KPI Target Setting for Customer Complaint

This a great question. Setting goals for KPIs is a widely misunderstood process.
Certain things like safety incidents and Customer Complaints should have a ‘ultimate goal’ of zero but in practice achieving this is a long term effort.
So we need to set ‘realistic’ goals or targets. Too often goals are set by guessing at what might hopefully happen: such as a 10% improvement over last year. However these goals are subject to gamesmanship and rarely help an organization achieve real improvements. Deming stated (paraphrasing) that goals without a means for achieving them are wasteful. Means are what actions what are you going to do, how are you going to do it and who will be doing it.

Let’s remember that the setting of targets or goals are part of a Quality Management System. Emphasis on the management. There are two effective ways to set a truly realistic goal. The first is to look at the Pareto of Customer Complaints and identify which problems can be solved with the resources you have. The goal is then to solve those problems. The second method is to be used if your complaint rate is too high (for customer loyalty or budget reasons). In this case your management identifies what rate is acceptable and then you increase resources in alignment with how many thing need to get corrected in order to meet that goal. Either way it’s about identifying the necessary actions and providing the necessary resources, i.e. managing the process.

I always add statistical control limits about the KPI and track it monthly or weekly - depending on what makes sense. Then we review the actions that th assigned teams are taking to ensure that they are making progress. we meet at least monthly if not more frequently. Again managing the process…

Hope this helps.

 

Customers are always right. Which customer (who functionally? Quality? Purchasing? Materials Control?) is telling you it's unacceptable?

 

I would offer that metrics which focus solely on response/closure time add little value to truly understanding what can come from analyzing customer complaints. Time-based metrics just tell you how fast people work.

While 0 as a target for the number of complaints isn't ideal, possible metrics that can lead to a better story (and better idea of where to drill down on customer complaints) include:

• # of complaints/product shipped (or something that allows you to compare complaints to production)
• $ value of complaints for top 10 customers (it's a subset of data, but it does allow you to see if your bread-and-butter are becoming more unhappy or vocal)
• # of complaints with [insert root cause here] (if the analysis of complaints shows a recurring root cause or set of root causes, these can be the areas to report on)

Setting a target of 10% decrease each month is also not an approach I'd recommend for the following reasons:

• If it's a bunch of little complaints with a bunch of different root causes and with minor customers, you end up focusing energy in areas that may not add value to the bottom-line
• If they have 10 complaints a month equating to $1,000 but then there's a month where they have 8 complaints worth $10,000, if you've set the target based on the number of complaints, congrats, you've hit target, but you've lost $9.000 more dollars (which won't impress senior leadership)

I'm all for SMART targets, but this means one needs to truly understand the data.

 

Exactly so. Excellent post RoxaneB!