The Balanced Scorecard Customer Perspective

Customer satisfaction has a big effect on 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.) They often name this perspective after the people they serve: constituents, recipients of benefits, stakeholders, or citizens. The name changes, but the meaning is the same.

‍The theory behind the Balanced Scorecard customer perspective is that you have to make your customers happy to sell them products and services, and to make your customers happy, you have to understand them.

Here are three things to do when you put together your Balanced Scorecard customer perspective. For the full picture, see this full Balanced Scorecard example.

The Balanced Scorecard Customer Perspective

1. Figure out what your customers are looking for.

As you work through customer objectives and measures, the hard part is knowing what the customer actually wants. Saying you want to “retain your customers longer” or “increase the number of customers” is not enough. Everyone wants those. Instead, describe what differentiates your products or services and identify why customers are choosing you.

Origin Bank started its new strategic plan here. The first step was to recognize the bank’s core competencies, critical resources and key success factors, the things that let it build a unique experience for the customer. The customer stays in view after the plan is set. Any major project or strategy change at Origin now goes through a “Decision Tree” form that asks about the impact on customers, culture and the business, as well as the financial implications.

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 put themselves in the customer’s shoes, some leaders 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.

The exercise works for nonprofits and municipalities too. It shows you the value your organization holds for your citizens or the populations you serve.

The Washington State Department of Licensing (WDOL) rebuilt its strategy around this idea. Its new purpose statement is “Helping every Washington resident live, work, drive, and thrive.” When it develops measures, the team asks: Who is my customer? What does our customer need? How do I know if I’m meeting their unique needs? How can we honor their feedback? Tony Griego, Planning and Performance Manager, puts it this way: “It’s time to shift from the Golden Rule (treat others the way you’d like to be treated) to the Platinum Rule (treat others the way they’d like to be treated).”

3. Know the difference between what customers say and what they do.

Some customers tell you they’re very satisfied with your product or service and never purchase from you again. 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.

WDOL tracks both sides. It moved away from averages and began using more raw data from customer survey results, so its measures now show the percentage and raw number of customers who do not get the result they wanted. Surveys add qualitative questions, ClearPoint charts show who is served and who is underserved, and the team even quotes customers directly in its write-ups for leadership. The team also asks who it has missed entirely: “Who is underserved?” and “Who is un-served all together?”

Get the library of 53 KPIs for customer opinion and activity