People often ask questions, such as, "What kinds of metrics are
most commonly used to measure ROI?" There then follows discussions
on the kinds of measures used, or that shouldn't be used, and
sometimes the conversation goes off track and conflict brakes out.
While people may be happy with the concept of conducting an ROI of
training, they may be less happy with how to do it, just
what measures should be considered? Is there a standard set or is
every organization or training intervention different and therefore
needing its own set of measures?
Each organization and training event is different, and therefore
needs a different set of measures, but the approach to identifying
and employing them is the same.
Consider the following questions:
- If your customers are not kept happy, what could happen to your
organization, and you?
- How do you know (as opposed to assuming) that your
customers are happy? What indicators do you have?
One of the many reasons for training interventions is to improve an
organization's bottom line. And there are two ways to do this:
- Reduce costs.
- Increase income.
There are two other related things that feed into the above
reasons:
- Reduce risks, which feeds into reducing costs.
- Increase competitive advantage, which feeds into increasing
income.
Process Metrics
To achieve reduced costs (and risks) typically requires a focus on
processes, hence the need for process metrics. Is the training
intervention contributing to process improvements?
Process metrics tell you how things are going now, and can help you
spot mistakes and correct them before the customer does.
If training is process focused, it will contribute to improved
bottom line performance by reducing costs. Who or what defines the
process metrics to focus the training objectives on? Simple: the
processes that need to be improved! So even in the same
organization, different metrics may be needed for each
intervention.
Customer-Centered Metrics
To achieve increased income (and competitive advantage) requires a
focus on the customer, and a combination of:
- on-time payments
- payment in full
- repeat business
- new business.
Consider how many of your own customers pay on time, and/or in
full. How many come back, are new and/or make referrals? What do
you not know about your customers' intentions?
If you don't have payment on time or in full, you may have cash
flow issues, which may lead you to employ debt collection and other
recovery services, which adds to your costs. It means resources
that could go into growing the business go elsewhere. On-time
payment also can indicate customer satisfaction and therefore
repeat business or referrals.
Present a great service or product offering and customers will come
back. This secures increased income because there is a need and
value for what is offered.
Customer-centered metrics will tell you about how things are likely
to be in the future. Without them, it's like driving a car by only
looking through the rear-view mirror, you can't see the obstruction
in the road ahead or the terrible wreck that will happen if you
don't take avoiding action. So, are customer-centered metrics
important? Yes!
Without customer-centered metrics, how can you be sure that things
are as good as they need to be in the customer-facing parts of the
organization? How can you be sure without these measures that
training is making a contribution to sustaining the organization?
How can we be sure that training is customer focused? Who or what
defines the customer metrics? The customer does! But how do you
find out what they are? Ask them! It's that simple. When was the
last time your organization really engaged with the customer to
find out what they need and want, instead of presuming to know? Do
you actually know why customers came to you in the first place, or
why they stay?
Customer-centered metrics typically include:
- consistency (of delivery service, pricing, reliability,
promises kept, and so forth)
- quality
- delivery (on time vs. too early or too late, to the right
location, in right packaging, and so forth)
- advertising and promotional material and perceptions meet
reality
- honesty and openness in the relationship, the customer gets
full, accurate, concise information on deliveries, problems,
alternatives, solutions, and so forth.
The next steps are to ask the customer how your organization stacks
up against these customer metrics. For example, on a scale of 1-10
where 1 is awful and 10 is the best possible. Then ask what would
need to happen for them to rate you a 10 in each area. This gives
strong data on where to focus your energies.