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Metrics That Destroy Your Organisation

In this post I’m going to show you the serious effect metrics can have on your organisation and customers. At the end of the post I’ll also offer some practical advice on how you should apply this information.

Short Term Effects of Metrics

Let’s start with a simple example of the effect of setting a sales department two different metrics:

  1. Time to sell a product
  2. Customer satisfaction

Note: I am not suggesting to just have one metric in a department this is purely an example. The negative effects are most likely to occur if you have no customer related metrics. 

MetricsImmediate

  • Time to sell a product:

We can see that the department have met the metric of time to sell products by reducing the quality of sales provided to the customer. To meet the target the department has also cut back on product customisation meaning the customer is less happy when they get the actual product.

  • Customer satisfaction:

In this case we can see that the department met the metric of customer satisfaction with a more tailored product coupled with more in depth demonstrations to the customer. This resulted in a better final outcome that made the customer happy.

When measuring revenue the focus on time to sell a product may give a a short term win only to see customers desert the company a year later, so be aware of delayed feedback even if things seem positive. There would be nothing wrong with having both of these metrics in place as long as the trade offs were understood.

Long Term Effects of Metrics

Now let’s look at the more serious effects of metrics appearing in the long term. The department has decided to invest money into improving the time to sell metric by speeding up quotes. Inadvertently this may put more pressure on the customer and actually lead to a lower satisfaction rating.

MetricsLongerTerm

The long term effects of concentrating on the wrong metrics can result in more and more detrimental changes. At the worst case the customers may disappear and the organisation collapse.

Metric Affect Processes

Over time the processes of the sales department will be aligned to meet the metric, which has become the artificial measure of success. Those processes can get more and more complex to meet targets that are actually damaging the organisation. In many cases the feedback from the people talking with customers will simply be ignored, as it does not benefit the head of department’s review.

Customer Centricity

Typically we would see each department with its own set of metrics and meeting those being the measure of success or failure. For example the sales team measure themselves on speed of receiving money, and the product delivery team on time taken on a client’s site:

MetricsCrossOrganisation

In this organisation there are major delays between sales and product delivery that are not picked up by those metrics.

SalesDelay

By shifting to customer satisfaction across the whole offering we would see this. Customer centricity moves us towards the customers view of how they interact with the whole organisation. It moves the metrics and processes optimisation to centre around the customer’s experience.

Customer Centricity = Shifting Project Funding

Here is a typical funding structure for projects where money is allocated to each department.  Localised departmental improvements are being made. These projects are affected by the departmental metrics.

MetricsDeptPortfolio

With a customer centric approach a wholesale shift occurs in project funding. Rather than localised departmental improvements the portfolio of projects is now based around the customer’s view. This may mean that some departments receive very few projects and others receive a lot:

MetricsCrossOrgPortfolio

Customer centric metrics focus on the end to end experience of the customer and their journey through the organisation.

Using This in Real Life

When seeking to invest in improvements it can be tempting to  start by going in and looking at business process efficiency or what an internal employees think of their processes. Here is what you should be doing…

Evaluate the situation:

  • What do your customers think of the whole service?
  • What are your department’s metrics that currently define success?

Act:

  • Align the project portfolio around the customer experience.
  • Align the departments and organisations metrics around the customer.

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