Podcast: Why every company should care about CPIs

Customer performance indicators, or CPIs, are essential metrics you should be tracking if you really care about customer satisfaction. Many companies claim to care, but too often, they're still hindered by inside-out thinking. In this episode, we discussed how to fix this with well-defined CPIs.

We've been writing about CPIs for a while, but since this is an important topic, I thought it was worth discussing it on the podcast.

Customer-centricity is spoken about a lot - I don't think any companies openly claim they don't care about their customers' needs or challenges. However, everyone (both in B2B and B2C) has had a poor experience as an existing or prospective customer of a company at one time or another. So what's going on? Clearly, these companies aren't approaching customer satisfaction in the right way.

CPIs are the remedy to this, and as usual, starting off with the basics gives you the best solutions. You can create wide-ranging NPS surveys and super-smart chatbots all you want, but if you don't track (or even know) the average time it takes for a customer to get a satisfactory answer to a question, you're starting at the wrong end. 

It's just me and Anders in this episode, and our discussion covered the benefits of tracking CPIs compared to standard key performance indicators (KPIs), how you can link these two metrics, and what CPIs you should start with if you're a company that's serious about actually knowing how it is to be your customers and prospects.

Watch the video version of the podcast to hear what we have to say, or listen to it on Spotify or Soundcloud using the buttons below.

If you thought this discussion was interesting, make sure to subscribe - you can do so on Spotify, SoundCloud, or right here on the blog, where we'll send you an email update when we release new episodes. Enjoy!

Transcription

Alexander Evjenth: [00:00:00] So in this episode I looked at a previous article called 'What is a CPI', that you published in June 2020. In the article, you mentioned that, I will quote you, "CPIs are the most exciting business measurement for the moment, and you should prioritize them today." So let's have a conversation about CPIs. What is a CPI?

Anders Björklund: [00:00:32] Obviously, you have read the article. So I'm going to be a bit rude now. Alexander, how did you interpret it? How did you understand the CPIs?

AE: [00:00:47] I interpret it as a measurement for measuring how well you are fulfilling a need, a specific need for a customer. So if that need is, for example, time for delivery, you will measure how well are you doing in the delivery time from ordering to delivering the product. Or if that need is convenience, or, yeah convenience, how convenient are you compared to that? So it's, basically, I understood it as an overview, begrepp, how do you say begrepp?

AB: [00:01:29] Yeah, I understand.

AE: [00:01:31] About several measurements, right?

AB: [00:01:35] And that is for me very understandable. But if we look at the times we live in, I would say that most B2B companies, and for that matter like most companies, claim or talk about how extremely important it is to be customer-centric and how very serious they are about it. And I mean only thinking about that. Is it a strategic decision, 2021 that the customer should be in focus and that the company should be customer-centric? Obviously it is, because every fifth year, either when someone changes their CEO or they got reminded about it, instead of having their company name in the circle of how they describe their offering, they put the customer there. And I would say that this is a cultural thing and I will get to the CPI part. I claim that most existing companies, and let's focus on the B2B ones now, they have a considerable challenge due to one very simple thing, except culture, which is everything those companies measure, is company-centric. And now I'll take the second part, which is I'm so sick and tired, and I have been for so many years, of companies that say, "yeah Anders, we used to be looking from the inside and out, but now we're going to think outside-in." And there are only two sides. One is on the inside and the other side is on the outside. The people that are on the outside of a B2B company, they don't care.

AB: [00:03:29] Of course, it's a prerequisite that they are passionate and that they live for the customer and have the customer in mind. I mean, it's a ridiculous discussion. Instead of sort of admitting that in most company cultures, you only talk about the inside, and to get a tap on the shoulder, you need to fulfill the very internal targets that you have. So the interesting thing with CPIs is that you cannot decide what a CPI is. You can stick with your KPIs if you want. But the interesting thing would be if you actually know the expectations from the customer's perspective and start measuring that. And then I don't talk about that, that it sort of should be mandatory that you each quarter ask them if they would recommend you to someone else or something like that, would be very interesting for anyone who listens to this episode, if they actually can get back to us and report or tell about their own company, if they have one metric that actually measures CPIs, that's number one. Number two is OK, is it part of the remuneration model then? Now it starts to get really, really interesting. I would guess that some e-commerce companies have these types of measurements. And I know about two e-commerce companies that are driven by CPIs in their remuneration models. But I'm talking about traditional B2B companies, the companies that I love most in this world. Was that an OK introduction of CPIs Alexander?

AE: [00:05:27] Yeah, very good. And so what it's all about is about measuring customer values or customer expectations?

AB: [00:05:37] I mean why I think it's so exciting from a business measurement perspective is because I think they are needed. They would change the impression of many companies and it would in a short time evolve their internal culture, because whoever I interact with as a decision-maker, they typically have the dashboards, visualising the data that reflects how their own companies perform. At the same time, every customer interaction done with that company is usually based on some type of problem, challenge, need, question, intent, along with always very, very high expectations. So these expectations usually are built on time, of course, quality, and all the other things that you presume. But the easiest one to exemplify is how quickly and easily can you fix this for me? Because I do have a problem, a challenge. You need intent or question or whatever it is. And all these together, all these outcomes should be measured through putting up relevant customer performance indicators. And if you want to have to take it based on time, how quickly and easily was this, in line with your expectations.

AE: [00:07:15] So is this something, is this a new measurement or have you heard it before? Was it common 10 years ago or?

AB: [00:07:24] I don't even know where we originally found the thinking, I would guess that the weatherman, Stellan, found something somewhere and we had a discussion. And then we sort of said, all right, let's go for this. Let's find a few. Let's start stimulating people around it. And most importantly, and I will not tell that in this episode, I will do that in another episode. Let's start measuring it ourselves on a very basic level based on our customers' expectations connected to time and how prompt or quickly things are done. And that can be, without telling everything, when you fulfill the form for a support ticket. Huge difference if you say "I expect an answer within three business days" or "within an hour", that's a huge difference. And then you need to have processes that, one, can alert someone that they expect an answer within an hour, and two, that you log it and can follow it up. As always, with implementing new things, start testing, experimenting, and then make it a best practice and a part of the process, the way of working, and the culture.

AE: [00:08:49] So what kind of response do you get from companies when you talk about CPIs?

AB: [00:08:54] As with many things, when you talk with people or with the companies or decision-makers, "Ah, that's an interesting way of thinking." But I mean, reality bites and to be very, very general with a world where everyone who's fully employed, who claims that they don't have time and with the bonus models and remuneration models and the cultures that exist, it's very different, difficult, and also different, could say different, very difficult for someone to take an initiative to change the foundation of how something is run or how something is measured or so on. So, so short answer very positively. And as always, the higher you come up in an organization talking about it, you get to questions: how and what? And when you have described that, you need to say, give me an example or show me an example. You need to get very practical when you start talking about new things. As we were joking before this episode, we actually had two minutes, and I mean, like the 'big data bullshit' that most companies talk about, that they prioritize that, and it's so important, and especially two to five years ago, I mean, most of the companies that told me and still tell me that "big data, oh that's the shit." Then if I ask them, "do you have email addresses to all your existing customers? Then we don't need to talk about big data. Then we better get the small things in place first before we get really ambitious." Sorry for the spin, as always.

AE: [00:10:47] No, it's appreciated. And there is no such thing as out of topic in this podcast. But how can companies start experimenting with this? Do you recommend to focus on speed then, on how quickly you solve something and try to measure that?

AB: [00:11:08] Two things: first, you need to decide that you actually are really, really curious in how it is to be done, because, without that, nothing is important on the outside. And secondly, as a suggestion, generally in B2B, you all have an aftermarket business or most of you have an aftermarket business where service is very important. You actually claim with what you sell that it's on time and nothing should stand still and whatever the arguments are. OK, so if you sell something where you have an aftermarket business and service, are you brave enough to say that your customers should be able to tell either in the contract or in some other way that "I expect stuff to be solved within 10 minutes, one minute, one hour," or whatever it is, and then measure that expectation? Take a very, very simple thing, and if you're not brave enough to do that, then look perhaps at a sort of practical thing as your website, where you can ask a question, and add that people can say how soon they want an answer. Then you sort of have the right mindset or the right start of measuring CPIs.

AB: [00:12:41] And to give you one more example, when I go to some B2B online presences and then, "you have a question". Yes, I have a question. When can I get this and how much does it cost? Or whatever I want to know. Please ask me about my expectations, how soon you will get back. In my case, we talk minutes, we don't talk hours, and we do definitely not talk working days. And that's in the B2B role. If I go to me as a consumer, how about right now without asking me anything? Answer me now, and very, very soon in B2B, that will be the case. You don't have to ask about the CPI. They want an answer here and now, live, when they have the challenge or the problem, that's most likely very soon with companies, that the easiest CPI is how many seconds did it take before they had a satisfying answer? But that's me provoking and pushing a bit to make people more interested.

AE: [00:13:54] So with that, your recommendation is to start defining what the expectations are, really?

AB: [00:14:02] Yeah, and do it in a simple way where you now interact with the customer, tick that box, or make the real decision - everything should be an instant answer, but that's a bit more provoking, and then I lose a lot of the people that I tried to stimulate now. So start by a form. Ask them, "how fast do you want a reply?" And fulfill their expectations.

AE: [00:14:25] And how do you connect CPIs to KPIs?

AB: [00:14:29] I think it is very easy if you prioritize customer satisfaction, which very few companies really do connect satisfaction with CPIs. So the KPI 'customer satisfaction', that's not a CPI, that's a KPI. Connect that with one, two, three CPIs that you started with and look for the correlation between them. Very easy, I would say, to find correlation between fulfilling expectations on very practical things and satisfaction.

AE: [00:15:06] Well, that's great. Do you have a last tip for the listeners about CPIs?

AB: [00:15:14] Most likely, I would say, but I can prolong what I was mumbling about with NPSs, that I think many companies actually believe that customer satisfaction is a sort of CPI. But that is a KPI. It only measures what we as a company or any company wants to measure. They do not provide direct traceability to anything, customer expected outcome or anything. It's just a very, very broad and general question. But accept that my always-around advice, which is if you understand what I talk about and it sounds fairly reasonable, start doing it. Do it as an experiment, do it as a test, and then make it a part of the process and the culture. That is most likely the easiest advice. But that is if you think this sounds reasonable, if you don't, listen again.

AE: [00:16:23] Thank you very much for your time.

AB: [00:16:25] Thank you, Alexander. And when is the weatherman back?

AE: [00:16:30] I think he is back on Wednesday, next Wednesday, next Wednesday. Yeah, in a new episode. Finally, can you with your trailer voice, do a 10-second elevator pitch for why companies should have CPIs?

AB: [00:16:47] Hmm, I need to think a bit about this one. No, it's very, very important what I say. The key for you is to make the whole culture, the whole company, focus on how it is to be them, meaning your potential and existing customers. Go ahead, start doing what you claim that you already do. That's the elevator pitch.

AE: [00:17:22] Well, thank you very much, Anders.

AB: [00:17:25] Thank you, Alexander.

AE: [00:17:26] And now it's Friday, no, it's Thursday fika!