Top Down and Bottom Up: Performance Metrics That Count


by Cinda Daly, with Vince McCord and Steve Hultquist


 

RedSeal Networks provides proactive enterprise security management solutions that continually assess and fortify organizations’ cyberdefenses while automating compliance. Its engineers provide global, round-the-clock support, troubleshooting any obstacles to the analysis and improvement of security for some of the largest, most complex networks in the world. RedSeal is experiencing massive growth, and it has lots of data, lots of numbers. Yet, it tracks and reports very little.

Like many support organizations, RedSeal struggles with metrics. “Most of the metrics companies use to manage their teams are based on what they can easily count and control,” says Phil Verghis, CEO of DancingE and The Verghis Group. “These metrics give an indication of their capacity and customer satisfaction, but not how successful they made their customers, their employees, or the company. They propagate the focus on busy work instead of doing the right things.” RedSeal leaders Vince McCord and Steve Hultquist agree. So they’re scrapping what metrics they do have and starting over.


Cinda Daly: What is your customer support philosophy, and what are your goals for customer satisfaction?

Steve Hultquist: I joined RedSeal as an individual contributor, so I have a unique view of how things operated in the past and what’s possible today and in the future. Because of what our product is and who our customers are, we have an opportunity to be a leader in how we support them. Instead of a more typical customer support reaction/response approach, our philosophy is based upon the question, “How do we help our customers become successful?” So, if a customer calls with a question, it’s not uncommon for us to respond with a question because we want to find out why they’re asking that particular question. Perhaps there’s a different way or a better way to get them to their goal. Obviously, we have to do that carefully, but that’s our focus. How do we become success partners for our customers? It’s what I call contagious customer delight. We want our customers to talk to other people about how good we are. We want them to be delighted with the service they get from us and with the way we focus on their success.

Daly: How have you overcome the perception that senior leadership opposes continual improvement programs because of the time and costs involved?

Vince McCord: Steve and Roger Spangler, our manager of customer support, are spearheading this effort to take customer support to a new level. As CFO, my job is to support them. To do that, I’ve got to view technical support the way I view the rest of the company. That is, as leaders, we’ve got to be willing to make investments if we want to see this initiative pay off.

At the most fundamental level, we have to be able to answer one question: what is the true total cost of support for our product? We’ve historically taken a very simplistic (for lack of a better term) approach to cost and margin: maintenance dollars are revenue and we just subtract from that the cost of people and overhead. But we know there’s more to it than that. That’s why I’ll be very interested to see what Roger and Steve come up with.

Hultquist: Ultimately, support’s job is to contribute to the organization’s goals and profitability. Those are the measures that matter for every group, so we need to understand and interlock with the way finance views the financial side of the business. One of the biggest challenges is the long view. We can’t manage support on the basis of quarterly numbers; at the same time, we can’t create a support approach that drags on the business. So, how do we create metrics and measures that will allow us to reach this end goal?

Daly: How have you been measuring your effectiveness in delighting the customer?

Hultquist: Things that are easily measured very rarely get us to what we really want. So what are the things we can measure that can actually get us where we want to go? It’s tempting to focus on responsiveness. It’s not a measure we use, but it is a measure that some customer support engineers (CSE) have internalized and are marching toward. Does this create contagious customer delight? Does it help us understand how the customer defines success? Not usually.

Daly: What steps are you taking to adjust that focus?

Hultquist: We all have to shift our thinking. We’re working on defining measures that help us manage week by week, communicate with our stakeholders, and understand when we’re making progress toward our goal. We have to analyze the measures we do have, first. Our CSEs are very high-level engineers, and what we need to know is, are they overwhelmed? Are they overloaded? Are we giving them enough freedom and enough time to be able to move in the best direction until we get measures in place that give us more clarity?

Daly: Are you meeting your performance targets using your existing metrics?

Hultquist: We haven’t had targets, actually. I moved into this role in the middle of 2012, and my commitment to myself was to observe. I didn’t want to measure the wrong things, and I didn’t want to reward the wrong behaviors. I didn’t want to create habits that would move us in a direction that was counter to what I believe is important. So I asked, “OK, what are we doing? How are people thinking? How can we change their hinking?” The process we plan to follow and the metrics we plan to use will support that shift.

Daly: So, right now, what are your customers saying about your level of support and service?

Hultquist: That’s a question that has some of our executive staff a bit confused. Our customers love our support. They believe that we care, and they recognize that our team is very bright, committed, and knowledgeable. We don’t get complaints that our support has fallen short, but internally we’re concerned about cases that have dragged out or gotten lost. We’re working on our systems to make this happen less frequently, but it’s a challenge. Our cases tend to be open for days or weeks, sometimes even months.

Daly: It sounds like you get very complex questions.

Hultquist: We do, yes, and these complex questions often have complex answers that require engineering changes. One of the measures we’re instituting right now is tracking status requests from customers. That number should be zero. So, any time we get a status request from a customer, it tells me that we’ve failed; either we didn’t successfully communicate an expected response time, or we didn’t keep the commitment we made.

Daly: On the one hand, it sounds like when you hear from your customers, they’re happy; on the other, you’re concerned enough to adopt a completely new approach to measuring effectiveness. What’s driving that decision?

Hultquist: We aren’t really measuring effectiveness today. There’s a temptation to use traditional measures for support, but those traditional measures don’t really fit the kind of support we provide.

McCord: We’re in a bit of a quandary here. It’s the Pareto principle in action, if you will. Twenty percent of our customers are tying up our resources on the technical support side and on the development side, and we’re trying to understand what that really means. These customers are the ones that are probably getting the most use out of our products, so the question is, if every customer rose to that level of utilization, would the number of cases (i.e., customers requiring support) increase? Any measures we can come up with that will help us set expectations and make accurate predictions will be extremely beneficial.

At the same time, we need to be able to explain the cost of supporting those customers. Some of our more mature customers have actually helped us make the product better, pushing the product in directions that many of our customers may eventually go. So we can argue that although they’re expensive, these customers are actually helping us make investment decisions. Unfortunately, there are others customers who, despite being large companies, don’t use our product as often or as extensively. Devoting hours of support time to those customers each week is definitely not profitable.

Daly: It sounds like these changes will result in some real cultural challenges. How do you plan to manage this transition?

Hultquist: It’s absolutely a leadership issue. My view is that it’s my job to serve this team. Give them vision. Equip them. Align accountability, responsibility, and authority so they can do what I’m asking them to do. All of those components roll into leading this team and helping them understand why this initiative is important. It’s really about how we contribute to the overall health of the company moving forward. Customer service and support is an integral component, and my team is responsible for customers. We communicate with them, train them, and support them. We work alongside them as consultants. The whole team is integrated and aligned around these concepts. So the question becomes, how do we measure our success in delivering service and support to our customers?

Daly: Vince, you said you were going to be very interested in seeing what Steve and his team come up with. How are you going to stay involved in the transition?

McCord: I’m very interested in nonfinancial measures, and I’m very happy to see that Steve and his team are focusing on activity-based measures, which give us an indication of our capacity and customer satisfaction, versus outcome-based measures, which tell us how successful we made our customers. But one man’s outcome is another man’s activity (so to speak). In other words, what they might consider activity-based measures, I might consider causal or driving financial measures. Overall, we should be designing for supportability, so any metrics that measure effectiveness should help us make inroads into the development organization.

Daly: Have you started to identify what some of these new metrics are going to be?

Hultquist: We’ve been talking about it, but we’re struggling with translating high-level measures into something the CSEs can understand. Some of the ideas from our senior leadership are measures like product adoption, speed of product deployment, frequency of product use, extent of product use, and the correlation between the product and the business’s core operations. We’re still in the first stage of the process (identifying targets and starting points); the next step will be corporate measures. What are the overall metrics we care about as a company? Then we’ll drill down for each of our groups.

Daly: Those high-level metrics are important, but do you think there will still be a need for more traditional measures (response time,
resolution time, etc.)?

Hultquist: Absolutely. However, those support management measures will be discussed and measured at the management level; they probably won’t be communicated to the support team because I don’t want them thinking about them. You get what you measure, most of the time. I want my team to focus on our customers’ success. How does a given customer define success? What’s going to make customers delighted enough that they’ll go home and tell their spouses? What will turn this into a tweet that says, “Holy smokes! I cannot believe how well these guys took care of me!”? That’s where I want their heads to be.

Daly: Let’s talk about the overall impact on growth, profitability, or retention, all these other big notions you’re striving toward. Do you have specific targets in mind?

Hultquist: The whole focus is on business growth, profitability, and customer retention. Contagious customer delight is about business growth. It’s about word of mouth. It’s about people who stick with us because they know that whatever they bump into, we can help them. But you can’t create delight at the expense of profit. We need a measure that warns us, that keeps us from going so far down the path of delight that we bankrupt the company.

Ultimately, everything we do is about success: our customers’ success and our company’s success. At RedSeal, we have very specific business goals that we use to measure the company’s success; so do our customers. Right now, there’s no connection between customer success and company success, but we’re beginning the process. Can we help the company in a more measurable and direct way? I believe the answer is, “Yes!”

 

For more than twenty-five years, Cinda Daly has managed teams, written dozens of industry articles and thousands of pages of technical documentation, developed training courses, conducted sales and service training, and consulted in the technical support and customer service space. In her current role, as HDI’s director of content, she is responsible for HDI’s virtual events, research, and print and electronic publications.

Tag(s): continual service improvement, security management, metrics and measurements, customer service

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