Social Business: To measure or not to measure?


You have heard it before: “You cannot improve what you cannot measure”. For the past few decades, we have strived to model and analyze all the aspects of business so that we can continuously create more efficiency and improve its performance.

Metrics are important, but not if they are the wrong ones

As we look at the shift towards business that is more social, many have argued that it is very important to continue measuring performance. Processes and tools will have to change to promote more engagement and capture conversations, but they need to continue to model and measure for business monitoring and improvement.

Of course, I agree with that. But I argue that current metrics used by business are not as useful in a Social Business environment. For analytics to continue to be valuable as business models change, metrics have to change accordingly.

Example: Measuring performance of Customer Service

When we measure Customer Service as a stand-alone organization, all we find are costs. There is no tangible value creation. A CEO looking at a KPI dashboard will be rightly compelled to take talent out of that cost center, reduce costs, outsource.

“But we measure Customer Satisfaction”.

That, my friends, is a fallacy. The accountant cannot place a dollar value on “Satisfaction” and it gets ignored by decision makers. We don’t need to argue, it is enough to look at how customer service is regarded in the majority of companies today.

“Customer Service is the New PR.” “Zappos is showing the way.” We all agree that Customer Service is a key element for Social Business success. But how to measure its performance?

Happy customer generates more revenue by influencing other prospects. That has always been true and is even more important in a world where consumers are empowered by peer-to-peer interaction through Social Media.

To evaluate performance of Customer Service, we need to measure new business generated through influence. The accountant can measure that in dollars and the CEO can make more informed decisions.

Now, if you keep current analytical models, try to tell Sales and Marketing that revenues from new business are no longer credited to their account, but to Customer Service.

It is not about who or which department is creating value, but understanding and correctly modeling business performance. Then getting people to collaborate towards business goals with less focus on personal and departmental accountability.

It requires less Management and more Leadership. That is the challenge of Social Business.

Conclusion

Metrics are important. But we need to shift from measurement that is primarily designed to provide accountability to more holistic metrics that evaluate the reality of business. Until we internalize the shift in business model, no metrics might be better than bad metrics.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s