How well does your company “manage” your customers? Too often, say Neil Woodcock and Doug Leather, there’s a disconnect between what executives think happens and what really happens at all the customer touch-points. In this edition of Inside Scoop, CRMGuru.com founder Bob Thompson talks to Woodcock, chairman of QCi Assessment, Ltd, and Leather, head of REAP Consulting, about CMAT, the customer management scorecard tool Woodcock developed.
Major topics:
Bob Thompson:
I’d like to welcome Neil Woodcock, chairman of QCi Assessment, Ltd, in London, and Doug Leather, head of REAP Consulting in Johannesburg, South Africa, to our Inside Scoop program. Neil and Doug, welcome.
Neil Woodcock:
Thank you very much.
Doug Leader:
Thank you, Neil and Bob.
Bob Thompson:
The subject of our chat today is a recent report that was published by QCi. It’s called The State of the Nation for the Year 2005: A Five-Year Global Study on How Organizations Manage Their Customers
. It revolves around a methodology called CMAT, the customer management scorecard.
I’m very pleased to have a chance to talk with both of you about CMAT and this report. Neil, could you lead us off and tell us a little bit about the current focus of your business and what it is that you’re doing now at QCi?
Neil Woodcock:
Thanks, Bob. QCi are customer management consultants, an Ogilvy company and part of the WPP group. We work throughout the world and directly through partners, such as REAP in South Africa. Our core product is the CMAT methodology that you just mentioned, which looks at assessing how well large companies manage customers. I lead our research, so I collect all the information we gather around the world and try and interpret it, which is a fantastic job. I also take a strategic role in some of our more strategic projects.
Bob Thompson:
Thanks, Neil. How long have you been with QCi?
Neil Woodcock:
About 15 years.
Bob Thompson:
Doug, you’re a partner of QCi. Can you tell us about what REAP Consulting is doing and how you’re related to QCi?
Doug Leader:
Bob, that’s correct, we are partners of QCi. Our partnership came about following a very extensive global search to find a unique, relevant and practical approach to customer management and customer management assessment. I think, in too many cases, we can get too theoretical about what customer management actually is. We position ourselves as customer management assessment and optimization specialists, helping organizations, local and international, understand their level of customer management competence and thereafter operationalizing recommendations that enhance that level of competence. CMAT is our primary tool.
Bob Thompson:
Your clients are based in South Africa, I assume. But where else?
Doug Leader:
We operate globally, together with QCi in some instances. Most recently, aside from an enviable South African client base, we’ve worked in West Africa, South America and Canada.
Bob Thompson:
I’m going to give the first question here to Neil. Could you just give us a quick overview of what CMAT is and why was it developed?
Neil Woodcock:
CMAT is a diagnostic or assessment tool looking at how well large companies manage customers. We developed it out of our consulting offering, in ’96. We tested the original model on a number of clients. We had academics look at the model and what we were asking. For the first two years, we really kept it under wraps, just using it as part of our consulting offering, as, indeed, a lot of the large consultancies do with their own discovery tools.
Then we realized that the model was strong, and we did our first piece of business performance research and realized there was a strong relationship between the CMAT score and business performance, which I’m sure we’ll come to in this conversation. We started, then, to realize the benchmarking capability of the tool and the fact that the questions and the compliance text could be asked by a number of different people, well-trained people, consistently over time and that we could actually build up a benchmark of how well companies are managing their customers and benchmark them against each other.
So CMAT has started its life off as a discovery tool for consulting and, actually, now is used both as a discovery tool and as a benchmarking tool.
Bob Thompson:
In your report, you talk about customer management. I’m not sure that you used the term “CRM” at all, but, if you do, it’s quite limited. So what’s the difference between customer management and CRM, in your view?
Neil Woodcock:
The difference between CM and CRM, is the “R” letter, and that little letter causes problems with people. Not everybody wants a relationship with their supplier, for instance, an impulse purchase, a low-ticket purchase or if you’re spot-buying on the oil market. When we talk about customer management, we talk about the professional way any supplier begins to understand its market, what its market wants, how that market should be managed and how they can develop their infrastructure to manage the market in an appropriate way. The word, “relationship,” I think, confuses people and sets up a series of thoughts in people’s minds which aren’t helpful.
Bob Thompson:
I’m kind of reading between the lines a little bit here. But there’s been some negative connotation to CRM: the so-called failure problems and the IT kind of focus. Did that have any bearing on your decision to kind of downplay the “R,” or was that a factor at all?
Neil Woodcock:
I think you are right. CRM does engender a number of thoughts in people’s heads, whether it’s the word, “relationship,” or whether it’s the association with “systems and IT,” which is what you’re implying there. CRM is a tarnished brand — there is a failure associated with the term, although, as we know, much of the criticism is unfair.
Bob Thompson:
Just for the record, our view at CRMGuru, and my personal view, is that what you’re talking about as customer management is one and the same with what CRM is or what it should be. We’re not making any distinction, but I’m just curious of your view on that.
Doug Leader:
I think there is some cynicism in the market around the CRM terminology, the CRM acronym. I think what is important is that the organization has a common understanding of what it means to the organization whatever we call it. A clear definition should exist within business.
Business types
Bob Thompson:
That’s a very good point. We’ve noticed in our research — and I’ve been in the market for going on eight years now — that the really successful companies, maybe half the time at most, use the term “CRM.” So we try not to get too hung up on the use of the term but look at the practice of managing customers well and having successful customers and happy customers in a good, profitable business. It seems to me like that’s the core elements about what CRM should deliver.
Let’s get into your report. You already talked a little bit about your CMAT process. You tend to focus on large companies. Neil, could you define for us what that is and what kind of industries tend to view this process as appropriate?
Neil Woodcock:
Company size is usually over 100 employees — normally large organizations, often with multiple business units. We work in business to business, business to consumer sectors — whether sales are made through intermediaries or direct. The principles of customer management are the same, no matter what sector you are in. You have to understand your target markets, understand the value and needs of customers, understand the proposition you’re going to put to those customers, understand how you’re going to deliver that proposition, develop the infrastructure to deliver it, motivate employees or intermediaries to do it, know what metrics you want to move and how you’re going to measure it, etc. The principles are the same across the different sectors.
Of course, some of the sector scores in the model may be different, reflecting their different priorities, and that’s why, when we assess, say, a business-to-consumer company that works through intermediaries, we will, generally, compare them with similar type of companies.
Bob Thompson:
So part of what you’re trying to do with CMAT as a benchmarking tool is find this linkage between effective customer management and business performance. Can you tell us how you measure customer management and how you measure business performance and then what you learned about that linkage?
Neil Woodcock:
Yes, sure. I think a key point is that a CMAT benchmark is evidence-based. This is probably the most critical aspect of the process. Here’s an example. A question we might ask a marketing guy, for instance, is, “Do you measure customer retention by customer value group?” And if the marketing guy says, “Yes, we do that,” we’ll ask for evidence: “Can we see the report that you use, and how you use it, please?” If they have no idea what we are talking about, they will get no score but an explanation of what we mean and why it is applicable to them. If they know what we mean but can’t show us the report or data they use, then they only get a partial score for this. If they can show us the report and how they use it, then they get a full score for that question.
Bob Thompson:
So your process is actually an on-site, face-to-face type of interview, right?
Neil Woodcock:
Normally, it is. We’ve tried many different ways of doing it. We’ve have online self-assessments. We have telephone assessments. We have shorter assessments, where we see a smaller number of people in a shorter time period. You can get some good information through these types of approaches, but they are sub-optimal. We find, whenever we do a full face-to-face study on a company that has carried out a shorter study, the scores that people have got with the shorter study are often misleading. People either record what they think happens or what they want to happen, which is different than what really happens.
Doug Leader:
Bob, the issue of perception is important. We refer to the “customer management illusion.” Many senior managers think that they know what happens at the front line, but the reality is very different. CMAT uncovers the fact, through evidence, of the reality.
Bob Thompson:
Can you tell me, Neil, how you come up with a number, say, the customer management score? And how do you come up with a business performance score so that you can do this correlation analysis?
Neil Woodcock:
That’s a good question. We’re asked it many times. Each question has a score associated with it. The model and the question scores have evolved over time based on feedback and our business performance correlation research. The question I just gave you is an example: Do you measure customer retention by value group? If someone clearly does do that, uses the report to drive business performance or business change, then we’ll give them a 100 percent score for that. So if the scoring is 750 for that question, they’ll get 750 points. What we’ve tried to do in the tool is to put a quantitative score on what, effectively, is a subjective area.
Bob Thompson:
So to what degree are you doing these different activities? And then business performance?
Business performance
Neil Woodcock:
We’ve done two major pieces of research on business performance correlations. In the most recent one, we compared CMAT scores with corporate financial performance indicators from a database called Datastream. We used indicators like return on assets, return on capital employed, operating margins, etc.
Bob Thompson:
And what did you find out about the linkage between customer management and business performance?
Neil Woodcock:
Well, firstly we did some correlation work, and we found that there was a strong correlation between CMAT scores and business performance. Because of the strong correlation, we began to do the regression analysis to try and quantify what the impact of customer management on business performance really is. We found a significantly positive correlation between the way a company manages customers, as described by CMAT and each of these indicators. The pleasure we got in that was obviously immense. The study was carried out independently, by the way, by the University of Surrey School of Management. We gave them the CMAT scores, and they obtained the financial indicators and did the analysis work.
Bob Thompson:
Which was the top one, or maybe the top two, that you would correlate the highest?
Neil Woodcock:
Well, let’s take return on capital employed, ROCE. We had an R-squared score of 61 percent.
Bob Thompson:
That’s quite high.
Neil Woodcock:
It’s very high. Sixty-one percent of ROCE is described by customer management, so that means that 39 percent is down to the market, product leadership innovation, leadership, competition, regulation and so on — those kind of things outside of customer management. But 61 percent of ROCE was dependent on the way the company went about managing customers. Now, that’s very powerful information, clearly. Also we had the R-squared score for operating profit margin at 46 percent.
Bob Thompson:
Right. Now, this R-squared is a correlation, correct?
Neil Woodcock:
Yes.
Bob Thompson:
So how do you leap from a correlation to a cause and effect, which I believe is the premise of CMAT? In other words, if you worked to improve customer management, then you will improve business performance.
Neil Woodcock:
Exactly.
Bob Thompson:
Correlation doesn’t, necessarily, mean one thing causes the other, right? It could be the other way around, or there are two things related to a third effect, right?
Neil Woodcock:
Yes, indeed, a third effect you haven’t even identified, potentially. No statistics can ever prove a causal relation. They can only show a correlation and the unlikelihood that the correlation was chance. Once we obtained the strong correlations, we applied a series of regression analyses to try and quantify the relationships. When you get a positive correlation as strong as we did, you can normally, then, go to the theory and the experience of translating CM work into financial return. So that’s why we claim a causal link.
Bob Thompson:
So Doug, over to you now. I’d like to get down to more where the rubber meets the road, if you know what I mean. Since you’re doing consulting projects in South Africa and elsewhere, what’s your view on this relationship? There’s a correlation from a research basis, but what do you see in the market as you’re doing your work with your clients, that leads you to believe that if you improve customer management, clients will get better business performance?
Doug Leader:
If you look at an organization’s balance sheet, we’ll see an increasingly higher percentage of value attributed to intangible assets. Analysts, investors and brokers have done a relatively poor job of really understanding these intangible assets and using them as predictors of earnings. One of the most important intangible assets is the customer base, so organizations that proactively manage their customer base — organizations that treat the customer base as one of the most important company assets — generate significant value.
Bob Thompson:
Could you give me an example of a company — you don’t need to mention the name if they haven’t approved that — that you’re aware of in your client experience that, in your view, has focused on customer management, whether they did that with CMAT or something else and which you believe has had a strong influence on a good business performance?
Understanding the client
Doug Leader:
Yes, clearly. I think there are many examples that we can look at. In fact, one of the speakers at your presentation [the CustomerThink Leadership Summit, held in June 2005] from Royal Bank of Canada. RBC, is an organization that has focused significantly on customer management. The adoption and implementation of customer management principles has enabled the organization to drive significant value through high-value client retention. Furthermore, high-value client average profitability has increased. Results such as these are driven by a deep understanding of client, by statistical analysis on customer data and through understanding client behavior.
Bob Thompson:
Neil, how about you? Do you have an example you can share?
Neil Woodcock:
Yes. HSBC are one. They have used CMAT and are fine-tuning their CRM approaches very successfully. Their business performance speaks for itself. Others are companies like Britannic Assurance — the U.K.’s second largest mutual-building society. They rely on customer management excellence to fight their corner in a very competitive financial services market here
Bob Thompson:
How about First Direct?
Neil Woodcock:
Yes. First Direct is part of HSBC, although we have never worked with them directly. In all of the high scoring CMAT companies, which interestingly come from an array of sectors — one sector does not dominate in customer management excellence — there are some linking factors. Very clear proposition, very clear product and service offering, well-engaged employees, and actually, the customer satisfaction and customer commitment scores are also very high. In other words, they may have different customer management models appropriate to their positioning in the market, but they have many similarities. And customers are happy with them.
Bob Thompson:
We did a study a couple of years ago in a half a dozen different industry sectors, and it’s somewhat similar to what you just said. So would you leap to the conclusion that it’s not just the premium or high service type companies that can practice good customer management?
Neil Woodcock:
Absolutely not.
Bob Thompson:
OK, so you could see in an airline industry, Southwest Airlines, which is a very different model from, say, Singapore Airlines. I don’t know if you’ve studied them, but both conceivably could do a good job on their CMAT scoring, even though their value proposition is clearly quite different.
Neil Woodcock:
Absolutely they could, because what CMAT looks for is the way the company has thought through how it will manage its customers. And if you take the simple model that, I understand, Southwest Airlines use, the whole company knows who they are and what they are about — and they deliver it with an unrelenting focus. Customers know what they’re going to get. They know what to expect. Then that’s a very powerful model. Singapore Airlines have a service model which is very different but equally successful.
Very different models, but they know who they are. They know what they need to do to attract the customers they want to attract and they make money. And that’s the key point of all of this, I think. As consultants in customer management, we have to focus on this. We’re not trying to recommend a high-service model that is misapplied in markets which don’t deserve it or markets that don’t desire it. What we’re saying is: Think through the customer management model and apply it in a way that makes sense to you and your customers.
Bob Thompson:
It could be, also, that it takes time to actually build a new business model and see the fruits of it, because Amazon.com gets very high ratings. They won a global award from CRMGuru. They got the highest rating of any company that we had listed in our study for being customer-centric. It was a simple voting, but it was stunning to see how many people thought Amazon was one of the most customer-centric companies in the world.
And they struggled for years and years to figure out how to make money because of the tremendous cost to build up a business model. So I want to ask you one question. You mentioned the word, “commitment,” several times now. Could you tell me why it’s important to measure commitment, rather than just satisfaction, and what is commitment?
Neil Woodcock:
The bottom line is that you have to measure both. You have to measure satisfaction because satisfaction allows you to understand how customers are feeling about certain interactions they have with you. You can break an interaction down into parts, and you can get some really useful information to see where your service pressure points are and what customers are liking and not liking about your offering. So to improve your offering, you need to measure satisfaction.
But we know — there are enough studies around now to show this — that satisfaction doesn’t imply repeat purchase. It might imply it, and it’s probably a fundamental to have high customer satisfaction in place to get repeat purchase. But it doesn’t guarantee it, because in the developed world customers are generally happy, generally satisfied, with all of the major suppliers. They’re happy to buy from Supplier A and from Supplier B, because they know they’re going to be relatively happy with what they get.
So satisfaction doesn’t give you that predictive measure that we’re looking for. Commitment questions ask customers (preferably your most valuable customers): Would you recommend us? Have you recommended us? How many times have you recommended us? When did you last recommend us? If we upped our price by 20 percent, would you still buy our product? This last question is interesting: No one’s going to say, “Yes, of course, I would.” But for people that say they might, it shows a level of commitment.
High commitment scores tend to show, as we see from the Reichheld and other studies, that people are more likely to buy from you in the future. [Frederick F. Reichheld is the author of The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value.] So what we say to our clients is, “You’ve got to measure satisfaction but also measure commitment.”
Bob Thompson:
What you’re calling “commitment,” some people call just a loyalty measurement — “Would you recommend us?” — which Reichheld has made quite famous with his study. He found that that one question had a very high correlation to growth in business. Of course, it doesn’t explain all of the reasons why. But he found that it intuitively makes some sense that there is a growing parity in the level and quality of services that people can get worldwide. What is the differentiation? If you can’t get somebody to the point emotionally, where they would recommend to somebody that they care about, then the real relationship, the real bond that they have, is not as strong as it could be.
Neil Woodcock:
Yes.
Bob Thompson:
Do you have a comment there, Doug?
Doug Leader:
I do. Yes. Satisfied clients are a minimum requirement of doing business. Satisfaction does not correlate with repurchasability, however. It does not correlate with loyalty. Satisfied clients don’t necessarily remain clients. Satisfaction is an attitudinal measure only. It doesn’t imply a behavioral intent to remain a customer.
Customer management drivers
Bob Thompson:
I want to get into another term that you guys have used in your report, called REAP. Doug, since your consulting firm uses that term in its name, maybe you could take that one. What does REAP mean, and how is it useful?
Doug Leader:
Well, REAP really is the acronym for the four key levers or the four key drivers of customer management. The ‘R” refers to retention. The “E” is efficiency, which relates to understanding of cost to serve; the “A” relates to acquisition and the “P” to penetration, increasing cross-sell and up-sell. What’s key is that these customer management drivers should be measured and should sit alongside the financial metrics that are discussed in EXCO [executive committee] and board meetings. The organization needs to introduce customer-oriented metrics into their scorecards and understand how various customer-oriented strategies and tactics impact on short term and long term financial performance.
Bob Thompson:
Let me ask both of you a kind of a qualitative question. I know you have research to back this up, but rather than get into the numbers so much, of all of the CMAT-related projects or assessments that you’ve done collectively, what percentage of those companies, roughly, would you say do a “good” job of customer management? You can define “good” however you want in your own mind, but “hey, they’re doing a pretty good job.” Is it 10 percent? Is it 90 percent? What would you say if somebody asked you that question more casually?
Neil Woodcock:
Doug, shall I go first?
Doug Leader:
Yeah, sure.
Neil Woodcock:
The average score is around 35 percent now for CMAT. In terms of the top performers, we’d say anybody over about 45 [percent] to 50 percent would count as a good performer. And I think you’re talking15 percent, maybe, of companies we look at do a good job. In almost all of the others, there are islands of best practice, islands of excellence. That’s the way we describe it: some really good things going on in isolated pockets within functions and within parts of the organization. What they don’t do is join them up in a way that enables customers to be managed across the enterprise.
Bob Thompson:
Doug, your view on this?
Doug Leader:
Absolute agreement.
Bob Thompson:
So those of this top 15 percent or so, presumably, are showing better performance than the other 85 percent. Is that a fair statement?
Doug Leader:
Right. Yes, it is.
Bob Thompson:
That’s very similar to what I’ve heard from other researchers. Something like 15 [percent] to 20 percent is the maximum anyone has ever told me when I asked them a similar question. When we did our own study of IT-related CRM projects over the last year, we found that looking at it as “what projects are delivering against strategic objectives” — which we defined as things like customer profitability and growth, as opposed to being able to cut cost and be more efficient, which we define as a more tactical initiative, projects that were really oriented for growth loyalty — only about 15 [percent] or 20 percent of projects were delivering to expectations. So I’m coming to the conclusion that there is something like 80 [percent] to 85 percent, maybe more, of the companies globally. And it’s not just large companies that have this enormous opportunity for improvement.
The question to you guys is: If that’s true — and there has been so much focus on customer management or CRM or customer-centricity, pick whatever buzzword you like — why is it that scores are only coming up very slightly over the last few years?
Neil Woodcock:
I think it’s evolution, Bob. It takes time. The understanding of what we mean by customer management is just developing in senior executives in organizations. In our State of the Nation report, we talk about the correlation between senior management ownership and customer management performance.
Actually, if you do have a senior management owner, you’re likely to be a poorer performer, which, of course, was contrary to all expectations. In thinking about this, we realized a lot of senior guys — some very smart people — simply didn’t understand the full implications of what they were trying to implement and would focus on the parts that they could understand and get their head around. That might be a review of processes or a system development or a call center installation or a particular aspect of customer management, which was probably close to their hearts and close to their experience.
When you look at what customer management really involves, it is, for a lot of companies, almost a significant business transformation. It doesn’t matter whether we’re talking customer management or something else. Transformation is an incredibly complex task, particularly for large organizations.
Bob Thompson:
You mean you can’t just go buy some software and transform yourself overnight?
[Laughter]
Neil Woodcock:
You can do it in 90 days, can’t you! So I think it’s an evolution. There’s a lot of guys we deal with now at board level across Europe who really do understand it. But I think that’s going to take time — a lag effect, if you like — to filter through down the organization. Three years ago, I probably couldn’t have said that senior people “got it.” There were a lot of people that I dealt with at board level that really didn’t have any idea of what was required. But I think that’s changing. I think that failure has made people understand more. There’s a lot of writing about it now. I think people do realize it’s hearts and minds. It’s not just functions and process.
Bob Thompson:
Yeah. I’m a lot more encouraged now than I was a few years ago about it, that top management does seem to get it and not only believe in it but have a practical view about what it’s going to take to make it work.
Neil Woodcock:
Yes.
Bob Thompson:
I’d like to wrap up and ask both of you to talk a little bit about more of the implementation and the real work involved. The assessment’s great. People can understand, just like in going to the doctor, that they need to lose a few pounds or they need to get in better shape or whatever. Getting that understanding is helpful, but now the hard work begins.
So I want to talk specifically about the organization changes. Do you have some short words of advice? How do you implement the kind of measurements or reward systems so that the organization — if they have the right leader who knows what he or she is doing — will follow and actually do the things that will make them more customer-centric or better customer managers? Doug, maybe you could take a shot at that first, based on your experience.
Doug Leader:
In the State of the Nation report, we introduce the “line of sight” concept. This is really is a very good descriptor of the evolution that organizations need to go through. For sustained superior business performance, an organization must be able to influence customer behavior, which requires true customer commitment. This is based on the delivery of a unique and differentiated client experience which requires employees who are truly engaged with the brand and the delivery of the brand promise. For this scenario to exist, an organization needs to set the context that encourages the appropriate customer management approach for example, policies, clear proposition, processes, IT infrastructure, measures, rewards, etc.
But I think what is absolutely fundamental is leadership. The role and effectiveness of leaders in facilitating change and transformation has never been more important. It is a visionary leader who puts the customer at the heart of everything they say and do. It is the quality and integrity of leadership that develops customer and employee trust. It is great leaders that understand that effective recruitment, that hiring for cultural fit and passion, is key. It is great leaders who develop and maintain organizational culture and values that enable a business to align the brand, the service and the delivery of a relevant customer experience. It is great leaders who ensure that measures align with expected output. It is great leaders who recognize and reward appropriate customer-oriented behavior. Great leaders are role models whose actions are consistent with the values of the organization.
Bob Thompson:
Thanks, Doug. Neil, what are your thoughts about the practicalities of making customer management work in the organization? Specifically measures and rewards?
Neil Woodcock:
We ask all of the successful companies the one thing they would recommend or the one thing that was essential to their success in customer management and the transformation to becoming great customer managers. The one thing they all say, without a shadow of a doubt, is leadership. The leader has to be not just on board from a signatory point of view but also on board from a hearts and minds point of view and really understand that there are going to be some significant barriers to overcome, one of which is measurements. And they’re going to have to do some hard yards in breaking some of those organizational barriers down. It’s not just a question of standing up at internal meetings and talking about it.
What gets measured gets done. Measurement’s one of the key barriers that people need to break. Generally, organizations measure themselves by function. Is this function doing the job efficiently? Organizations have to overlay across these efficiency measures a number of customer management measures which show the functions of working together to encourage the better management of customers. And line of sight, which Doug mentioned, do you remember that from the report, Bob?
Bob Thompson:
Yes.
Neil Woodcock:
Line of sight’s a really interesting concept, which we’re talking to a lot of boards about. Our worry was that CEOs were focusing more on the two main components of profit — costs and revenues — than on the system of producing profit. Line of sight starts of by defining what business performance means to a company and then looks at where it comes from. It comes from higher acquisition, retention and penetration of customers and a managed cost to serve. Higher retention and penetration will happen if customers are committed. Commitment comes from the experience they have with your company — a mixture of brand, direct experience, word of mouth and so on. A large driver of a positive customer experience comes from employee engagement and so on. We ask CEOs to worry about profit but focus on the system of improving it. Focusing on any one part of the system to the detriment other parts may destroy profit.
Line of sight, effectively, is a balanced scorecard of measures. We are beginning to implement those measures on a scorecard which can run in conjunction with the Kaplan and Norton-type scorecards, but our clients are beginning to think that it is more relevant and more practical to look at that line of sight. So if they can encourage employee engagement and commitment, then they know that that’s going to be linked to customer experience, to customer commitment, to customer behavior and to business performance. And they’re measured on that and rewarded on that as managers. They know that customer satisfaction and commitment is important, so they’re rewarded on those things.
Bob Thompson:
Well, it seems to me that this is one of the areas that we’re going to be exploring in more depth in coming months at CRMGuru, because it seems to me that what companies are lacking is, first of all, a basic understanding about what the linkages are. You found some linkages across your whole population, but every business is a little bit different.
Neil Woodcock:
Yes.
Bob Thompson:
So it’s almost like everyone’s trying to build their own car, and most of them don’t have dashboards at all. So they’re just getting in the car and driving it and wondering why they show up where they show up. So I think the work that you’re doing is incredibly important in that regard, helping take this Kaplan and Norton balanced scorecard idea and implement it for those companies that really need to be more customer-centric. How do you do that? Create the measurements, create a score carding-like approach, so that it can guide where you’re driving the car, so to speak?
Neil Woodcock:
Do you know? Most of the measures that we have in line of sight come from stuff that’s already been done in companies. I think that’s a key point — we rarely ask for more measures, we just sift out the key measures from work that is already being done, stuff that’s being done as a part of business as usual.
Everybody asks the question, “Would you recommend us?” in satisfaction surveys. Take employee advocacy and engagement, a key focus in line of sight. We’ve just done a piece of work with Europe’s largest insurer. We’ve taken their own employee satisfaction study and analyzed it in a different way. It shows the company where there is real advocacy and a company where people are “just doing a job.” You can plot positions on this matrix of where employees are, and you can, then, work on different groups of them. So a lot of the information, actually, does exist.
