Linking the Customer

Experience to Value

Joel Maynes and Alex RawsonMcKinsey & Company

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Housekeeping

©2015 QUALTRICS LLC.

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Joel MaynesAssociate Principal, McKinsey & Company

8+ Years of experience with McKinsey & company’s Los Angeles officeLeader of McKinsey’s Customer Personalization PracticeExpertise in “What Matters” customer experience analytics & personalization

Alex RawsonPrincipal, McKinsey & Company

11+ Years of experience with McKinsey & company’s Seattle officeLeader of McKinsey’s Customer Experience PracticeExpertise in broad Customer Experience & Front Line performance transformations

Introductions

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With a strong link to value, tackling Customer Experience can deliver stacked wins

©2015 Q

UALTRICS LLC.

LOWER COST TO SERVE

15 to 20%

FUEL REVENUE GROWTHChurn, upsell, repurchase

10 to 15%

IMPROVE CUSTOMER SATISFACTION

20%

ENGAGE EMPLOYEES

20 to 30%

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Getting the math right requires a structured & scientific approach to achieve three objectives

©2015 Q

UALTRICS LLC.

Build an explicit link to value1

Direct investments to where they will do the most good2

Design a road map with early successes to self-fund improvements3

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Clarify what CE is actually worth and exactly how improvements will generate value

©2015 Q

UALTRICS LLC.

Reduce Cost to Serve

Reduce Churn Risk

Increase Referrals

$144$160$180

8.0%10.9%16.4%

0.15%0.12%0.10%Referrals

customer, %

Annual Churn Rate, %

Annual Care Cost, $

Business outcomes by Satisfaction Score

$>300M

Value of a 10 point CE improvement?

$100-200M

$50-100M

Example value levers“Neutrals”(7 to 8 score)

“Promoters”(9 to 10 score)

“Detractors”(0 to 6 score)

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Customer-experience break points are not standard across industries

©2015 Q

UALTRICS LLC.

0

10

20

30

40

50

60

70

80

90

100

0 1 2 3 4 5 6 7 8 9 10

Likelihood of business outcomes1

Willingness to recommend(WTR)

NPS breakpointsBanking Pay TV Health insurance

Retail banking: every point matters, moving someone from a 9 to 10 is meaningful

Health insurance: driving detractors to passives has more impact; moving passives to promoters has little impact

Pay TV: passives are 5 and 6, not the typical 7 and 8

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End-to-end customer journeys, not individual touchpoints, are the unit to measure

©2015 Q

UALTRICS LLC.

Customer satisfaction

Willingness to Recommend

0.43 +36%0.58

0.47 +28%0.60

0.50 +19%0.59

-0.25

-0.33

+33%

Likelihood to stay/renew

Likelihood to cancel/churn

TouchpointsJourneys

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Build a model of customer satisfaction that links perceived and operational data on each journeyJohnson Relative Weights Driver Model

Func

tiona

l Ser

vice

Prod

uct

& P

rice

Emoti

on/

Bran

d

100100% =

Driven by Quant research linked to data

▪ Start by rethinking the scope of existing surveys

▪ Expand your customer data set so that it links up with operational data, as well as input from employees and customers

▪ Base priorities for initiatives and opportunities on their importance to customers

▪ Understand the sub drivers within the most important journeys

▪ Focus on customer-experience issues with the highest payouts

Example journeys: ▪ Bring me onboard▪ Solve my problem ▪ Move my service▪ Pay my bill

Example journeys: ▪ Price and value▪ Programming & equipment

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Supplement the model by looking at how consistently you perform on top journeys

©2015 Q

UALTRICS LLC.

Customer onboarding journey – first 100 days

Resear-ch offer-ings

Explain terms and condi-tions

Confir-mation email

Instal-lation

Consi-der sign-up

First bill Subse-quent bills

Assess needs, build rapport

Deter-mine pack-age

Resolv-ing problem

Signup on website First 100 days

% Dis-satisfied 40 30 4035 30 15 30 25 40

Felt confusedby offer

Did not receive

Agent did not help customer find right

product

Difficult to under-stand

packages

Higher than

expected

Confused by

language on bill

Dissatis-fied with schedul-

ing

Surprised by repair

fees

Signup process

Pain Points

Look For: What % of customers have a perfect end-to end experience and how variable is it?

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Set priorities for addressing the journeys that matter by sizing potential across three factors

©2015 Q

UALTRICS LLC.

Early Lifecycle Journeys

Problem resolution Journeys

Loyalty and late-tenure Journeys

Payment Journeys

Areas Journey Examples

Customers Impacted, M

Improving overall satisfaction, pts

Capturing long-term loyalty potential, $M

Reducingthe cost to serve, $M

0

0

1

3

1

2

1

2

1

1

5Bring me on-board 5

Word of Mouth & Referral journey 1

Video-on-Demand journey 12

Paying my bill journey 25

Getting my service reinstated 3

Getting my service working again 15

Coordinating an in-home visit 8

Get a better product experience

Moving to a new home 4

Cancelling my service early 2

Disconnecting my service 2 2

5

0

3

8

4

18

13

10

10

25

0

0

8

2

9

35

37

11

41

20

21

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Now you can construct a transformation road map backed by a clear business case

©2015 Q

UALTRICS LLC.

Ease of implementation

High (2+pts CE)

Low(<1pt CE)

Low High

Rev

enue

& S

atis

fact

ion

Impa

ct

Assess investment case or lower cost

Accelerate roll-out

Re-evaluate later Redesign for increased impact

Med (1-2pts CE)

3

58

1613

1

10

15 11

97

4

17

2

1214

6

Bring me onboard

Get My Service Working Again

Get a better product experience

Journeys:

Ease of implementation comprised of multiple factors: investment required, management capacity, front line training

Impact calculation based on:

• # customers impacted

• Derived Satisfaction Impact

• Demand for personal-izaiton initiative

“What Matters” driven Customer Experience Roadmap

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Questions to ask to lock in the ROI on CE©

2015 QUALTRICS LLC.

▪ Have you quantified your CE Value Equation (e.g., linked customer experience and outcomes at customer level)?

▪ Do you have end-to-end KPIs for your most important journeys, or just individual touchpoint metrics?

▪ Do you have a formal mechanism to run and evaluate CE tests at scale and book the impact with finance?

▪ Have you hardwired CE team resource requests to use low cost process, policy, and OpEx levers before turning to IT?

▪ What is your shortlist of 1-2 customer journeys that have the most economic potential?

▪ Do you have a forcing mechanism to solve tradeoff decisions across functions in order to deliver on bolder CE aspirations?

Upfront On-GoingBoth

Q&A

THANK YOU