Outcome Centricity: The next frontier for agile organizations (Part X)

Note: This is Part X of the series on Outcome Centricity, focusing on customer outcomes. You'll find the first part of the series here, the second part here, the third part here, the fourth part here, the fifth part here, the sixth part here, the seventh part here, the eigth part here, and the ninth part here.

Over the coming articles I'd like to dig a little deeper into the idea of customer outcomes, specifically customer outcome-based strategy, which is something we've had the opportunity to explore with a variety of clients over the last months. For now, however, I wanted to provide just a brief overview of how I think about customer outcomes, because there's typically a good bit of confusion around that notion.

That said, let's get started - and why don't we kick off this post with a wonderful quote from Fred Reichheld, the inventor of NPS, which was featured in a recent Harvard Business School article (available here):

Today we can establish the business success begins with leaders who embrace a fundamental proposition that their firm's primary purpose is to treat customers with loving care.

That approach begets loyalty, which powers sustainable, profitable growth. It underpins the financial prosperity of great organizations [...]. It's time to [...] recognize that improving the lives of the people we serve is the only way to win.

Now, who wouldn't agree? Alas, and here's the irony: Do you really believe that you actually improve the lives of the people you serve by tracking your NPS score? Of course not. I have yet to meet a single person whose life has improved because she's now more likely to recommend a given company to her peers. Put that way, it almost sounds ludicrous (and, of course, I'm being a bit provocative here).

But if that's the case, why are so many companies so keen on tracking this metric? The answer, of course, is the following: It may give you an indication if your business is on the right track (and the academic literature is much more nuanced on this issue than you might think). What NPS certainly is not - and this is crucial - it is not a metric customers truly care about. It's not a customer-centric metric, even if many businesses seem to believe just that.

With that little prelude, let's take a step back and properly define customer outcomes. To make it clear upfront: It's all about meaningful customer outcomes, about outcomes that actually matter to customers.

Take this brilliant question by Jeff Gothelf, which gives you a good sense of how I think about customer outcomes:

What changes in customer behavior will indicate you have solved a real problem in a way that adds value to your customers?

Meaningful customer outcomes are changes in customer behavior elicited by a product, brand or service which actually matter to your customer.

Let's start with a couple of examples of customer metrics which are typically not particularly meaningful for customers. These are customer metrics we, as the business, would like to see to change in our favor:

1. Brand & funnel metrics (such as consideration, usage etc.)
2. Digital engagement metrics (clicks, logins, likes and so forth)
3. Satisfaction & loyalty metrics (CSAT, NPS and the like)

These and similar metrics might well be an indicator of success, but they typically don't drive success. Some of them are commonly known as vanity metrics. They typically implicate some type of (hypothetical) behavior change on the side of the customer, but they are not meaningful in the sense that they solve a real customer problem. In that sense, they are fake customer outcomes, more often than not implying fake customer centricity.

Meaningful customer outcomes, on the other hand, are customer outcomes that the customer actually cares about; the behavioral change elicited by the product or brand solves some type of problem for him or her. These typically fall into one or more of these categories:

1. Product metrics (e.g. task/job success...)
2. UX and experience metrics (e.g. task time, ease of use, task enjoyment...)
3. Service metrics (e.g. first time right, average waiting time...)

These might well differ depending on the segment and specific journey you're looking at, of course. As I've mentioned in my previous posts, large tech companies such as Netflix and Amazon are extremely focused on measuring and tracking these and similar meaningful customer outcomes.

By way of example, take this wonderful anecdote from the former Lead Product Manager and Head of Growth at Gmail:

“In the next quarter we expect 45% of our users to use the new onboarding flow.” It sounds great—it’s an outcome, it’s measurable—but who actually said that this new onboarding flow is a good thing? [...] A good outcome would be based on what the new onboarding flow would provide to users—would it shorten the onboarding time? Would it increase the success rate of onboarding? Any other benefit?

Using the new onboarding flow per se is meaningless for customers (a typical digital engagement metric). What's meaningful, on the other hand, is if you're solving a real problem in the sense that you're shortening the onboarding time for your customers (a relevant UX metric). That's likely to be a truly meaningful outcome for your customers and drive your business forward.

What do you say - does this make sense? What do you think?

As always, I'd love to hear your thoughts and feedback. And thanks to Robin for your help with this article!