Camille Nicita is president & CEO of Gongos, Inc., a consultative agency focused on driving customer centricity for Fortune 500 companies.
In their quest to objectively measure progress toward desired business outcomes through key performance indicators (KPIs), organizations may be in opposition to their very own customer-centric behaviors. After all, truly customer-centric organizations look for ways to provide the most value they can to customers over their lifetimes. Why then do most organizations leverage a more internally focused set of measures to solve problems and assess progress? Because many have not yet identified or operationalized customer performance indicators (CPIs), which are metrics that facilitate outcomes valued by customers.
Customer Outcomes Fuel Business Outcomes
Many companies claim to be customer-centric, yet from what I’ve seen, too many calculate their business prowess using company-focused metrics, such as net promoter scores (NPS) or basket size — indicators that customers care very little about. There is an implicit disconnect within companies when KPIs receive all the attention. While KPIs are often developed by executives, CPIs are identified from the outside in. They require talking directly to customers or observing their actions to identify wants, needs and expectations.
To develop true CPIs, these customer interactions should take place during the purchase and usage of a product or service — providing a window into the true customer journey and the ability to uncover unmet needs.
Simply put, customers care about their experiences. Did the site or platform work as expected or present a series of roadblocks? How frequently do customers have to request a supervisor to get an issue resolved? These are the bases of CPIs — measuring outcomes that benefit the customer for the short- and long-term, and quantifying whether and how a business is facilitating things such as making customers’ lives easier, more productive or perhaps even more meaningful.
In contrast, KPIs were largely developed for shareholders, look to profit margins and tend to measure short-term outcomes. They certainly have their place: They provide key stakeholders with baselines for financial performance and organizational efficiencies. However, in failing to measure the value of a business through the lens of the customer base, KPIs fail to transform customer centricity from aspiration to actualization. Adopting CPIs addresses this gap.
Personalizing CPIs For Your Industry
Like KPIs, some basic CPIs are universal. Businesses at the starting gate can begin with metrics related to convenience and time spent to transact. However, the ways CPIs are operationalized likely differ across industries and organizations. Brands need to develop their CPIs with tailored views based on customer and organizational dynamics and an understanding of the nuances of their industry. Here are a few examples:
• B2B and B2C: Convenience or the time required to transact is a different process for a B2C retailer than it is for a complex B2B software platform provider.
• CPG and retail: Consumer packaged goods (CPG) brands must rely on partners in the supply chain, such as retailers, to help deliver on targeted CPIs.
• Hospitality: A hotel chain likely has direct measurement tools available to determine valued customer outcomes, such as whether a room was clean or whether the check-in process was seamless. However, while Airbnb and Vrbo are fulfilling the same basic customer need for a place to stay, their ability to operationalize and measure customer outcomes is very different. They may best focus on a smooth and transparent booking experience on the front end, followed by monitoring post-stay reviews and satisfaction.
Involving Employees To Improve CPIs
For CPI measurement to provide meaningful results, look to examine experiences along the customer’s journey. These experiences are not possible without employees guiding and helping the customer along the way. Employee involvement is a key differentiator between KPIs and CPIs. It is far easier for an employee to internalize the desired outcome for a customer on the basis of a CPI as they can directly influence the outcome.
For example, consider a sporting goods retailer. This company’s employees can relate to improving how easy it is for customers to find products based on shelf-sets and merchandising. Compared to a KPI, such as cost per transaction or average cart abandonment time, CPIs spark more tangible actions such as keeping inventory stocked or streamlining the in-store checkout process.
A positive customer experience is driven by employee satisfaction, engagement and ongoing training programs related to creating value for the customer. When employee and customer interests are in sync with one another, KPIs and overall performance will follow suit.
Driving Long-Term Change
As the world recovers from the pandemic, humans are demonstrating that their needs and expectations are adjusting at warp speed. I believe brands must throw out old assumptions and open dialogue with customers to gauge their pulse and develop CPIs accordingly. In some instances, this may mean performing root cause analyses to determine which actions are falling short and which can be improved in future experiences.
CPIs cannot be operationalized with a set-it-and-forget-it mentality. Their impact implies an ongoing dialogue with the customer — a continuous process of listening, designing and implementing. This constant loop of monitoring and adjusting empowers organizations to look beyond today with the foresight to improve and innovate against white space opportunities.
While this is not a call to replace KPIs with CPIs, if companies identify, operationalize and measure the outcomes that customers value, the results will be transformative for both employee engagement and the ability to cultivate value for customers over the course of their lifetimes.
Forbes Agency Council is an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies. Do I qualify?
Go to Source
Author: Camille Nicita, Forbes Councils Member