Paradigm21 Group: 5 Questions CEOs should ask

5 Questions CEO's Should be Asking: Guerilla Metrics

These five questions are called 'Guerrilla Metrics' because they propel the organization into understanding the customer end-game and supply leaders with a platform to stand behind and reinforce.

They establish a language for CEOs in how they ask about customers; placing the customer front and center on their agenda. They are a potent first step to kick-start or reenergize a faltering customer 'focus.'

They work because they clear through the clutter usually encountered in the drive for customer experience and profitability:

§ Inconsistencies in defining, reporting, and managing the state of
relationships with customers.

§ Focusing on survey administration and negotiating survey scores rather
than driving action and accountability.

Guerrilla Metrics give leadership five questions for commanding customer accountability inside their organizations:

1. New Customers; Volume and Value

Ask about the volume and value of your incoming customers as often as you ask about sales goals. You may find that you are tracking incoming customers across a multitude of company areas - with conflicting definitions of what it means to be a new customer.

The wild card here is if you have achieved alignment in how customers are classified inside your system. The part that's not likely tracked is the quality of incoming customers. This is especially important as the market becomes more saturated and new, profitable customers are harder to come by.

2. Lost Customers; Volume and Value and Reasons

Pair this question about lost customers with the one above about new customers. The volume and value of lost customers needs to be paired with the new customer information to lay out the true situation for your company.

You must reconcile "Customers In" with "Customers Out" to know how well you are doing with managing customers as an asset of your company. In addition to knowing which customers left, you need to know the reasons why they don't care to do business with you anymore so you can drive change across the business. Without this information, the organization misses a massive opportunity to galvanize people into taking action.

3. Renewals with Reasons

For this to have relevance for your company, you'll need to define customer behaviors that constitute renew or the commitment to continue doing business with you, according to your business model. The key is to understand patterns which indicate loyalty based on continuous purchase habits.

You must ask for reasons why customers are staying with you to ensure that you personally know what you are delivering to customers that they value - and to ensure that you are well aware when these reasons shift or begin to erode. The "with reasons" part of these metrics are key to taking a leadership role in demanding focused actions to drive customer profitability rather than reacting to random pitches that come across your desk.

4. Revenue and Profitability by Customer Group

Getting to this classification of customers is not a trivial project. You need to understand the movement of customers from one profitability group to another so you can strategically lead the customer agenda. Your goal should be driving efforts that cause your costliest customer groups to decline and those most profitable to grow.

If you are not demanding that the business be tracked this way and if you do not ask for accountability around these metrics in the regular language of meetings, it won't happen. Getting this data in line to achieve a regular pattern of accountability around customer profitability patterns will take some time, but stay the course. It will optimize your ability to manage customers as an asset of your business.

5. Referrals by Customer Group

If your customers are willing to stick their necks out vouching for you, they have become your marketers. Keeping these customers, growing them and developing other customers like them are the key. You need to know how far you are down this path of building a customer base that would refer you.

Because if you can track the rate of referrals in general and by customer group, you'll know the strength of your ongoing revenue stream before you even spend another dollar on marketing. Companies completely focused on customer profitability will learn how referral rates differ by customer group and reasons for not referring. They will rigorously apply this learning to constantly adjust and improve.

Use Guerrilla Metrics to Drive Your Customer Accountability Platform.

It's not enough to simply have the metrics - it's what you do with them that matters. To make the Guerrilla Metrics stick, and to use them to steer the actions of your business, you need to take them out of the hordes of reports and paperwork and put them front and center as part of your personal mantra.

There is nothing like public accountability to take the mystery out of what's important to you and to start a friendly horse race among peers that motivates performance.

Consider establishing a 'Customer Accountability Room,' where a regularly scheduled spotlight is shone on these metrics and their improvement. Use it to kick-start the Guerrilla Metrics into action:
Lay out the Guerrilla Metrics to your leaders and begin asking for them within one week.

Give a drop-dead date for when you want to know the baseline metrics.

Build a customer accountability room, visually mapping each metric and its performance.

Within the first month, take your first walk-through in the customer room with your leaders. For each metric require accountability for "Why is this occurring?" "Who will resolve it"? and "When?"

Repeat the walk-through quarterly, or up to once a month. People will step up. Change WILL occur.

Use Guerrilla Metrics to Power 'The Customer' into Board Meetings.

You can use Guerrilla Metrics to redefine business success with your board, based on how well you are performing in keeping priority customers and driving their growth.

According to a November 2004 Harvard Business Review article entitled Bringing Customers into the Boardroom, customer management issues being elevated to the board level are on the decline. Among the large U.S. companies surveyed for that article, over a third of them said that their boards spent less than ten percent of their time on customer-related or marketing issues.

You need to be clear with your board that managing the value and trend of profitable customers is not negotiable. You can use Guerrilla Metrics as a tool to define, quantify and connect the dots for them on why customers must be discussed and managed as a key asset of your corporation. Guerrilla Metrics will give the perspective you need so you can elevate high-priority customer issues, and get your board to sanction investments required to keep them.

Jeanne Bliss is the author of Chief Customer Officer: Getting Past Lip Service to Passionate Action, which is based on her 25-years' reporting to company presidents and tasked to drive customer focus and customer profitability.

Should you need assistance developing a customer relationship enhancement or marketing program, please contact us to discuss how we can help.