced scorecard’s cus- tomer leg. It doesn’t matter if you make products or provide services; you have to ask a basic but important question: “Why do our customers choose to buy from us and not from the competition?”
Setting customer-based strategic measures
When you know what’s critical to your customers’ satisfaction (see the previ- ous sections of this chapter), you can start the process of measuring the things you dothat affect the things the customers want. By measuring, you ensure that you hit the mark, time after time, and that you know you’re hit- ting the right mark!
When translating the customer’s voice into the things that you can measure within your company, you can — you guessed it — look at and measure cer- tain basic things. Some of the more common measures you have for measur- ing customer satisfaction are as follows:
⻬Faster:Examine your speed of service or product delivery. For instance, look at time from order to delivery, on-time delivery, the time a single process takes in order to make a product or provide a service, and so on.
⻬Better:Examine how you set and meet customer specifications and mea- sures for quality.
⻬Cheaper:Examine product/service costs - both purchase costs and total lifecycle costs.
And, of course, always measure how you stack up against the competition on all the previous measures.
Linking Customer Measures to Your Strategies, Policies, and Plans
The time has come to develop the customer leg of the balanced scorecard.
When developing your balanced scorecard customer leg, you should center your work on the following questions:
Where do you want to be in the market?
Do you want to be an industry leader, far ahead of the competition, or a follower, willing to let others set the direction and lead the way?
Within your market(s), do you want to target the high end, the middle, or the low end? All the above?
The answers to these questions, as well as the following sections, can help determine what your customers can expect from you, and they’re absolutely necessary in developing your balanced scorecard customer leg.
Developing customer strategies
Generally speaking, your balanced scorecard customer leg calls for five basic core strategic goals. According to Robert Kaplan and David Norton in their book The Balanced Scorecard (Harvard Business School Press), they are as follows:
⻬Increase market share:How much of the overall market do you have?
⻬Maintain a high customer retention:Keep your eyes on the number of repeat customers you have.
⻬Increase customer acquisition:How many new customer can you attract?
⻬Keep a high level of satisfaction:Your customers need to stay happy with you.
⻬Strive for high profitability:How much do particular customers con- tribute to your overall profits?
Figure 5-3 takes another look at the chart you’ve used for your scorecard strategies and uses it to link your plans and tactics.
Customer Segment 3 Year Strategy CustomerSegment A
Customer Segment B Customer Segment C
Product/Service Product Line X Product Line Y Product Line Z
Annual Plan +5%
No Change No Change Grow 15%
Maintain Maintain
Tactic Service Quality
Measure SP 0107-2 QP18-2 Figure 5-3:
Linking cus- tomers and strategies.
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Chapter 5: Understanding Your Role with Customers
Creating customer plans and tactics
You have several things to consider when setting up customer-based plans and tactics for the customer leg of the balanced scorecard. The following list presents some of the more critical things you must do:
⻬Develop and implement a measurement and benchmarking (best prac- tices and competitive) program to improve customer service processes.
⻬Leverage your metrics results to develop new customer strategies.
⻬Measure and enhance the customer experience.
⻬Improve customer satisfaction by responding to quantified customer data.
⻬Align your customer-service department and workforce with corporate strategies.
⻬Utilize Six Sigma and other business-process-improvement tools to con- tinually improve customer interactions and service.
⻬Measure your multi-channel, contact-center, and online customer service.
⻬Utilize metrics and benchmarks to increase responsiveness and drive customer retention.
⻬Develop metrics to manage any outsourced and/or offshore customer service.
Taking action when your customers don’t get what they want
Nothing is more frustrating when you’re working on the customer leg of the scorecard than thinking you know what your customers want and need and then finding out you’ve missed the mark. Trying to recover is not only costly in terms of time and effort, but also can kill your product or service in the mar- ketplace. Some companies never recover from such a fatal error. You need to get on top of the situation and do it fast if this occurs. This is one reason why the balanced scorecard is so critical: It lets you know when you’re on track and when you’re missing the mark, and it enables you to get back on track — fast.
When what your customers want and what they get don’t link, you need to go back and review your customer research strategies and your plans and tac- tics for the customer leg to find where the disconnects occurred. Ask the fol- lowing questions:
⻬Is the information from your surveys and focus groups accurate?
⻬Are you dealing with real or perceived information (in other words, does the information come straight from customers)?
⻬Are your relationships with your customers satisfactory? Are you close enough to your customers?
⻬Are you communicating customer information to your employees, and do they know what to measure and how?
The key to success in the customer leg of the scorecard is getting your workforce obsessed with customer satisfaction and giving them the tools and measures that allow them to focus on customer satisfaction.
Your employees have to know what your customers want and how their jobs impact the customer experience. They have to know how they add value to the customer experience, how to measure the experience, and what to do when they’re not hitting the mark. Customer survey and focus group data — and your balanced scorecard customer leg — have to be communicated and made available to all employees.
⻬Is your system for measuring accurate and capable?
The answers to these questions should pave the way to fixing any disconnects you have between the strategies, plans, and tactics within your scorecard.
Following Up with Your Customers for Adjustments
Unfortunately, rather than followup with customers, many companies will foulup with their customers. That’s good news for you, especially if the ones who are fouling up with them are your competition and you’re the ones who are following up with them. It’s a sad and sordid tale about the number of companies that don’t validate the conclusions they reach about their cus- tomers and what they think they know. It’s almost like they were marksmen who follow a process of ready, fire, and who cares about aiming. As any good marksman will tell you, you hit the target consistently only when you follow a process of ready, aim, fire. And we know you want to be one of those who are hitting the mark of customer satisfaction consistently.
In order to hit the bulls-eye like a true marksman, you have to validate your data and information with your customers. Doing so enables you to adjust your aim based upon new information, and finding out this new info is as easy as asking the following questions:
⻬Did we get this right?
⻬Is this what you’re talking about?
⻬Is this what you want?
⻬Are we on the right track?
⻬Did we miss something?
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And then, you need to keep your customers informed about what you’ve learned and the changes you make as a result of your new knowledge. If you do, you can manage the information they get and keep them thinking about you and your company. After all, they will think about you when it comes time to buy your service or product in the future. So keep your customers informed by:
⻬Putting out company newsletters or putting valuable information on your Web site are excellent ways to keep you customers informed about what you and your company are doing.
⻬Another way to keep customers informed is through newspapers and journals. You can use them to generate a buzz about new products and services and about how you’re dealing with issues that are important to them. Let them know they matter to you and that you care about them.
⻬If a customer has a complaint, send them a personal letter, letting them know you are working the problem and you appreciate their business and will work hard to solve their issues. When solved, send them another letter, letting them know it’s solved and what you’ve done to correct it.
Yes, we said a personal letter! Not one of those boilerplate, cookie-cutter kind of letters that get printed out en masse that has all of the personal- ity of a pet rock. We know, it takes time to do this, but put yourself in their shoes. Getting a personal letter makes you feel special, and isn’t that how you want your customers to feel — special?