Applying the balanced scorecard for customer experience management

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The balanced scorecard is an effective tool for measurement and evaluation of a firm's actions and strategies. However, where does the BSC stand with measuring Customer Experience Management. We discuss this with a case study of Southwest Airlines. A presentation for Services Marketing postgraduate course at The University of Queensland.

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Applying the balanced scorecard for customer experience management

  1. 1. AND THE BALANCED SCORECARD BLACK HOLE?
  2. 2. 1.1. IT’S ABOUT MEASUREMENT
  3. 3. = MANAGING A COMPANY IS LIKE FLYING AN AIRCRAFT
  4. 4. 2. BALANCED SCORECARD
  5. 5. BALANCED SCORECARD GIVES YOU THE TOOLS YOU NEED
  6. 6. SITUATION Financial objectives Non-financial objectives MAKE $$$ Sales and profits Financial data Customers + Service Employee productivity Operations Management
  7. 7. 3. CUSTOMER3. CUSTOMER3. CUSTOMER Objectives Measures Targets Initiatives “To achieve our vision,our vision, how should we appear to customerscustomers 2. INTERNAL BUSINESS PROCESS2. INTERNAL BUSINESS PROCESS2. INTERNAL BUSINESS PROCESS2. INTERNAL BUSINESS PROCESS2. INTERNAL BUSINESS PROCESS “To satisfy our Objectives Measures Targets Initiatives “To satisfy our shareholders and customers,and customers, what businesswhat business processes must we excel at?we excel at? BSC MODEL Source: Kaplan & Norton, 1992 4. ORGANISATION LEARNING4. ORGANISATION LEARNING4. ORGANISATION LEARNING4. ORGANISATION LEARNING4. ORGANISATION LEARNING “To achieve Objectives Measures Targets Initiatives our vision, how will wehow will we sustain our ability toability to change andchange and improve? 1. FINANCIAL1. FINANCIAL1. FINANCIAL Objectives Measures Targets Initiatives “To succeed financially,financially, how should we appear to our shareholders?shareholders? 1. FINANCIAL1. FINANCIAL1. FINANCIAL Objectives Measures Targets Initiatives “To succeed financially,financially, how should we appear to our shareholders?shareholders?
  8. 8. Most organisations will say the purpose of BSC is to link evaluation to strategy. (Schneiderman, 2003)
  9. 9. From performance evaluation to  strategic management EVOLUTION 1st Generation (Kaplan & Norton, 1992) Four box approach 2nd Generation (Kaplan & Norton, 1996) Four box approach Strategic linkages 3rd Generation (Late 1990s) Four box approach Strategic linkages “Destination statement” 4th Generation? NOT SURE WHAT WILL BE “NEW”- A LINK TO CUSTOMER EXPERIENCE MANAGEMENT?
  10. 10. 3. CUSTOMER EXPERIENCE MANAGEMENT
  11. 11. Process managing a customer’s experience with a product or a company Truly customer focused management concept (not a “marketing” concept) Is also related to employees WHAT IS CEM?
  12. 12. Source: Schmitt, 2003 FIVE STEPS OFCEM FRAMEWORK 1.Analyze experiential world of the customer 2. Build experiential platform 3. Design the brand experience 4. Structure customer interface 5. Engage in continuous innovation
  13. 13. Innovation Segmentation and marketing Positioning Service Branding APPLICATION AREAS
  14. 14. Financial Value Internal Resources Customer Experience Customer equity Retention Add-on SellingAcquisition Brand experience Customer interface Continuous innovation Corporate creativity EX Database HR for EX Experiential Marketing Employee experience
  15. 15. 3. THE BLACK HOLE?
  16. 16. THE BLACK HOLE BSC CEM
  17. 17. 4. CASE STUDY: SOUTHWEST AIRLINES
  18. 18. Low fares Free baggage! Flying multiple short routes Only one aircraft type 32 years of profitable operations The lowest ratio of complaints
  19. 19. Ground-crew strategy map and BSC
  20. 20. 1. Strategy 2. Voice of consumers 3. Experience design 4. Employee brand engagement 5. Delivery 6. Metrics Source: Venkat, 2010 SIX STEPS INCEM IMPLEMENTATION
  21. 21. #1: STRATEGY CUSTOMEREMPLOYEES COMPANY
  22. 22. Based in Texas, USA, since 1967 Full-service No seat assignments, no meals, no movies Fulfill its promises Customer Service guarantee: Low-cost, no-frills Brand value: people & love Brand differentiators : Flight attendants
  23. 23. #2: VOICE
  24. 24. 1. Effective and memorable 2. Branded and differentiated 3. Contrastive and prominent #3: EXPERIENCE DESIGN
  25. 25. #4: EMPLOYEE BRAND ENAGEMENT Make customer happy? Make employee happy first! Engage customer? Engage employee first! Embedded corporate culture Group cohesion Affective commitment Motivation
  26. 26. 1. Segment target customers 2. Know about them 3. Orchestrate ideal experiences 4. Action 5. Deliver distinctive customer experiences: create value for customers #5: ORCHESTRATED DELIVERY
  27. 27. #6: METRICS Share of wallet Share of mind Share of mouth Customer satisfaction Customer retention
  28. 28. 5. RECOMMENDATIONS: BSC + CEM MODEL
  29. 29. “While more recent Balanced Scorecard designs are substantial improvements on original ideas, there is room for improvement.” - Lawrie and Cobbold (2004)
  30. 30. Strategy map Objectives Measures Targets Initiatives Financial Same as their original BSCSame as their original BSCSame as their original BSC Customer Desirable customer experience Desirable customer experience 1. Customer satisfaction 2. Customer retention 3.Three shares Rank 1 Customer engagement Internal Service guarantee General service Branded service 1. Service reaction time 2. Positive feedback rate Raise work efficiency 100% Attendant engagement Learning Desirable employee experience Employee skills Aligned with strategy 1. Employee satisfaction 2. Employee retention 3. Self- assessment Rank 1 Training Communicati on Incentive Internal competition
  31. 31. 1. What is a Balanced Scorecard good for? 2. What is Customer Experience Management 3. The Black Hole of BSC-CEM 4. Case study: Southwest Airlines 5. Formulation of a new model IMPORTANT LESSONS RECAPLET’S DO A

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