A practical guide to CPI metrics, their link to KPIs, and understanding not just how you're doing well, but why.
March 17, 2021
By Rachel Smith
A few weeks ago, at the grocery store, the guy bagging my groceries started bragging to the bagger in the next lane that he was the fastest bagger in the store. He went on and on about how nobody could beat him.
I tend to avoid confrontation, so I stood there silently while he mangled my produce. But what I really wanted to tell him was that he might be fast, but whenever he bags my groceries there are holes in every bag and something is always crushed. I don’t care how quickly my groceries get into the bag. I would much rather arrive home with intact grapes and bags I can reuse.
Clearly this grocery chain has instilled in their employees that speed is important. It makes sense. The faster you can get people through the checkout line, the more people you can ring up. And sure, nobody likes to wait in line, but I think most shoppers would rather wait a few more minutes and not arrive home with a flattened loaf of bread.
The grocery store is measuring what’s most important to them, not what’s most important to the customer. On the grocery chain’s website, it says they are customer-focused—not a big surprise. Nearly every company claims to be customer-centric, but is that really the case if they don’t measure what’s important to their clients?
What comes to mind when you think about business metrics? Most of us think about key performance indicators (KPIs), which might be sales-cycle length and number of new leads, or web traffic and email-open rates, depending on what your role is within your company. What all of these measures have in common is that they don’t mean anything to your customers.
A recent Harvard Business Review article by Gene Cornfield asked readers to consider whether a business can truly be customer-centric if it doesn’t measure how it’s performing for the customer. One could argue that an increased number of leads must mean happy customers, but doesn’t it make sense to measure what the customer needs directly?
Cornfield thinks so, and I agree, not only because it can give companies better insights into how well they are targeting customer pain points, but also because those measures could also be used for more effective marketing. If a moving company tells me that they have shortened their sales cycle by 50 percent, I don’t care. If they tell me they can get me a same-day quote? Now I’m listening.
This month we’re talking about Impact, the “I” in DRIVE, Maestro’s information gathering framework. Measuring the impact your product or service has on your clients can be difficult to do, but by measuring outcomes important to your customers, you can get a much better idea of your impact and have a measurement that speaks to prospects.
These customer-focused metrics are called Customer Performance Indicators (CPIs). In order for a metric to qualify as a CPI, it must measure something that the customer deems important, and it must be measurable in increments that the customer values.
How many people are looking at your website? A customer does not care. What about an NPS score? While this indicates whether previous customers are pleased with your service, it’s not communicating specific values a buyer cares about. A measurement of how long customers spend on hold when calling in with a problem? That’s somebody’s time. That’s something they value. That is a CPI.
CPIs Link to KPIs
Yes, your company is customer-centric. Yes, you want to solve problems for your clients. But you also have investors who want to see company growth. The great thing about CPIs is that they help you as a company in two important ways. The first is that they can always be connected to at least one KPI.
Think about it. Your client wants any issues with your product or service solved effectively and quickly. Maybe the CPI you’re measuring is customer service issues solved in a single call. Happy customers who get their problems solved quickly translate directly into less client churn, likely a KPI you are measuring.
If you are now tempted to look at your KPIs and trace them back to the CPIs you think they are connected to, please don’t. That’s doing things backwards. That’s assuming grocery shoppers won’t change stores because you get them through the checkout line quickly when what would really keep them from changing stores is fewer bruised apples.
In order to come up with the right CPIs, you need to examine the experience your customer is having all along their journey. You already ask questions to determine what impact your prospects are hoping your product or service will have, but to develop CPIs, you need to look for other impacts your relationship could and does provide along the way. There are likely other companies out there that can solve the same customer pain points. CPIs get to the metrics of how your company is better.
Are you providing the time tracking system that their employees actually remember to fill out? Are you supplying them with a CRM that reduces the number of angry customers they have to talk to? Are you furnishing their house with tomatoes that aren’t squashed? (Can you tell I’m mad about my ruined produce? Because I’m pretty distraught about my ruined produce.) CPIs don’t just let you know how well you’re doing. They let you know why you’re doing well.
I wrote above that CPIs can provide benefit to your business in two ways. Besides helping you figure out why you are or are not meeting your KPIs, CPIs can serve as powerful marketing tools. By measuring CPIs, you now have a metric that speaks directly to your prospective clients.
Do you want to use “the best time tracking software?” Or do you want to buy “the time tracking software that decreased the number of reminders bosses had to send to their employees by 75 percent?” Everyone says they are the best in the field, but not everyone has metrics that prospective clients care about to back it up.
In Gene Cornfield’s article he mentions an audio product manufacturer that turned the idea of customer lifetime value on its head. Instead of just looking at how much value they got from customers throughout their relationship, they also measured the value their customers got from them. That’s a powerful metric to share when customers are deciding whether or not to renew a subscription.
KPIs can tell you whether or not you have happy customers, but they can’t tell you why they are happy or what you could do to make them happier. The power to do that lies with CPIs. You better believe if a grocery store could promise me a less-than-one percent rate of product damage by their baggers, I would go there in a heartbeat.
Do you want to do something that will have a major impact? Schedule a workshop with Maestro Group at Mastery@maestrogroup.co!
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