“Customer Experience….. Mapping and Measuring”

1. “Customer Experience….. Mapping and Measuring” Prepared for CCA Seminar 27th October 2005

2. Retention Through Experience • As the cost of acquiring customers rises organisations are investing in retention Index of Costs Retention 100 Winback 140 Acquisition 240 [source QCI/WPP customer management research 2003] • Key Retention Drivers • Brand Traditional Marketing • Proposition Elements Experience • Contact Service • Customer Lifecycles suggest increasing customer interactions/contacts and more demanding customers • National Consumer Council reported an increase in complaints from consumers in 2003 of 24% over the past 5 years © Marketing Inside Ltd 2004

3. Service Impact • Customer Experience through contact influences customer’s perception of the brand and is a key component of brand loyalty and can often override traditional/other marketing communication, for example recent outsourcing of customer service…… • Indian Call Centres “you can’t subcontract your relationships with customers” – Richard Pym CEO Alliance & Leicester • Customer Experience Impacts on Retention “A Good Experience is based on strong relationships between dialogue, satisfaction and these drive customer retention” – Maggie Evans marketing director iSKY Europe • The Customer’s experience is an area where the successful businesses are very good in this respect…and the not so successful are very poor (First Direct Vs PC World) © Marketing Inside Ltd 2004

4. Most companies have fundamental gaps in their customer lifecycle model In more than 90% of companies, Staff who are responsible for talking to customers could not articulate why customers should buy from them Although 52% look at the quantity of customers acquired, only 8% look at the quality of customers acquired. Only 2% have regular winback programmes 63% do not know how many high value customers they lose 47% do not have any sales lead distribution agreements 30% follow-up a complaint to check on satisfactory resolution Only 35% bother to thank new customers Only 13% of senior management have regular contact with customers Only 4% of companies have an enterprise-wide customer information plan 11% drive contact strategies via a database In most markets, just 1% of customers are worth about 30% of total margin, but 58% do not have any special development plans for these key customers 41% do not record customer contact channel preferences, let alone contact customers through their preferred medium. Source: QCI/WPP Customer Management Research project 2003 © Marketing Inside Ltd 2004

5. Measurement and Improvement • Key question is how do you know if you’re delivering a good experience (customer satisfaction scores?) and how do you know where to improve? • Organisations tend to measure Experience by measuring Customer Satisfaction • Only measures single activity in isolation • Ignores the context • Organisations therefore traditionally tend to look for improvement in this area in one of two ways • Significant investment in CRM IT systems (EdF; ESB; Britannic) • Re-engineer their customer service processes (ESB; National Express) © Marketing Inside Ltd 2004

6. Customer Experience Influencing Components • Is there delivery of a consistent experience Brand Values • Touchpoints – customers can interact with a company in increasing ways and how do they impact cost? Some channels are more expensive than others • Organisational Priority – which experiences are more important than others and what is the organisational driver? • Segmentation? • Revenue? • Cost? (activity based) © Marketing Inside Ltd 2004

7. Customer Experience Steps Step I • Define Experience Priorities • opportunities (e.g. high value customer segments) • high impact/risk (e.g. sales and processing for new customers) • Understand/Define Brand Values • Agree Customer Touchpoints • Map Customer Experience at Touchpoints using model • Identify poor experience areas and examine Cost Benefit at those points Step II • Look for quick wins (non System/IT) Step III • Improvements • Implement Plans to improve and measure effect using model • Use QCI Cmat Benchmarking to develop long term KPI’s and monitor © Marketing Inside Ltd 2004

8. Customer Experience Approach • Developed simple tool • Map Touch Points which generate “The Experience” • Attach values to Touch Points “Experience Score” • Weight these values by importance the customer places on a given part of the experience • 2 part approach • Map and Measure experience with front line staff who represent Touchpoints (internally) • Map and Measure experience with customers who have recently passed through experience • Workshop approach taken internally for staff and quantitive research (telephone/interview) for customers © Marketing Inside Ltd 2004

9. An Example – Electricity Company

10. Background • This company is approaching a fully competitive electricity market in 2005 (some business customers can choose supplier currently) • As the monopoly supplier overt retention in the short term is not possible, but building a strong position for the future is recognised as important • Segmentation has identified valuable customers which are desirable to retain and Customer Experience was recognised as a key driver • CRM is so large a subject that many people didn’t know where to start in terms of Customer Experience and we discovered there was no simple tool to measure Customer Experience © Marketing Inside Ltd 2004

11. Background • A new approach was required • There were a number of projects in customer services amending processes and systems and a significant investment by IT in CRM systems (SAP with a CRM module) • BUT Process work was almost ad hoc (aimed at fixing broken processes) and Implementation of SAP is problematical • Key Question - how to leverage longer term benefits from investment in Customer Experience to drive better Retention? • Operational Business was charged with delivering these benefits • Marketing (scope possibilities) • Customer Services; Retail Shops; Metering (delivery and change management) © Marketing Inside Ltd 2004

12. Customer Experience Steps • Agreed Brand Values • “brand iceberg” • reflected in brand(s) • Agree Customer Touchpoints and the brand values to be communicated at those points • Define Experience Priorities • high impact/risk (e.g. billing and processing) • opportunities (e.g. home movers)  chose this one • Map Customer Experience (for home movers) using model • Internally (own front line staff) • Externally (customers who have recently experienced) • Identify poor experience areas • Look for quick wins (non IT) • Implement Plans to improve and measure effect using model © Marketing Inside Ltd 2004

13. Customer Experience - Measurement • Objective was to examine the end to end experience for residential home movers and called it “Crate Expectations” • Used simple tool • Attaches values to customer experience “Experience Score” • Weights these values by importance the customer places on each aspect of the experience relative to each other • 2 part approach • Map experience with front line call centre staff (internally) • Map experience with customers who had recently passed through home moving (externally) • Workshop approach taken internally for staff and quantitive research (telephone) for customers © Marketing Inside Ltd 2004

14. Home Movers“Crate Expectations” • Objective: review and improve the residential customer experience for home movers setting a platform for retention and in the longer term winning opportunities to acquire customers (once the market opens) • 180,000 moves each year (400,000 inbound calls) • Reducing calls by 20% reduces cost by €30k • Losses predicted at 20% Year 1 = 36,000. Reduced losses to 10% = 18,000. Estimated incremental enterprise value (retention:18k customers at €40 = €720k) • 3 customer experience scenarios identified e.g. existing customer moving to existing supplied property © Marketing Inside Ltd 2004

15. Home Movers Experience – staff view © Marketing Inside Ltd 2004

16. Home Movers Experience – customer view © Marketing Inside Ltd 2004

17. Home Movers Experience – compared © Marketing Inside Ltd 2004

18. “Crate Expectations” - Conclusions • Customer perception of experience different to staff view • Internal process not being followed, so experience being mapped is on different basis • Improvements required are centred on communications (support material and calls and are largely not IT related) • 4 Quick Wins (not IT dependant) • Call backs in all scenarios and by same CSA • Create check list for the CSA's to use during the calls e.g. prompt • Home Movers Pack/Booklet (tips;do’s and don’ts;contact numbers) and Welcome letter re-write • Training for Customer Services • E.g. Set expectations on when welcome letter will arrive © Marketing Inside Ltd 2004

19. “Crate Expectations”– early implementation • Call Backs by CSA’s • 18% of all inbound calling in contact centres related to home moving • In first 3 months of implementation calls reduced by 30% (stable state = 12% of all inbound calls now relate to home movers). Estimated cost reduction €48k • Customer Service Training • Total Customer Experience Weighted Score (average) moved from -2.01 to -1.8 • Customer Satisfaction • Re-visited customer satisfaction tracking and re-aligned/added some questions to track this activity/experience © Marketing Inside Ltd 2004

20. An Example – Life Assurance(early work)

21. Background • A portfolio of mainly Life Assurance customers in excess of 1 million • As acquisition ceased almost 3 yrs ago, this base is slowly being eroded • Retention has taken on a new importance • Policies are purchased and then forgotten with little contact with the customer and little cross sell/up sell • Main contact during the life of the policy is with the contact centre with requests for surrender values © Marketing Inside Ltd 2004

22. Customer Experience Steps • Agree Customer Touchpoints • Define Experience Priorities • Surrender queries (active customers) • Aimed at maximum retention (winback of sorts) • Map Customer Experience (for priorities) using model • Internally (own front line staff) – completed as a test • Externally (customers who have experienced) – not yet started • Identify poor experience areas • Look for quick wins (non IT) • Implement Plans to improve and measure effect using model © Marketing Inside Ltd 2004

23. Surrender Enquiries– a priority • Objective: improve the customer experience for surrender queries increasing retention • Current attrition is 5% p.a. • Estimated incremental enterprise value (retention: x customers at £y =£) • Map customer Experience both internally and externally • 3 customer scenarios identified e.g. have received an annual policy review © Marketing Inside Ltd 2004

24. Surrender Queries – staff view © Marketing Inside Ltd 2004

25. Surrender Enquiries– early thoughts • Making it easy for customer to leave is seen as good customer experience internally ! • Customer receives cash at end of experience is viewed as a positive finish point for customer • Issue is lost relationship, no winback • As there is no acquisition, any brand value cannot be leveraged in longer term • Support communications is unexpected, confusing and regulatory based © Marketing Inside Ltd 2004

26. An Example – Train Franchise

27. Objectives • Phase I – Existing Customer Data • Examine current customer satisfaction position, in particular current data (SRA bi-annual reports and CSS quarterly surveys) and methods of survey • Where possible aligning customer experience factors (touchpoints) in each • Generate messaging template (internal comms and media) • Re-examine role of SRA (regulator) survey and CSS (internal) survey • Phase II – Customer Experience Measure • Look at end to end experience and develop scoring map • Score with internal staff as a comparison (it will be different from customers) • Identify key drivers of customer experience • Calculate cost impact • Focus on those factors which are most important to customer and there is under performance on © Marketing Inside Ltd 2004

28. . . © Marketing Inside Ltd 2004

29. Phase II - Key Findings • Staff Score the experience lower than customers • Rail staff tend to have a pessimistic view • In terms of what they believe to be important to customers, their view is very different to customers • Commuters accept Punctuality is an issue within the experience, but is not the most important factor • Punctuality has become a hygiene factor • Customers are more concerned about provision of information • Ease of Access to stations and trains is important • Disabled customers are an important group • Opportunity for a “Priority Customer” approach • Cost of focussing on Punctuality does not provide cost benefit • Cost of additional staff balanced by improvement in experience score • Better information provision and leveraging technology has a significant impact on experience score © Marketing Inside Ltd 2004

30. Summary • Customer Experience is a powerful driver of retention • Measuring customer satisfaction is misleading • The Approach demonstrated • can be applied to any organisation/market • Is simple • Will deliver quick wins • Is not costly e.g. Electricity Co. total cost was £17k • Ongoing benchmarking will deliver ongoing benefits © Marketing Inside Ltd 2004