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jonathan.becher

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Two weeks ago I visited the SAP offices in Mumbai and Bangalore, and had the chance to meet with customers, partners, press, analysts, and bloggers.  It was an amazing experience for me personally: the culture, the energy, and the opportunity.  I was asked multiple times to try to summarize the SAP India organization and India's impact on SAP.  Given the diversity, it's a difficult thing to do but here are some interesting facts I consolidated:

 

SAP India

Started in 1996, SAP India is one of the fastest growing companies within SAP worldwide with ~5,500 employees and more than 4,800 customers.

  • SAP India is the third largest subsidiary for SAP in terms of employees.
  • The second largest SAP lab for development and research is located in Bangalore, India
    • Some of the applications developed in India include HR Applications, Mobile Solutions, Supplier relationship management, SAP HANA and Big Data activity
  • SAP Education in India has trained over 50,000 SAP consultants in the last decade
  • SAP has 3,800 SME customers in the country
  • SAP India was declared the HUB of the region in 2011 for its outstanding performance

 

The Best-Run Indian Businesses Run SAP

SAP has emerged as the unquestionable partner of India Inc.

    

India and the SAP community / social networks

  • SAP has approximately 2.5M registered members of the SAP Community Network (SCN)
    • 425,000 (17%) of the total are from India; second only to the USA (23%) and ahead of Germany (13%
  • 19% of the 3.2M total visits to SAP Community Network each month are from India
  • SAP has 120,000 fans on Facebook
    • India is the top contributor with 27,000 fans, followed by USA at less than half that number
    • Six of India’s urban areas (Bangalore, Mumbai, Hyderabad, New Delhi, Pune, Chennai) are in the top ten cities generating traffic to SAP’s Facebook pages
  • About 10% of SAP’s 50,000+ followers on Twitter are from India

When I was asked to blog about my impressions at SAP’s developer kick-off meeting (DKOM), my initial reaction was “why me? I'm a marketing suit at a coding fest.”  Maybe even more importantly, I wondered why anyone outside of SAP would care about an internal meeting.

It was a vexing enough question that I started asking people: SAP employees, existing partners, and people who barely knew what SAP does.  It wasn't long before an interesting answer emerged. 

Most software developers code in the dark.  Of course, I don't mean that literally; electricity isn't that expensive yet.  But they do their job in relative isolation without much interaction with the rest of the business.  As an ex-developer myself, I remember that I rarely understood how the things I did helped the business or impacted the company strategy.

DKOM is a chance for developers to understand SAP’s strategy and how the software they work on helps the company achieve its business goals.  I know that sounds highfalutin but it’s really the goal of the event.  SAP is focused on five technology market categories: applications, analytics, mobile, cloud, and database&technology. Of course, the keynotes had frequent mentions of the categories but the entire event was organized around them.

This wasn't lip service to strategy.  Sessions went into detail on what developers could do to help SAP reach its objectives.  For example, Raj Nathan led a session of what it would take for SAP to become the #2 vendor in the database market which described how to combine the best of Sybase ASE, Sybase IQ and SAP HANA.  It focused on what we want to do but not how. After the talk, I saw several developers in animated discussions with Raj.  They had ideas for the how.

That’s when I had my (suddenly obvious) epiphany.  DKOM was a great way to get everyone on the same page.  To create an alignment focused organization.  It was management by walking around.

Why doesn't every software company have a similar event?

A few years ago, I was considered to be the “SAPPHIRE Reflections - Welcome to the INSIGHTS from SAPPHIRE Blog” for large SAP events like SAPPHIRE.   Best I can tell, I was asked because I was one of the few executives who were active in social media; my initial blog entry was almost six years ago.  Happily, this designation died at SAPPHIRE NOW 2010 with the advent of dozens of on-site SAP social media reporters who captured footage from keynotes & sessions, interviewed customers & partners, and provided on-the-spot commentary.

In my SAPPHIRE NOW 2010: End of the Official Blogger post last year, I compared this openness of social media with a change in the event itself.  Rather than just happening in Orlando, SAPPHIRE NOW occurred simultaneously in Frankfurt, Orlando, Buenos Aires, Bogotá, Tokyo, Sydney, and Singapore.  And much of the live event was captured and broadcast on an on-line platform for the rest of the world to see.  

Feedback from last year was so overwhelmingly positive that we were awarded one of the 14 most innovative meetings of 2010, but we’re not content to rest of our laurels.  For one, we want to transform the event from three days in May to something that continues throughout the year.  As such, there are two global SAPPHIRE NOWs this year; one in Orlando in May and the other in Madrid in November.  Both will be broadcast live to other physical locations around the world.  The strategy is simple – it’s about creating a personal, local experience when you need it.  SAPPHIRE NOW, not SAPPHIRE some time later.

I've walked through some of the downstream effects of having multiple events with several members of SAP influencer community and Dennis immediately grasped the ramifications. More frequent marketing scrum cycles are reflective of more frequent development scrums cycles which reflect the increased speed of change of SAP.  It’s not just about innovation; it’s about consuming those innovations in more digestible morsels.  

There are several other interesting changes coming to SAPPHIRE NOW in Orlando. We are going from one hands-on area in the Innovation campus to six; one in each campus.  It won’t be just hearing about SAP solutions but you can experience them first-hand.  And trust me, there are some that might surprise you…

I’m also really excited about the new content concierge counters which are designed to help you understand the bigger trends at SAP like On Demand and In Memory.  But more about these in another post.

Many people picked SAPPHIRE NOW 2010 is a signal post in the revitalization of SAP.  I have even higher expectations in 2011.

Jonathan Becher

Dirty KPIs

Posted by Jonathan Becher Mar 17, 2011

I occasionally re-post from my other blog called Manage By Walking Around.  This one discusses the challenges of setting KPIs:

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At a recent performance management workshop, I asked an attendee for an example metric that he was using to track performance. The attendee, who worked for a city’s public works department, immediately replied “# of miles of streets cleaned”. Before I could ask any questions, he proudly added “and we cleaned more than 1000 miles last quarter; up 10% since the previous quarter”.

I’m no maintenance worker but 1000 miles and up 10% both seemed like good performance. Therein, however, lies the problem with our old friend: context. The attendee (we’ll call him Joe) had sat through most of my workshop and was trying to provide additional information about the actual miles of streets cleaned by comparing it to the previous quarter’s actual value. Clearly, an increase of 10% is easier for me – as a non-expert – to understand than the raw number.

However, because this is an activity measure, all I really know is that output increased from last quarter. What if a new subdivision opened in the last 90 days so that the total number of streets that could have been cleaned is 15% higher now? This means that the 10% increase in actual output is further away from our target of cleaning all of the streets. Output is up but performance is down.

Immediately seeing my point, Joe suggested that they switch to “% of street miles cleaned each month” with a target value of 100% and letter grade scoring so that greater than 90% would be an ‘A’, 80-90% a ‘B’, etc. This was a definite improvement and might have ended the discussion until one of the other attendees pointed out that there is an incremental cost to cleaning a higher percentage of streets. Do we really need to set a target of 100% so that every street is cleaned monthly? Is there sufficient value to increase the percentage from 80 to 90? Perhaps the right answer is to set the target slightly higher than the benchmark from our sister communities. That will make sure that we don’t spend too much money but that we continue winning those awards for the best places to live.

That discussion brought us back to one of my favorite topics. The problem with this and other output measures is that it’s not easily tied back to an outcome. What goal are we trying to achieve? After scratching his head for a few minutes, Joe remembered that one of the overall objectives for the Public Works department was “to increase citizen satisfaction”. Presumably, if the streets were clean, people would complain less and they would be happier with the department.

Logical, but worth going the next step. If the goal is to increase satisfaction, we might establish an outcome measure such as “# complaints about street cleanliness reported every quarter” with the target of reducing it by 5% every quarter for two years. If we are hitting the target for the output measure of street miles cleaned but not our target for the outcome measure of complaints, then we’re probably tracking the wrong activity and unlikely to meet our citizen satisfaction objective. Perhaps people care about more than just clean streets.

Speaking of which, Joe, there’s this pothole in front of my house I would like to talk to you about.

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If you enjoyed this story, there's a follow on here: http://alignment.wordpress.com/2006/11/29/dirty-kpis-revisited

I occasionally re-post or except from my other blog called Manage By Walking Around.  Since the topic of embodied cognition is considered "Beyond SAP," I've only provided an except here. 

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The next time you go on a job interview be sure to bring your resume in a heavy, well-constructed portfolio and encourage the person interviewing you to drink a hot beverage. You’re more likely to get the job. New research in the field of embodied cognition has shown that job candidates appear more important when they are associated with heavy objects. In addition, people are more likely to think of you as personable and believable if they hold a hot drink in their hand than if they hold an iced drink. 

Embodied cognition is based on the emerging psychological hypothesis that bodily perceptions – like touch – influence how we think. The hardness, weight, shape and texture of objects affect our decisions about unrelated situations. It might sound like voodoo science but an incredible array of scientific experiments bear this out.

Continue reading

I occasionally re-post from my other blog called Manage By Walking Around.  This one tries to summarize the discipline of performance management:

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After many years as a performance management enthusiast, I sometimes forget how much confusion there still is around the topic.  Since I’m a big believer that standardized language helps reduce confusion, I’ve decided to summarize some of my deeply held beliefs on performance management:

 

An objective describes what you want to accomplish. For example, ‘win the race’.  A key performance indicator (KPI) monitors progress towards a specific objective.  For example, ‘position among the runners’.  A target is the value of a KPI at a defined moment in time. For example, in order to win the race, the target value for the KPI needs to be 1 at the end of the race (but not necessarily throughout the race).

 

Obviously the actual value of the position KPI can change over time, as various runners speed up and slow down (or even leave the race).  In a similar manner, you should apriori set target values for different moments of time.  That way, you can compare your actual value to the target value at specific intervals to know if you are on track. (This 2008 post describes more about objectives, KPIs, and targets using the analogy of a race.)

 

I’ve noticed that many people forget that targets can – and should – have multiple values and instead focus on the ultimate result: zero defects, $100M in revenue, or a 4.5 score in customer satisfaction.  If the result is far enough away in time, comparing the current actual value to the eventual target value may lead to the mistaken conclusion that we’re not going to reach the objective.  This is especially critical when results don’t happen uniformly. For example, in high tech sales, a disproportionate amount of deals happen in the last month of a quarter and in the last quarter of a year.  A single target value would not capture this nuance. (This 2007 post provides an example of multiple targets in a call center.)

 

A grading system compares actual and target values to determine a performance score.  The closer the actual value is to the target value, the better the score.  One of the most common systems is based on letter grades (A/B/C/D/F) in which 90% and above is an “A”, 80-90% is an “B”, etc.  Unfortunately, this common scheme doesn’t work in many situations such as rewarding over-performance , grading on a curve, and dealing with defect rates.

 

In my experience most performance management practitioners don’t spend enough time creating the appropriate grading system that will help them understand (and explain) the size of the gap between actual and target.  Unfortunately, this oversight means many of their performance conclusions are faulty.

 

Finally, organizations may use measures to track the resources that they consume and the product/services they produce but should focus KPIs on the results that they are trying to achieve.  This distinction is codified in the Logic Model which describes the relationship between inputs, outputs, and outcomes.

 

The distinction between output and outcome also gives rise to some of my favorite performance management stories: the dirty KPIs in a city public works department, circumventing the CRM system in a call center, and keeping my own lawn green.

 

Do you have your own story of outcomes vs outputs that you’d like to share?

I occasionally re-post from my other blog called Manage By Walking Around.  In this post I provide more tips for new managers.

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After reading my MBWA 101 post, a colleague asked me if I had ever compiled a list of tips for new managers. He wanted to provide some concrete recommendations for a new mentee who had recently become a first line manager. Other than my own management philosophy, I’d never written anything down before so I offered to follow up with some thoughts.

I came up with seven tips and added catchy phrases to help remember them:

1. “Hard on the issues, easy on the people”
2. “Manage by exception”
3. “People are your most valuable asset”
4. “Actions speak louder than words”
5. “Good enough is good enough”
6. “Reward outcomes, not activities”
7. “Mindset matters”

These tips are no substitute for management experience but they are good reminders of how we should interact with our direct reports.  You can read the complete post here.

I occasionally re-post from my other blog called Manage By Walking Around.  In this post I provide some tips for new managers.

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A few weeks ago, a newly minted manager asked my advice on how to best manage by walking around.  I gave him an encouraging – but non-specific – answer.  This post is my follow-up to his question.

Wander frequently
Your employees may worry that you’re spying on them the first few times that you show up.  If you make wandering a regular on-going event, people will get more comfortable over time. But please, don’t put it on your calendar for the same time every month.

Go by yourself
You’ll be tempted to bring your trusted advisor; the one that comes to those important meetings and takes notes for you.  Don’t.  The only way to be authentic is to remove your protection and open yourself up.

Listen first, talk later
The old adage is that you have two ears and one mouth.   Use them in that proportion.  Unfortunately, most of the people only have heard you talk, not listen.  When you do talk, ask simple open-ended questions that encourage them to talk.

Be constructive, not critical
If you point out mistakes that people are making, it might be viewed as embarrassing rather than helpful.  They’ll remember the criticism and will less likely provide feedback the next time.

Follow up
Don’t make promises unless you’re absolutely sure that you can keep them.  Instead, show you were listening by following up afterwards – even if you can’t fix the issues that came up.  And don’t forget to thank people for their time before you leave.

It’s never too early in your career to start managing by walking around.  In fact, it’s never too late either.

Over the last few years, I've been asked to be the “official blogger” for several SAP events. While I was honored to be asked, the designation never sat well with me.  After all, blogging is based on the concept of open discourse; everyone is entitled to their opinion and the masses ultimately vote with their blogreaders as to whose point of view is most sought after. 

 

Naming me official blogger and making me the only blog listed on the online platform felt like a kind of censorship. Even worse, there were times when I didn't feel like I could keep up with my blogger responsibilities, as I was too busy to blog.

 

Happily my reign is over.

 

Instead of one official blogger, there are expected to be more than 100 people blogging about SAPPHIRE NOW 2010.  So-called “social media reporters”, armed with flip cameras, will be capturing footage from keynotes & sessions, interviewing customers & partners, and providing on-the-spot commentary.  Like the successful SAP Influencer Summit, twitter will be deeply integrated into the event and the online platform.  I’ll personally refer to the backchannel during my Countdown to Keynote sessions.

 

The multitude of social media reflects the revamped structure of SAPPHIRE NOW compared to 2009. Instead of a single event in Orlando, SAPPHIRE NOW is happening simultaneously in Frankfurt, Orlando, Buenos Aires, Bogotá, Tokyo, Sydney, and Singapore – not to mention wherever you want via the on-line experience.  Instead of a 3-day event on-site and two-week window on-line, SAPPHIRE NOW continues throughout the year – with new content generated at and after the event.

 

It’s the beginning of a new era for social media and SAP events. The future is no longer coming; it’s already here.  It’s time for SAPPHIRE NOW.

For the last several days, I've been meaning to write a final blog on the Influencer Summit which provided my own assessment and analyzed influencer feedback.  In particular I was interested in comparing word frequency and sentiment analysis between the live twitter stream and the subsequent articles.  I haven't done so but this time it wasn't SAP Influencer Summit 09: Collision of Physical and Virtual but rather my day job.  Since others have provided early analysis, I decided to follow the lead of some of the attendees by providing my own "summit scorecard".   

Since its inception in 2003, the mission of the influencer summit is to offer an inside look at SAP's solution strategy for the following year and beyond.  What began as an industry analyst conference has evolved to include other important industry voices including bloggers, business consultants, faculty, media, and user group members.  SAP recognizes that all of these groups influence our industry and together the collective thoughts and feedback of these individuals is very powerful in helping to shape our strategy and direction.  As such, when developing the summit program, we asked many of the influencers what they wanted to hear and established objectives which would measure the success of this event.  

While the influencers were interested in a wide range of issues, three topics dominated their feedback: technology innovation, on demand (especially SAP Business ByDesign), and sustainability.   

Today's post contains my assessment on each of these topics.  I'm a tough grader so my SAP colleagues may not be pleased with my scores. 

Technology innovation

Vishal Sikka focused his morning keynote on the power of breakthrough technology including in-memory, cloud-based consumption, pervasive connectedness and interoperable components.  Much of the presentation focused on leverage advances in in-memory data and application management to reduce the size and importance of the "technology stack" over time with the potential to significantly lower TCO. For many people, his magic paper video was the highlight of the event.  Vishal also demonstrated groundbreaking mobile technology to access and update information in real time on preferred mobile devices, such as the Google Android OS and Apple iPhone.  

My rating is B-.  Why?  While we did a good job of opening people's eyes to the innovation coming out of SAP, some observers are maintaining a "wait and see" attitude until these innovations show up in more shipping products. 

On Demand

John Wookey noted that SAP is poised to execute on on-demand in the formidable fashion with which it has defined and led the business software market.  In a nod to frequent jabs by hungry competitors, Wookey quipped, "Being a leader in any phase of computing doesn't guarantee leadership in the next."  Wookey walked through the breadth of the SAP on demand portfolio, from line of business solutions, to business intelligence, to sustainability and BusinessByDesign.   With Peter Lorenz, John Wookey detailed SAP's 100 clients for BusinessByDesign and shown how the charter experience is serving both SAP and the customers well.  The TCO (total cost of ownership) of Business ByDesign has been reduced dramatically (~20X) and the user experience improved.

So, how did we rate?  Based on the tweets and feedback from influencers I spoke with, the attendees were impressed with the progress we've made.  Some even speculated that SAP was well on the way to being a force in on demand.  Getting out my grading pen, I give us a B+. 

Sustainability

With the Climate Conference in Copenhagen on everyone's mind, another hot topic (no pun intended) is Sustainability. Peter Graf, SAP's Chief Sustainability Officer, outlined a broad strategy of sustainability, honing in on the Copenhagen Climate Change Summit.  "If Copenhagen happens as organizers hope, it will mean regulation," Graf stated.  He underlined that irrespective of Copenhagen's outcomes, SAP customers are already using SAP software to take the lead on sustainable business practices. "Every major country that will be held accountable to a carbon footprint reduction is a country in which we operate. And every industry in which our customers operate is an industry in which we're expert. Our software is a leading means through which our customers can meet and beat expectations, whether they're regulated or self-imposed." 

On the topic of Sustainability, I give us an A-.  SAP is one of the only vendors with a holistic strategy and we have done a very good job of making SAP itself more sustainable. 

 

What do you think?  Am I a tough grader or did I grade on a curve?  What scores would you give? 

My best to all of you and your families for a safe and happy holiday season and I look forward to continuing our conversation in 2010.

During my interview of John Schwarz on how SAP's go-to-market strategy has evolved to address new markets, new delivery needs, and higher volume, John invited Ashok Santhanam, President & CEO of Bristlecone, to join us on stage.  Bristlecone is highly focused consulting and systems integration firm with some innovative approaches.  For one, they focus on supply chain management and nothing else which gives them more practical experience. In addition, they do almost all of their engagements on a fixed fee basis, rather than relying on time and material billing.  In some cases, they even tie fees to business benefits.

What's more, they don't operate like a traditional systems integrator as they've built a number of packaged solution offerings that streamline deployments.  For example, in consumer packaged goods they've been able to shrink the time to value for demand planning solutions from typically 26-30 weeks down to 6-8 weeks.  They also have an SAP All-in-One certified end-to-end semiconductor supply chain solution that reduces custom implementation from 12-18 months to go live in 3 months.  They can even offer this in a hosted model so that it doesn't disrupt any the customer's infrastructure.

The clincher was when Ashok described the Newell Rubbermaid sale and deployment. Bristlecone worked very closely with SAP and jointly delivered a proof of concept of "accelerated savings and procurement" in one week.  The POC validated the business case, demo'd the product, verified that it could work with their data.  It also helped the deal close in 37 days.  Not to rest on their laurels, Bristlecone then took the POC live in 90 days after the purchase of the solution.

About 4 months from first touch to realized value.  That's not your grandfather's delivery.

During my opening session at SAP Influencer Summit #sapsummit, I interacted with a computer called TERI (Trusty Explorer and Retriever of Information).  TERI's job was to retrieve relevant bits of information about market trends so I could assess how they might impact SAP.  The five trends were as follows:

  • Economic Volatility
  • Emerging technologies
  • Networked Business Practices
  • Rising customer influence
  • Sustainability and Regulations

The later keynotes described how SAP's product, technology, and go-to-market strategy have been influenced by these trends.

Some people have commented to me that it was difficult to capture all of the factoids that TERI and I used so I've repeated most of them here:

  • 40 Exabytes (4.0 x 1019 ) of unique NEW information will be generated worldwide this year 
  • One weeks' worth of New York Times contains more information than a person came across in their entire lifetime in the 18th century
  • 60% of the world's population uses mobile technology in some way
  • 12% of software market will go to the cloud by 2011
  • 31% of future innovation will come from customers
  • Companies committed to sustainability outperformed their peers by 15% during the financial crisis
  • 50% of the S&P 500 now report on their sustainability performance

And for those of you wondering, I have no idea how that song got on my iPod.

When I was asked to be the "official" blogger for the SAP Influencer Summit, I assumed that it would end up following a similar flow as SAPPHIRE Reflections - Welcome to the INSIGHTS from SAPPHIRE Blog earlier this year.  That is, I would write up some short observations after each of the morning's keynotes and post them throughout the day.  Later in the evening, I would provide some more general observations about the event, with perhaps some on-site tidbits to share with those that couldn't attend in person.

It didn't turn out that way at all.

I wrote the SAP Influencer Summit 09: Thoughts on the Eve of the Summit during the relative calm of the night before the Influencer Summit.  I planned to write my second post during the break after Jim Snabe's and Vishal Sikka's morning keynotes.  Since we expected that the influencers to be very active on twitter, I also decided to monitor the #sapsummit hashtag live during the morning keynotes.  If specific issues came up, I could respond to them myself and, if anyone made any relevant comments, I could refer to them during my slots between the other presentations.

I knew that I was going to be busy but I wasn't quite prepared for the firestorm of tweets.  While I don't have any reliable statistics (and my comment of 400 tweets in one minute now seems suspect), at one point #sapsummit appeared in the "trending topics" section on the twitter home page. The tweets weren't just from the attendees in the room but also from those attending virtually.

What's more, the tweets weren't just about content.  We learned that we had audio problems with the on-line platform, insufficient capacity on the wireless, and even the need for more electrical sockets.  Twitter gave us real-time feedback.  In return, I tried to provide the attendees with real-time feedback as well.  While no one was happy with the technical issues, they were happy that we were listening.

All of this meant I had no time to write the second blog entry.  Someone suggested that they could ghostwrite an entry for me but I've already gone on record that it's a really bad idea to have someone else do this.

While I may not have been timely writing this blog entry, I think we successfully integrated twitter into the event.  As @timoelliot said, "#sapsummit is the first I've seen that comes close to using the possibilities of real-time Twitter -- good job..." 

SAP Influencer Summit 09: Thoughts on the Eve of the Summit

Greetings from chilly Boston where it was 34 degrees F (that's 1 C) when I landed earlier this morning.  Luckily, it's not snowing -- although there are some nasty ice patches on the ground.

I'm here for the next three days to spend time with the IT industry's leading influencers at the SAP Influencer Summit. Together with SAP customers, partners and colleagues, we'll be discussing SAP's product, technology and go-to-market strategy.  For those of you that can't join me in Boston, I plan to share my observations of the event in a series of postings.  I also encourage you to view the Executive Keynotes from the virtual platform; you can request registration here

As I thought about how best to share the discussions we'll have onsite in this blog, I realized that there are certain topics on the agenda that I want to make sure that I cover: Product Strategy, Technology Innovation, On Demand Solutions, and Sustainability.  This should give you a representative insight into the keynotes, the strategy sessions, and the educational deep dives.  I'll also try to capture some of the conversations I have with attendees and give you a peak "behind the scenes" of the event.

Feel free to add your comments about what you’d like to hear about most from Influencer Summit. While I can’t be everywhere at the same time, I do have a couple of volunteers that have offered to help me scout other venues. And, of course, if you’re here in Boston, feel free to add your own color commentary.

 

Looking forward to dinner tonight… perhaps Boston's famous clam chowder and lobstah.

I'm posting excerpts from a few of the most popular posts from my other blog called Manage By Walking Around.  In this post I explore some ideas of how to think about measuring customer satisfaction.

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As I talk to organizations about their performance management journey, one of the most common questions that I hear is “What’s the best way to measure customer satisfaction?” As is my tendency, I often answer their question with a question of my own “Why do you want satisfied customers?” This question is usually jarring to them but my point is to get them to think about their actual objectives. The reason that they want their customers to be happy.

In my experience the explanation usually fits into one or more of the following categories:
  • Highly satisfied customers are more likely to repurchase the same product/service without considering switching to a competitor.
  • Highly satisfied customers are more likely to recommend the product/service to their friends, family, and co-workers.
  • Highly satisfied customers are more likely to pay a premium price as compared to equivalent products/services.

Notice that I used the phrase “highly satisfied customers”.  Research by Xerox found that very satisfied customers were six times more likely to repurchase within the next 18 months than customers who were simply satisfied.  One simple suggestion is that you ask your customers how satisfied they are, not simply if they are satisfied.

Remember, customer satisfaction is from the customer point of view, not your organization’s point of view.  Your organization’s performance may be outstanding but if your customers feel that it is poor – or even no better than the competition – they may report that their satisfaction is low.   Also, an organization cannot be great on all things.  Focus on those things that bring value to your customers.

Recently I spent some time with an operations manager for a federal agency.  He bemoaned to me that employee satisfaction with the on-site cafeteria was low, even though he had already changed outsourced vendors twice.  Since the employees were his customers, he was quite worried.

After reviewing the survey questions that they had used, I suggested that they stop using abstract questions such as “Are you happy with the quality/variety of food?” and instead focus on comparing the cafeteria with other options available to employees.  We settled on questions such as “How satisfied are you with the quality/variety/value as compared to those in nearby restaurants?” and “How satisfied are you with quality/variety/value as compared to other federal cafeterias that you have visited?”  Since the agency isn’t really in the business of serving food, these questions do a better job of benchmarking the cafeteria against expectations and the competition.

With that in mind, I would encourage you to avoid simple questions of satisfaction and instead which of the three goals above you are trying to achieve.   For example, if your objective is to up-sell or cross-sell more products to your existing customers, you may want to ask them how likely they are to do so in the next 12 months.  That question is probably a better gauge of their happiness.

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