What is a primary reason that nonfinancial measurements are valuable in managing a company?

Nonfinancial measurements are valuable in managing a company primarily because they reveal customer satisfaction levels. Understanding how customers feel about a company's products or services is pivotal to long-term success. High levels of customer satisfaction often correlate with repeat business, customer loyalty, and positive word-of-mouth, all of which can drive revenue growth. Furthermore, insights into customer satisfaction can inform product development, service enhancements, and overall business strategies, allowing companies to adapt to market needs and improve competitive positioning.

While enhancing revenue growth, reducing operational costs, and limiting corporate risk are all important aspects of business management, they often stem from insights gained through nonfinancial metrics. These metrics can guide companies in making informed decisions that indirectly lead to improvements in profitability and risk management. However, the direct connection between nonfinancial measurements and customer satisfaction provides a foundational element for achieving broader business objectives.