Do You Have a Goal-Measure Mismatch?by Stacey Barr
A goal-measure mismatch means that the evidence your measures or KPIs provide doesn’t match the evidence you need to monitor the goal.
Sometimes people hate their measures or KPIs because they’re badly chosen or designed. But there are plenty of times when people hate them simply because the measure is the wrong one for the goal they’re trying to monitor.
A performance area in which we see this a lot is customer service. There are a raft of customer related measures we could choose from, including these:
- Net Promoter Score
- Customer Satisfaction Rating
- Customer Lifetime Value
- Customer Retention Rate
- Customer Complaints
But we forget something vitally important, as we too eagerly dive into debates about which is the best measure.
We focus too quickly on the question “Which measure?”
Most of us will immediately jump to one of two types of KPIs when we first set out to measure a goal:
- the latest KPI to get lots of attention in the media
- the KPI that’s easiest for us to build with our existing data
Net Promoter Score (NPS) is an example of the first situation. In December 2003, NPS was celebrated in the Harvard Business Review for being the one number we need for business growth. Then in April 2016, NPS was challenged in the MIT Sloan Management Review, recommending that other customer measures are required as well to ensure true growth.
Customer Complaints is an example of the second situation. More often than any other customer measure, I’ve seen the number of customer complaints in the KPI column of the strategic plan. And the simple reason is that the data for customer complaints is already captured, and easy to get into a dashboard or spreadsheet for counting.
The question “Which measure should we use?” is asked too soon. It leads us to jump to the wrong measure. We soon complain that the measure really isn’t that useful or insightful. And we now have a mismatch between our measure and our goal.
It’s not the measure’s fault. It’s our fault: we started with the wrong question.
We should start with the question “What is the goal?”
The truth about the different types of customer measures is that they each serve different purposes. We aren’t really looking for better customer measures. We’re looking for evidence of the customer-specific results or goals we want to improve. Goals like these:
- Will our customers recommend us?
- How satisfied are our customers with our products and services?
- How much are our customers worth to us?
- Do our customers stay with us, or defect to our competitors?
- Do many customers complain about our products and services?
The calculation of NPS comes from asking customers the question “How likely is it that you would recommend us to a friend or colleague?” This measure only provides evidence of the customer’s intention to recommend us. It’s not evidence of how satisfied customers are with the important dimensions of our service. It’s not evidence of how profitable our customers are to us. It’s not evidence of how loyal they have been to our organisation. It’s not evidence of the complaints they have about our products and services. But NPS is a good predictor of whether customers will actually recommend us to others.
Customer Complaints is a simple count of the complaints received from customers, within specific timeframes like each week or month. This measure only provides evidence of how many complaints we receive. It doesn’t even provide evidence of the complaints that customers don’t make because they’re too busy, too annoyed, or just don’t believe we’ll act on them. It’s generally a bad measure because of this bias. And certainly it’s no evidence of customer satisfaction or loyalty.
The problem is usually not with the measure, but with the goal we match it to. That’s why it’s so important – essential, in fact – to start with the question “What is the goal we want to achieve?”
Goal first, measure second. Always.
Whether it’s customer service performance or any other area of performance in your organisation, you can only find meaningful performance measures when you start from, and stay well aware of, the meaningful results you’re trying to measure. Always design or choose your measures through a deep understanding of your results.
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