how loyal are your customers…really?

How Loyal are Your How Loyal are Your Customers…Really?Customers…Really?

Ken DawsonKen Dawson

Director, Product SupportDirector, Product Support

McKesson – Extended Care Solutions GroupMcKesson – Extended Care Solutions Group

Service StrategiesCertification Showcase

June 23, 2005Boston, MA.

2004 World Series Champions

AgendaAgenda

Who is McKesson?Who is McKesson?

SCP certification statisticsSCP certification statistics

Customer loyalty analysis – the Customer loyalty analysis – the fundamentalsfundamentals

How was life before the new way?How was life before the new way?

Agenda Agenda (cont’d.)

The problemThe problem

The realizationThe realization

The approachThe approach

Loyalty collection mechanismLoyalty collection mechanism


Loyalty scale and definitionsLoyalty scale and definitions

Here’s how we do itHere’s how we do it

Courtesy call customer segmentsCourtesy call customer segments

Courtesy call preparationCourtesy call preparation


Courtesy call possible actionsCourtesy call possible actions

So that’s the process…what were the So that’s the process…what were the results?results?

Applicability to the SCP programApplicability to the SCP program

RecommendationsRecommendations


Comments & QuestionsComments & Questions

Founded in 1833Founded in 1833

Headquarters in San Francisco, CAHeadquarters in San Francisco, CA

Leading provider of pharmaceutical, Leading provider of pharmaceutical, medical supplies, care management, medical supplies, care management, and health information technology and health information technology products/services in the health care products/services in the health care industryindustry

World’s largest health care services World’s largest health care services companycompany 24,500 employees24,500 employees Revenues of nearly $70 billion for last Revenues of nearly $70 billion for last

fiscal yearfiscal year Ranked # 15 on Fortune 500 listRanked # 15 on Fortune 500 list Touching the lives of more than 100 Touching the lives of more than 100

million patients each day in the health million patients each day in the health care settingcare setting

McKesson’s customer demographicsMcKesson’s customer demographics 50,000 healthcare facilities & physician 50,000 healthcare facilities & physician

practicespractices 5,000 hospitals5,000 hospitals 25,000 retail pharmacies25,000 retail pharmacies 200,000 physicians200,000 physicians 10,000 long-term care sites10,000 long-term care sites 600 healthcare payor organizations600 healthcare payor organizations

McKesson business divisionsMcKesson business divisions McKesson Pharmaceutical SolutionsMcKesson Pharmaceutical Solutions

– San Francisco, CASan Francisco, CA McKesson Provider TechnologiesMcKesson Provider Technologies

– Alpharetta, GAAlpharetta, GA McKesson Medical-Surgical SolutionsMcKesson Medical-Surgical Solutions

– Richmond, VARichmond, VA McKesson Customer and Financial McKesson Customer and Financial

OperationsOperations

– Carrollton, TXCarrollton, TX

Extended Care Solutions Group profileExtended Care Solutions Group profile Located in Springfield, MOLocated in Springfield, MO Industry: Healthcare Information Industry: Healthcare Information

Technology – Home HealthcareTechnology – Home Healthcare Revenues: $55 millionRevenues: $55 million 240 employees – 71 support employees240 employees – 71 support employees Product suite:Product suite:– Intake/patient registration– Financial operations– Patient and staff scheduling– Clinical management– Point of care– Telephony

– Web Physician Portal– Decision Support– Telehealth– Hospice– PDA point of care

Extended Care Solutions Group profileExtended Care Solutions Group profile 380 customers380 customers

– 233 hospital-based233 hospital-based

– 147 stand alone147 stand alone

– 210 hospice customers210 hospice customers

18 McKesson Provider Technologies 18 McKesson Provider Technologies (MPT) support centers have achieved (MPT) support centers have achieved SCP certificationSCP certification

60 SCP certifications have 60 SCP certifications have successfully been achieved since successfully been achieved since January 2001January 2001

Extended Care Solutions Group Extended Care Solutions Group (ECSG) was the first MPT support (ECSG) was the first MPT support center to achieve certification center to achieve certification (certified in 2001, 2002, 2003, 2004 (certified in 2001, 2002, 2003, 2004 & 2005)& 2005)

ECSG was also the first MPT center to ECSG was also the first MPT center to be audited under the “surveillance” be audited under the “surveillance” methodology (January 2005) methodology (January 2005)

Get past the idea that customer Get past the idea that customer “satisfaction” is the same as “satisfaction” is the same as customer “loyalty”customer “loyalty”

A customer loyalty collection A customer loyalty collection mechanism must be in placemechanism must be in place

Based on analysis of collected loyalty Based on analysis of collected loyalty data, develop a set of goalsdata, develop a set of goals

Develop various measurement tools Develop various measurement tools to gauge progress toward goalsto gauge progress toward goals

Establish a mechanism to proactively Establish a mechanism to proactively communicate with your customer communicate with your customer basebase

Based on customer quarterly case Based on customer quarterly case volumesvolumes

Proactive courtesy calls were placed Proactive courtesy calls were placed to customers who called the most and to customers who called the most and least each quarterleast each quarter

Results were recorded and Results were recorded and appropriate action takenappropriate action taken

Proactive courtesy calls were placed Proactive courtesy calls were placed quarterly…quarterly…

One-dimensional methodology…One-dimensional methodology…

No common approach…No common approach…

We were missing interaction We were missing interaction opportunities due to the lack of opportunities due to the lack of

frequencyfrequency

Only 1 factor consideredOnly 1 factor considered

““Individual” approach versus a common Individual” approach versus a common “Team” approach“Team” approach

The methodology needed to be The methodology needed to be expanded to include more business expanded to include more business

relationship considerations and allow relationship considerations and allow the team to make more courtesy calls…the team to make more courtesy calls…

but how?but how?

Proactive courtesy calls are based on the Proactive courtesy calls are based on the combination of:combination of: Monthly customer loyalty results and;Monthly customer loyalty results and; Monthly customer accounts receivable amountsMonthly customer accounts receivable amounts

Two customer “segments” were developed Two customer “segments” were developed based on loyalty and A/R databased on loyalty and A/R data

Courtesy call “templates” were developed Courtesy call “templates” were developed to establish consistencyto establish consistency

Administered by SatmetrixAdministered by Satmetrix Collected monthly via case event Collected monthly via case event surveysurvey

Survey generated approx. every 30 daysSurvey generated approx. every 30 days Sent to the customer contact associated Sent to the customer contact associated

with the closed support case (unless with the closed support case (unless surveyed within the last 30 days)surveyed within the last 30 days)

First seven questions are specific to the First seven questions are specific to the support case itself and last three are support case itself and last three are specific to loyalty to McKesson specific to loyalty to McKesson

Thinking about the company in general, Thinking about the company in general, please rate your overall experience please rate your overall experience

with McKesson.with McKesson.

1. Satisfaction with McKesson as a company.

2. If you had the opportunity, indicate the likelihood of recommending McKesson to a colleague or associate during the next 12 months.

3. If you were making a buying decision, indicate the likelihood to continue purchasing McKesson products.

Respondents rate the loyalty questions using Respondents rate the loyalty questions using a a

7-point scale:7-point scale:

7:Extremely satisfied or extremely likely

6:Satisfied or likely

5:Somewhat satisfied or somewhat likely

4:Neutral

3:Somewhat dissatisfied or somewhat unlikely

2:Dissatisfied or unlikely

1:Extremely dissatisfied or extremely unlikely

PromoterPromoter High scores on each of the loyalty questions. They are committed and are very likely to provide recommendations.

ContentContent Medium to high scores on each of the loyalty questions. Although they are likely to remain loyal, your company should develop action plans so that “Content” customers become “Promoters”.

DisappointeDisappointedd

Below average scores on each of the loyalty questions. They are dissatisfied with one component of loyalty, and could easily be lost to competitors if your company does not address their needs.

LostLost Low scores on each of the loyalty questions. They exhibit a high level of dissatisfaction on the loyalty questions. At this point, it is better to concentrate your efforts on customers in the Disappointed or Content categories.

Monthly Satmetrix loyalty results are Monthly Satmetrix loyalty results are imported into a local database and a imported into a local database and a “customer loyalty score” is derived“customer loyalty score” is derived

For ECSG customers, their loyalty For ECSG customers, their loyalty data is combined with their A/R data is combined with their A/R balances that are 61 – 90 or > 90 days balances that are 61 – 90 or > 90 days past due for the same monthpast due for the same month

Based on combined data, two priority Based on combined data, two priority lists (customer segments) are defined lists (customer segments) are defined and courtesy calls beginand courtesy calls begin

Courtesy Call A-ListCourtesy Call A-List Top priority for the monthly courtesy callsTop priority for the monthly courtesy calls Customers that have any amount of A/R Customers that have any amount of A/R

past 61 dayspast 61 days Two sort levels:Two sort levels:

11stst level: level: Customer loyalty category, Customer loyalty category, low low to high (Lost, to high (Lost, Disappointed, Disappointed, Content, Content, Promoter)Promoter)

22ndnd level: level: Total amount of A/R past 61 Total amount of A/R past 61 days, greatest to days, greatest to

least amountleast amount

Courtesy Call B-ListCourtesy Call B-List Second priority for the monthly courtesy Second priority for the monthly courtesy

callscalls Customers that DO NOT have any amount Customers that DO NOT have any amount

of A/R past 61 daysof A/R past 61 days Two sort levels:Two sort levels:

11stst level: level: Customer loyalty category, Customer loyalty category, low low to high (Lost, to high (Lost, Disappointed, Disappointed, Content, Content, Promoter)Promoter)

22ndnd level: level: Customer loyalty score, low Customer loyalty score, low to to highhigh

Courtesy call A & B lists are printed Courtesy call A & B lists are printed and distributedand distributed

Courtesy call A & B list “templates” Courtesy call A & B list “templates” are printed and distributedare printed and distributed

Customer Loyalty Category

Customer demographics

Customer A/R information

Customer contact demographics

Customer Loyalty Category

Customer demographics

Customer contact demographics

A & B list template common A & B list template common fieldsfields

Field Auto Populated?

Field Auto Populated?

Customer loyalty category

Yes Telephone number Yes

Customer name Yes Extension Yes

Customer # Yes E-mail address Yes

Time Zone Yes Case volume No

State Yes Courtesy call comments

No

Customer support region

Yes Release level Yes

Support transition date Yes Regulatory issues No

Customer loyalty score Yes # of office locations No

Called in FY? Yes Fiscal year-end Yes

Date contacted No Hospital based? Yes

Message left? No Changes in contact info?

No

Follow-up date No Problem/under utilized areas

No

Contact name Yes Interest in participating in the beta process

No

Title Yes

Action Description

No action necessary Standard courtesy call with no follow-up required.

Additional follow-up required

Issues encountered that require further follow-up by someone within the business unit.

Immediate customer escalation

Issues encountered were so severe and broad that immediate escalation to the Customer Care team was needed.

Added to the team “radar screen” for further analysis

Immediate escalation was not required, but the situation needs to be further evaluated to determine the best course of action.

Added to the Product Support reference site funnel

Customer has expressed interest or has demonstrated they would be a reference site for the Product Support organization. Customers are analyzed for reference site readiness.

Lead generated A need for additional services, consulting, etc., was identified and a lead was entered.

Impact on least loyal customersImpact on least loyal customers

Least loyal customers were identifiedLeast loyal customers were identified

Six-month trial was implementedSix-month trial was implemented

The results?The results?

Impact on least loyal customers Impact on least loyal customers (cont’d.)

25 of the 30 customers (83%) showed loyalty increases

Almost a 29% increase in overall loyalty scores

Impact on broader customer baseImpact on broader customer base

3 immediate escalations to Customer 3 immediate escalations to Customer CareCare

47 customers added to the team 47 customers added to the team “radar screen” for further analysis“radar screen” for further analysis

9 of the 47 customers were escalated 9 of the 47 customers were escalated to the Customer Care team to the Customer Care team

Increase in aggregate customer Increase in aggregate customer loyalty results month-to-monthloyalty results month-to-month

Average monthly loyalty improvement Average monthly loyalty improvement of 4.55%of 4.55%

Impact on broader customer base Impact on broader customer base (cont’d.)

ECSG Unduplicated Customer Loyalty

32.2% 37.2% 33.7% 32.8% 33.5%27.0%

34.9% 36.2% 33.7% 35.6% 38.2%45.7%

38.7% 36.5% 39.9%

52.0%50.0%

47.0% 49.8% 52.0% 59.0%52.3% 53.4% 54.1% 54.8% 50.9%

48.4%51.5% 55.2% 48.6%

12.4% 9.1%16.0% 14.9% 13.3% 11.0% 11.3% 8.0% 9.4% 9.6% 9.7%

5.3% 9.2% 6.6% 9.8%

33.5%32.2%

50.5%54.0%

12.8%11.5%

1.7%1.7%0.6%0.5%0.6%0.0%2.8%2.3%1.5%3.0%1.2%2.5%3.3%3.7%3.4%3.2%2.3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec.'03

Jan.'04

Feb.'04

Mar.'04

Apr.'04

May'04

Jun.'04

Jul.'04

Aug.'04

Sep.'04

Oct.'04

Nov.'04

Dec.'04

Jan.'05

Feb.'05

Mar.'05

Apr.'05

% Promoter % Content % Disappointed % Lost

Goal: 85% within Promoter and Content categories

Total # of customers with loyalty data

174 188 177 164 181 201 173 200 195 174

181 177 165 188 163 181 173

Pre-Implementation Post-Implementation

Impact on team efficiencyImpact on team efficiency

Avg. # Courtesy Calls per Month

Avg. # of Custome

r Contacts

per Month

Avg. Monthly Reach Rate

Avg. Length of Call

(minutes)

* Avg. Cost per

Call

Previous Process

Current Process

% Difference

39.88 27.78 69.66% 20 $11.91

101.54 89.23 87.88% 7.5 $4.66

61.66 61.45 18.22% -12.5 -$7.25

154.61% 221.2% -62.5% -60.87%

Difference

Impact on the companyImpact on the company

Courtesy call data utilized to influence Courtesy call data utilized to influence future releases of our productsfuture releases of our products

Increased the quality of dialogue with Increased the quality of dialogue with the Sales organizationthe Sales organization

Demonstrated applicability and Demonstrated applicability and repeatability in other McKesson officesrepeatability in other McKesson offices

The process named as a company best The process named as a company best practicepractice

1.01:1.01: Customer Satisfaction Customer Satisfaction ProcessProcess

1.09: 1.09: Direct Customer FeedbackDirect Customer Feedback 1.11: 1.11: Customer Loyalty and Customer Loyalty and

Retention Retention ProgramsPrograms 2.07:2.07: Technical Account Technical Account

Management Management ProgramProgram 11.03:11.03: Customer status updates for Customer status updates for

the the Sales and Services TeamsSales and Services Teams

Assess where you are with customer Assess where you are with customer loyaltyloyalty

Where do you want to be?Where do you want to be? Formulate a game planFormulate a game plan Have your team take the field!Have your team take the field!

TrackTrack MeasureMeasure Revise game plan as neededRevise game plan as needed

Comments & QuestionsComments & Questions

Follow-up comments to:

[email protected]

1-800-800-5403 x 4324

how loyal are your customers…really?

Documents

care management

loyalty scale

loyalty data

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customer segmentscourtesy

customer basewho

customer satisfaction

new way