Short term strategies to try and meet monthly KPIs are severely affecting the longer term performance of many businesses.
This approach according to Chris Bell New Zealand’s leading customer experience coach and developer of a tool designed to measure the impact of non financial business drivers.
Customer loyalty is on the decline, New Zealand’s productivity is near the bottom of the OECD rankings, customer word of mouth has become more powerful than any other form of advertising driven by the internet and social media. Due to increasing commoditisation business is finding it increasingly difficult to develop a sustainable competitive advantage.
All this according to Bell is driving an increasing focus on price with the resulting negative impact on margins and profitability.
If businesses started to capture numbers on the impact of these vital areas of business performance (customer loyalty, employee disengagement, cost of staff turnover, negative word of mouth), Bell believes there would be a much greater focus on improving these areas. This would result in the development of strategies designed to build a more holistic approach to improving business growth and profitability.
The examples below illustrate the importance of focusing on non financial drivers for business success.
The value of customer loyalty
- 50% of satisfied customers and 25% of very satisfied customers are doing business with a competitor
The value of positive word of mouth
- 83% will act on a recommendation before any other form of advertising
- Loyal customers are 50% more likely to recommend than satisfied customers
The damage of negative word of mouth
- Businesses that have not met customer expectations will tell on average 8-10 other people – Colmar Brunton
- It takes 5 positive experiences to counter 1 poor customer experiences – Colmar Brunton
The value of capitalising on your creativity
- The most important leadership quality was “creativity” – survey by IBMs Institute of Business Value 2010
- Higher engagement &productivity
The value of increased employee engagement
- Top trend- employee/employer relationship changing to a partnership
- Acquiring and keeping key talent a priority
- People have become the primary source of competitive advantage
- 80% of market value today comes from the intangible
- You can copy products & services but you can’t copy people
- High engagement = high growth
- Less absenteeism
- Less errors/mistakes
- Higher sales goals
The savings from low staff turnover
- Separation costs
- Replacement costs
- Training costs
- Lost productivity costs
Towers Perrin published research –
- Income improved 19.2% from high engagement
- Income declined 32.7% from low engagement – over same sales period
Increased engagement = high customer satisfaction
Attracts and retains high performers
The value of a sustainable competitive advantage
- Competitors don’t have it
- Competitors don’t know how to get it
- An investment to develop it/not a cost
- Good marketing investment
- Customers do the work for you
- Continual development