Mahesh Sharma June 04, 2012
Eddie Machaalani, co-founder and CEO, BigCommerce.
Companies are finding new ways to grow profitability by using data analysis software to better measure employee success.
Employers are perpetually puzzled by the question of why some employees are more successful than others, and according to NAB workforce effectiveness manager Stuart Moseley the big-four banks use software to find answers.
NAB used human resources software from SAP-owned SuccessFactors to pull data from human resources systems and from across the business, to analyse the issue in the context of high-level corporate goals.
"We segment the [employee] population," Moseley said during a presentation at the recent SuccessConnect conference. "In this cluster of success, is there something about them making them successful?"
"What is that kernel making them successful, and what is it making the other ones not successful?"
The NAB project found that tenure at the company was a key factor in success, after it segmented the bankers that were/weren't successful and compared this against employee engagement scores, and while it sounds obvious, he said executives can use data to justify their decisions.
"The higher the percentage of people that have less than three years tenure in a team [...] the risk profile of that population starts climbing, which makes sense."
"We need to rotate people around the organisation to make sure there's always someone experienced.
"A lot of this is like telling grandma to suck eggs, but we can quantify this information now."
E-commerce software provider BigCommerce uses data to quantify the contribution employees make to sales, product teams, marketing, and engineering. Co-founder and CEO Eddie Machaalani said metrics ensured individual performance and the company's high-level targets were aligned.
For this BigCommerce has created its own metric - the customer success index (CSI) - to accurately measure the time it takes for customers to start making money from its e-commerce platform, which is tied to the company's mission to drive more revenue for clients and customers.
Over the past two years the CSI has halved, according to Machaalani. On average it now takes 45 days for a customer to make a sale. Machaalani hopes to shorten the sales lead further to a week.
"Every single person has small part of this [key performance indicator] KPI that helps drive the CSI metric," Machalaani said. "If you're in sales you should be working on making people more successful."
The same techniques are being used to identify the most relevant measurement of customer satisfaction.
The 'ultimate question' in customer service, according to Bain and Company fellow Fred Reichheld, is whether a customer would recommend a product or service to a friend or colleague.
He researched companies across a range of industries, and published his findings in Harvard Business Review in 2003, and later in his book The Ultimate Question, to demonstrate how an accurate measure of customer satisfaction would lead to better products and services, and boost the bottom line.
This led to the formulation of the net promoter score (NPS).
'Promoters' (customers that award a score of 9/10) generate good profits and true, sustainable growth, while customers that provide a score between 0 and 6 sully a firm's reputation and readily switch to competitors. These are 'detractors'. The NPS is the percentage of promoters minus the percentage of detractors, a score above zero is said to be good while 50+ is excellent.
The NPS is used by GE, Apple Retail, Allianz, American Express, Westpac Banking Corporation, and Rackspace.
Rackspace targets a NPS of 40, according to Australia managing director Mark Randall, who said the metric is measured by the company's customer relationship management (CRM) system, and is the foundation of the company culture.
"It helps on the revenue side because we get a lot of growth from existing customers," Randall said. "And it reduces our churn. We have very low what we call defection churn, churn to other competitors."