NETTING IT OUT

The Customer Flight DeckSMPerformance Measurement System is designed to give you 1) a framework for monitoring the quality of your customers' experience; 2) a basis for prioritizing and making operational improvements; and 3) a way to validate those improvements by correlations with increased customer retention, lower customer acquisition costs, and greater customer spending and profitability.

First, you'll need to select a customer segment to monitor, since each Customer Flight Deck focuses on a specific customer segment. The second step in designing a sample Customer Flight Deck performance measurement system is to set target goals for the number of people or accounts you'd like to have in this segment as active customers and to monitor how you're doing against those goals. Of course, you'll need to define what you mean by "active" customers. Finally, you'll want to measure how you're doing in deepening the relationships you have with this group of customers.

SET STRATEGY-DRIVEN TARGETS

The first section of your Customer Flight Deck centers on the depth and breadth of your customer relationships. In particular, for each customer segment that you identified in Step 1(1), you will want to define your expectations for growing and managing that customer base and then for ensuring your criticality to them. There's a great deal of subtlety involved in defining these expectations, and you may discover that one way of thinking might not work for all customer segments. Still, there are some rules of thumb you can use for the sake of this "do-it-yourself" exercise.

First, your long-term strategic objectives should define what you want customer numbers and depth of relationships to mean. Growth in operating income, for example, is a common goal, and most companies can quantify what that means for them. But income growth almost always implies growth in the customer base, and few companies have taken the trouble to quantify precisely how they intend to achieve their income growth by growing their penetration and deepening their relationships in particular customer segments. We also recommend that you set targets for the number of individuals within each account or household because it implies greater penetration into existing accounts.

We also recommend that you focus on your known and active customers. Known customers are generally worth more to you than anonymous customers, and active customers are worth more than inactive ones. At first blush, this seems simplistic, and for companies that produce commodity items for retail sale to consumers, perhaps restrictive. But the Flight Deck stresses the importance of your relationship with customers, and that depends on knowing who they are and ensuring that they continue to value you. It is this sense of relationship that will allow you to improve the branded experience you provide to them.

This does not mean that you forsake everyone else. Indeed, if you have any intention of increasing the number of known customers you have, and increasing their levels of activity, you will need to convert a portion of the anonymous, inactive ones.

NAVIGATION

Begin with Your Strategy-Driven Targets

For now, we're going to concentrate on Navigation. As described in the Overview (2), we use the term Navigation to describe the set of metrics we use to assess progress to goals. This means we need a set of goals ...

*****Footnote
1) " Designing a Customer Flight Deck(SM) System - Customer Segmentation: Step 1: Select a Customer Segment to Monitor ," by Patricia B. Seybold and Emmanuel S. Sodbinow
By Patricia B. Seybold and Emmanuel S. Sodbinow

2) "Designing a Customer Flight Deck(SM) System: Introducing a Performance Measurement System for the Customer Economy ," by Patricia B. Seybold and Emmanuel S. Sodbinow. **********End Footnote