Thursday, December 9, 2004

Measures for your customer satisfaction

The Manila Times
Business Times p.B1
Thursday, December 09, 2004

By Moje Ramos-Aquino, FPM
Measures for your customer satisfaction

Some companies, even now, consider customer relations and brand management as cost items in their planning and financial reporting. Dynamic companies deem brand recognition and customer relations as intangible assets and metrics for success. The Baldrige Criteria for Performance Excellence and our very own Philippine Quality Awards (PQA) assigned Customer & Market Focus a total of 235 points for excellence in process and results.

Baldrige & PQA examine how your organization determines your target customers, customer groups and market segments including their requirements, expectations and preferences to ensure the continuing relevance of your products and services to develop new opportunities. Also, how you build relationships with customers to acquire, satisfy and retain customers. Therefore, there is a critical need to differentiate your organization and the market you want to serve to enable you to create your customer value proposition. You cannot be everything to everybody.

In their book, The Discipline of Market Leaders, Michael Treacy and Fred Wiersema proposes three “disciplines” to create your customer value proposition.

• Operational Excellence. Organizations pursuing an operational excellence discipline focus on low price, convenience, and often “no frills.” Makro, Cebu Pacific, Bayantel, Pricemart, Cost U Less, Book Sale, Burger Machine, Reyes Haircutters, Secosana Bags, RiteMed and stores at Divisoria and Tutuban malls are examples of companies who focus on operational excellence by offering consistently low prices as their competitive edge.

• Product Leadership. Product leaders push the envelope of their company’s products. Constantly innovating, they strive to offer simply the best product in the market. Sony Corporation, Apple Computers, Jollibee, Unilab, Nokia, Pampanga’s Best, CDO, San Miguel Beer, Mary Grace Ensaymada, among others, would be considered product leaders

• Customer Intimacy. Doing whatever it takes to provide solutions for customers’ unique needs helps define the customer-intimate company. They don’t look for one-time transactions but instead focus on long-term relationship building through their deep knowledge of customer needs. Asian Eye Institute is a great example of a customer intimate organization. We also have Rustan’s, Emphasis Salon, Red Crab Restaurant, Fully Booked, Victoria Court, Maalikaya and many others.

Paul Niven writes in his book, Balanced Scorecard Step-by-Step, that the value proposition you select will greatly influence the performance measures you choose since each will entail a different emphasis.

For your Balanced Scorecard, Niven suggests these sample measures of how well you are creating and delivering customer value: Product prices, prices relative to competition, product availability, inventory turnover, stockouts, customer satisfaction, customer loyalty, market share, customer complaints, complaints resolved on first contact, return rates, response time per customer request, direct price, total cost to customer, average duration of customer relationship, customer lost, customer retention, customer acquisition rates, annual sales per customer, percentage of revenue from new customers, number of customers, win rate (sales closed/sales contracts), customer visits to the company, hours pent with customers, marketing cost as a percentage of sales, number of ads placed, number of proposals made, brand recognition, response rate, number of trade shows attended, sales volume, share of target customer spending, sales per channel, average customer size, customers per employees, customer service expense per customer, customer profitability and frequency (number of sales transactions).

It is important that you include both lag measures and lead indicators for your Scorecard to track your strategic and operational progress.

(Moje, president of Paradigms & Paradoxes Corporation, assist organizations in their Strategic Thinking, Planning, Balanced Scorecard, Change Management and Talent Development initiatives. Her email address is

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