The Customer Revolution B I Z


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The Customer Revolution B I Z

  1. 2. The Customer Revolution How to Thrive When Customers Are In Control AUTHOR: Patricia B. Seybold, Ronni T. Marshak & Jeffrey M. Lewis PUBLISHER: Random House, Inc. DATE OF PUBLICATION: 2001 ISBN : 0609607723 NUMBER OF PAGES: 359 pages Book pic
  3. 4. 1. Embrace the Customer Revolution and Thrive in the Customer Economy <ul><li>Unless you act now to focus on the quality and consistency of the customer experience you offer, your firm will be hopelessly lost in the turbulence. </li></ul><ul><ul><li>Customers have taken matters into their own hands, maximizing their power of choice. </li></ul></ul><ul><ul><li>They prefer custom-designed experiences. </li></ul></ul><ul><ul><li>They want good service, fair prices, and innovative offerings. </li></ul></ul><ul><ul><li>If they don’t get it from your business, they will go elsewhere, and will tell the world too. </li></ul></ul><ul><li>Sweet Surrender </li></ul><ul><ul><li>Relinquish control of your company’s destiny. The Internet and mobile wireless devices arm the new customer with tools to access your business, as well as your competitors. Take a look at some of these examples: </li></ul></ul><ul><ul><ul><li>Peer-to-peer file sharing (Napster) </li></ul></ul></ul><ul><ul><ul><li>Open-source design communities (Linux) </li></ul></ul></ul><ul><ul><ul><li>Self-policing marketplaces (eBay) </li></ul></ul></ul>
  4. 5. 1. Embrace the Customer Revolution and Thrive in the Customer Economy <ul><li>Adapt to changing customer desires in real-time. </li></ul><ul><ul><li>A customer-focused culture attracts and retains employees because these companies are more fun to work in than those that are product-centric and bureaucratic. </li></ul></ul><ul><li>How to Survive in this Profound Revolution: </li></ul><ul><ul><li>First, recognize every business is now an e-business. </li></ul></ul><ul><ul><li>Second, realize there are no e-customers, only customers. </li></ul></ul><ul><ul><li>Third, adopt new, dynamic partnering relationships as customers’ needs evolve. </li></ul></ul><ul><ul><li>Fourth, be prepared to participate in customer-led, self-organizing communities and to respond flexibly as customer behavior reshapes your industry. </li></ul></ul><ul><li>MAKE IT EASY FOR CUSTOMERS TO DO </li></ul><ul><li>BUSINESS WITH YOU. </li></ul>
  5. 6. <ul><li>Focus on Customer Relationships </li></ul><ul><ul><li>Investors want to know… </li></ul></ul><ul><ul><ul><li>How many customers do you have? </li></ul></ul></ul><ul><ul><ul><li>How long have you been in an active relationship with each? </li></ul></ul></ul><ul><ul><ul><li>How are earnings per customer? </li></ul></ul></ul><ul><ul><ul><li>How much does it cost you to acquire a new customer? </li></ul></ul></ul><ul><ul><ul><li>How well are you able to retain your customers? </li></ul></ul></ul><ul><li>Monitor and Improve Customers’ Experiences (in Near Real-Time) </li></ul><ul><ul><li>The companies that will thrive in the customer economy understand how to build and maintain customers’ trust by carefully managing customers’ experiences with their brands. </li></ul></ul>1. Embrace the Customer Revolution and Thrive in the Customer Economy
  6. 7. <ul><li>Don’t Rely on Monthly or Weekly Reports. </li></ul><ul><ul><li>The real masters of the customer experience game walk around with pagers that alert them when customer needs aren’t being met. </li></ul></ul><ul><ul><li>They proactively monitor the processes that impact customers, from delayed flights to Web site performance, knowing up-to-the-minute is what gives you the edge in the customer revolution. </li></ul></ul><ul><li>Let Customers Dictate Your Business Direction </li></ul><ul><ul><li>Anticipate needs. Should you sell direct or use dealers, retailers, or independent agents? Are your employees well-versed in the workings of your website? Do you offer wireless access? </li></ul></ul><ul><li>Learn from the Veterans of the Customer Revolution </li></ul><ul><ul><li>From business-to-consumer enterprises or business-to-business players, whether a small business, or conglomerate, it is the company that embraces the customer who leads the pack, continuously innovating, reinventing, and evolving. </li></ul></ul>1. Embrace the Customer Revolution and Thrive in the Customer Economy
  7. 8. <ul><li>Master the Three Principles of the Customer Economy </li></ul><ul><ul><li>Customers are in control and they’re reshaping businesses and transforming industries. </li></ul></ul><ul><ul><li>Customer relationships count, the value of your present and future customer relationships –your customer franchise—will determine the value of your company </li></ul></ul><ul><ul><li>Customer experience matters, the feelings the customers have when they interact with your brand determine their loyalty. </li></ul></ul>1. Embrace the Customer Revolution and Thrive in the Customer Economy
  8. 9. <ul><li>Principle No.1 Customers Are In Control – reshaping businesses, transforming industries. </li></ul>1. Embrace the Customer Revolution and Thrive in the Customer Economy Investors reward ability to partner flexibly with others and jointly develop and produce products at competitive prices and with dependable quality. Investors value ability to offer vertically integrated products with captive capacity and control over margins. Also need to show growth in customer value and customer yield Measure year’s revenue growth and profit margin Grow revenue by building flexible, dynamic capabilities for designing and delivering new value-added services. Grow revenue by adding more products and companies to your portfolio Attract and retain customers Make and sell products Today’s New Customer-Driven Economy Before the Customer Revolution
  9. 10. 1. Embrace the Customer Revolution and Thrive in the Customer Economy <ul><li>How customers are transforming industries and taking control: </li></ul>E-markets exist with customers’ building projects, medical records, systems configurations, and/or inventory at their core. Customers’ projects, processes, and supply needs are the magnets that draw suppliers to compete and cooperate in dynamic e-market spaces. One could only imagine online marketplaces where buyers and sellers could efficiently find one another and transact business. Manufacturers have the tools to make custom- manufacturing cost-effective and practical. Many companies now offer customized products and services. Manufacturers could give lip service to designing and configuring products for customers. Pricing is more transparent. Customers demand equal prices round the globe. Pricing varied dramatically from one country to another and was complex Customers can easily move their financial records and their relationships, taking their business elsewhere when unsatisfied. Banks, brokerages, and insurers counted on customer inertia. Customers demand to freely share and reuse digital goods, paying once or not at all and then altering, distributing and re-purposing the original material. Intangible goods like music, information, software, and entertainment reaped high profit margins after their creation. Today… In the past…
  10. 11. <ul><li>Principle No.2 Customer Relationships Count – The Value of your Present and Future Customer Relationships – Your Customer Franchise- Will Determine the Value of Your Company. </li></ul><ul><ul><li>Investors Care About Your Customer Capital. </li></ul></ul><ul><ul><ul><li>This is the sum of the value of all your customer relationships. </li></ul></ul></ul><ul><ul><ul><li>How many you have, the depth and quality of those relationships in terms of their capacity to generate current and future earnings, the duration or your customer retention, and the profitability of those relationships. </li></ul></ul></ul><ul><ul><ul><li>Annual reports can include a new section after Return on Equity or Return on Assets, a Customer Value Index indicating average profit per customer and growth and retention rates. </li></ul></ul></ul>1. Embrace the Customer Revolution and Thrive in the Customer Economy
  11. 12. <ul><li>Principle No.3 Customer Experience Matters – The Feelings Customers Have When They Interact with Your Brand Determine their Loyalty </li></ul><ul><ul><li>On the phone, in your store, on your Website, reading your e-mail, or using your product -how do you make them feel? </li></ul></ul><ul><ul><ul><li>A brand must deliver consistent value, make customers return for more, and want to spread the word to their friends. </li></ul></ul></ul><ul><ul><ul><li>Companies can create the new position of Total Customer Experience EVP. </li></ul></ul></ul><ul><ul><ul><li>Customer scenarios should be monitored in near real-time to see if the company is fulfilling customers’ expectations and to be able to adjust to customer needs as they evolve. </li></ul></ul></ul><ul><ul><li>An Operational Framework: </li></ul></ul><ul><ul><ul><li>Measure Customer Value </li></ul></ul></ul><ul><ul><ul><li>Monitor What Matters to Customers </li></ul></ul></ul><ul><ul><ul><li>Deliver a Great Total Customer Experience </li></ul></ul></ul>1. Embrace the Customer Revolution and Thrive in the Customer Economy
  12. 13. <ul><li>Implement a Customer Flight Deck, and Develop Flight Plans </li></ul><ul><ul><li>Like flying a plane into the turbulent customer economy, you need an appropriate flight deck or instrument panel to indicate your customer value, and measure your customer experiences. </li></ul></ul><ul><li>Delivering the Total Customer Experience demands mastery of eight key steps: </li></ul><ul><ul><li>Create a Compelling Brand Personality </li></ul></ul><ul><ul><li>Deliver a Seamless Customer Experience Across Channels and Touchpoints </li></ul></ul><ul><ul><li>Care About Customers and their Outcomes </li></ul></ul><ul><ul><li>Measure what Matters to Customers </li></ul></ul><ul><ul><li>Hone Operational Excellence </li></ul></ul><ul><ul><li>Value Customers’ Time </li></ul></ul><ul><ul><li>Place Customers’ “DNA” at the Core </li></ul></ul><ul><ul><li>Design to Morph </li></ul></ul><ul><li>Principle No. 1 </li></ul><ul><ul><li>Customers are in control and they’re reshaping businesses and transforming industries. </li></ul></ul>1. Embrace the Customer Revolution and Thrive in the Customer Economy
  13. 14. 2. What Happened In the Music Industry Will Happen To You. <ul><li>What can we learn from the music industry that would apply to other industries coming under control of the customer revolution? </li></ul><ul><ul><li>See how customers use your products and services, and then devise means to make it easier for them to do so. Adjust prices and practices accordingly. </li></ul></ul><ul><ul><li>Watch the early adapters and they will show you how your business practices will change. </li></ul></ul><ul><ul><li>Streamline processes for customers in order to gain loyalty and increase convenience. </li></ul></ul><ul><ul><li>Build a closer relationship by making it easier for the customer to manage assets. </li></ul></ul><ul><ul><li>Many customers like products and services that make them look good and show status. </li></ul></ul>
  14. 15. <ul><li>The Day the Music Died </li></ul><ul><ul><li>Arne Frager </li></ul></ul><ul><ul><ul><li>founder of The Plant, a well-established recording studio in Sausalito, California bemoans the revenues of the music industry. </li></ul></ul></ul><ul><ul><ul><li>Paralyzed by Napster, MP3, and Gnutella free distribution networks, the whole music industry suffered a 50% cut in earnings. </li></ul></ul></ul><ul><ul><ul><li>Many of the recording studios like Arne’s fell silent for the first time in 27 years. </li></ul></ul></ul><ul><ul><li>The creation of the MP3 file format, allowing music lovers to copy entire CDs onto the Net, created a problem for major record labels. </li></ul></ul><ul><ul><ul><li>Music fans took control and the balance of power shifted dramatically. </li></ul></ul></ul>2. What Happened In the Music Industry Will Happen To You.
  15. 16. <ul><li>Technology Fuels a Revolution </li></ul><ul><ul><li>Shawn Fanning </li></ul></ul><ul><ul><ul><li>Napster’s creator </li></ul></ul></ul><ul><ul><ul><li>Released his brainchild into the world, a combination of instant relay chat, Microsoft file sharing, and search and filtering capabilities. </li></ul></ul></ul><ul><ul><li>Investor Bill Bales saw the unstoppable power of this new peer-to-peer network. </li></ul></ul><ul><ul><li>When news of copyright lawsuits from musicians Metallica, and numerous record industry giants spread, Napster users swapped files in a mad frenzy, fearing a shutdown. </li></ul></ul><ul><ul><li>By fall of the year 2000, BMG records dropped its lawsuit against Napster and instead invested in it. </li></ul></ul><ul><ul><ul><li>The free file-swapping service was turned into one with a low monthly subscription. </li></ul></ul></ul>2. What Happened In the Music Industry Will Happen To You.
  16. 17. <ul><li>The Napster phenomenon shows us: </li></ul><ul><ul><li>How the music consumer feels liberated with such easy-to-use technology. The music lover can download and store his own collection in a CD and listen to it in the car, at the office or at a friends’ place. </li></ul></ul><ul><ul><li>The customer can “strut his stuff” and show off his good taste in music to his peers. </li></ul></ul><ul><li>The target market, mainly college kids with high bandwidth Internet access, got their way. </li></ul><ul><ul><li>The record labels were forced to comply and eventually offered electronic downloads. </li></ul></ul>2. What Happened In the Music Industry Will Happen To You.
  17. 18. <ul><li>Renegade Customers and Intellectual Property </li></ul><ul><ul><li>It’s renegade customers (or early adopters) who lead the way. Music in digital form can be used in customized compilations. </li></ul></ul><ul><ul><li>Customers will continue to insist on having the ability to mix, match, and share music with others. </li></ul></ul><ul><ul><li>The challenge for the music industry is to let customers have what they want and still find a profitable business model. </li></ul></ul><ul><li>To understand how the Napster phenomenon might impact other industries, see how the music consumers behaved: </li></ul><ul><ul><li>Fans tried out new music. </li></ul></ul><ul><ul><li>Fans built private collections. </li></ul></ul><ul><ul><li>Fans made their own “mixes” or custom compilations. </li></ul></ul><ul><ul><li>Fans created radio stations. </li></ul></ul><ul><li>Undiscovered amateurs and struggling professionals posted their wares and got airplay from 24-hour Internet radio stations like </li></ul>2. What Happened In the Music Industry Will Happen To You.
  18. 19. <ul><li>Building Revolutionary Business Models </li></ul><ul><ul><li>One by one the large record labels bowed to the demands of the customers. First it was Sony, then EMI, Columbia, and BMG. By autumn of the year 2000, the powers that be in the music industry were offering rights-protected music for customers to purchase and download electronically. </li></ul></ul><ul><li>The Takeaways: How Customers Will Reshape Soft Goods Industries – particularly intellectual property goods such as software, publishing, and music. </li></ul><ul><ul><li>Customers will try before they buy. </li></ul></ul><ul><ul><li>Customers will buy by the piece. </li></ul></ul><ul><ul><li>Customers will mix and match. </li></ul></ul><ul><ul><li>Customers will want to reshape and re-purpose your goods. (i.e., Photodisc for stock photography) </li></ul></ul><ul><ul><li>Customers will want to share it with others. </li></ul></ul><ul><ul><li>Customers will want to publish their own “mixes”. </li></ul></ul><ul><ul><li>Customers will want to co-brand your material. </li></ul></ul>2. What Happened In the Music Industry Will Happen To You.
  19. 20. <ul><li>Open, equal access. </li></ul><ul><ul><li>The Securities and Exchange Commission (SEC) was forced to adapt new measures when more than 6,000 individual investors blasted the unfair practice of “selective disclosure” of information, which favored only institutional investors. </li></ul></ul><ul><ul><li>Today, the world’s stock exchanges are under siege by these customers. </li></ul></ul><ul><li>Real-time information </li></ul><ul><li>Specialist information. </li></ul><ul><ul><li>The customer demand for expert advice is evident in the health industry. </li></ul></ul><ul><ul><li>Customers do their own research on the Web and go to their doctors’ offices armed with questions. </li></ul></ul><ul><li>Convenient access </li></ul><ul><li>Information portability </li></ul><ul><li>Process transparency </li></ul>3. A Dozen Customer Demands That Will Change Your Business
  20. 21. <ul><li>Logistics transparency </li></ul><ul><li>Pricing transparency </li></ul><ul><li>Fair, global pricing </li></ul><ul><li>The ability to set prices </li></ul><ul><li>Choice of distribution channels </li></ul><ul><li>Control over their private and corporate information </li></ul>3. A Dozen Customer Demands That Will Change Your Business
  21. 22. <ul><li>Value Your Customer’s Time. </li></ul><ul><ul><li>Thanks to e-markets, customers can choose from a wide variety of products and suppliers from companies around the world. The expenses incurred in sourcing a supplier (measured in people, time and effort) are 30% of a company’s procurement costs. </li></ul></ul><ul><li>A company will stick to a supplier and a long-term contract for 2 reasons: </li></ul><ul><ul><li>To guarantee pricing, quality, and availability of goods </li></ul></ul><ul><ul><li>To lower the cost of sourcing </li></ul></ul>4. Surviving The E-Market Revolution
  22. 23. <ul><li>What Are E-Markets? </li></ul><ul><ul><li>E-markets are electronic trading communities made up of buyers and sellers with common needs. </li></ul></ul><ul><ul><li>Whether auction, exchange, or one-stop-solutions, e-markets offer dynamic pricing. </li></ul></ul><ul><ul><ul><li>Requests for Quotes and Proposals on new B2B or business-to-business marketplaces like Buzzsaw - a building construction resource site - cropped up. </li></ul></ul></ul><ul><li>The Key to Surviving the E-Market Revolution is to realize that e-markets are simply one of a number of avenues through which you will be selling and procuring products and services. </li></ul><ul><li>Suppliers need to organize their product information and rules-based pricing using a single, flexible, information architecture, so all changes in products, descriptions, attributes, pricing, and availability are entered and managed in a single location. </li></ul>4. Surviving The E-Market Revolution
  23. 24. <ul><li>EBay Sparked the E-Market Revolution. </li></ul><ul><ul><li>EBay began as a consumer-to-consumer auction site for used goods, quickly growing into a business-to-consumer, and business-to-business e-marketplace. </li></ul></ul><ul><ul><li>It has retained its original consumer-to-consumer transactions while establishing itself as the premiere online trading community worldwide, and the first mass-market electronic marketplace. </li></ul></ul><ul><ul><li>EBay has become the de facto arbiter of price. </li></ul></ul><ul><li>What Did Businesses Learn from eBay? </li></ul><ul><ul><li>Pricing is transparent. </li></ul></ul><ul><ul><li>Product availability is transparent. </li></ul></ul><ul><ul><li>Auctions take place in real-time. </li></ul></ul><ul><ul><li>Customers can set the price they’re willing to pay. </li></ul></ul><ul><ul><li>Customers are in control – they rate the sellers and these ratings matter. </li></ul></ul><ul><ul><li>Customers can become sellers. </li></ul></ul><ul><ul><li>Sellers can become customers. </li></ul></ul>4. Surviving The E-Market Revolution
  24. 25. <ul><li>Steps That Led to the B2B E-Market Frenzy: </li></ul><ul><ul><li>Customers demand their own customized websites. </li></ul></ul><ul><ul><ul><li>In 1996, Dell Computer, Microsoft, and National Semiconductor acceded to demands for account-specific websites, also known as Premier Pages or extranets. </li></ul></ul></ul><ul><ul><ul><li>Customers co-designed solutions and previewed new supplier information and products. </li></ul></ul></ul><ul><ul><ul><li>These extranets caused 3 major problems: </li></ul></ul></ul><ul><ul><ul><ul><li>Too many log-on passwords to remember per supplier. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>No one-stop-shopping capability </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Corporate procurement workflows were bypassed. </li></ul></ul></ul></ul><ul><ul><li>Large customers want suppliers to integrate into their procurement systems. </li></ul></ul><ul><ul><ul><li>In 1998 to 2000, large and powerful business customers clamored for suppliers to deliver product information along with customer configuration and pricing inside their Internet firewalls. </li></ul></ul></ul>4. Surviving The E-Market Revolution Why B2B E-Markets Emerged When They Did
  25. 26. 4. Surviving The E-Market Revolution <ul><ul><ul><li>They wanted each supplier’s information provided in a format integrated into their own Intranet-based multi-supplier catalogs. </li></ul></ul></ul><ul><ul><li>Exchanges and auctions spur interest. </li></ul></ul><ul><ul><li>Multi-supplier e-catalogs, distributors, and aggregators launch e-markets. </li></ul></ul><ul><ul><ul><li>An example would be </li></ul></ul></ul><ul><ul><ul><li>It offered one of the key criteria for a true e-market: the ability to buy products from multiple suppliers with a single purchase order. </li></ul></ul></ul><ul><ul><li>E-markets emerge in every industry. </li></ul></ul><ul><ul><li>Large customers form their own buyer-led, industry-specific e-markets. </li></ul></ul><ul><ul><li>Customer Scenario Nets: e-markets with customer scenarios at the core, revolving around the customer’s specific projects, tasks, and processes. </li></ul></ul>
  26. 27. <ul><ul><li>A Customer Scenario Net offers one-stop-shopping for all the steps in the scenario. </li></ul></ul><ul><ul><ul><li>Examples are Buzzsaw, a building construction resource where one can source materials and suppliers for a project, and Medscape, where vital doctor-patient health information is exchanged. </li></ul></ul></ul><ul><li>How to Prosper in the Midst of the E-Market Revolution: </li></ul><ul><ul><li>Target key customers with whom you’re seeking to build a relationship. </li></ul></ul><ul><ul><li>Find out which critical scenarios and projects these customers need to do and determine where your products and services fit in these scenarios. </li></ul></ul><ul><ul><li>Organize all the information about your products and services so it’s optimized for customers who need to make decisions and take action. </li></ul></ul><ul><ul><li>Create dynamic, rules-based pricing engines for all your products and services so you’ll be able to present each business customer with the accurate, negotiated and customized pricing that’s relevant for his company. </li></ul></ul>4. Surviving The E-Market Revolution
  27. 28. <ul><ul><li>Organize your product information, pricing and rules and inventory information so they can be re-usable in 7 different business models or steps earlier described. </li></ul></ul><ul><ul><li>Participate in a variety of vertical and horizontal e-markets – you want customers to find you easily. </li></ul></ul><ul><ul><li>Don’t seek to be the exclusive supplier to an e-market. Customers value choice. </li></ul></ul><ul><ul><li>Participate in e-markets that help build your brand. </li></ul></ul><ul><ul><li>Plan now to create or participate in relevant customer scenario nets. Offer tools for streamlining processes. Find out what information they customers are willing to provide within the contexts of the tasks they’re performing. </li></ul></ul><ul><li>Principle No.2 Customer Relationships Count </li></ul><ul><ul><li>The value of your company is based on the value of your present and future customer relationships. </li></ul></ul>4. Surviving The E-Market Revolution
  28. 29. 5. It’s the Customer Economy: Leverage Your Customer Capital and Grow Your Customer Franchise. <ul><li>We predict that by 2005, companies will feel the need to report a Customer Value Index to its investors, indicating growth in earnings per customer. </li></ul><ul><li>The Dawn of the Customer Economy </li></ul><ul><ul><li>The AOL –Time Warner merger in January of 2000 marked the dawn of the customer economy. Now customers could get their Internet, cable, and magazine subscriptions from one source. Investors valued AOL customers at $7,455 each, while Time Warner customers were valued at $3,495 each. </li></ul></ul><ul><li>Why were AOL customers worth so much more? AOL knew who its customers were, and their customers thought of themselves as AOL members. </li></ul><ul><ul><li>Time Warner did not know its customers, and their customers thought of themselves not as Time Warner members, but as Fortune magazine subscribers, or cable TV subscribers. </li></ul></ul><ul><ul><li>The AOL brand was stronger than the Time Warner brand. This illustrates how deeper customer relationships matter. </li></ul></ul>
  29. 30. <ul><li>Customer Capital </li></ul><ul><ul><li>It is the sum value of all your existing customer relationships in terms of their capacity to generate current and future earnings, the duration of those customer relationships (your customer retention) and the profitability of those customer relationships. </li></ul></ul><ul><li>Marketers have long used the following elements to determine the profitability of the different customer segments and the viability of their marketing campaigns: </li></ul><ul><ul><li>The number of active customers </li></ul></ul><ul><ul><li>The different customer segments (demographics, behavior) cohorts (when acquired) </li></ul></ul><ul><ul><li>Current average profit per customer </li></ul></ul><ul><ul><li>Cost to acquire a customer in each segment </li></ul></ul><ul><ul><li>The retention rate for customers in each segment </li></ul></ul><ul><ul><li>Anticipated growth or decline of profits per customer in each segment (based on the recency, frequency, complexity, and value of their transactions) </li></ul></ul>5. It’s the Customer Economy: Leverage Your Customer Capital and Grow Your Customer Franchise.
  30. 31. <ul><li>Customer Momentum </li></ul><ul><ul><li>This is defined as the ability to attract and sustain new customers. How do you determine your future earnings? Here are some assumptions you need to make: </li></ul></ul><ul><ul><ul><li>How much will it cost you to acquire each new customer in the future? </li></ul></ul></ul><ul><ul><ul><li>What percentage of your marketing budget will you spend on customer acquisition? </li></ul></ul></ul><ul><ul><ul><li>What will be the average profits per customer for each acquisition effort and/or time period? </li></ul></ul></ul><ul><ul><ul><li>What will be the likely retention rate for each new group of customers you acquire? </li></ul></ul></ul><ul><ul><ul><li>How fast will the earnings per customer grow in each segment? </li></ul></ul></ul><ul><li>SATISFIED AND LOYAL CUSTOMERS WILL RECRUIT </li></ul><ul><li>MORE CUSTOMERS. They spread the word to their </li></ul><ul><li>families, friends, and colleagues thereby lowering your cost </li></ul><ul><li>of recruiting new customers. </li></ul>5. It’s the Customer Economy: Leverage Your Customer Capital and Grow Your Customer Franchise.
  31. 32. <ul><li>Investors care about the value of your customer franchise – the total present value of projected earnings from current and future customers. </li></ul><ul><li>Customer Momentum + Customer Capital = Your Customer Franchise </li></ul><ul><li>Educate Investors on the Value of Your Customer Franchise </li></ul><ul><ul><li>Charles Schwab reports its new and active customer accounts each quarter. Hewlett-Packard’s 20 million customers are in constant touch with the company, continuously buying a steady stream of supplies, a revenue stream the financial investors need to understand. </li></ul></ul><ul><li>Customer Relationships are a Key Intangible Asset </li></ul><ul><ul><li> altered its privacy policy in September 2000, notifying customers it maintains the right to transfer customer lists when it sells off any of its “stores”. </li></ul></ul>5. It’s the Customer Economy: Leverage Your Customer Capital and Grow Your Customer Franchise.
  32. 33. <ul><ul><li>The company would then be able to share or sell the customer information with the company Toys R Us, with whom it had cut a major deal. </li></ul></ul><ul><ul><li>You cannot actually transfer a customer relationship, only the customer information. </li></ul></ul><ul><ul><li>The new owner of this information can only hope to win the loyalty of the customer accounts. </li></ul></ul><ul><ul><li>The list is not as valuable as the close relationship the previous owner established. </li></ul></ul><ul><li>Count Your End Customers </li></ul><ul><ul><li>We encourage all companies to do the work required to learn who their end customers are. </li></ul></ul><ul><ul><ul><li>Although Charles Schwab doesn’t interact directly with its advisors’ clients, it knows who those clients are, and they are included in the reporting of customer numbers and customer assets. </li></ul></ul></ul>5. It’s the Customer Economy: Leverage Your Customer Capital and Grow Your Customer Franchise.
  33. 34. <ul><li>Known Customer Versus Anonymous Customers </li></ul><ul><ul><li>Companies that know who their customers are and have relationships with them are more valuable to investors than companies in the same industry that don’t know who their customers are. </li></ul></ul><ul><ul><li>If you want to start building a relationship with your anonymous customers, you have to gain their trust and offer a better customer experience each time they are willing to reveal more information about themselves. </li></ul></ul><ul><li>The companies that are leading the way into the customer economy are: </li></ul><ul><ul><li>American Airlines, Charles Schwab, Cisco Systems, Dell Computer, Egg, Getty Images, W.W. Grainger, Hewlett-Packard, IBM, Lands’ End, National Semiconductor, Snap-on Tools, and Wells Fargo. </li></ul></ul>5. It’s the Customer Economy: Leverage Your Customer Capital and Grow Your Customer Franchise.
  34. 35. <ul><li>These companies have been managing themselves by and for customer value for at least 2 years. </li></ul><ul><li>They know: </li></ul><ul><ul><li>How many end customers they have </li></ul></ul><ul><ul><li>Who their customers are </li></ul></ul><ul><ul><li>What their profits per customer are </li></ul></ul><ul><ul><li>How their profits per customer are growing </li></ul></ul><ul><ul><li>What their customers care about </li></ul></ul><ul><ul><li>How satisfied their customers are </li></ul></ul><ul><ul><li>How loyal their customers are </li></ul></ul><ul><ul><li>What actions are most likely to keep their customers loyal </li></ul></ul>5. It’s the Customer Economy: Leverage Your Customer Capital and Grow Your Customer Franchise.
  35. 36. <ul><li>“ Before the Internet, companies could be customer-aware, but </li></ul><ul><li>they didn’t have to be customer-centric. Now they have no other choice.” -Gideon Sasson, Enterprise President, Charles Schwab </li></ul><ul><li>What the Internet did was to move control directly to the customer’s hands. </li></ul><ul><ul><li>Customers are really just a mouse-click away from your competition, and the power of their choice has never been so strong as with the Internet. </li></ul></ul><ul><li>The Charles Schwab $420 billion-dollar online brokerage firm is focused on growing customer’s assets faster, and keeping them satisfied with good customer experiences. </li></ul><ul><ul><li>Profit and loss are not so much the metrics now, but customers’ asset accumulation, satisfaction, and retention. </li></ul></ul><ul><ul><li>Managing profit & loss in near-real time allows Schwab to compensate immediately for sudden shortages or “surprises”. </li></ul></ul>6. Managing By and For Customer Value
  36. 37. <ul><li>Ask yourself how can we make the customer experience a </li></ul><ul><li>better one? </li></ul><ul><li>Egg, the U.K.-based financial services firm, is managed for customer value, mainly the net present value of the lifetime value of its customers, or as we have put it – its customer franchise. </li></ul><ul><ul><li>Egg’s financial models indicate once a customer is using 2.5 Egg products, they become profitable. </li></ul></ul><ul><li>At Cisco Systems </li></ul><ul><ul><li>customer satisfaction is measured at its website and its call centers every week. </li></ul></ul><ul><ul><li>A number of customers receive an email or phone survey after completing an interaction. </li></ul></ul><ul><ul><li>Every six months, a relationship survey is conducted, targeting decision-makers, as opposed to the daily or weekly basis customers. </li></ul></ul><ul><ul><li>When customer satisfaction goals are met, the employees get their bonuses. </li></ul></ul>6. Managing By and For Customer Value
  37. 38. <ul><li>NCR monitors customer loyalty and ties it directly to employee compensation so workers understand the effect of their efforts. </li></ul><ul><ul><li>Research, constant monitoring, and quick response to needs are the elements in the company’s customer intelligence. </li></ul></ul><ul><li>Principle No. 3 </li></ul><ul><ul><li>Customer Experience Matters </li></ul></ul><ul><ul><ul><li>The Feelings Customers Have When They Interact with Your Brand Determine Their Loyalty </li></ul></ul></ul>6. Managing By and For Customer Value
  38. 39. <ul><li>Companies like Virgin spend a lot of money on advertising campaigns, and focus on the execution of a very memorable customer experience. </li></ul><ul><ul><li>The Virgin brand image-makers want customers to associate the brand with fun, quality, and innovation. </li></ul></ul><ul><ul><li>A strong brand personality like Richard Branson is another key factor in its successfulness, as well as offering a luxury customer experience at a price most customers can afford. </li></ul></ul><ul><li>Total customer experience </li></ul><ul><ul><li>is defined as a consistent representation and flawless execution, across distribution channels and interaction touchpoints, of the emotional connection and relationship you want your customers to have with your brand. </li></ul></ul><ul><li>By identifying and bonding with your branded experience, customers give you permission to continue to evolve your brand and the value it represents into new areas. </li></ul>7. The Saving Grace: Deliver a Great Total Customer Experience
  39. 40. <ul><li>More than a fancy ad campaign, customers want to be treated well on the phone, and on the Web. </li></ul><ul><ul><li>Expert advice and guidance, delivery and support along with some good old-fashioned attention to detail are what customers want. </li></ul></ul><ul><li>What brought the dot-com crash in the spring of 2000? </li></ul><ul><ul><li>The 3 serious mistakes of the investment community that precipitated the dot-com bust were: </li></ul></ul><ul><ul><ul><li>They overspent on branding and advertising versus execution and operational efficiency. </li></ul></ul></ul><ul><ul><ul><li>They expected unreasonably fast returns. </li></ul></ul></ul><ul><ul><ul><ul><li>It takes at least 3 years to become profitable in most business ventures. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>The investors expected returns on their e-businesses in 18 to 24 months – some in less than 12 months. </li></ul></ul></ul></ul><ul><ul><ul><li>Investors failed to realize that customers aren’t loyal to a brand. </li></ul></ul></ul>7. The Saving Grace: Deliver a Great Total Customer Experience
  40. 41. <ul><ul><ul><ul><li>They become loyal to a branded experience. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>It takes time to hone and refine a sustainable customer experience and money to continuously improve it. </li></ul></ul></ul></ul><ul><li>Anatomy of a Total Customer Experience </li></ul>7. The Saving Grace: Deliver a Great Total Customer Experience 8. E-Markets 7. Ease of interactions (No putting a customer on hold, passing her around, etc) 7. Multi-product store 6. Ease of decision-making 6. Partnerships 5. Ease of doing business 5. E-mail 4. Efficient use of customer’s time 4. Website 3. Reliable fulfillment, delivery, and support 3. Dedicated Retail Store 2. Integrity 2. Call Center 1. Value 1. Catalogue Qualities that Build Trust 8 Interaction Touchpoints and Distribution Channels to be consistent in:
  41. 42. <ul><li>When a customer identifies with your brand, saying, for </li></ul><ul><li>instance, “I’m a Nordstrom kind of girl” then you will have </li></ul><ul><li>built a strong customer relationship from positive experiences </li></ul><ul><li>with your brand. </li></ul><ul><li>Egg: Hatching a Branded Experience from Scratch </li></ul><ul><ul><li>Created to serve a new breed of retail banking customers as a subsidiary of Prudential, a UK-based insurance company, Egg was geared toward the young, technology-savvy, 2-career household. </li></ul></ul><ul><ul><li>New customers were looking for self-service, personalized attention, and value in a complete range of financial services with the convenience of Internet banking. </li></ul></ul><ul><li>Customers want to be recognized as individuals – to be seen as </li></ul><ul><li>a person, not a number. They want a relationship with someone </li></ul><ul><li>who can help them make the choices that affect their lives </li></ul><ul><li>rather than being ‘sold to’. -Mike Harris, Egg </li></ul>7. The Saving Grace: Deliver a Great Total Customer Experience
  42. 43. <ul><li>Egg: Hatching a The Egg-Hatching Process: </li></ul><ul><ul><li>Brand name-testing among focus groups. </li></ul></ul><ul><ul><li>Heavy investment in its call center facility and operations, with a 120,000 square foot center designed for employee comfort and morale (including exercise and break rooms), and training of 1,000 Egg associates. </li></ul></ul><ul><li>An Egg Free Zone on the website allowed for an open forum, for customer complaints to be aired in public. </li></ul><ul><ul><li>Customer service did not intervene in this zone except to acknowledge the complaint, while other Egg customers came to the rescue, defending Egg’s service with positive stories. </li></ul></ul><ul><ul><li>A direct email address was provided for customers to send complaints or queries. </li></ul></ul><ul><ul><li>The public forum Egg Free Zone worked because: </li></ul></ul><ul><ul><ul><li>By complaining on the website, customers did not go elsewhere to complain, which would have meant Egg had no control over them. </li></ul></ul></ul>7. The Saving Grace: Deliver a Great Total Customer Experience
  43. 44. <ul><ul><ul><li>Customers believed they had more control over their experience because they had an interested audience. </li></ul></ul></ul><ul><ul><ul><li>Open airing of complaints was reassuring to prospective customers. Nothing was hidden from them. </li></ul></ul></ul><ul><li>Egg focused on becoming an Internet Financial brand. </li></ul><ul><ul><li>It was able to build along with the public perception it was an Internet bank at a time when anything “Net” was fashionable. </li></ul></ul><ul><li>How did Egg become a respected Internet bank in 6 months? </li></ul><ul><ul><li>Self-service through technology </li></ul></ul><ul><ul><ul><li>By offering customers self-service on a website where they could fill out application forms, a call center and a “hand-holding” approach to customer service. Information on how to save money, draw up a will, plan for your children’s education were provided on the website as well. </li></ul></ul></ul>7. The Saving Grace: Deliver a Great Total Customer Experience
  44. 45. <ul><ul><li>Simple functionality </li></ul></ul><ul><ul><ul><li>Online customer service for savings account customers to access their balance information, or transfer funds in and out of accounts. </li></ul></ul></ul><ul><ul><ul><li>Online financial bookshop (Egg partnership with an online retailer) </li></ul></ul></ul><ul><ul><ul><li>Egg Free Zone open forum for complaints and queries </li></ul></ul></ul><ul><ul><li>“ Free” Internet access (customers still have to pay phone bill) low cost PCs with free installation and training home service, and a color printer, software and Microsoft Money package. </li></ul></ul><ul><li>Online banking and self-service were more profitable business models, suited to the fresh, new, young and hip branded experience. To reach the new 5-year goal Egg offered: </li></ul><ul><ul><li>Internet-only application for savings accounts, lured by higher interest rates. </li></ul></ul>7. The Saving Grace: Deliver a Great Total Customer Experience
  45. 46. <ul><ul><li>Online mortgage application with speedier decision in principal, the customer is immediately informed whether he qualifies for the mortgage, then sends in the paperwork later. </li></ul></ul><ul><ul><ul><li>Offline Egg customers have to wait 24 hours for the preliminary decision. </li></ul></ul></ul><ul><ul><li>Lower interest rates plus airline miles and a points reward program for the new Egg credit cardholder. </li></ul></ul><ul><ul><ul><li>Some of the Egg Card features were: </li></ul></ul></ul><ul><ul><ul><ul><li>online application and access to your account, 2% cash back for online purchases at the Egg Shop (an online mall with 100 stores) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>no fee, 24-hour online servicing of payments </li></ul></ul></ul></ul><ul><ul><ul><ul><li>an Internet fraud guarantee designed to address customers’ security concerns about shopping online. </li></ul></ul></ul></ul><ul><ul><ul><li>A ‘smart search’ feature on the website where 1 query lists all merchants and prices of one item </li></ul></ul></ul>7. The Saving Grace: Deliver a Great Total Customer Experience
  46. 47. <ul><ul><ul><li>A single Egg shopper’s profile used across all retailers </li></ul></ul></ul><ul><ul><ul><li>The ability to order items from multiple stores in a single order. </li></ul></ul></ul><ul><li>Morphing the Egg Business Model </li></ul><ul><ul><li>The first Egg business model was as a transaction portal, next it morphed into an intermediary investment supermarket, insurance supermarket and later, an outsourced provider of financial services. </li></ul></ul><ul><ul><li>Egg Invest was put up for Egg savings account holders to become investors in order to gain a larger portfolio share of existing Egg customers. </li></ul></ul><ul><ul><ul><li>to attract new customers who are more interested in investments than savings accounts or credit cards. </li></ul></ul></ul><ul><ul><ul><li>Egg Insure answered the basic home, car and life insurance needs with the backing of parent company Prudential. </li></ul></ul></ul><ul><ul><ul><li>Egg and Boots followed; a partnership with the UK pharmacy chain Boots, producing a credit and loyalty card in one. </li></ul></ul></ul>7. The Saving Grace: Deliver a Great Total Customer Experience
  47. 48. <ul><ul><ul><li>By November 2000, parent company Prudential offered its physical counter space to Egg since customers made it clear they still appreciated face-to-face interactions. </li></ul></ul></ul><ul><li>Takeaways </li></ul><ul><ul><li>Restructuring of Egg business models (flying the plane while changing the engine) </li></ul></ul><ul><ul><li>The position of Director of Customer Experience for Egg’s overall communications centers and customer experiences, both offline and online, was created. </li></ul></ul><ul><li>Unlike Charles Schwab, Egg has not meshed its employee compensation with customer outcomes and satisfaction. </li></ul><ul><li>The following are key ideas from An Operational Framework: </li></ul><ul><ul><li>Measure Customer Value, </li></ul></ul><ul><ul><li>Monitor What Matters to Customers </li></ul></ul><ul><ul><li>Deliver a Great Total Customer Experience. </li></ul></ul>7. The Saving Grace: Deliver a Great Total Customer Experience
  48. 49. <ul><li>Monitor navigation, performance, operational controls, and environment across customer numbers, retention, experience, and spending. </li></ul><ul><ul><li>The flight plan is your company strategy, of course. </li></ul></ul><ul><ul><li>Creating your flight deck starts with your strategic objectives or defining your key navigation metrics. </li></ul></ul><ul><ul><li>Define Performance and Operational metrics by asking yourself what causes them to move. </li></ul></ul><ul><ul><li>Begin an inventory of measures and a process hierarchy. </li></ul></ul>8. Implement a Customer Flight Deck and Take the Eight Great Total Customer Experience.
  49. 50. <ul><li>The concept for the mobile phone network ‘Sunday’ came to Hong Kong graphic designer Alan Chan, on a Saturday, when pressed for a logo design for Mandarin Communications and up against a deadline, he thought of the name Sunday. </li></ul><ul><ul><li>This was the only day he could enjoy himself because most Hong Kong residents work six days a week. </li></ul></ul><ul><ul><li>It represented a whole concept of easy living; reinforced by intriguing, quirky, edgy ad copy like ‘You look like you haven’t had it in weeks’. </li></ul></ul><ul><ul><li>Unveiled on a Sunday, naturally, it brought a whole new customer experience of bright colors, approachable sales staff, and pioneering services designed to make life much easier - services that were way ahead of its competitors: </li></ul></ul><ul><ul><ul><li>Mobile Concierge, Mobile Assist, Mobile Reporter, SoWAP, mobile banking and commerce, Mobile Cupid, Mobile Jukebox, stock-trading, and opt-in special promotions. </li></ul></ul></ul>9. STEP ONE: Create a Compelling Brand Personality.
  50. 51. <ul><li>Takeaways from the Sunday experience: </li></ul><ul><ul><li>Customers appreciate a brand identity that makes them feel good about themselves as users of the service or product you offer. Base the brand identity on the way the customer wants to see herself. </li></ul></ul><ul><ul><li>You do need buzz to launch a brand, but it can be created in a clever way using PR as well as advertising. </li></ul></ul><ul><ul><li>The brand image and the buzz you create need to reinforce the customer experience. </li></ul></ul><ul><ul><li>Carefully design every aspect of the customer experience - from the lighting within the store, to the way the staff answers the phones. </li></ul></ul><ul><ul><li>Monitor the quality of your customer experience with planted “mystery shoppers” to check if the brand is consistently represented in the retail stores. </li></ul></ul>9. STEP ONE: Create a Compelling Brand Personality.
  51. 52. 9. STEP ONE: Create a Compelling Brand Personality. <ul><ul><li>It isn’t just the graphics; it’s the feeling of your call center, your in-store presence, Web interaction, site navigation, and ease of use in all your channels and touchpoints - that creates the compelling brand personality. </li></ul></ul><ul><ul><li>Display of merchandise is crucial, Sunday customers were free to touch, look, feel, and try out products and services. Customers need to feel empowered by having all the information available to make a decision. </li></ul></ul>
  52. 53. <ul><li>A touchpoint is the type of media through which customers interact with company representatives. </li></ul><ul><ul><li>Channels are distribution channels or business relationships set up by the company in order to deliver faster to their customers. </li></ul></ul><ul><li>Snap-On Tools has single-mindedly pursued its vision of offering a consistent branded experience to professional technicians around the world. </li></ul><ul><ul><li>Snap-on’s multi-channel, multi-touchpoint experience is strong because it has a strong human touch. </li></ul></ul><ul><ul><li>A new CRM system will reflect what products customers buy, whether on credit, for how much, and what issues do these specialized technicians have with Snap-on tools? </li></ul></ul><ul><ul><li>With an online tool chest for easy inventory to help customers keep track of their tools, Snap-on can look forward to designing its CRM system from the customer’s point of view. </li></ul></ul>10. STEP TWO: Deliver a Seamless Customer Experience Across Channels and Touchpoints.
  53. 54. 11. STEP THREE: Care About Customers And Their Outcomes. <ul><li>COMPANIES WITH ‘THE RIGHT STUFF’ SEE THEIR </li></ul><ul><li>CUSTOMERS NOT AS REVENUE TARGETS, PROFIT </li></ul><ul><li>CONTRIBUTORS, OR ADVERTISING MAGNETS, </li></ul><ul><li>BUT AS PEOPLE . </li></ul><ul><li>Nobody can beat Charles Schwab when it comes to genuine caring for its customers. </li></ul><ul><ul><li>The company only hires people who truly share in its customer-centric values: fairness, responsiveness, and respect. </li></ul></ul><ul><li>It’s the companies that focus on customers, and not market share, that will survive the customer revolution. </li></ul><ul><li>As the new CEO in July 1999, Carly Fiorina reorganized Hewlett-Packard from a product-centric company to a customer-centric company by prioritizing customers through consumer customer units and business customer units. </li></ul>
  54. 55. 11. STEP THREE: Care About Customers And Their Outcomes. <ul><ul><li>The product-generating units then supported these customer-facing units. </li></ul></ul><ul><ul><li>She added a strategic core business process - owning the total customer experience. </li></ul></ul><ul><li>Pharmaceutical companies focus on doctors, not patients. Newspapers focus on advertisers, and not readers. </li></ul><ul><ul><li>These companies need to train their focus on building a great end-user, total customer experience, because that is what matters in the long run. </li></ul></ul><ul><li>At Charles Schwab, the customer-centric values are constantly renewed. </li></ul><ul><ul><li>These are the ways they did it. </li></ul></ul><ul><ul><ul><li>Cement the Culture with Stories. True customer stories are captured, videotaped, and passed around as part of the culture-building process. </li></ul></ul></ul><ul><ul><ul><li>Reinforce the Values in Writing. This was done in 1991, the formalizing of the culture-building process. </li></ul></ul></ul>
  55. 56. 11. STEP THREE: Care About Customers And Their Outcomes. <ul><ul><ul><li>Periodically Revitalize Values. Setting a 10-year goal – to serve 10 million investors and have 1 trillion dollars in custody within 10 years – and including all 7,000 Schwab employees in the process. </li></ul></ul></ul><ul><li>Schwab also segments its customers according to their investment styles and trading behaviors. </li></ul><ul><li>Finally, Schwab links its compensation packages to customer outcomes, and everyone benefits when the company’s customer satisfaction goals are met. </li></ul><ul><li>The real difference in how Schwab operates isn’t in the details; </li></ul><ul><li>it’s in the essence of the company. It’s one of the few </li></ul><ul><li>companies we’ve found in which every employee truly cares </li></ul><ul><li>about customers’ outcomes. </li></ul>
  56. 57. 11. STEP THREE: Care About Customers And Their Outcomes. <ul><li>Five Steps to Make Your Corporate Culture More </li></ul><ul><li>Customer-Focused: </li></ul><ul><ul><li>Start at the top with a passion for customers. Love your customers to death. </li></ul></ul><ul><ul><li>Focus on the Customer Experience. </li></ul></ul><ul><ul><li>Use Customer Measurements. </li></ul></ul><ul><ul><li>Measure Long-Term Customer Profitability </li></ul></ul><ul><ul><li>Tell Customer Stories and Instill Values </li></ul></ul><ul><li>Determine what tasks matter most to your customers. </li></ul><ul><ul><li>Put yourself in their shoes by trying out the steps they take to contact you </li></ul></ul><ul><ul><li>find your nearest branch, search for something on your website, download from the Web, and </li></ul></ul><ul><ul><li>get help from your customer representatives or the status of their account. </li></ul></ul><ul><ul><ul><li>How seamless is the system? </li></ul></ul></ul><ul><ul><ul><li>Can they phone immediately after reading your Web page? </li></ul></ul></ul><ul><ul><ul><li>Are they passed from department to department and have to repeat the same query to different customer service representatives? </li></ul></ul></ul>
  57. 58. 12. STEP FOUR: Measure What Matters to Customers. <ul><li>Hewlett-Packard has a database with the information on its 20 million customers. </li></ul><ul><ul><li>The company knows their needs, monitoring, and responding to them in real-time. </li></ul></ul><ul><ul><li>The relatively rapid progress that HP’s consumer business model has been able to make in shifting the organizational culture and execution is based on 4 factors: </li></ul></ul><ul><ul><ul><li>The initiative is truly led from the customer’s point of view. </li></ul></ul></ul><ul><ul><ul><li>The initiative is clearly customer-focused in objectives and strategies. </li></ul></ul></ul><ul><ul><ul><li>A strong integrated change management program is in place. </li></ul></ul></ul><ul><ul><ul><li>HP uses the Internet and Web as a transformational force in making the process changes required. </li></ul></ul></ul>
  58. 59. 12. STEP FOUR: Measure What Matters to Customers. <ul><ul><li>HP’s 5-point customer satisfaction and loyalty rating system include questions like: </li></ul></ul><ul><ul><ul><li>Were you satisfied with this interaction? </li></ul></ul></ul><ul><ul><ul><li>Did you get the outcome you wanted? </li></ul></ul></ul><ul><ul><ul><li>Would you do this again? </li></ul></ul></ul><ul><ul><ul><li>Would you recommend this to a friend or colleague? </li></ul></ul></ul><ul><ul><ul><li>Would you repurchase with us? </li></ul></ul></ul><ul><li>Redesign Customer-Facing Processes from the Back-End </li></ul><ul><ul><li>Another good example is evident in the words of a satisfied Timbuk2 customer: </li></ul></ul><ul><li>“ Just wanted to let you know how happy I am with my new </li></ul><ul><li>Timbuk2 bag and the whole buying experience. You guys made </li></ul><ul><li>it so easy and your bag builder software rocks! All my friends </li></ul><ul><li>are digging my new bag and are planning on ordering their own. </li></ul><ul><li>Not to knock any retailer, but do you know how much of a pain </li></ul><ul><li>it is to find the bag you want in the colors and size you’re </li></ul><ul><li>looking for? Who the heck wants to fill out actual paper to </li></ul><ul><li>special-order anything these days? I thought it would be cool to </li></ul><ul><li>create a bag to my specs and not be forced to buy something </li></ul><ul><li>someone else determined I needed. Thank you for providing a </li></ul><ul><li>quality product at a reasonable price.” </li></ul>
  59. 60. 13. STEP FIVE: Hone Operational Excellence <ul><li>Issues to Master for Operational Excellence: </li></ul><ul><ul><li>Design your back-end processes first. </li></ul></ul><ul><ul><li>Ensure there are no black holes, that is, no points in the process you can’t see into and modify. </li></ul></ul><ul><ul><li>Instrument and proactively monitor performance of all key services. </li></ul></ul><ul><ul><li>Take responsibility for the end-to-end experience from the customer’s home, office, or other touchpoint through the entire supply/value chain. </li></ul></ul><ul><ul><li>Monitor and manage every element that impacts customers, shortens cycle time, and improves your costs to serve. </li></ul></ul>
  60. 61. 14. STEP SIX: Value Customer’s Time <ul><li>Streamline decision-making by offering multiple searches, tools, product comparisons, photos/illustrations; specify price, availability, and arrival times, provide troubleshooting access before the sale, and design your customer scenario. </li></ul><ul><li>How to do Customer Scenario Design: </li></ul><ul><ul><li>Select a target customer, an end-to-end scenario </li></ul></ul><ul><ul><li>Put her in a context and walk through from beginning to end, the end being the successful achievement of the customer’s goal. </li></ul></ul><ul><ul><li>Map out all the what-ifs and review each step. </li></ul></ul><ul><ul><li>Capture the profile information, key events, objects, and rules. </li></ul></ul><ul><ul><li>Let your IT people design according to these scenarios. </li></ul></ul><ul><ul><li>Let them witness the scenario first-hand in order to design it more seamlessly. </li></ul></ul>
  61. 62. 15. STEP SEVEN: Place Customer’s DNA (Do Not Annoy) at the Core. <ul><li> </li></ul><ul><ul><li>It evolved into an e-market with customer’s building projects at the hub, from the makers of AutoCAD </li></ul></ul><ul><ul><li>a complete construction planning, design, management, bidding, directory and trading center online. </li></ul></ul><ul><ul><li>All of its operations are in tune with the customer’s building project, with real-time interaction and support. </li></ul></ul><ul><ul><li>Today, Buzzsaw has more than 20,000 customer projects from all over the world, managed remotely from the U.S. </li></ul></ul>
  62. 63. 16. STEP EIGHT: Design to Morph. <ul><li>When Should You Change Your Business Model or spawn a new one? When: </li></ul><ul><ul><li>It feels right. </li></ul></ul><ul><ul><li>Your customers give you cues. </li></ul></ul><ul><ul><li>Would-be customers give you cues. </li></ul></ul><ul><ul><li>Existing partners want you to provide a service for them. </li></ul></ul><ul><ul><li>Would-be partners want you to provide a service for them. </li></ul></ul><ul><ul><li>You know you’re onto something but you haven’t quite nailed it. </li></ul></ul><ul><ul><li>The market begins to shift away from your business model. </li></ul></ul><ul><ul><li>Your business model is still taking shape. </li></ul></ul><ul><ul><li>Change your business on the fly. </li></ul></ul><ul><ul><ul><li>Start with an executive team with vision, flexibility, and deep expertise, and investors willing to support that team. </li></ul></ul></ul><ul><ul><ul><li>Develop a branded experience that customers love and save them time. </li></ul></ul></ul><ul><ul><ul><li>Invest heavily in functional infrastructure and processes. </li></ul></ul></ul>
  63. 64. 16. STEP EIGHT: Design to Morph. <ul><ul><ul><li>Listen to customers carefully and suppliers. </li></ul></ul></ul><ul><ul><ul><li>Watch the market. </li></ul></ul></ul><ul><ul><ul><li>Spawn new businesses to meet emerging customer, market, and partner needs. </li></ul></ul></ul><ul><ul><ul><li>Educate your investors and board members as you go. </li></ul></ul></ul><ul><ul><ul><li>Be prepared to cut your losses and walk away from models that don’t work by closing down or spinning them off. </li></ul></ul></ul>
  64. 65. 17. CONCLUSION: Flight Plans for the Customer Economy. <ul><li>The Pre-Flight Checklist </li></ul><ul><ul><li>Do you have a top executive who owns the Total Customer Experience from start-to-end? </li></ul></ul><ul><ul><li>Do you have an operationally efficient engine? </li></ul></ul><ul><ul><li>Do you have a customer-focused culture? </li></ul></ul><ul><ul><li>Do you have a strategic technology architect in charge of your infrastructure? </li></ul></ul><ul><ul><li>Do you have a Customer Relationship Management Strategy and Architecture in place? </li></ul></ul><ul><ul><li>Have you provided your channel partners with the tools they need to co-manage your customer experience? </li></ul></ul><ul><ul><li>Will your information architecture support mobile wireless devices and other interaction touchpoints? </li></ul></ul><ul><ul><li>Is your architecture making full use of XML, business events, objects, and e-services? </li></ul></ul><ul><ul><li>Are you able to monitor the quality of your customer’s experiences across systems, applications, and organizational boundaries? </li></ul></ul>
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