Is it possible to care too much about your customers? It’s a debate that’s been ignited by the recent, pre-pandemic controversy over Away CEO Stephanie Korey’s hardball treatment of employees who were struggling to keep up with customer inquiries.
Korey quit the direct-to-consumer luggage company valued at over $1 billion after tech news site The Verge published an article in which former employees described a “toxic work environment.” It revealed Slack messages in which Korey criticized her stretched customer-care team for falling behind in responding to customer emails and pressured them to work longer and later hours, including through holidays.
Weeks after apologizing for her management style and stepping down, Korey decided to take her job back with the support of the board. It was a decision that won plaudits from some, who felt that she’d been unfairly maligned and had actually been right as CEO to put a laser focus on customer satisfaction.
It may be easy to put off what happened to Korey as something that doesn’t apply to the Covid-19-obsessed world we currently occupy. But to me, the controversy highlights two things, which are as fundamental now as they’ve ever been: 1) how important it’s become for businesses to identify leading indicators; and 2) how hard it can be to find the right ones.
The basic idea behind leading indicators is to measure and target things that affect the quality of your service or product. Whereas traditional metrics like profit margins and operating costs look backwards, leading indicators tell you where the business is heading. Or, at least, how you’re doing right now.
Customer experience metrics, such as net promoter scores and satisfaction scores, can be among the more powerful leading indicators because they have a strong link to future growth and profits. But that doesn’t mean they are always the best or only leading indicators that businesses should use to measure themselves.
In Korey’s case, she was trying to do the right thing by putting customer experience on a pedestal, especially since the direct-to-consumer model depends so much on having a strong bond with customers. But in doing so, she appears to have missed the fact that her customers were effectively her employees, and that keeping them happy and motivated was a crucial part of the overall client satisfaction puzzle.
This is only the most recent and vivid example of companies getting it spectacularly right or wrong on leading indicators.
In the 1990s, Continental Airlines saved itself from oblivion by focusing on a few key metrics, including on time arrival, lost luggage rates and improving customer satisfaction. At the same time, its rivals were focused on squeezing more passengers into planes to boost their price per seat. By the end of the decade, Continental was thriving and topped customer satisfaction rates nationally.
A more recent example is Zappos under CEO Tony Hsieh, who has described his firm as a “customer-service company that happens to sell shoes.” Hence why Zappos actually incentivizes his employees to spend a long time on the phone with customers. Length of calls for customer service was a metric everyone in the industry happened to measure, it’s just that Hsieh and Zappos decided to reward what everyone else was punishing: lengthy calls that strengthened bonds with customers by actually solving their problems.
Yet it’s easy to get this wrong, even with good intentions. One auto dealership I know announced a “one hour” promise to customers, with the laudable aim of addressing people’s frustration over how long it takes to buy a car. Unfortunately, the dealership’s promise only referred to the paperwork time, whereas customers assumed it meant one hour for the whole car-buying process, leading to a lot of dissatisfied clients.
At least Korey and the auto dealership had the right instincts. Many CEOs are still chasing the wrong things, caught up in what I call “urgency addiction.” Their focus is on winning the day or the week, rather than the year and those to come. This leads them to become myopic, focusing on sales and margin metrics to the exclusion of much more revealing data.
It’s genuinely hard to resist the tyranny of urgency. Even in my own work, I find it can be hard to tune out the daily noise and pressure for constant updates on performance. That’s even more true in a moment when, on top of regular demands, leaders are now facing a very uncertain future.
It’s something I see a lot in the healthcare sector, though it’s just as prevalent in other industries. Hospitals tend to be good at measuring the efficiency of their workers and other operating metrics. But it’s rarer for them to use data that’s more relevant to quality, such as readmission rates, wait times, and hospital infection rates.
My fear is that the pull toward urgency addiction is only getting stronger as CEOs get more access to real-time performance data. Being able to see web sales in real time, for example, may seem like a big insight, but really you’re just staring at a number that’s already in the past and out of your control.
Real-time data certainly has value, especially in alerting companies to outages that can have a big impact on customer satisfaction. But a lot of it is just noise that risks distracting CEOs from strategic decision-making and from measuring the things that really predict future success—whatever those might be.