Metrics That Matter

Kicking off Guest-Post Tuesday is Tristan Bishop (@KnowledgeBishop), one of my favorite experts in the fields of leadership, corporate culture, and customer service. He is a true 21st-Century Business leader!

Tristan drives teams toward efficient delivery of effective content. From early days defining the Knowledge Management vision for the first online bank (Wells Fargo) to his current digital strategy role at the world's leading security company (Symantec), Tristan has consistently increased customer access to key content. By integrating technical publishing best practices with web delivery innovation, Tristan forges solutions that optimize customer experience, improving the corporate/customer relationship.

The paramedics burst through the ER door, wheeling a man on a collapsible gurney. The triage nurse quickly moved in front of them and asked, "How long are his fingernails?" "His FINGERNAILS?" gasped the medic, "We got his temperature, pulse, blood pressure and heart rate?" The triage worker shook his head, "We've GOT to measure the fingernails! Just LOOK at these babies: Longest we've had this year."

I offer this ludicrous fictional anecdote only to illustrate a point: Some organizations obsess over absurd metrics. In business, as in healthcare, some measurements matter MUCH more than others. Many of the things we study don't truly reveal the health of our organizations.

I've had a chance to contribute to a number of corporate functions over the years. Along the way, I've seen a variety of metrics claim more mind-share than they merit:

• Within Marketing, I've seen leaders more interested in "direct mail % response rates" than in the actual revenue created by the campaign.
• Within Customer Service, I've seen center managers more interested in lowering Average Handle Time (AHT) than in increasing customer satisfaction.
• Within in Documentation, I've seen managers attempt to determine team "productivity" by tracking "words written, per writer, per day."

For a number of reasons, each metric mattered to the manager in question. But I assert that the most valuable metrics are those that assess attitudes. With the big-picture in mind, I want to offer three metrics: One that matters, another that matters MORE and a third that matters MOST:

Matters: Earnings Per Share (EPS) is a crucial metric for any publicly traded company. In plain language, EPS answers "How much profit did we create for our stock holders in the past three months?" Obviously, this is important. That said, if EPS is the main goal, a brand will OVER-Focus on cost-containment. They will "control costs at ALL costs." Loyalty is built over MANY calendar quarters and, therefore, MUST be measured with a longer view.

Matters MORE: Net Promoter Score (NPS) is a customer loyalty measurement methodology that has gained traction in recent years. NPS is based on a single question a brand asks current customers: "On a scale of 0-10, how likely are you to recommend us to a friend or colleague?" While NPS is hotly debated, due to it's simplicity, there are compelling correlations between "recommendibility" and revenue growth. For example, in key industries (Insurance, Airline, Cellular)
the brand with the highest Net Promoter Score claimed recent profits, even as competitors lost profound amounts of money.

Matters MOST: Employee Net Promoter Score (ENPS) takes NPS methodology and uses it to assess employee engagement. ENPS adoption is growing among thought-leaders. In 2010, extensive surveys were conducted on how likely employees are to recommend their products to friends and family or to encourage others to take a job alongside them. According to Vovoci, there is a direct correlation between employee loyalty and customer loyalty. Consider this quote from Walker Information: "Loyal employees have a positive impact on customer loyalty and retention: 92% of loyal employees do tasks for customers "above and beyond the call of duty." Only 54% of trapped and high risk employees do so."

The corporate world seems to have gone "Penny Wise, Pound Foolish." Speak some sense back into your plans. Going forward, the most valuable commodity will likely be LOYALTY. And, when viewed through the lens of loyalty, metrics that once motivated now matter less than ever.

We have a new opportunity to focus on better metrics: Metrics that strongly correlate to renewal and retention. So I say this: Start with employee loyalty. Let this drive customer loyalty. Let customer loyalty drive revenue.

I suggest that you have to go from ENPS to NPS to EPS. I'm thinking it doesn't work the other way around.