Measure of Success

I am reading an interesting book about building an organization around the customer, called Chief Customer Officer by Jeanne Bliss. She has worked in executive positions for Land’s End, Microsoft, and Mazda, to name a few, and she has primarily been the customer advocate in these organizations.

Her book is very tactical, and instructs people on how to “fight the good fight” regarding dedication to the customer. I had the good fortune to speak with Ms. Bliss on the phone, as I was (and still am) reading her book. She recommends what she terms “guerilla metrics” in measuring business success. These metrics go beyond simple sales goals, and other inane customer service metrics like average length of call, number of calls taken, etc. Her metrics are:

  1. What is the value and volume of your new customers in any given time period? Are you bringing in new business, and more importantly, is it the right kind of business?
  2. What is the value and volume of your lost business, and what are the reasons behind their defections. It is critical to know why customers no longer do business with you.
  3. What is the value and volume of your renewals, or repeat business? What reasons are behind this? You need to know what you are doing right for each customer.
  4. Analyze revenue and profitability by customer group. Sales figures alone do not tell the whole story. If a customer brings in tons of revenue, but requires huge amounts of attention and hand-holding and special treatment, they may not be your ideal client. You want to shrink your most costly customer group, and grow your more profitable groups.
  5. Referrals by customer group. Who is, and is not, referring your business to others, and for what reasons? This is quite possibly the most important metric, in my mind.

These metrics get to the heart of the matter. Is there more business coming in than leaving? If so, why? If not, why not? And, are people sufficiently enamoured with your business that they would recommend you to their friends and colleagues? This is called Trust, and it is the most important asset a business can have.

— Chuck Dennis

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