Balanced Scorecard: Customer Perspective the Balanced Scorecard

Balanced Scorecard: Customer Perspective

The balanced scorecard (BSC) developed by Robert Kaplan and David Norton is "one of the most highly touted management tools today" (Gumbus, A. & Lussier, R. 2006), and is used extensively by Fortune 1000 companies to "set strategy and align operations to achieve breakthrough results" (Gumbus, A. & Lussier, R. 2006). Is the balanced scorecard a tool only for the multinational or conglomerate firm? Increasingly no, as small to mid-sized firms are embracing BSC as an effective "strategic planning and measurement system" (Balanced Scorecard Institute) which allows for organic growth, greater profitability, "innovation, and outstanding customer service" (Niven, P.N.D.). An analysis of three firms: Hyde Park Electronics, Futura Industries, and Southern Gardens Citrus demonstrate the positive impact of the BSC for small to mid- size entities.

The balanced scorecard was designed with the understanding that "financial measures alone were not sufficient to measure performance" (Gumbus, A. & Lussier, R. 2006). Kaplan and Norton devised a framework which utilized four perspectives: financial, customer, internal process, and learning and growth. In analyzing the above mentioned three firms, the focus will be on the customer perspective and its application to a successful BSC implementation.

The customer perspective originates from the question of "how must we be viewed in the eyes of our consumers" (Gumbus, A. & Lussier, R. 2006). Breaking that proposition down further, companies must determine who their customers are, what do these customers expect from us, and what value is provided to them (Niven, P.N.D.).

For Hyde Electronics "the management team felt that measures of customer satisfaction are increased sales and increased income that would result from product acceptance and the generation of repeat customers" (Gumbus, A. & Lussier, R. 2006). Revenue and income metrics tied in well with the financial perspective "because the company was strong in this area and had a great number of controls in place" (Gumbus, A. & Lussier, R. 2006). In addition, Hyde's management team looked to product shipment dates and warranty returns as crucial customer satisfaction metrics. These indicators are directly tied to Hyde's profit sharing plan: "operating profit target 15%; cumulative warranty return 1.7%; and delivery on time target 90%" (Gumbus, A. & Lussier, R. 2006).

Futura Industries customer perspective flows from the "basic question, how do you give good customer service" (Gumbus, A. & Lussier, R. 2006). The answer was four metrics: customer satisfaction, customer hassle index, on-time delivery, and lead times (Gumbus, A. & Lussier, R. 2006). The measurement system utilizes a customer satisfaction survey which asks respondents a series of questions on quality, delivery, and value of Futura's product. Futura scored 8.92 on their survey on a 1-10 scale (Gumbus, A. & Lussier, R. 2006).