Towards better customer experience management

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How to improve customer experience to drive profitable growth and promote loyalty

How to improve customer experience to drive profitable growth and promote loyalty

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  • 1. COMMUNICATIONS & MEDIA Seven steps tobetter customer experience management Improving customer management to drive profitable growth kpmg.com
  • 2. © 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliatedIntroduction with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23183NSS It costs many times more to acquire a new customer than retain an existing one. However, not all customers are created equal. Some require more attention than others, some need guidance from time to time, and some simply do not wish to be disturbed. By gaining insights on needs, preferences, and behavior, customer journeys can be optimized at critical touch points. Consistently delivering positive experiences establishes relationships. Strong relationships help build loyalty and drive growth. Customer experience management They also help generate incremental (CEM) focuses on creating differentiated sales through recommendations on experiences at touch points that social and professional networks. , customers choose to interact with In today’s business climate, the company. Focusing on CEM as rapid innovation and fierce competition a strategy helps service delivery makes it harder for telecommunications capabilities align and adapt to behavioral companies to outpace rivals on a shifts of the target audience. Benefits product basis alone. With new features realized go well beyond improvements quickly copied and introduced to in customer satisfaction and churn. market, the quality of the customer Loyal customers buy more and share experience becomes paramount as it experiences with friends and family.
  • 3. Seven steps to better customer experience management | 3 © 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23183NSSis an intangible that can be imitated but statisticians. Responsibility for the “Positive customernot commoditized. In some instances, end-to-end customer journey isthe quality of experience can even help distributed across multiple business experience can build itsjustify premium pricing. functions, often times causing messaging own momentum, creating and service delivery consistency to beManaging customer experience can a challenge. an ‘ecosystem of goodwill’be a tall order. Every touch point,from advertising campaigns to post- The issue is becoming more acute as data that costs relatively little topurchase support, can affect customer about customers accumulates throughout maintain, but can deliver aperception and loyalty. To influence those the customer life cycle. In addition,interactions, organizations often need to as companies grow, whether organically loyal fan base and tangiblego through a significant transformation or through acquisition, new systems, bottom-line returns. ”of their own, adapting their systems, applications, and processes areprocesses, and infrastructure to put often only partially integrated withthe customer at the center. The effort is legacy infrastructure, leading to dataworth the investment. Positive customer fragmentation, inconsistent taxonomies, ,experience can build its own momentum, and inaccurate reporting. Ownershipcreating an ‘ecosystem of goodwill’ that for the customer experience tends tocosts relatively little to maintain, but can be fragmented, nestled within productdeliver a loyal fan base that generates organizations, marketing departments,tangible bottom-line returns. and sales groups, often with little cohesion among them.This paper offers seven ideas to helpcompanies in the communications Until now, the solution has been toand media industry drive growth and spend heavily on sales and customerprofitability using customer experience analytics. But this, too, can causeas a service differentiator. problems. Many marketing initiatives are evaluated on a one-off basis.Why managing customer experience is The net impact is multiple teamshard to do reporting results on the sameAlthough many departments and campaign, or worse, perceivedfunctions have systems to track improvements are artificial, driven bycustomer data, and measure customer changes in metric calculations.satisfaction, few organizations have aholistic, enterprise-wide view of Given its importance, communicationscustomer experience. Voice of the and media companies are keen to rethinkCustomer programs can determine strategy, assign leadership, and defineNet Promoter scores but are typically governance for customer experiencenot action oriented. Business intelligence management, not only to gain a bettertools provide insights on the dynamic understanding of customer needs andnature of customer behavior but not buying behaviors but to translate thewithout IT support and interpretation from insights into better, more tailored, service.
  • 4. 4 | Seven steps to better customer experience managementSeven steps to better customer © 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo andexperience managementBased on our experience with clients in the communications and media sector, there areseven key steps that organizations can take to improve their ability to capture, analyze,and respond to customer data and improve the customer experience. “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23183NSSStep 1:Understand the needs, wants, and preferences of your target audiencePreference research, consisting of both Key points to considerqualitative and quantitative studies, • Has the needs and preferences of yourcan help organizations gain insights on target audience changed over time?customer shopping, pricing, productusage, and service support preferences. • What are the growth categories in yourThis critical first step is not about creating industry? What share of growth doesa new segmentation scheme. your company capture?Instead, the focus is on gaining insights • Other than price, how do youon (1) how prospects hear about new differentiate your products and ,products; (2) the factors that influence services?who, what, and where they shop;(3) onboarding needs and expectations; • How well aligned is your product and(4) how they like to get help when issues service road map with market trends?arise; and (5) perceived value at specific • How successful are your renewal,price points given new technologies and up-sell, and cross-sell campaigns?market trends.The last point suggests that while acustomer may pay premium prices forcertain service features, they bargainshop for others. So knowing wherekey customers place their priorities isessential to positioning in a meaningfulway. For example, while the convenienceof one bill and savings related toconsolidating voice, video, and Internetservice still drive purchase decisions,the value of the bundle is fast diminishingas more households switch to wireless orthird-party VoIP providers for voice.
  • 5. Seven steps to better customer experience management | 5 © 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23183NSSStep 2:Establish economic frameworks to understand and prioritize impact ofmarketing, sales, and service decisionsComprehensive economic frameworks New product focus shifted to growth Key points to considerdrive everything from market opportunity categories only. Highly targeted • How do you decide which markets toassessments, product pricing/cost acquisition and up-sell/cross-sell enter, grow, harvest, and exit?analysis, marketing spend, channel mix, campaigns followed.support strategy, and customer policies, • How well do you understand Over the next 12 months, the companyamong others. With focus on customer performance within your distributed not only cut marketing expenditures byexperience management, tradeoffs are sale model? more than 40 percent, but also, churnrequired at each touch point. The challenge improved, average revenue per customer • How do you determine whichis to balance cost to acquire and cost increased, and it actually boosted sales by products and services represent ,to serve against customer tenure and 10 percent, thanks to greater performance growth categories?profitability. discipline. • How much pricing volatility is thereIn mature markets, companies are in the current product and serviceconstantly implementing differentiated portfolio?strategies and tactics. At onetelecommunications firm, the marketing • What is the cost to serve customersbudget was cut by about 40 percent. using current online and offline supportHowever, there was no relief on the target tactics?sales numbers. Rather than betting bigon a new marketing campaign to increaseyield on existing tactics, big-ticketexpenditures, such as golf sponsorshipsand TV advertising, were cut. But theteam realized that much deeper changeswere needed to hit their numbers at thereduced budget level. After much debatebetween Marketing, Sales, and Product,the company dramatically reshapedits marketing footprint, pulling out ofunderperforming areas and going froma nationwide presence to locations injust 10 key markets. They then allocatedbudget based on market size,sales momentum, supplier strength,and other criteria. At the same time,they revamped their indirect channelprograms and moved from a residualpayout to pay-for-performance model.
  • 6. 6 | Seven steps to better customer experience management © 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23183NSSStep 3:Track customer behavior, distill patterns, and adapt to accommodate shiftsInternational Data Corporation (IDC) an outcome, behavior analytics allows • What are your most and least profitableestimates that 5 gigabytes of data you to identify and start understanding campaigns? Should you spend yourexists for every person on the planet. key drivers behind emerging trends budget online or buy print ads orThe need to make sense of that sooner so you can anticipate, align, airtime? How quickly does campaigninformation, and turn data into and adapt quicker to accommodate effectiveness erode over time?actionable insights, is the business behavior shifts.intelligence challenge.The traditional Corporate decision makers can quicklyway of analyzing data involved pulling uncover behavioral patterns across anyinformation using database query tools, aspect of customer interaction and act ,and then running regression analysis to on these timely insights to increaseunderstand propensities. If someone customer acquisition, retention, up-sells,bought diapers every two weeks cross-sells, and Web monetization.for the last two years, the predictive Specific applications includemodel would suggest that he or she market basket and loyalty analysis,will likely do so again. The problem is merchandising and marketingthat customer behavior is not linear. optimization, and online analytics.And although predictive analytics hasevolved significantly, many propensity Key points to considermodels are still largely developed by • Are current propensity models ablereverse engineering outcomes like to identify emerging trends thatpurchase and churn events to identify represent growth opportunities?leading indicators. While useful,predictive analysis lacks the ability to • Beyond seasonality and regionalidentify emerging trends that are driven factors, what is driving changes inby different leading indicators quickly. purchase patterns?The task is limited by the time required How does in-store behavior • How does in-store behavior affectto run a new regression model focused online purchase decisions? affect online purchaseon tracing events that lead to the new decisions? What is the connection between anoutcome. abandoned online shopping basket andBehavioral analysis has surfaced in subsequent purchases, either in-storerecent years as the approach that fills or online?this void. It enables organizations to spot • What are the best ways to targetand sort new patterns by association. your most profitable customers?Think of association as answers to Are you reaching your most profitablequestions that may not have been asked customer segments?yet. So in contrast to reverse engineering
  • 7. Seven steps to better customer experience management | 7 © 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23183NSSStep 4:Develop lead nurturing and customer management plans for target audiencesEvery interaction informs the next Similarly, customer management plans Key points to considerinteraction. Over time the information can be developed to address events that • How are past customer and prospectyields actionable insights for sales occur during the service and customer lists managed and leveraged by salesand service engagement. Strong lead life cycle. Event triggers and responses acquisition programs? How effectivenurturing and customer management can be tiered by segment, risk, and value. are your win-back campaigns?programs are built around insights about A customer who spends $5 per month,interests/needs and preferred contact for instance, will trigger certain • How many times a year does yourpreferences. For instance, downloading a responses, such as sound bytes and company communicate with thewhite paper or podcast on a new product e-mail notifications, while a customer customer? How many times a year ,or service might indicate that a prospect who spends triple that amount may does your company market to ais looking for preliminary insight, but is receive a dedicated customer service prospect?not yet ready to buy. The company can number and a single point of contact for • What is the optimal contact strategyrespond to those inputs by directing issue resolution. Knowing the average for renewing and up/cross-sellingadditional related material toward the lead time and the typical progression customers?consumer over the coming weeks and of trigger events can help productmonths. A request for a free trial or and marketing managers gauge the • What are your customers, mostdemo, on the other hand, might signal a effectiveness of current campaign preferred communications channels?greater degree of interest, one that might strategy and refine accordingly. • What are the most critical touch pointsmerit a sales call or other more personal in your sales and service life cycle?communication.It’s important to define a structured planfor different stages of lead generation.If a prospect says “no” today, the leadshould not be disposed of. Informationpicked up in that interaction can still formthe basis for subsequent contact.Even cold leads need their respectivedecision pathways. For instance,the prospect may still be under contractor may be waiting for prices to go down.That information is then compiled intothe lead nurturing plan to be acted uponlater as the prospect’s needs change.
  • 8. 8 | Seven steps to better customer experience management © 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23183NSSStep 5:Develop a customer-centric information architectureGaining a single view of the customer will be gradual. While the path generally Key points to consideris critical, yet hard to obtain, particularly starts with call center and Web initiatives, • How quickly can new information aboutsince many large organizations tend to the journey eventually touches customer a customer disseminate through yourhave information about the customer databases and data warehouses, enterprise?distributed across multiple systems. knowledge bases, search technologies,The problem is complicated by the fact mobile applications, online portals, • Was your information architecturethat information captured about the online communities and social media, designed for products and systems,customer typically only describes the marketing campaign management, or customers?responsible party on the account. customer service systems, product • How does your information architecture ,The account may be a household where and service configurators, simulations and account for relationship hierarchy?there are multiple family members or visualizations, as well as manufacturing,a business where there are multiple inventory, billing, shipping and delivery, • How do you categorize customer data?employees. For some distributed and replenishment of the supply chain, By life cycle events, interactions,businesses, headquarters may be even in-vehicle and handheld systems. or products?the responsible party for the account. None of these areas remains untouched. • Are your marketing and customerDesigning and deploying a customer- Application design and development is databases integrated? If so, what is thecentric information architecture not a sequential process. Neither is the unique identifier?involves understanding the entity shift to a customer-centric informationtype, creating the entity relationship architecture. The change process isstructure, linking events to the structure, recursive and iterative. Many activitiesand then populating the entity can take place in parallel. Just about all ofstructure with relevant data over time. them will be done many times, over andAnother compelling reason to create a over again.customer-centric information architectureis because customer-facing applicationsdemand it. Design and development ofcustomer applications is not the same The problem is complicatedas design of applications that run thebusiness. In many ways, what we’re by the fact that informationreally talking about here is the shift of your captured about the customerorganization’s information systems from typically describes thea product-centric focus to a customer-centric focus. For most communications responsible party onand media companies, the move to a the account.customer-centric information environment
  • 9. Seven steps to better customer experience management | 9 © 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23183NSSStep 6:Deploy workflow-based tools to marketing, sales, and servicestakeholder groupsToday’s multichannel environment creates Better connectivity and transparency Key points to considermany more sources of potential customer can also create better reporting tools, • How well coordinated are handoffsinteraction. Social and commercial such as dashboards, and easier between marketing, sales, and servicenetworks, for instance, offer important monitoring, through enhanced functions?clues into the potential for up-selling, performance measurement capabilities.switching providers, and increasing For companies wrestling with legacy • How well does your company managerevenue. Eliciting this information requires architectures and fragmented databases, customer escalations? How long doesthat companies develop the ability to SaaS and cloud computing can be a way it typically take to resolve? How manymonitor customer behavior by channel to leapfrog over to a more integrated data are not resolved? ,and integrate that information across the and workflow management platform. • How are lead nurturing and customerorganization. management plans monitored?Workflow tools provide a way for sales, • What tools are in place to facilitatemarketing, and support functions to workflow across business functions?perform key tasks more collaborativelyand transparently. These technologies can • How much visibility and control doease bottlenecks, reduce paperwork, customers have on service issuesand improve communication between and through online portals?among departments. The real-time natureof these systems allows information,such as a new lead, to be flagged andqualified. Once vetted, that lead, and theentire customer record, including notes,can be fed to the sales team.Similarly, negative customer satisfactionfeedback can trigger workflows.Depending on the issue, response may bean automated e-mail or an outbound call bya service quality agent.Social and commercial networks, forinstance, offer important clues intothe potential for up-selling, switchingproviders, and increasing revenue.
  • 10. 10 | Seven steps to better customer experience management © 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23183NSSStep 7:Create a customer experience map to optimize touch pointsThe customer experience map charts Organizations often develop multiple • What percentage of work flows endsthe journey from first contact with experience maps covering customer- up on jeopardy paths?a product or company through the facing touch point categories, such as • How do you measure the effectivenessrelationship life cycle. The goal is to shopping, onboarding, bill payment, of customer experience delivery?align process, policy, technology, and service support. A prospectiveand organization with needs and customer might be in the market for a • Can your company drive growthpreferences of the target audience. new smartphone, for instance. To acquaint using customer experience as aA map can help define functional herself with current offerings, she might differentiator?requirements to support the launch start with Internet browsing, then head to The quality of the customer experience ,of a new product or service. It can a retail outlet to compare products and talk has a direct bearing on sales, profit,also help identify gaps in existing one-on-one with a sales representative. and overall market position. For manyprocesses. With that information, the customer companies, improving it will involve might then return home, consult with aIt’s important to note that a customer changes in how data is captured, few friends, and shop online for the bestexperience map is not a workflow shared, and leveraged and will require deal. Using customer experience maps,diagram. Although process flows are structural improvements in how staff organizations can design and coordinateunderlying components, they are used across functions work together. experiences across each touch point toprimarily to assess strength of existing While defining and refining the deliver consistent messaging and calls tocapabilities and to identify dependencies customer experience is an ongoing action.between business functions. process, there is growing urgency toStrength is tested with customer use Key points to consider act. The communications and mediacases that represent jeopardy path companies that lead in this area can have • Who owns customer experience withinscenarios. For instance, one use case a significant competitive advantage over your company? If ownership is shared,for a VoIP phone service provider tests slower-acting peers. who drives customer experiencehow well the current process addresses tradeoff decisions?prospects who do not have broadbandat home and/or a data plan on their • As business processes are defined,mobile device. In this same example, what customer experience factorsa dependency on the VoIP provider’s are incorporated into the planning?broadband service partner might be Are they included in go-to-market gateweak if that partner’s broadband footprint requirements?is limited. All this to address a simplequestion:“Can I get your service?”
  • 11. Seven steps to better customer experience management | 11 © 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated , with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and“cutting through complexity” are registered trademarks or trademarks of KPMG International. 23183NSS
  • 12. For more information on customer experience managementinitiatives, please contact any of the following individuals:Tony CastellanosPartnerU.S. Communications & Media Sector LeaderKPMG LLP212-954-6840acastellanos@kpmg.comMiriam Hernandez-KakolPrincipalCommunications & MediaKPMG LLP973-912-6227mhernandezkakol@kpmg.comDavid HuangSenior ManagerCommunications & MediaKPMG LLP973-912-6576davidhuang@kpmg.comThe information contained herein is of a general nature and is not intended to address the circumstances of any particular individual orentity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurateas of the date it is received or that it will continue to be accurate in the future. No one should act upon such information withoutappropriate professional advice after a thorough examination of the particular situation.© 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member ,firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A.The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23183NSS