Pwc 10 minutes-customer-impact


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Today's empowered customers expect distinctive, high-touch experiences that keep pace with their wants and needs. Exceptional customer experience is one of the key drivers of organic business growth, and organizations can gain a clear advantage if they learn to transform customer data into insights and meaningful interactions.

That said, the majority of companies don't have sufficiently mature processes and skills to uncover these insights from customer information flows. Information from corporate sources is often in a format employees cannot use, and two-thirds of workers distrust information from other functions in the organization outside of their own.

Customer expectations are rising fast, changing the way firms do business. This 10Minutes explores what companies should consider doing to keep up.

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Pwc 10 minutes-customer-impact

  1. 1. At a glance 01 02 03 04 Upcoming 10Minutes How PwC can help    10Minuteson customer impact March 2012Getting to know your Opportunities await companies that can tap into their customers’ minds. With 65% Is opportunity passing you by? 1. A quarter of global consumers—andcustomer better: of global CEOs—and 77% of US CEOs— indicating that customer demand will be nearly one-third in the US—believethe new frontier of the biggest factor driving strategy changes companies usually fail to satisfy their expectations. These are also missedbusiness growth this year,1 it has never been more critical to understand what motivates customers. opportunities; most consumers are willing to spend more with companiesHighlights Today’s empowered customers expect they believe provide excellent service.3 distinctive, high-touch experiences thatCompanies now have more opportunities to 2. Of the 47 industries in the American keep pace with their wants and needs.understand their customers better. They can rely on Customer Satisfaction Index, 60% Exceptional customer experience is onemore information, better technology, and advances score lower than 80 on a scale of 0 to of the key drivers of organic businessin analytical techniques. 100. Top-rated companies in the lower- growth, so firms can gain an advantage scoring industries achieve ratings thatAstute users of all these new tools will be able to if they transform customer data into exceed industry averages by severalfine tune the way they interact with and serve their insights and meaningful interactions.customers. points. And in the top-scoring industries, However, the majority of companies companies are challenged to constantlyThoughtful, systematic organizational change will don’t have sufficiently mature processes distinguish themselves from the pack.4often be required to create a truly synchronized, and skills to uncover these insightsmulti-channel experience for customers. from customer information flows. 3. Eighty-two percent of the world’s Information from corporate sources online population use social media.5The CEO is often the best-positioned leader to serve is often in a format employees cannot Yet PwC research shows that only 37%as Chief Customer Advocate. use, and two-thirds of workers distrust of companies have invested in social information from other functions in the media tools to understand customers.6 organization outside of their own.2 2 Corporate Executive Board, “Overcoming the Insight Deficit: Big Judgment in an Era of Big Data,” 2011. Customers’ expectations are rising fast, 3 American Express, “2011 Global Customer Service changing the way firms do business. This Barometer,” 2011. 10Minutes explores what companies 4 The American Customer Satisfaction Index, 2010 and 2011 data; PwC analysis. should consider doing to keep up. 5 comScore, Inc., “It’s a Social World: Top 10 Need-to-Knows about Social Networking and Where It’s Headed,” 2011. 1 PwC, “15th Annual Global CEO Survey,” 2012. 6 PwC, “The 4th Annual Digital IQ Survey,” 2011.
  2. 2. Home 01 02 03 04 Upcoming 10Minutes How PwC can help     At a glance Many leading companies have moved toward customer-centric models, shifting away from a product-centric mindset. Their experience indicates that each business function should change for the transformation to be successful. Business Product-centric Customer-centric Function characteristics characteristics Marketing • Basic customer insight • Deep customer insight • Organized by product lines • Organized by customer segment or need Products • Off-the-shelf, little differentiation • Designed around the customer, or customization among segments differentiated by customer segments Channels • Lack of channel integration • Synchronized experience across channels • Systems determine strategy • Customer determines strategy Operations • Sales team incentivized by • Sales team incentivized by customer metrics product volumes • Customer experience exceeds expectations Technology • Legacy systems built • The newest tools that capture the customer’s around products voice and allow that voice to shape strategy Human • Culture based on financial targets • The right talent to deliver customer excellence Resources Finance • Measurements centered on • Measurements based on customer perception product metrics, such as of brand; financial and customer metrics profitability and market share don’t compete
  3. 3. Home At a glance 02 03 04 Upcoming 10Minutes How PwC can help    01 Taking customer Improvements in business intelligence and the art and science of analyzing customer behavior Are you benefiting from new insights garnered from economics and psychology? insight to the are coming together to help companies. Behavioral economics, which combines classical next level Are you focusing on the right things— economics and behavioral psychology, can help companies understand how customers actually and using the right data? make decisions, rather than assume how customers Not all data are created equal. Corporate Executive will behave. Southwest Airlines research found Board research finds that 85% of data captured by that bag fees evoked a very strong emotional companies are unstructured.7 Companies that can response from passengers.As a result, Southwest, learn to use these data to help shape strategy can the only major US carrier to not charge for first find an edge. Seeking to reduce customer turnover, and second checked bags, framed its offers with business-to-business telecommunications firm XO the “Bags Fly Free” slogan. In 2010 and 2011, the Communications applied predictive analytics to campaign’s first two full years, Southwest posted Attributes associated with good customer experiences forecast when subscribers would leave or default its biggest recent annual revenue increases, on payments. In the first year, the company $1.75 billion and $3.55 billion, respectively.11 Illustration: For retail companies, most good experiences can saved between $9 million and $13 million.8 be attributed to strong support and staff who understand Is your customer experience synched up across customers’ needs. Are you listening to your customers? all touch points within your company? Next-generation social intelligence tools—such Dividing lines between channels become hazier each as natural language analysis—allow companies day. Understanding this, retailer Nordstrom adopted 56% to analyze context, mood, and intent within a multi-channel approach to inventory, displaying 40% 2% 2% customer conversations. In 2010, PepsiCo’s stock from its warehouses and stores online.12 The Gatorade built a social media Mission Control company posted record sales in 2010, triggered by Support Quality Accessibility Presentation center, using such tools to create real-time initiatives that integrated operations “consistent data visualizations of online conversations. with our customers’ expectations of a seamless Learning how customers perceive its products shopping experience regardless of channel.”13 and brand has contributed to greater market share.9 Gatorade posted a double-digit increase in 67% volume during the first three quarters of 2011.10 31% 3% 7 Corporate Executive Board, “Overcoming the Insight Deficit: Staff Staff Big Judgment in an Era of Big Data,” 2011. friendliness recommendations Others 8 Melissa Korn and Shara Tibken, “Fumbling Over Data,” The Wall Street Journal, October 3, 2011. 11 Southwest Airlines Co., company financials. 9 Business Insider, “Interview with PepsiCo head of digital, 12 PwC and the Grocery Manufacturers Association, “2011 Financial Sample size: 258 Bonin Bough,” November 4, 2011. Performance Report: Thriving in a Connected World,” 2011. Source: PwC, “Experience Radar, Retail Insights 2011,” 2011 10 PepsiCo, Inc., Form 10-Q for the quarter ended September 3, 2011. 13 Nordstrom, Inc., Form 10-K for the year ended January 29, 2011.
  4. 4. Home At a glance 01 03 04 Upcoming 10Minutes How PwC can help    02 Beyond insight: PwC’s Experience Radar industry-based customer research shows that each customer segment has forums and social media sites. By combining these structured and unstructured data, the company meaningful its own recipe for a stellar experience—with a different mix of ingredients such as convenience, learned that the length of time customers were spending during check-in was a key reason for interactions and support, community, and quality. Unfortunately, poor overall customer experience. Gaylord created brand-defining few companies deliver on these recipes.14 targets for check-in times, offered staff incentives for meeting them, and generated daily reports Simplifying the customer decision process experiences PwC worked with a major US healthcare insurer to measure the process. Half of its check-ins (49%) in the first quarter of 2011 took less than to improve the company’s online channel and five minutes, up from 39% about a year earlier. increase online sales. The company noticed During the same period, average customer ratings that many customers would begin shopping for for ease of check-in increased about 67%.15 insurance coverage online, but finish the transaction by phone or abandon it altogether. Customer Taking the focus away from products interviews, usability tests, and competitive USAA, the financial services firm that began by analysis indicated that customers found the online servicing the military, typically leads its industry in process cumbersome and were intimidated by too customer satisfaction. But with no branches and a many choices. The company updated its online complex set of products and services, USAA realized navigation to reduce the number of choices— it needed an even sharper customer focus. To keep highlighting the best choice based on a customer’s its customers at the center, USAA moved away needs and preselecting ancillary products (such from a structure organized by products. Instead, as dental coverage). This example illustrates the it consolidated its channels and call centers into impact of behavioral economics in redesigning a unified Member Experience organization that experiences that aid customers in making focuses on life events—such as buying a house, decisions—leading to more relevant customer deploying for military service, getting married, outcomes and better revenues for the company. or having a baby. To provide customers with a Opening doors with first impressions synchronized experience across these events, USAA maintains a single, cross-channel information file Hotel chain Gaylord Entertainment began for each customer, and the executive vice president combining data from internal customer satisfaction of customer experience reports directly to the CEO.16 surveys with text analysis from online industry 15 “Case Study: Hotel Chain Looks for ‘Moments of Truth,’” Computerworld, October 10, 2011. 16 Peter Weill, “What Is Your Digital Business Model?” MIT Sloan School of Management Center for Information Systems Research, 14 PwC, “Experience Radar 2011,” 2011. September 2011.
  5. 5. Home At a glance 01 02 04 Upcoming 10Minutes How PwC can help    03 Building the In most companies, different functions (e.g., sales, marketing, service, Web, shipping) have organizational change that would involve people, processes, and technology, specifically: customer-centric distinct views of the customer—and each of these views represents only a slice of the • Standardizing the types of data that organization takes overall customer. Ultimately, the design of your different groups gathered and analyzed (i.e., demographics, customer-service patterns, real change organization may be limiting what you can accomplish. CMO Council research finds that one online behaviors, transactional data); in five marketers believes brand influence is being • Overhauling the technology suite to integrate limited by his or her organization’s design.17 the applications powering branches, ATMs, online banking, and call centers; and Organizations need feedback loops—the ability to provide customer information in real-time • Changing incentive structures to focus across the firm—because companies’ reaction on enterprise-wide value rather thanHow focused is your organization on the customer? times are now measured in minutes, not days. individual product line volume.Often, companies must realign and retool their organizationsaround these questions to put the customer at the center. Case in point: Peeling back the onion The bank anticipates the new strategy and seamless After analyzing its customer-facing organization, customer experience will result in significantCustomer-centered strategy—Are your a top-10 retail bank realized customers were revenue increases over the next five years.functional barriers preventing a unified view frustrated by an uncoordinated experience—a Creating distinctive customer experiencesof the customer across the company? branch teller not having information on a means businesses need to rethink how theyProfitable pricing—Are your pricing strategies directly transaction the customer made online, a customer generate demand and how they sell to andtied to the customer’s voice in the marketplace? having to repeat information when using the call service customers. By putting the customerInnovative products—Do insights about customer center, or customers receiving multiple promotional at the center, companies can look beyondexpectations drive your new product development? calls after already indicating they weren’t interested. traditional functional boundaries, bringingClosed-loop marketing—Are your marketing, PwC helped the bank develop a strategy together marketing, technology, and operationssales, and service functions integrated in a way that would integrate its channels to create to reinvent the customer-facing organization.that is measurable and fosters collaboration? a single view of the customer. This requiredNext-generation sales—Do meaningfulinteractions with customers align your salesprocess with customers’ needs?Progressive service—Do your culture and infrastructurepromote service quality that can generate revenue? 17 CMO Council, “Variance in the Social Brand Experience,” 2011.
  6. 6. Home At a glance 01 02 03 Upcoming 10Minutes How PwC can help    04 Leading the charge The CEO is often the organization’s only leader who has the scope of responsibility, authority, and customers on digital platforms, using social media, and analyzing unstructured data to create a customer- influence to properly advocate for the customer and for uniformity and excellence in customer streams—become part of business as usual. focused business experience. Chief experience officers can play 3. Firms can be inundated by the list of available customer connectivity technologies. But in a crucial roles in connecting the dots, but their period of limited financial resources, the CEO effectiveness depends on the tone from the top. needs to invest in the right spots. Among global The Chief Customer Advocate’s challenges CEOs, 73% expect changes in their technology investments over the next year.20 The difference Indeed, CEOs want to understand customers will be how these changes align with priorities. better. Among global CEOs, 69% wish they could Top-performing firms in PwC’s Digital IQ are spend more time meeting with customers.18 As far more likely to have a CEO who champions the company’s Chief Customer Advocate, the CEO the use of technology to achieve strategy.21 needs to overcome fundamental challenges on the way to building a customer-centric organization. 4. Companies are collecting and using customer 1. The CEO must delegate authority and mobilize information that resides up against the privacy the organization to adopt a customer focus. wall. Privacy is the emerging hot-button issue of While 68% of respondents in PwC’s 4th Annual customer experience, and the CEO needs to help Digital IQ Survey say their firm has an effective the organization explore the privacy/value trade- overall strategy, only 49% say the strategy off to properly serve its customers. That makes the is well communicated across the firm.19 CEO the guardian of customer trust, leading an effective approach to mitigating data theft risks. 2. Some traditional functions will need to change, and new learning will be required, often across Building a customer advocacy team—that is, a disciplines. CEO support will be vital to make voice-of-the-customer function—at the heart of new functions—such as communicating with your organization gives the customer a seat at the leadership table. 18 PwC, “15th Annual Global CEO Survey,” 2012. 20 PwC, “15th Annual Global CEO Survey,” 2012. 19 PwC, “The 4th Annual Digital IQ Survey,” 2011. 21 PwC, “The 4th Annual Digital IQ Survey,” 2011.
  7. 7. At a glance a glance Home At 01 02 03 04 How PwC can help     Upcoming CEO Agenda 2012 Toward a more flexible supply chain Despite uncertainties—whether economic, Volatility has become a fact of life in today’s 10Minutes topics regulatory or other—CEOs are taking deliberate business landscape. Yet, after years of global steps to stretch in markets they believe are most expansion, many companies’ supply chains are important for their future. 10Minutes distills the brittle, unable to respond to frequent fluctuations findings from PwC’s survey of more than 1,250 CEOs in demand and supply. This 10Minutes explores around the world as the CEOs’ agenda for 2012. the strategies companies can deploy to make their supply chains more agile and adaptable. Managing water risks Businesses have to compete for fresh water with a burgeoning global population that is consuming more food and energy; both are inextricably linked to water. Missteps in managing water can lead to political and legal snafus that halt production in far-flung global operations. 10Minutes discusses how companies can find creative solutions to managing water risks by taking the long view.
  8. 8. Home At a glance 01 02 03 04 Upcoming 10Minutes How PwC can help     How PwC To have a deeper discussion about customer impact, please contact: Tell us how you like 10Minutes and what topics you would like to hear more about. Just send an can help Paul D’Alessandro email to: Principal Download and experience the 10Minutes series PwC with enhanced multimedia on your iPad. Look +1.312.298.6810 for PwC 10Minutes in the iTunes App store. Tom Puthiyamadam Principal PwC +1.646.471.1490 PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at © 2012 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. 10Minutes® is a trademark of PwC US. ST-11-0027