Value Creation: Impact of Customer Experience (CX)

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Framework Primer
Value Creation: Impact of
Customer Experience (CX)
Presentation created by
Adopt
Continuous
Improvement
(CI) Thinking
Focus
on Most
Important
Customer
Journeys
Link
Customer
Value to
Operational
Drivers
Simplify and
Streamline
Offering
Understand
What
Customers
Value
1 2 3 4 5

2This document is an exclusive document available to FlevyPro members - http://flevy.com/pro
Contents
Overview
The Digital Age
Customer Experience Approach to Value Creation
Templates
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In this Digital Age of frequent disruption, this framework discusses how to
improve Customer Experience (CX) and secure maximum value
Presentation Overview
Satisfied customers spend more, stay loyal over the long term, and bring improved value
to the organizations serving them.
With the evolving technology, leaders will have to keep evolving their Customer Experience (CX) approaches to
secure additional avenues of revenue and to stay competitive in the market. To do this, they will need to develop
Data Analytics capabilities to effectively utilize insights on customer preferences and provide them with the
offerings of their choice. Digital Transformation initiatives fall short of securing their maximum value potential
due to the leadership’s focus on improving specific touchpoints instead of confronting the entire Customer
Journey—spanning across several departments and channels.
To make their evolved CX sustainable and to become customer-centric, organizations need to clearly transform
their ways of doing business, operations, and employee behaviors. This is not going to happen by concentrating
entirely on the front-end CX and not improving the fundamental support processes.
This presentation provides a detailed overview of the 5-phase approach that organizations can utilize to enrich
their CX and capture the highest potential value:
The slide deck also includes some slide templates for you to use in your own business presentations.
1 Understand What Customers Value
2 Simplify and Streamline Offering
3 Link Customer Value to Operational Drivers
4 Focus on Most Important Customer Journeys
5 Adopt Continuous Improvement (CI) Thinking

Contents
Overview
The Digital Age
Templates

Customer Experience (CX) is evolving with the evolving technology
Customer Experience optimization benefits include more satisfied/paying customers,
additional value, more viewership, and better retention rates.
The Digital Age – Impact of Customer Experience
Source: Putting Customer Experience at the Heart of Next-generation Operating Models, McKinsey, 2017
Digital native organizations are exploiting innovative technologies to offer new products and services;
provide different means of interaction between vendors and customers; and to introduce tailored yet
uncomplicated experiences for customers.
With the evolving technology, large traditionally-run firms will have to keep evolving
their CX approaches to secure additional avenues of revenue and to stay competitive
in the market. To do this, they will need to develop Data Analytics capabilities to
effectively utilize insights on customer preferences and provide them with the
offerings of their choice.
Digital Transformation initiatives fall short of securing their maximum value potential
due to the leadership’s focus on improving specific touchpoints instead of confronting
the entire Customer Journey—spanning across several departments and channels.
To make their evolved Customer Experience sustainable and to become customer-
centric, organizations need to clearly transform their ways of doing business,
operations, and employee behaviors. This is not going to happen by concentrating
entirely on the front-end CX and not improving the fundamental support processes.

There is a positive association between Customer Satisfaction and Total
Shareholder Return
For more information on TSR, refer to this FlevyPro Framework:
https://flevy.com/browse/flevypro/total-shareholder-return-tsr-2913.
The Digital Age – Customer Satisfaction (CSAT) to TSR
Source: Putting Customer Experience at the Heart of Next-generation Operating Models, McKinsey, 2017
Customer Satisfaction has a significant impact on Total Shareholder Return (TSR). Companies that excel at Customer
Satisfaction generate superior Total Shareholder Return at lower risk.
Research reveals that
the companies that
consistently scored
above-average on
American Customer
Satisfaction Index
achieved 400% growth
in value over a 10-year
period compared to
those that had a below-
average Customer
Satisfaction (CSAT)
score.
Total return to shareholders for companies with above- and below- average customer-
satisfaction across /%
Ten-year value growth
1 Companies with above-average American Customer Satisfaction Index scores within their industry
2 Companies with below-average ACSI scores within their industry
Leaders1
S&P 500
Laggards1

Contents
Overview
The Digital Age
Templates

For organizations to become customer centric, a laser-like focus on
optimizing CX is essential
This 5-phase approach facilitates the organizations in transforming their Customer
Experience into customer delight and achieving clear-cut differentiation.
Customer Experience (CX) – Approach to Value Creation
Customer Experience management is the key to Customer Satisfaction, additional customer spending,
and improved revenue figures.
The following 5-phase pragmatic approach is immensely beneficial for organizations in improving their CX and
securing maximum potential value:
Adopt
Continuous
Improvement
(CI) Thinking
Focus
on Most
Important
Customer
Journeys
Link
Customer
Value to
Operational
Drivers
Simplify and
Streamline
Offering
Understand
What
Customers
Value
1 2 3 4 5

Ascertaining the key drivers of Customer Satisfaction is the foremost
step in improving Customer Experience
Understanding what matters to customers helps companies unlock new business
opportunities and value, and adopt more robust operating models.
1. Understand Value – Overview
A flawed approach—that many companies still employ—at the onset of a CX management initiative is to reduce costs
associated with internal processes and exploring customer pain points. This doesn’t assist in generating maximum
customer value.
1
Understand
What
Customers
Value
Developing a clear understanding of what matters to the customers the most.
• This facilitates the organizations in deciding where to focus (e.g., a cumbersome process).
Deliberating on rationalizing their processes
Creating new experiences for the customers to generate additional value.
Showing compassion to their customers, going an extra mile to resolve their issues,
and even delighting them with the kind of support they provide to them.
Customer-centric organizations devote their time in:PHASE

A Customer Journey can achieve an aggregate low score for satisfaction
even when individual interactions perform satisfactorily
Great Customer Journey necessitates much more than just satisfactory interactions.
1. Understand Value – CSAT vs. Touchpoints
Customer Satisfaction should be mapped along a journey spanning multiple functions and channels, as customers use
various channels to communicate with service providers before making a transaction.
For instance, to get
a problem resolved,
customers typically
interact by visiting an
outlet, calling a rep at
the call center,
navigating online, or
utilizing an app.
Satisfaction of a
customer with these
interactions—
individually with a rating
of 85 to 90%—can still
be low when measured
as an aggregate of all 4
interactions (just 60%).
Examples of customer journeys
Open an account Move to a new
address
Make changes
to an account
Resolve an issue
Satisfactory touchpoints may not add up to a satisfactory customer journey
Touchpoint
satisfaction
End-to-end
journey
satisfaction
90% 85%
Branch Call center Web App
“I want to resolve an issue…” journey
85% 90% 60%X X X =

Alongside rationalizing the processes, a detailed analysis of the offerings
and pricing is essential to tap value from Customer Experience
A thorough assessment of the product and service portfolio, brands and pricing helps
unlock the most potential from the transformation initiative.
2. Simplify and Streamline – Overview
Prior to reorganizing Customer Experience, it is equally important to review your brands, pricing regime and product /
service offerings. After all, even the most pleasing Customer Experience cannot offset an unpredictable or exorbitantly
expensive product.
2
Simplify and
Streamline
Offering
Investigate which interactions and journeys carry the most significance in a Customer
Experience.
Evaluate how the organization is being rated in each journey.
Highlight and focus on the operations and processes that need to be overhauled to
improve the overall Customer Experience to the maximum possible extent.
Once these fundamentals are in order, organizations should:PHASE

Rationalizing the product or service offerings and eliminating redundant
process steps assist in enhancing Customer Experience
Other important Customer Journeys which rank worst by customers include setting up new
accounts and signing up, needing them to fill out various forms and enter a lot of data.
2. Simplify and Streamline – Customer Journeys vs. CSAT (Example)
Customer Experience offers numerous benefits in every sector including banking. Major Customer Journeys at banks
help reveal areas that constantly underachieve and ways to tackle them.
A study by McKinsey
shows relationship of
Customer Journeys with
Customer Satisfaction.
It reveals “using a
product or service” and
“resolving issues” as the
2 most critical journeys
where banks
underperform, which
contributed 23% and
20% respectively to
Customer Satisfaction.
Performance
% of customers affects
1 Setting up online banking, creating automatic bill payments, ordering checks
2 Changing address or name on account, for example 3 Relative weight against customer satisfaction
Importance
Receiving & managing
bank statements
Resolving problems
with your accounts
Higher customer
satisfaction, lower
importance
Making changes
to your accounts2
Signing up for
a new account
Adding a new
product or account
Higher importance, lower
customer satisfaction
Setting up your account
& getting it running1
Using the bank’s
products & services
58
42
18
42
30 40
70The content on this page has been partially hidden.

Seeing journeys from the customer perspective aids in linking internal
processes, structures, and KPIs to customer facilitation
Even minute incremental changes assist in creating the right mindsets.
3. Link Value to Drivers – Overview
Technology and customer input provide the stimulus to streamline offerings and Customer Experience. However, the
real value comes from linking the Customer Experience to core operational processes.
3
Link Customer
Value to
Operational
Drivers
Elements that are of most value to the customer across a journey (e.g., quick cycle
time, customization)
Drivers of business costs and revenues (additional sales, number of manual touches,
extent of customer fallout).
Most importantly, there is a need to inculcate the right mindsets—from cost reduction
and “complaining of problems in implementing transformation” to “customer
centricity.”
This necessitates deeper insights on:PHASE

A delightful Customer Experience warrants systematic implementation
and superior service
The net promoter score (NPS) was low if application completion took > 20 minutes, if new
account activation took > 1 day, or debit card issuance and PIN took > 5 days.
3. Link Value to Drivers – Impact of Drivers on CSAT (Example)
A deeper analysis of Customer Journeys benefits the organizations in determining the operational improvements that
bear the most positive effect on Customer Experience.
A Customer Experience
benchmarking study
carried out at a large
North American bank
examined the impact of
time on Customer
Satisfaction in deposit
account opening
customers—to apply
and activate the
account, and receive an
account card.
See the results to the
right.
Net promoter, score, %
Time to apply
(minutes)
Time to activate
account
(days)
Time to receive
debit card and
PIN (days)

Another important step of the approach to improving Customer
Experience is to concentrate on key journeys one at a time
By implementing customer insights, best practices and benchmarks, companies can map
and fulfill their customer expectations.
4. Focus on Important Journeys – Overview
Focus on the most important Customer Journeys sequentially and encourage the Customer Experience
agenda by transforming operations in order to enhance productivity and agility.
4
Focus on Most
Important
Customer
Journeys
Realizing that long queues for security checks fret customers—over concerns of missing their
flights—is important for airports. Competent airport authorities use this opportunity by
displaying signs that indicate approximate waiting times to let their customers plan accordingly,
and to ease their anxiety.
Likewise, customers prefer knowing the arrival time of a repair technician than stay waiting.
Customer-centric organizations refine their scheduling and track their repair staff in real time,
by using GPS and dynamic dispatch technology, improving staffing levels and costs, and
transforming their operating models.
In the bank deposit account sign-up journey the thing that mattered most to customers was the
smooth completion of the application and the availability of information to help in choosing and
comparing services. Leading financial institutions enable customers to open a functioning
deposit account in less than 10 minutes. This gives a benchmark which any bank can use to
improve its sign-up journey.
Here is an illustrative example:PHASE

To better manage their Customer Experience, organizations need to
implement lean management and continuous improvement initiatives
Leading organizations create value by embedding agile methods of working and transform
their management systems to support CI.
5. Adopt CI – Overview
Customer-centric organizations employ a systematic Lean approach to simplifying their processes, removing waste, and
nurturing a Continuous Improvement (CI) culture. They draw help from technology to improve Customer Journeys.
3
Adopt
Continuous
Improvement
(CI) Thinking
Utilize digitization to automate journeys.
Use Advanced Analytics to autonomously process data and gather valuable insights on
customer preferences.
Redesign processes with automation and machine learning to remove recurring routine
jobs.
Use Business Process Outsourcing (BPO) to complete specific tasks, particularly for
virtual, non-core activities.
Here are several ways of how to leverage technology for Customer Journey improvement:PHASE

Contents
Overview
The Digital Age
Templates

Insert headline
Insert bumper.
Customer Experience (CX) Approach to Value Creation – TEMPLATE
Adopt
Continuous
Improvement
(CI) Thinking
Focus
on Most
Important
Customer
Journeys
Link
Customer
Value to
Operational
Drivers
Simplify and
Streamline
Offering
Understand
What
Customers
Value
1 2 3 4 5
• Insert filler text, filler
text, filler text, filler
text, filler text.
text, filler text.
text, filler text.
text, filler text.
text, filler text.
text, filler text.
text, filler text.
text, filler text.
text, filler text.
text, filler text.

Insert headline
Insert bumper.
Customer Experience (CX) Approach to Value Creation – TEMPLATE ALTERNATE
Understand
What
Customers
Value
1 2 3 4 5
Simplify and
Streamline
Offering
Link
Customer
Value to
Operational
Drivers
Focus on
Most
Important
Customer
Journeys
Adopt
Continuous
Improvement
(CI) Thinking

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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
about our company.
• General Inquiries
support@flevy.com
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