For Bluefly CEO & Founder Ken Seiff there are three problems with traditional retail success metrics such as order size, gross margins, and fill rates:

Problem #1. They're retrospective and thus limited in terms of predicting future success and guiding improvements.

Problem #2. There are so many metrics that it's difficult to draw out a focus for concerted action.

Problem #3. Many employees don't readily identify with these metrics, since their efforts have little immediate impact on them.

So what Bluefly wanted was an alternative that unifies these metrics in one measure, allows all employees to work toward a clear goal and which correlates with likely future profitability.

The answer: customer satisfaction.

But since every retailer claims customer satisfaction as a goal, just how does the Bluefly approach differ? Here's what Seiff told us.

Tactic #1. A different mindset

The customer experience drives satisfaction. But Seiff argues that businesses focus on too narrow a definition of this customer experience; one based on customer interactions with, for example, a website's services and features.

But that's a company perspective and not a customer one.

Seiff explains, "Our customers were writing us letters that were speaking about experience using a different vocabulary. We got letters like 'thank you for making me feel pretty today'. And what we were thinking about was how good is our search, how fast is our site, and how fast do we get the orders out the door."

"It became clear that our customer was measuring us against a very different set of standards. We needed to build an organization that was single-mindedly focused on creating the experience which we were being measured by."

Tactic #2. Understanding the basics

To do that, you need an understanding of the customer experience from both a practical and theoretical perspective.

Seiff says two things are required for a customer to connect with a business in the positive emotional way that underpins maximum satisfaction. "The nuts and bolts of the business need to be working frictionlessly, and the business needs to be talking to the customer in a way that connects at not just a utilitarian level, but at a deeply psychological level."

How?

Seiff explains, "You aren't creating an 'experience' if it's not fundamentally different from what everyone else is doing."

But that doesn't mean drastic changes are required - it means paying attention to all the areas of the business where you can enhance the customer experience by doing something unexpected or surprising.

"Customers get jaded because there's so much commodity to the shopping or buying experience in the world today. When you can find tens or even hundreds of ways to distinguish yourself you wake the customer up."

An example: Third party credit card statements (like VISA) don't say "Bluefly, Inc." and the charge amount. Instead, they say, "Bluefly.com thanks you" and the charge amount.

Another example: The packing tape on Bluefly boxes reads, "Sealed for fashion freshness."

"It really doesn't cost any more to do that, but it does help distinguish the experience because it tells the customer that a company that cares about their packing tape must also care about their product, and must also care about their customer. These are the kinds of little things that can contribute -- if done in large numbers -- to creating a very strong brand and an extremely strong relationship and bond with the customer."

Tactic #3. Understanding the challenges

But that's not all there is to it. For example...

-- The customer response to the experience is not linear. The real rewards only come when your experience is much better than everyone else's.

Seiff notes, "Customers only talk about the businesses that are superlative. So there is a critical threshold which says 'be great and you build the bond. Be good and customers will shop with you until they find someone who's great' - or simply just more convenient."

-- The components of the experience that drive satisfaction are not the same for each customer. Seiff says, "There's no one part of the experience that all of our customers say, 'that's what makes it for me at Bluefly'. So it's really important to get all the big and small parts to be great."

-- Improved experiences raise customer expectations. "What was extraordinary and unexpected at the beginning becomes common over time ... you actually work against yourself because the customers expect more, and what it takes to impress them becomes progressively more and more difficult."

The Bluefly answer to these issues? Create a working environment that encourages enhancements across every element of the customer experience and ongoing innovation: a cultural revolution.

Tactic #4. Changing the culture

Seiff notes that a reorientation toward the customer experience is easier than you might think. Non-executive employees in particular relate better to the customer experience as a priority, rather than to (for them) abstract numerical metrics. You release their desire to contribute by giving them a more relevant goal.

"You get to sit with your team and say, 'tell me today how you're going to improve what we do to excite or entertain the customer more tomorrow.' And everybody can contribute on that level."

Some of the changes Bluefly introduced or are working on are...

-- New recruitment and training criteria. Seiff says, "It starts with the people. We are spending an enormous amount of time defining the kinds of people who we want to work in this company; what it is about how they think and how they think about the customer that's meaningful to us."

-- Reorienting weekly management team meetings so the main focus is on what's being done to improve the customer experience.

-- Performance and payment incentives, as well as employee of the month awards, will reflect the success of an employee in improving the customer experience.

Tactic #5. Encouraging customer and employee input

But where does the actual inspiration for customer experience enhancements come from? Seiff says there are three main sources...

-- Customer satisfaction surveys

Bluefly uses an online customer satisfaction survey tool to measure customer satisfaction (baseline and changes through time) and to understand what parts of the experience are most important to customers. The company analyzes and discusses the results on a monthly basis.

-- Customer feedback

Seiff says that satisfaction surveys, "give you areas to focus on but they don't necessarily tell you what activities to undertake." Direct customer feedback, however, often includes practical suggestions. So every two weeks, customer service distributes a summary of customer ideas and issues.

-- Employees

Employees have the knowledge to come up with customer experience innovations and enhancements, if given the right tools, resources and culture.

So the customer experience priority is a major part of staff training and management-employee interaction. Bluefly's also creating an internal customer experience group with the expertise and resources to help shepherd any improvement through the organization.

Any employee can recommend a project to the group that improves the customer or employee experience; "Because happy employees create a happier customer experience."

Seiff notes that... "when you create a culture where everyone is focused on the experience, you get employees who don't accept a poor experience. And when that happens ... the passion is so great to fix it, improve it or build it for the customer that the experience gets raised to a new level."

Though Bluefly's transformation is still in its infancy, Seiff's already seeing positive results come out. He says, "Our business has never been stronger."

Note: Bluefly is a member of Shop.org, a forum for retailing online executives to share information, lessons-learned, new perspectives, insights and intelligence. More info at http://www.shop.org