Analytical Approach towards the relationship between Project Management and Company Performance

Abstract

The report has identified that Customer Satisfaction Score, Net Promoter Score and Customer Effort Score are the current industry standards used for measuring company performance from the customer satisfaction perspective. Amazon, United Health Group and US Group have been measuring customer value using Net Promoter Score after implementing the Agile software development method. The research has showed that a transition from Waterfall to Agile has helped a company like Amazon to be more successful.  The research concluded by showing that implementation of project management methodologies could reduce speed to market time and improve quality; it could have a direct impact on the company’s performance.

I. Introduction

Key performance indicators (KPI) help in understanding and evaluating the performance of departments in a company and also the company itself. KPI’s should be used to understand if the department or a company is on the correct path to success, it should be well defined and applicable to the department or the company. For example, a manufacturing firm would use percentage of product defect as their KPI instead of day sales outstanding (DSO) which would be used by a marketing/sales firm. There are financial metrics like profit, cost and cost of goods sold, customer metrics like customer acquisition cost (CAC), customer satisfaction score (CSAT), customer effort score (CES) and net promoter score (NPS), process metrics like efficiency and percentage of product defects and people metrics like employee satisfaction and employee turnover rate (ETR). In the report we will analyze the relationship between the company performance and their implemented project management ideologies from a customer metrics perspective.

II. Performance Benchmarks

Each organization knows that they should be measuring customer satisfaction, but there are so many types of surveys that make selecting one to send out to the customers a difficult task. Listed below are the performance benchmarks currently utilized for measuring company performance from the customer satisfaction perspective.

1. Customer Satisfaction Score (CSAT): The service industry bases the performance of their company mostly by customer reviews or customer satisfaction. There are numerous techniques or rather metrics that companies utilize. It is one of the most straightforward customer satisfaction survey methodologies, which measures satisfaction with a business, purchase or interaction. It is fairly simple with asking customers for their views on matters that indicate how well or how badly the company is performing. A question could be “How satisfied were you with your experience?” And a corresponding survey scale, which can be 1 – 3, 1 – 5, or 1 – 10. Or “How would you describe your overall satisfaction with this product?”

Measurement: The answers are then quantified and expressed as a percentage between 0 and 100%. Higher percentage indicates that your customers are highly satisfied.

One of the top benefits of this survey is that the company can collect customer’s current thoughts on various aspects of the business, be it the value of the products, the quality of company’s customer service. It helps in gaining insight into how the customer is currently feeling about the company. It also allows company to ask variety of customizable survey questions so that company can explore different strengths and weaknesses to focus on finding the best possible ways to meet customers’ needs. This survey makes it nearly effortless for the customers to respond onto their experience with the products or services on a consistent basis.

80% of the companies in the service industry utilize customer satisfaction score as a metric to evaluate customer satisfaction and customer experience. The need for such metrics arises from the fact that companies are under the impression that there is a direct relation between customer satisfaction and customer loyalty.

2. Net Promoter Score (NPS): Fred Reichheld developed a metric which would allow a company to calculate customer loyalty and prospective company growth, the scores provided to customers is on a 0-10 scale but NPS is calculated as a percentage. NPS helps in understanding how likely a customer is to recommending a product or a business to another person. The customers get categorized into three groups.