Microsoft's New Incentive Plan: Customers Really Do Matter

Microsoft announced this week, as reported on the Financial Times website July 27, 2003, that it's changing its management incentive plan. Microsoft will no longer reward senior managers based on internally driven measurements, but on a series of customer-performance metrics. While this news item has not received much media play, according to Suzanne Baldino Jones and Mark W. Heisler consultants and authors of "From CellMates to SoulMates: Integrating Sales and Service", companies better sit up and take notice.

The corporate-speak is consistent: customers are continually told how important they are to a business. However, few businesses back up that claim and reward employees based on hard-nosed numbers that measure the quality of the customer experience. "Traditional customer-based incentive metrics like new sales orders or productivity-oriented customer service goals don't measure how well or poorly a company handles its customer relationships," says Baldino Jones. "Repeat business, contract renewals, referrals, complaints are true indicators of whether a customer is truly satisfied with a company's product or service," she continues.

Baldino Jones and Heisler predict Microsoft's decision will have profound implications on the relationship between the rest of Corporate America and their customers. "When a company with the market stature of a Microsoft says customer actions and perceptions are critical to our long-term success, other companies will be compelled to follow suit," adds Heisler.

Heisler summarizes things this way, "Any company can try to be more customer-centric by refocusing technology, processes and practices around the customer relationship, but only those firms that reinforce those changes by rewarding employees on key customer performance measurements will succeed." What customers think really does matter now.