Decision Equity

Chapter 9

A Best Practice Approach to Linkage Analysis

A Framework for Conducting Linkage Analysis

The prospect of linking metrics across functional areas is an exciting but challenging exercise. Hasty or analytically weak decisions can unfortunately lead to severe adverse consequences. For instance, a bank that reduces the number of tellers in its branches as a cost cutting measure will likely experience erosion of customer loyalty because of increased waiting time at the branches. In the short term, however, despite eroding customer loyalty, profits might go up, largely because of the cost reduction measures undertaken by the bank. The link between customer loyalty and the financial performance of the firm might thus seem negative in the short ...