The purpose of any business is to provide goods or services to customers, and generate profit. As a consequence, it is crucial to take an approach that puts well being of customers as important as prosperity of internal stakeholders like employees and shareholders. Introduced by Dr. Robert Kaplan and Dr. David Norton in 1992, the business scorecard uses four pillars: Financial, Customer, Business Process and Learning and Growth. These four pillars are interlinked for the well being of any business entity. The strength of Balanced Scorecard is its forward-looking approach (Kaplan, 2005). Gumbus and Lussier define balanced scorecard as a tool to translate strategy into performance measures. It is a technique that enables an enterprise to clarify its vision and strategy and translate them into action. It, also, needs constant feedback to improve results. In this article, our focus would be on the customer perspective.
The customer perspective makes sure, that an organization is not only supplying goods or services, but also recording high rate of customer satisfaction. Customer satisfaction is measured through various means, such as report cards, customer surveys, etc. The idea is that, if satisfaction level is low after availing current products/services, then existing customers may not remain with the company in the near future. Gaining newer leads and customers would be still difficult. While traditional tools, such as Profit and Loss Account, take note of progress from historical perspective, balanced scorecard enables a firm to prepare it for the future.
Andra Gumbus and Robert Lussier in their article ‘Entrepreneurs Use a Balanced Scorecard To Translate Strategy into Performance Measures’ proves, that this method is, also, very effective for small businesses. According to their survey, although around 50% of the 1000 large Fortune companies have implemented balanced scorecard approach into their system, the use of this technique in Small and Medium Enterprises (SME) is very low. A case study of how Hyde Park Electronics, Futura Industries and Southern Gardens Citrus implemented balanced scorecard and achieved breakthrough results is made.
Under the case study, the three companies have the similar aim of achieving good customer service. On-time delivery is an important parameter for all the three companies. However, apart from this, each of the three companies has different parameters for judging customer satisfaction. For Hyde Park Electronics, measuring good customer service is significantly through keeping an eye on whether they are increasing their current sale and current revenue. For Futura Industries, key indicators are customer satisfaction, customer hassle index and lead times. For Southern Gardens Citrus (SGC), loading cycle time and customer service are significant parameters as part of their customer perspective (Niven, N.D.).
Although, objective of all the three companies is to achieve good customer service, I believe, that Hyde Park failed to take forward-looking approach under customer category, which is the hallmark of balanced scorecard approach. Customers do not care, if the sale of a particular product or service is increasing. For them, their own satisfaction is most important. As a consequence, one may get a wrong impression and misjudge future, based on the idea, that increasing sales mean satisfied customers. A company may have increased sale for other reasons, like momentary lack of competitors, strike in another prominent supplier factory, etc. Hyde Park uses World Wide Web to track online orders and effects of direct mail marketing. I believe that, if Hyde Park invested on encouraging their customers to give a feedback or carried out Internet surveys, it would have helped them more. Inquiring perception of customers, like ease of ordering and paying that better measure customer satisfaction is not in place.
Futura and SGC both more truly incorporate customer perspective as per balanced scorecard approach. It is important for them, how their consumers view them. Futura has customer surveys that are done monthly and personally. This is important to signal customers that Futura really cares for them.
I believe that all the three companies understood that each of the four perspectives under balanced scorecard operates in an integrated way. For instance, each of the three companies realized how satisfied employees would help in achieving satisfied customers, which in turn would reflect in better internal business and financial numbers.
Paul Niven in his article ‘Customer Perspective,’ stresses the importance of incorporating customer perspective in balanced scorecard approach faithfully. This is even more relevant today, when customers have more choices and it is increasingly challenging to keep the loyalty of customers intact (Niven, N.D.). This is far different from around 50 or 100 years, when there were few producers and consumers had limited choices. Today, monopoly or duopoly is rare. Intense competition, because of increased globalization and newer channels like internet marketing, makes it imperative that the interest of customers has been taken into account thoughtfully. Although, all the three companies incorporated customer perspective, Hyde Park should have introduced some form of surveys and been more interactive with their customers, especially on the World Wide Web. Also, other pointers, such as proportion of sold goods, returned could, also, be easily incorporated under existing resources, while judging the level of customer satisfaction.