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Remember the classic scene from “L.A. Law,” when the direct-marketing expert is urging the high-priced divorce attorney to go for volume with a video aimed at women considering a split? “You want women ready to talk about divorce? I can give you women over 40 whove just applied for credit in their own names! I can give you wives of men with three children whove just bought two-seater sports cars!” He continues in this vein with a long list of demographic groups that might be potential customers.
The point: There are things that are hard to measure, there are things that are easy to measure, and there are sometimes useful connections between those groups.
What brought this to mind was this months proud announcement from CFO Research Services and Saugatuck Technology, trumpeting their discovery that “non-financial metrics outweigh financial metrics as gauges of technology investment value.” My first thought was, “Lazy slobs. They just havent figured out how to measure the bottom-line impact of making customers happy.” That was also my second thought.
Perhaps I betray my years of indoctrination at Exxon, which at the highest corporate level is really more an investment club than an oil and gas production company. The function of a corporation is to find productive employment for capital, and to offer the owners of capital a way of seeking growth without putting their entire wealth at risk. Thats what a corporation does, in law and practice; everything else is just the details that distinguish one special case from another.
Anyone who forgets this, or thinks that the latest new technology somehow changes all the rules, should be boiled in his own pudding and buried with a sprig of holly through his heart–or something else along those lines, if youre not feeling Dickensian. Read “The Victorian Internet” for a compelling perspective on just how much these things stay the same–both the core truths and the apparent desire to believe that the New New Thing changes them.
Perhaps Im being too hard on the notion that so-called “customer-centric technology (CCT) investments” must be subjected to “blended metrics … to gauge the likely costs and impact on the firm in a manner that conforms to required budgetary control practices, while being able to track the actual business value of the investments–or the lack of value, as the case may be,” to quote further from the announcement I cited above. Gobbledygook.
There are two possible meanings for the above: One is that traditional ROI measures are failing to reflect the long-term impacts of positive and negative customer good will, but thats just another way of saying that the present value of future cash flows is not being adequately captured by ones analysts. The second possibility is that customer satisfaction correlates so well with future performance that its actually the best available metric, and that translating it into bottom-line effects just dilutes its predictive value. I dont buy it.
At the end of the day, a company lives or dies by what it can sell–not by what its customers like or dont like. Thats why its so hard to have a useful discussion about companies like, for example, Microsoft and Apple. Microsoft interviews customers to find out what will make them better customers. Not happier customers, not more satisfied customers, but customers who will spend more with Microsoft tomorrow than they do today. And Microsoft executes very, very well against what it learns.
Would customers be happier, more satisfied, if they could buy stuff from Microsoft with higher confidence that they could integrate it with other companies products tomorrow? Of course. Would that make them better Microsoft customers? Clearly not. It would greatly increase Microsofts cost of making those future sales against competing alternatives on a more level playing field. Does Microsoft suffer today for the perception that its technical choices limit customers options tomorrow? Not so far as I can see.
Then, theres Apple. Not the opposite of Microsoft, certainly, but (it seems to me) much more driven by “make them happy” than by “make them ours.” Apples technology choices seem more aimed at elevating expectations than at limiting future freedoms: People buy Apple products, not because they feel they have no choice (obviously), but because they feel theyre getting something better today that everyone else wont be getting until next year.
Thats why Apple customers are generally happier than Microsoft customers: not because theres something weird about them, but because Apples strategy is designed to attract people who like to feel good about their technology, while Microsofts is designed to attract people who will tolerate continuing dissatisfaction as the price of short-term convenience. Both strategies are working, even though measures of customer satisfaction would suggest that Apples should work much better. But Microsoft isnt afraid to work hard at understanding all the factors that lead into its ROI.
Nor should you fall for feel-good statements that “customer satisfaction is what matters.” There are customers who will buy from you even if not satisfied; there are customers who are very, very expensive to satisfy, out of all proportion to the value of their business to you. You cant afford to attract them, let alone to keep them.
Its the job of enterprise IT not only to measure its own costs against criteria that actually matter, but to help the entire enterprise capture the right data to enable effective measures in every sphere of operation.
Tell me what satisfies you, and whether it matters in what youll do tomorrow