Creative Metrification – How to Measure the “Soft” Issues

Some things in business are relatively easy to measure – these are the “hard” metrics such as sales volume and profit, production per man-hour, time without an accident, shipments without error, number of customers served, on-time delivery, etc.  “Soft” metrics such as customer satisfaction, employee engagement and satisfaction, conflict resolution, and are more difficult to quantify, but with a little creativity, measurement can be made of just about anything.

It is a process I call “Creative Metrification” but before I tell you more about it, I have to first issue a disclaimer.  It is important to note that “soft” metrics create approximate numbers, not exact measurements that would satisfy a scientist or an engineer however “soft metrics” are much more precise than a “gut” reaction or a “hunch”.  They work best if you first establish a baseline starting point to use as a basis for comparison and, from that point, new  data will show trends.

As an oversimplified example, let’s say the goal is to increase sales using a strategy of increasing “Customer Satisfaction.”  The logic is that, if we can make our customers happier with our products and services, we will increase sales to returning customers and / or decrease defections – about as “soft” a metric as there is.  Is “Customer Satisfaction” measurable? Yes!  It can be measured by taking a count of non-returning customer per month and / or a count of customers who return within a normal time period (this is dependent upon normal buying cycles of your industry).

We can measure “Customer Satisfaction” by creating a metric I’ll call “Customer Dissatisfaction Rate.” The measurement will be the number of complaints you receive each month.  We also keep track of the reason for complaint (product quality, errors in order picking, late delivery, staff attitude, price, etc.).  From this data we can create a prioritized action plan to eliminate or significantly reduce the number of complaints and therefore the number of dissatisfied customers.  If the action taken to reduce complaints is working, over time the number of complaints, and therefore dissatisfied customers will decrease.  All things being equal, sales revenue should then be increasing.  Other ways of measuring “Customer Satisfaction” are the number of referrals, responses to telephone or mail surveys, returning customers (and perhaps time between sales to returning customers also).

Is this an exact process?  No, but the final measurement is whether improvement is being made and the only way to measure improvement is by using Creative Metrification.

Question or comment to Larry:  larry@larrygaller.com