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The Balanced Scorecard Customer Perspective
Customer satisfaction can dramatically impact your bottom line—so be sure you keep these three things in mind when you put together this perspective.
A high level of customer satisfaction can dramatically impact your company’s strategic success (and your bottom line). That’s why for-profit companies usually rank the customer perspective second on their Balanced Scorecard—just below the financial perspective. (Nonprofits and municipalities sometimes put this perspective at the top of their strategy map.) And while nonprofits and municipalities often call this perspective by a name specific to the populations they serve—constituents, recipients of benefits, stakeholders, and citizens are a few examples—all the terminology holds the same importance and meaning.
The theory behind the Balanced Scorecard customer perspective is that you have to make your customers happy to sell them products and services—and in order to make your customers happy, you have to understand them.
To help you achieve this, we’ve outlined three things you need to do when you put together your Balanced Scorecard customer perspective.
The Balanced Scorecard Customer Perspective
1. Figure out what your customers are looking for.
One challenge you’ll face as you work through customer objectives and measures is in knowing what the customer actually wants. Simply saying you want to “retain your customers longer” or “increase the number of customers” is insufficient; everyone wants to achieve these objectives! Instead, describe what differentiates your products or services and identify why customers are choosing you.
For example, if you are involved in public school administration, “providing a safe learning environment” is not a valid objective. All educational institutions hope for this. But striving for “unique classroom designs that encourage learning” or “a specialized approach to teaching character” could both be unique to your school and describe the value you bring.
2. Describe your objectives from your customer’s point of view.
To place themselves in the customer’s shoes, some organization leaders choose to write objectives in the voice of the customer. For example, if your company’s name is XYZ Company, your objective might be written, “XYZ Company’s product design fits my personality,” or “XYZ Company gives me quick and honest results,” or “XYZ Company’s product makes my job easier.” By articulating what your customers want, need, or enjoy about your product, you’ll better understand their point of view.
If you’re in the nonprofit or municipal world, this exercise still applies. It allows you to better understand the value your organization holds to your citizens or the populations you serve.
3. Know the difference between what customers say and what they do.
Ever find that some customers tell you they’re very satisfied with your product or service and never purchase from you again—and others complain religiously and purchase from you every two weeks? That’s why you should break down customer perspective KPIs based on what your customers say and what they actually do:
- Customer opinion: To find out what your customers think about your service or product, look at survey information, focus group data, online feedback forms, Net Promoter Score (NPS), and any other ways of gathering insight from your customers.
- Customer activity: To find out how your customers are acting, monitor their behavior. You may choose to measure renewal rates, purchasing behavior, size of purchases, market share, speed of purchase, etc. This provides you with the hard data that tends to be missing from surveys.
Want a list of 53 KPIs that measure both customer opinion and customer activity? Download our free customer measure library.
Pro Tip: Don’t worry about linking initiatives or projects to this perspective.
Like the financial perspective, the Balanced Scorecard customer perspective typically doesn’t have initiatives or projects because it is primarily outcome-based. Instead, the majority of your projects will be linked to your internal process perspective and your learning and growth (or “people”) perspective.
Download Now: 53 Free Customer KPIs
Get a leg up on figuring out which customer key performance indicators to track by downloading this free guide. The measures are in a simple Excel format that you can easily customize to suit your organization’s needs. Get your copy today!