Dennis Chapman

Dennis Chapman

It’s true that you can’t manage what you don’t measure. Metrics have an increasing role when managing strategic accounts. But what do you measure? Is there such a thing as the right metrics? With so much data to measure, many companies aren’t sure how to create the right mix of metrics to accurately plan for future growth.

Dennis Chapman, President and CEO of the Chapman Group, leads a one-day session at SAMA University Chicago (Session #13-Metrics that Measure SAM Program Readiness and Effectiveness), October 19-22 that directly addresses how to use metrics to analyze your SAM program, and the future for you and your clients.

Q - In your session “Metrics that Measure SAM Program Readiness and Effectiveness,” you say that while measuring revenue increase is critical, it is not “predictive.” Could you give some examples of leading rather than lagging indicators?

A — First, one should understand that what most companies do is to forecast the future by looking at what has happened in the past — while the past is important it is only a piece of the whole forecasting process. Companies often determine sales success (effectiveness) during the year by how well they are doing in actual revenue and profit versus targets. While these facts are important, revenue and profit are lagging indicators — they tell us what we have accomplished — not what revenue and profit we will accomplish in the upcoming months.

Now more than ever historical data is presenting a limited insight into the future. Organizations need to be smarter than ever through “predictive analytics”– leading indicators that predict the future and that enable us set to strategy and associated tactics in-action well before a crisis occurs; i.e. a drop in revenue and/or profits. The economy has changed and the way that we forecast needs to change as well.

Leading indicators are measurements of key events and knowledge that are happening in the present day that will directly influence an organization’s success. Some specific examples of leading indicators may include;
-phone conversations and face-to-face meetings with decision makers
-quality proposals presented
-meetings with “C” level players
-rate of acceptance and/or sale of innovative products
-relationship penetration index in a strategic account
-growth rate and value of an opportunity pipeline
-loyalty rating of existing strategic accounts

These metrics predict the future.

Q - Do you find that many companies struggle with finding the right blend of metrics for their business objectives?

A - Absolutely. Adopting predictive analytics requires new thinking, new measurement tools, a re-invention of traditional management focus, refinement of “best practices” and process and investment. Even though many business leaders have known and placed a high value on many of these measurements and metrics they have not always integrated them into their business operations, planning and execution.

There are some companies that have been able to do this successfully on their own and others who have solicited outside experts that help them determine which metrics are important to their business. How to capture and integrate these measurements into their business processes is often a significant challenge. The three biggest challenges that many companies face are:

  • Management acceptance and support
  • Deciding what to measure and how to capture and measure the data
  • Turning this new data (knowledge) into action.

Q - What is the difference between customer satisfaction and customer loyalty, and what can companies measure to help increase both metrics?

A - These two terms are very different and provide two distinctly different knowledge points. Customer satisfaction is a moment-in-time measurement of how a specific interaction is perceived “emotionally” by your customer. A study by Rath & Strong showed that 60 to 80 percent of accounts who defected had declared themselves satisfied or highly satisfied on their last satisfaction survey — what this basically says is that having satisfied customers is no guarantee that customers will remain customers!

Customer loyalty is a deeper content measurement of the “mutual dependency” of the relationship between the customer and the supplier. It is a measurement of key indicators (dependencies) that predict the “staying power” of the overall account relationship. It is most accurate when the knowledge is sourced from multiple contact points high and wide in an account on a more frequent basis; often quarterly from different relationship sources within an account.

We have been able to determine that there are at least seven key dependencies to measure:
Emotional
Structural
Business
Satisfaction
Performance
ROI — Economic Value
Alignment/Fit

Q - It has been said that you cannot impact what you cannot measure. Are there — or does there need to be - metrics for every aspect of my program? If so, how do we go about determining the most crucial ones?

A - Yes, that’s very true — to improve one must measure. The Chapman Group firmly believes that metrics are the key to creating a successful SAM Program. However, you can go to an extreme and try to measure too much in your SAM program; causing you to lose sight of the real issues. Too many metrics can cause too many initiatives (over managing), confusion and may even lead to a lack of focus. The result of over measuring is like trying to eat and digest an elephant in one bite; too much at one time — prioritize - fewer is better!

Remember, the right mix of metrics varies for every company based on their own situation. An organization needs to first identify which key metrics are most important to the success of their program. Measure a few consistently, integrate them into business planning and use the results to create an actionable plan that will enable you to over achieve your business objectives. I Recommend that you always have loyalty as one of the key measurements!

For more tips and insights on metrics, visit Dennis Chapman’s blog