The topic of metrics has always been popular with our members, but demand for information regarding Operations dashboards and indicators has significantly increased over the past few months, and I have found myself having many conversations with members lately about our Innovative Metric Blueprint piece. That’s why when I read this article on the Seven Sins of Performance Measurement in Lisa Hershman’s column on Business Week I knew I had comment on it in our blog.
The article mentions a few of the most frequently committed metrics sins, including using siloed metrics, tracking metrics from the company’s point of view as opposed to the customer’s and making assumptions about what’s important to measure. As you’ll see in our piece, we agree with Lisa on those points. However, one sin Lisa doesn’t mention and that we find particularly egregious lies not so much in selecting the right metrics but rather in setting perfomance standards once metrics have been selected. While most organizations set targets based on historical performance, many neglect to consider the most important standard of all – what the customer expects. Our research suggests that in financial services consistently overperforming on critical aspects of the customer experience is expensive and has diminishing returns, whereas consistently hitting customers’ expectations for quality, timeliness and service has a bigger impact on loyalty and is more cost-effective. Similarly, while consistently overperforming is a problem, consistently underperforming is an even bigger problem and setting targets based on historical performance is no guarantee that historical performance is good enough for the customer.
If the idea of setting goals around customer expectations appeals to you and you’d like to see how it plays out in nature, take a look at our Metrics-Driven Customer Experience Management case from a leading Australian institution we’ve pseudonymed Gibson Bank.