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
- 3. = MANAGING A COMPANY IS LIKE FLYING AN AIRCRAFT
- 5. BALANCED SCORECARD GIVES YOU THE TOOLS YOU NEED
- 6. SITUATION Financial objectives Non-financial objectives MAKE $$$ Sales and profits Financial data Customers + Service Employee productivity Operations Management
- 7. 3. CUSTOMER 3. CUSTOMER 3. CUSTOMER Objectives Measures Targets Initiatives “To achieve our vision, our vision, how should we appear to customers customers 2. INTERNAL BUSINESS PROCESS 2. INTERNAL BUSINESS PROCESS 2. INTERNAL BUSINESS PROCESS 2. INTERNAL BUSINESS PROCESS 2. INTERNAL BUSINESS PROCESS “To satisfy our Objectives Measures Targets Initiatives “To satisfy our shareholders and customers, and customers, what business what business processes must we excel at? we excel at? BSC MODEL Source: Kaplan & Norton, 1992 4. ORGANISATION LEARNING 4. ORGANISATION LEARNING 4. ORGANISATION LEARNING 4. ORGANISATION LEARNING 4. ORGANISATION LEARNING “To achieve Objectives Measures Targets Initiatives our vision, how will we how will we sustain our ability to ability to change and change and improve? 1. FINANCIAL 1. FINANCIAL 1. FINANCIAL Objectives Measures Targets Initiatives “To succeed financially, financially, how should we appear to our shareholders? shareholders? 1. FINANCIAL 1. FINANCIAL 1. FINANCIAL Objectives Measures Targets Initiatives “To succeed financially, financially, how should we appear to our shareholders? shareholders?
- 8. Most organisations will say the purpose of BSC is to link evaluation to strategy. (Schneiderman, 2003)
- 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?
- 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. 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. Innovation Segmentation and marketing Positioning Service Branding A P P L IC A T IO N A R E A S
- 14. Financial Value Internal Resources Customer Experience Customer equity Retention Add-on Selling Acquisition Brand experience Customer interface Continuous innovation Corporate creativity EX Database HR for EX Experiential Marketing Employee experience
- 16. THE BLACK HOLE BSC CEM
- 18. Low fares Free baggage! Flying multiple short routes Only one aircraft type 32 years of profitable operations The lowest ratio of complaints
- 19. Ground-crew strategy map and BSC
- 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
- 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. #2: VOICE
- 24. 1. Effective and memorable 2. Branded and differentiated 3. Contrastive and prominent #3: EXPERIENCE DESIGN
- 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. 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. #6: METRICS Share of wallet Share of mind Share of mouth Customer satisfaction Customer retention
- 28. 5. RECOMMENDATIONS: BSC + CEM MODEL
- 29. “While more recent Balanced Scorecard designs are substantial improvements on original ideas, there is room for improvement.” - Lawrie and Cobbold (2004)
- 30. Strategy map Objectives Measures Targets Initiatives Financial Same as their original BSC Same as their original BSC Same 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. 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 RECAP LET’S DO A