Hi Track Customer Experience, but Don’t Forget the Financials!.

Hi Track Customer Experience, but Don’t Forget the Financials!.

Businesses are always on the hunt for customer feedback. They e-mail us surveys. They ask us to stay on the phone after a service call to rate the interaction. Many rely on metrics such as the Net Promoter Score to track how customers feel about them. The most disciplined firms not only exploit the data to identify problems with their products and services but also get everyone on staff involved in fixing them.

This “customer experience” movement, if we can call it that, reminds me of the period a couple of decades ago when manufacturers (and others) discovered quality. Remember quality circles? Total Quality Management? Company after company learned to use new metrics and to address the root causes of problems. Front-line employees began monitoring their own output and figuring out improvements.

It’s worth recalling this push for better quality, because we wouldn’t want to repeat an unfortunate aspect of it. People got so caught up in trying to improve quality they sometimes forgot that a business has to make money, too. The Wallace Company, an oilfield-supply company, famously won the Malcolm Baldrige National Quality Award in 1990 and filed for bankruptcy shortly thereafter. Many other firms embarked on ambitious quality programs only to scale them back later on because they proved to be too expensive.

So far, no business I’m aware of has Net Promotered itself into insolvency. But look at things from the perspective of the front-line employee who is being asked to take responsibility for keeping customers happy. Should I schedule yet another service visit? What about forgiving this bounced-check fee? Should I honor that warranty even though it expired a month ago? These are difficult decisions; they require tradeoffs between customer delight on the one hand and costs on the other.

So here’s an idea: Let’s have employees monitor customer feedback and make improvements in response to it while also watching key financial indicators and taking actions to move them in the right direction. Every executive knows — or should know — that good business decisions require both kinds of input. If companies are going to ask front-line employees to make more decisions themselves, the front-liners will need to know how to keep customers happy andwhat it costs to do so.

How to combine the two sensibilities? Imagine a daily or weekly dashboard showing relevant customer-feedback scores and comments, along with key financial numbers—variance to budget, cost per customer, whatever the most important figures might be. Employees will quickly learn to track the short-term tradeoffs and will naturally try to keep costs under control. But they’ll also be curious to know about the longer-term benefits. If they schedule a lot of extra service visits, for example, or regularly honor those expired warrantees, the cost of service will rise. But there’s likely to be a payoff in greater customer loyalty — meaning less churn and reduced customer-acquisition costs.

Front-line employees don’t need to become statisticians. The folks in finance can perform the analyses that show them which tradeoffs are worth making and why. But now the front-liners will be thinking like businesspeople, understanding from the data when they can afford to give the customer an extra benefit and when they can’t. Their decisions will be that much better, and the company won’t go broke trying to satisfy every customer’s wish, at any cost.