Balanced Scorecards (BSC) Are Designed to Provide

Balanced Scorecards (BSC) are designed to provide insights into which customer-centric strategies are the most profitable and scalable over the long-term (Glykas, Valiris, 2011). Often customer-centric measures of satisfaction, sales and repurchase rates hide the real issues of customer profitability, lifetime customer value and cost to serve the most loyal customers (Kaplan, 2005). A balanced scorecard must take into account the entire value chain of a business if it is going to be successful and capture those most profitability activities first, not just seek to gain customers' satisfaction levels alone (Jayashree, Hussain, 2011).

The measurements as defined by Niven are not customer-centric, they are centered on how companies connect with their prospects and customers. There is a major difference in truly customer-centric measures of performance and those that seek to measure the value of the messaging produced. Niven is speaking of unique value propositions (UVP) that are unquantifiable by nature, and they are not customer-centric. Organizations strive to make their UVPs very customer-focused, yet often they only convey part of the message.

A more effective series of metrics is defined by Kaplan, specifically evaluating the metrics that capture lifetime customer value and the costs to serve them, are more complete and thorough in their approach (Kaplan, 2005). Kaplan contends that using metrics to evaluate how product line extensions including build-to-order and mass customization strategies can more effectively meet needs is critically important as well. There is also the dimension of cycle times for customers and their expectations relative to what a company can deliver. Merely choosing metrics for a balanced scorecard that measure customer satisfaction by the pure efficiency of a business is very misleading and can over time lead to unprofitable decisions (Jayashree, Hussain, 2011).

What is needed are more effective metrics that capture how cycle times can be created that allow for more flexibility in creating customer satisfaction (Glykas, Valiris, 2011). Balanced scorecards that provide for an element of agility and focus on the customer as they change, not just how they are today, is essential for any business to keep moving forward. The Niven examples are one-dimensional in this regard; they only capture customer satisfaction, not the expense of serving them or the long-term view of how they will change. The Kaplan analysis of metrics and key performance indicators (KPIs) are in the right framework of how to evaluate strategies based on the costs to a business while at the same time balanced customer satisfaction. In seeking to make a more effective and reliable link between customer satisfaction, relationships and sales, balance d scorecards can deliver greater insights than many accounting systems, even with advanced financial analysis being used (Glykas, Valiris, 2011). The use of activity-based costing (ABC) to track the true costs of a given customer strategy or program also needs to be balanced with pricing and other measurable marketing variables as well (Jayashree, Hussain, 2011). The measuring of profitability and the steps taken in customer-centric strategies to achieve it far outweigh any of the qualitative research of customer satisfaction. As Kaplan explains that while companies will literally jump as high as their customers ask them to, the question of whether a given strategy or series of actions is profitable or not is an entirely different discussion in their planning and implementation sessions (Kaplan, 2005). Kaplan ends his discussion at a point that could be considered tactical, with a clear delineation needed of what the strategic implications are of a balanced scorecard approach to managing customer relationships. Instead of just focusing on short-term results, the lifetime value of a customer needs to also be taken into account, a point that is only alluded to in other studies (Glykas, Valiris, 2011)