Perspectives

CEO: Is our strategy delivering the right customer and financial results?

At the 100,000-foot level, Collaborative for CUBES™ provides guidance to the CEO, who is most concerned about the success of his or her company’s overall strategy. Success is measured based on a diverse set of financial and non-financial outcomes, each closely related to overall customer satisfaction. Collaborative for CUBES rigorously measures and quantifies these strategy outcomes to provide a benchmarking platform across peers, within divisions, and over time.

 

The experience of companies in multiple industries has shown an exclusive focus on financial metrics can be misleading. CEOs may be tempted to achieve short-term financial results at the expense of long-term, forward-looking metrics that help build a high-quality customer base. But a customer-based strategy, the cornerstone of Collaborative for CUBES, allows firms to prosper in the long run because of highly satisfied customers, which further improve the quality of the firm’s client base through the “customer-satisfaction effect.”

 

Non-financial metrics, based on customer loyalty metrics, which are robust predictors of financial outcomes, provide a CEO with a strong sense of his or her company’s customer-base health. Collaborative for CUBES uses a set of forward looking, academically rigorous loyalty metrics offering high predictive validity with respect to financial metrics, including: rate of supplier reuse for new jobs, recommendation rate, positive word-of-mouth activities, and pricing power.

 

Financial metrics are also critical, as CEOs are ultimately held accountable for financial results, which may include top-line metrics (sales, revenues), bottom line metrics (margins, EBITDA), or metrics associated with firm value (stock returns).

 

When a firm has a coherent and aligned customer-based strategy, its financial and non-financial metrics operate in tandem. Collaborative for CUBES features a built-in mechanism to clearly quantify how financial and non-financial metrics are aligned.

 

Collaborative for CUBES explicitly recognizes successful strategy is based on satisfying customer needs. Satisfied customers reward firms with repurchase, recommendations, pricing power, and positive-word-of mouth activities. These translate into higher sales, revenues, margins, and EBITDA. By providing a concrete quantification of the association of financial and non-financial metrics, Collaborative for CUBES provides CEOs with a ready platform for comprehensively assessing their desired outcomes.

 

Insights
Busting the Value Trap
Collaborative for CUBES Shows How B2B Companies Can Increase Sales
Collaborative for CUBES™
Collaborative for Customer-Based Execution and Strategy

Features
Data Suggests Customer Satisfaction the Only Road Back for Staples

Even as Staples announced the closure of 70 stores on March 9 – those on the heels of 48 store closures in 2016 and 242 in previous years – CEO Shira Goodman said she had reason for optimism.

 

“I am particularly proud of our ability to grow our delivery business by continuing to enhance our offering and satisfy our business customers,” she said in a meeting with investors.