Imagine going on a road trip.
Your destination is 100 miles away and your GPS system says it will take about two hours to get there. A quick calculation shows your average speed needs to be 50 miles per hour.
Average speed is a key performance indicator, or KPI, in this context. You risk taking longer than two hours if you average less than 50 mph.
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Going 50 mph isn’t the goal. Imagine you tried to maintain 50 mph for the entire trip. That wouldn’t win you any friends while driving on a highway with a speed limit of 65 mph. It would be flat out reckless to maintain a speed of 50 mph in a 25 mph school zone.
Yet, this is the very sort of confusion that customer service leaders encounter on a daily basis. The goal is to reach the destination in two hours, but the focus wanders to maintaining 50 mph.
Here’s what to do about it.
The Danger of Confusing KPIs for Goals
Wells Fargo recently made headlines when it was announced the company had fired 5,300 employees since 2011 for creating more than 2 million phony bank and credit card accounts.
The primary culprit was a culture that pressured employees to focus on KPIs instead of goals. The KPI was the number of Wells Fargo products a customer has, which was intended to help achieve a goal of increased fee revenue. In 2015, the company made more than 10 percent of its revenue from service charges on deposit accounts and credit card fees.
Here’s a statement from a 2006 Wells Fargo strategy document which described this up-selling focus:
The more you sell them, the higher the profit because the added cost of selling another product to an existing customer is often only about ten percent of the cost of selling that same product to a new customer.
The confusion between KPIs and goals is rampant in contact centers.
For example, a recent Contact Center Pipeline report discovered that 94 percent of contact centers list call quality as a KPI that’s tracked. Yet, only 59 percent felt call quality mapped to organizational goals.
That means that roughly 35 percent of contact centers are tracking a KPI that’s not really indicating good performance. It’s just a metric with no clear bearing on what the contact center is trying to achieve.
Another metric in the report was even worse:
- 88 percent track the length of calls
- 35 percent felt it mapped very well to business goals
What about the other 53 percent?!
Here’s just one more example. Many companies are confusing survey score (a KPI) with a goal of providing outstanding customer service. This confusion often leads to employees engaging in survey begging, where they plead with customers to give them a good survey.
Photo credit: Jeff Toister
Putting KPIs in Their Place
You can put KPIs in their appropriate place if you set goals first. A good goal should follow the SMART model. (You can use this SMART goal worksheet.)
- S = Specific
- M = Measurable
- A = Attainable
- R = Relevant (to the business, your vision, etc.)
- T = Time-bound
You may also want to check your goal against the good goal, bad goal criteria to ensure it will likely drive the right behavior. Good goals:
- Focus attention on the desired results.
- Promote teamwork.
- Rely on intrinsic, or internal, motivation.
Once you’ve set your goals, you can identify KPIs that support achieving these goals. So, an average customer service survey score might be a good KPI for a customer retention goal.
The final step in this process is critical. You must view KPIs in the context of achieving your goal.
Let’s go back to the road trip example from the start of this post. Your average speed is a KPI on a trip where you have to go 100 miles in 2 hours. But, you know you’ll have to slow down sometimes (like that 25 mph school zone). Other times, you can go faster.
You can also make other decisions that affect your goal, such as taking a toll road that cuts off five miles from the original route or filling up your tank with gas before the trip so you don’t have to stop. You might even leave a few minutes early to ensure you arrive on time.
Apply that same logic to your business KPIs. A KPI should always be viewed in context.
That means if you’re trying to achieve a customer loyalty goal, then survey scores can help you identify factors that will make customers less loyal. But, the score by itself is not a good loyalty predictor. You’ll need to consider other KPIs along with each customer’s needs to understand whether someone will be loyal.