A Matter of Metrics

By Steve Callahan
Senior Consultant

Constrained product margins, increasing labor costs, increasing shareholder pressure on returns, higher consumer expectations, and intensified competition are all testing the operational capacity of our industry. As product features converge, the importance of service becomes more apparent. Executive dashboards, benchmarking, and productivity as an integral part of performance management, all represent a growing recognition of the importance of turnaround time, quality, and consistency to market share and growth To monitor these service levels, the most successful companies have put in place clear metrics that often incorporate qualitative aspects like customer satisfaction.

Despite all the attention being given to metrics, there lies an inherent risk buried in the measurement of average performance over time. For example, take call center performance, a topic increasingly under the spotlight of debate. One prevalent measure of success for call centers is service level, stated as “80% of the calls will be answered within 30 seconds or less for at least 90% of the 15-minute intervals measured.” No question about it: this is a clearly stated, measurable performance goal.

Now say you are achieving that goal. How is your service? Most would respond that their service was good because the goal was being met. Perhaps, yet what about the other 20%, the calls not being answered within 30 seconds? How would those customers rate their experience with you? And if they are frequent callers—the high-maintenance customers—how do they feel when one out of every five of their calls takes more than 30 seconds to be answered? Do they accept the disparity as an acceptable given?

We have the technology available today to allow speech recognition, automated response to service needs, even the automated scheduling of callbacks during busy times. We have Internet-enabled customer service portals, electronic signatures, automated faxback of forms, “Call Me Now” online service buttons. We can route calls by geography, need, even by caller if necessary. The technology is stable, mature, and in place at many companies now. Given all that is available, are we ready to accept what is being measured today as our mantra of success? Or would the company’s competitive position be better served by taking service to the next level? If so, will there be a measurable benefit to offset the costs?

With the abundance of options available for improving performance, how does the savvy executive weigh the possibilities and put in place the right blend of solutions? Looking ahead, there are no clear-cut answers, no one strategy to fit every company. One thing’s apparent, though: the potential solutions have become complex and incur costs that are easier to measure than the financial value (if there is any). Evaluating the options to find the best strategic fit requires careful thought and due diligence, as does ensuring the alignment of operational solutions with long-term organizational goals.

As leaders, we have become very effective in weighing the financial aspects of costs and benefits, particularly in the context of measurable investments like technology, capital investments, or underwriting performance. Yet the times, and associated demands on our judgment, continue to change. The horizon of implementation and impact for many of our decisions has moved way beyond the one- to three-year realm, and great care must be taken to effectively make the shift to this longer view.

Nolan challenges senior executives to scrutinize what is being measured and what is considered “success” at their companies, especially given the changing cost of competitiveness. The traps of averages and percentages have to be taken into account as measurement systems become more directly linked to the total customer experience over time versus single event-driven measures. Are you positioned to leverage the inherent value of service as a competitive differentiator?