Customer-centric Organization: Core Capabilities (Part I)

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Framework Primer
Customer-centric Organization:
Core Capabilities (Part I)
Presentation created by
Sales & Service
Transformation
Customer
Experience
(CX)
Customer
Strategy
Connected
Enterprise
Data &
Analytics
Digital
Transformation
1
2
34
5
6

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Contents
Overview
Capability 1. Customer Strategy
Capability 2. Customer Experience (CX)
Templates
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A Customer-centric Organization must have 6 core capabilities
to compete in the Digital Age
Presentation Overview
In this Digital Age, Customer-centricity ceases to be a differentiator—it has become
necessary for survival.
Today’s customers are better informed, better connected, and more demanding that ever before. CEOs
are now concerned about Customer Loyalty and they recognize that mastery of the customer agenda is
essential. In fact, global leaders of successful organizations recognize that creating a customer-centric,
digitally-transformed business is a top priority.
In this age of digital disruption, how can organizations engage customers, increase Customer Loyalty,
and achieve profitable growth?
Almost every market is experiencing fundamental change. Consumer expectations have shifted and
digital technologies are making the biggest impact on businesses large and small since the start of the
information age. Ultimately, businesses need to navigate the challenges of digital disruption and find
new ways to create economic value and drive growth.
This framework digs deep into what it takes to achieve Customer-centricity. In this Digital Age, there are
6 core capabilities organizations must have to be a customer-centric business.
In this presentation, we discuss the first 2 capabilities in detail.
This deck also includes slide templates for you to use in your own business presentations.
1 Customer Strategy
2 Customer Experience (CX)
3 Sales & Service Transformation
4 Connected Enterprise
5 Data & Analytics
6 Digital Transformation

Evolving customer demands and expectations are forcing a dramatic
change in business operating models
Recognizing the value of the customer relationship is vital—at the point of initial sale and
over the customer lifetime.
Evolving Customer Demands and Expectations
80% of the global population will have access
to mobile telephony.
More than 60% will access smartphones or
low-cost tablet computers.
By 2020, there will be more than 50 billion
connected devices globally.
Mobile will be the primary internet device for
most individuals.
Technology is growing at an exponential rate,
influencing customer behavior and marketing
strategies.
Customer expectations are shaping across all
sectors.
1
2
3
4
More
demanding
Increased expectations in
terms of convenience,
flexibility, and personalization
or personal interactions.
More
diverse
Global growth of women in
the workforce.
More
egotistic
It is all about me.
More
sophisticated
Emerging middle classes
wanting more financial
services.

The 6 core Capabilities of a customer-centric organization is the strategic
framework to addressing shift in customer expectations
This presentation is part of a 3-deck series—in each deck, we cover 2 of the 6 core
capabilities.
6 Core Capabilities – Overview
Organizations need to navigate the challenges of digital disruption. Ultimately, we need to become a customer-centric
organization that find ways to create economic value and drive profitable growth.
There are 6 core capabilities
organizations must have to be a
customer-centric business.
In this presentation, we will focus
on the first 2 capabilities.
• Customer Strategy
• Customer
Experience (CX)
Sales & Service
Transformation
Customer
Experience
(CX)
Customer
Strategy
Connected
Enterprise
Data &
Analytics
Digital
Transformation
1
2
34
5
6
1
2
Source: Customer First, KPMG, 2017
The 6 core
capabilities unlock
new sources of
customer value and
allow organizations
to compete
successfully in the
Digital Age.

Contents
Overview
Templates

CORE CAPABILITY
Customer Strategy is our first capability, focused on addressing changing
customer needs and behavior
Successful companies are willing to fail fast and embrace constant innovation
in the process of finding a winning strategy.
Customer Strategy – Overview
• Involves the development of a clear view of customer behavior and intentions
using data and analytics.Customer
Strategy
DESCRIPTION
APPLICATION
• Netflix with a simple clear customer strategy and
business model adapted for the digital age.
• Uses customer insight data to refine and develop
proposition.
• Uses extensive data analytics to develop rich personal
profiles of customer preferences and behavior.
• Uses aggregate customer data to inform major
investments in new media content.
• Use of sophisticated data analytics tools.
• Hold huge quantities of rich customer insight data.
• Use an agile, test-and-learn approach to the
development of valuable new propositions.
APPROACHES

Creating a successful Customer Strategy has its key challenges
The Key Challenges underscore the need for a new Customer Strategy when faced
with a disruptive business environment.
Customer Strategy – Key Challenges
Digital disruptions have challenged organizations when it comes to creating a successful customer
strategy.
Source: Customer First, KPMG, 2017; KPMG Global CEO Outlook; KPMG Unlocking the Potential of Pricing 2016; KPMG Global Top of Mind Survey 2016;
Forrester KPMG Omnichannel research 2016
1
2
3
4
5 • 44% of businesses find setting the optimum pricing strategies a challenge
due to volatile economic conditions.
Volatile Markets
• 82% of CEOs are concerned about whether their company’s current
products and services remain relevant to customers in 3 years from now.
Relevance of Current
Products and Services
• 65% of CEOs recognize that the lines between the industry sectors are
blurring. They are concerned about defending against the disruption of
new entrants.
Defense against New
Entrants
• 60% of business leaders believe that they can increase profitability through
more effective pricing strategies.
Competing using
Pricing
• 44% of CEOs of businesses in all sectors are concerned about ways to
grow revenue profitably and efficiently.
Achieving Profitable
Growth

Creating a new and effective Customer Strategy requires a 5-Step
Approach to action planning
The 5-Step Approach is tried and tested with each step incrementally adding value
to the one before.
Customer Strategy – Approach
Analyzing the needs and behavior of customers and collaborating with them is essential to having
a winning Customer Strategy.
Through this 5-step approach, new sources of customer value can be unlocked.
The Single
Customer View
Customer Need
Identification
Agile
Proposition
Development
Transformed
Products
Evolved
Business
Models
1 2 3 54

This 5-phase approach leads to the creation of new propositions and
pricing models proven to improve customer lifetime value (LTV)
A Customer-centric business provides products and services that address customers’
underlying issues and needs.
Customer Strategy – Approach (Details)
• Consider becoming a
platform business enabling
an ecosystem of partners.
• Provide radically improved
solutions to customers.
• Enable collaboration in the
delivery of an overall
proposition.
• Augment traditional
products with digital
services. Today’s
customers have a
preference for convenient
online services.
• Engage your customers
via connected online
services.
• Consider offering monthly
subscriptions, online
community sites,
membership sites, etc.
• Reimagine products by
focusing on your
customers’ core issues.
• Dwell on the problem that
your current products
solve.
• Use the newly created
customer insight as input
to product innovation
workshops.
• Test new product ideas
with your customer to add
more value than
competitors.
• Develop new customer
behavior segments and
persona.
• Merge existing structured
company data sources,
e.g. merging social media
data with website
browsing patterns.
• Curate new ecosystem of
data to predict customer
behavior.
• Create 360 -degree
customer profiles.
• Treat every customer
differently. The single
customer view does not
hold anymore.
• Create rich individual
customer profiles within a
single master database.
The Single
Customer View
Customer Need
Identification
Agile Proposition
Development
Transformed
Products
Evolved Business
Models
1 2 3 4 5

Contents
Overview
Templates

CX is a core capability that generates a significant Competitive
Advantage—a 2X revenue growth against industry counterparts
Economic and reputational rewards of improved CX are seized when visions get executed
through new, more digitally enabled journeys.
Customer Experience (CX) – Overview
CORE CAPABILITY
APPLICATION
• The world’s most advanced customer businesses
undertake customer journey mapping and experience
design which is critical to executing customer-centric
change.
• With informed innovation and design thinking, customer-
centric operating models and cross functional ways of
working were developed.
• Responding to customer needs balanced with understanding the values
customers bring to the enterprise.Customer
Experience (CX)
DESCRIPTION
• Bold differentiating vision—a unifying idea that helps
everyone in the organization behave towards customers
and colleagues in a consistent, effective way.
• Creation of sophisticated toolkit in designing improved
CX.
• Drawing of global, cross-sector best practices.
• Equally effective measurement grounded in digital,
social, and operational data for a complete voice of the
customer.
APPROACHES

Improving Customer Experience has its key challenges
By understanding the economics of Customer Experience, organization can better design
a CS that can drive ROI and create competitive advantage.
Customer Experience (CX) – Key Challenges
Over the next 5 years, almost 89% of CEOs expect to be competing on the basis of Customer
Experience. Yet, only 7% currently deliver it effectively.
Source: Customer First, KPMG, 2017; Forrester; Garter; KPMG; Microsoft State of Global Service Report 2016
1
2
3
4
5
• 200% of customers penalize those who under-deliver twice as much as
they reward companies who over-deliver.
Avoiding penalties
of under-delivery
• 89% of companies are expected to be competing on the basis of Customer
Experience over the next 5 years.
Competing on
Customer Experience
• 88% of CEOs are concerned about Customer Loyalty and recognize that
mastering the customer agenda can provide competitive advantage.
Improving Customer
Loyalty
• 60% of consumers have stopped doing business with a brand due to poor
customer service experience.
Avoiding customer
defection
• Only 7% of CEOs are satisfied that their companies deliver Customer
Experience effectively. Majority see the need for transformation.
Maintaining current
performance
There are 5 key challenges organizations must understand when investing in Customer Experience Excellence.

Creating an Effective Customer Experience using a 5-step approach
drives organizations to achieve real business results
The 5-Step Approach enables businesses to create customer-centric changes and achieve
Customer Experience Excellence.
Customer Experience (CX) – Approach
Effective Customer Experience can be achieved following a proven sequence of steps.
Customer
Experience
Strategy
Customer
Experience
Analytics
Customer
Experience
Equity
Customer
Journey Design
Customer
Experience
Transformation
1 2 3 54

Application of the 5-step approach to Customer Experience leads to
investments being balanced with the value of CX Excellence
Systematically redesigning customer journeys and Customer Experience require major
structure change to a business.
Customer Experience (CX) – Approach (Details)
• Execute business change
to redefine the business.
• Use new Customer
Experience journeys as
the “north star” to plan the
design of new, digitally
enabled operating models,
processes, and structures.
• Embrace design thinking
to create engaging future
Customer Experiences.
• Manage customer-centric
change on scale.
• Apply the rigor of product
design to the new
discipline of customer
journey “service design.”
• Use customer research
coupled with design
technology to allow cross-
functional collaboration
and rapid agile progress.
• Master the economics of
Customer Experience.
• Make effective customer
programs CFO relevant.
• Focus on customer
journeys that matter and
rationalize the change
portfolio.
• Create a predictive
capability built on facts
and linked to cost-saving
and growth.
• Bring the voice of the
customer into the
boardroom.
• What gets measured, gets
managed: Use voice of
the customer program to
guide execution and
evaluate returns.
• Put in place next-
generation platform
technologies to combine
sentiment with digital,
social, and operational
data.
• Drive frontline customer
engagement to achieve
effective marketing, sales,
and service operations.
• Define a strategic vision
and design principles.
• Instill a clear customer
vision that is drawn from
the brand and its values,
but informed by cross-
sector leading practices.
• Have a careful
examination of
capabilities and culture
and make brave choices
where necessary to
ensure sustainable
success.
Customer Experience
Strategy
Customer Experience
Analytics
Customer Experience
Equity
Customer Journey
Design
Customer Experience
Transformation
1 2 3 4 5

There are 4 building blocks that are central in connecting our company
better with our customers—thus creating a tangible improvement to CX
Customer Experience (CX) – Building Blocks
For more information on these building blocks and a different approach to CX, refer to this
framework: https://flevy.com/browse/flevypro/customer-experience-primer-3234.
Technology has made it possible for our customers to expect “now” service within 5 minutes of making
contact online.
Increasingly, our customers
are now expecting immediacy,
personalization, and
convenience from our
company.
To meet this, our company
must take the first step in
transforming our business into
a more customer-centered
organization.
There are 4 building blocks of a comprehensive improvement in
Customer Experience.
Defining our Customer’s
Journey.
Defining our Customer’s
Journey.
Count what matters most
to our customers.
Count what matters most
to our customers.
Focusing on Customer
Journey to achieve
business outcome.
Focusing on Customer
Journey to achieve
business outcome.
Know your Customer
Experience aspiration
and common purpose.
Know your Customer
Experience aspiration
and common purpose.
1 2
3 4

In measuring CX, the ideal CX measurement system puts journeys
at the center and connects them to other critical elements
Customer Experience (CX) – Customer Experience Measurement Pyramid
The employee feedback our company captures is necessary in identifying improvement
opportunities.
Source: The CEO Guide to Customer Experience, McKinsey, 2016
Our leading practitioners follow a Customer Experience measurement pyramid. This starts out with the
Customer Experience and then moves down to measure the Customer Journey. This includes measuring the
journey-related KPIs and the organizational and cultural foundation carrying this journey.
In these processes,
our employees must
be involved in the top
3 stages. Our
executives must
engage employees at
every level of our
organization; in retail
settings, taking calls,
and getting out into
the field.
Journey analytics
and operational key
performance indicators
Organizational and cultural
foundation
Journey-
experience
assessment
CE
metric
Employeefeedback
Principles
Top-line customer-experience (CE)
metric linked to business outcome.
Journeys, not touchpoints,
at the core; aim to understand
performance on each journey.
Regular, objective metrics
serve as leading indicators
building to each journey.
Employees leveraged to assess
customers’ experience and
identify operational improvements.
Supported by change-
management capabilities and
customer-centric culture.

Contents
Overview
Templates

Insert headline
Insert bumper.
6 Core Capabilities of a Customer-centric Organization – TEMPLATE
Sales & Service
Transformation
Customer
Experience
(CX)
Customer
Strategy
Connected
Enterprise
Data &
Analytics
Digital
Transformation
1
2
34
5
6
• Filler text, filler text,
filler text, filler text,
filler text, filler text.
filler text, filler text,
filler text.
filler text.

Insert headline
Insert bumper.
6 Core Capabilities of a Customer-centric Organization – TEMPLATE ALTERNATE
Sales &
Service
Transformation
Customer
Experience
(CX)
Customer
Strategy
Connected
Enterprise
Data &
Analytics
Digital
Transformation
1
25
6
34
• Filler text, filler text.

Insert headline
Customer Experience Measurement Pyramid – TEMPLATE
Insert bumper.
Source: The CEO Guide to Customer Experience, McKinsey, 2016
Journey analytics
and operational key
performance indicators
Organizational and cultural
foundation
Journey-
experience
assessment
CE
metric
Employeefeedback
PRINCIPLES
Top-line customer-experience (CE)
metric linked to business outcome.
Journeys, not touchpoints,
at the core; aim to understand
performance on each journey.
Regular, objective metrics
serve as leading indicators
building to each journey.
Employees leveraged to assess
customers’ experience and identify
operational improvements.
Supported by change-
management capabilities and
customer-centric culture.

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Flevy (www.flevy.com) is the marketplace
for premium documents. These
documents can range from Business
Frameworks to Financial Models to
PowerPoint Templates.
Flevy was founded under the principle that
companies waste a lot of time and money
recreating the same foundational business
documents. Our vision is for Flevy to
become a comprehensive knowledge base
of business documents. All organizations,
from startups to large enterprises, can use
Flevy— whether it's to jumpstart projects, to
find reference or comparison materials, or
just to learn.
Contact Us
Please contact us with any questions you may have
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Customer-centric Organization: Core Capabilities (Part I)

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