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Voice of the Customer
Value Added – What Does It Mean?
2008 CASRO Client Conference
Michael Matza
WaMu Service Excellence Group
June 3, 2008

WaMu - Michael Matza 2008 CASRO Client Conference 2
Agenda
• Washington Mutual
– History and corporate evolution
• Voice of the Customer and Loyalty System (VOC)
– Framework to analyze data and identify operational improvements
that drive customer loyalty
• VOC in Action
– Case studies and examples

WaMu Overview – A Powerful Distribution Franchise
Presence in 18 of 30 Largest Metropolitan Areas
Retail Banking and Mortgage Lending
2,261 Retail store in 15 states
4,965 owned and branded ATMs
160 Home Loan Centers* in 15 States
Wholesale* and Consumer Direct Lending in 49 States
Multi-Family Lending through 44 offices in 18 markets
As of 3/31/08
*Recently announced plans to close all Home Loan Centers and discontinue Wholesale operations.

WaMu Recognized for Service Quality…
• Business Week “Customer Service Elite”
– 2007 Top 25 customer service leaders in US
• JD Power and Associates
– Ranked #1 in West and Midwest: 2007 Retail Banking Customer
Satisfaction Study
• Reputation Institute
– Top 50 Corporate Reputations in US
…and continually working to improve

Voice of the Customer
and Loyalty System (VOC)

WaMu – Voice of the Customer
The Opportunity
• High customer expectations necessitated top-notch
delivery of service at peak efficiency
– Actual customer experience, both product features and service
interactions, must meet or exceed brand positioning
– Managers must have data on „Critical-to-Customer‟ (CTC) service
criteria to drive operational improvement
• Business Process Excellence Solution
– Actionable feedback based on customer or employee experiences
across the enterprise
– A framework to prioritize critical changes that drive customer
loyalty
– Voice of the Customer (VOC)

Voice of the Customer (VOC)
The Solution
The VOC system utilizes customer insights to identify and
drive improved processes:
– Deliver and utilize VOC data and information to discover, analyze,
trend, and recommend service improvements to increase ability to
execute superior service processes and experiences as one
company
– Consult with and educate business lines and enablers on VOC
implications to service delivery and profitability
– Design and deliver VOC-based Service Excellence initiatives (e.g.,
best practices, problem resolution/service recovery strategies, and
feedback/performance programs)
Provide framework to understand & use data to
create meaningful customer experiences that build
strong customer relationships and loyalty.

Integrated set of tools provide insights to measure, manage,
and effectively improve WaMu’s customer experience.
 Measures all WaMu business lines
 Measures people, process, product, price, and presentation
 Measures contact and steady state (non-contact) touch points
Provides a
Comprehensive View
of the customer’s experience
 Provides system to compare and evaluate performance across
business lines and business units
 Provides system to benchmark WaMu performance with
competitors
Allows for
Internal and External
Benchmarks
for management insight
 Provides actionable information by highlighting service
thresholds that support desired customer satisfaction and
loyalty levels. These thresholds can be used to drive
improvement targets specific to operations
Includes
Operations or Service-
Level Diagnostics
reported by the customer
 Enables WaMu to prioritize performance improvement actions
based on what will have the greatest impact on customer
satisfaction and loyalty
Provides
Priorities for Action
based on what is important to
the customer
 Provides an understanding of who, what, when, and how the
transaction/contact was conducted
 Captures feedback close to the transaction/contact to ensure
fresh recollection by the customer
Focuses on
Specific Events
of the experience

WaMu - Michael Matza 2008 CASRO Client Conference
VOC Online Reporting
• Key Features
– Drill-down by business
– Index scores
– Benchmark
– Weighted attributes
– Breakpoint analysis

Voice of the Customer and Loyalty
System In Action
Linkage Analysis
 Key Business Drivers
Customer Impact Assessment
 Project Prioritization

VOC in Action
What We Wanted to Find Out
STRATEGIC
• Which customer behaviors do
we currently influence through
service experiences?
– Direction
– Magnitude
– Financial implications
• How can we demonstrate a
return on service that is
competitive with other
investments?
TACTICAL
• At a project level, how do
“ripple effects” to customers
and employees change the
expected project outcome?
– Attitudes and intentions
– Behaviors
– Financial implications
Linkage Analysis Customer Impact
Assessment

Path to Profitable Service (In Theory)
• Branch
• Phone
• Web
• Mail
• Satisfaction
• Willingness to
recommend
• Intention to
remain/repurchase
• Intention to switch
from competitor
• Retention
• Referrals
• More products
purchased
• Higher balances
• Lower cost
channel usage
• Fewer complaints/
escalations
• More positive/
less negative
word-of-mouth
Service
Experience
Attitudes/
Intentions
Behaviors
$

Does Satisfaction = Attrition?
Delighted Neutral Dissatisfied
AttritionLevel
Satisfaction Level vs. Household Attrition
3 Months After Survey
1.5 times higher
2.7 times higher
 Yes
• Look at categories
instead of averages
• The effect “wears
off” quickly

Does Satisfaction = Purchasing?
Surveyed Month 1 Month 2 Month 3 Month 4
Changeinnumberofaccounts
Satisfaction Level vs. Number of Accounts
3 Months Following Survey
 No
• Delighted customers
do not “reward” with
more business or
higher balances
• Dissatisfied customers
may “punish” by
dropping accounts

Does Satisfaction = Acquisition?
Satisfaction Level vs. # Referrals Made
Within the Last Year
3.2 times more
1.75 times more
Estimated conversion
rate of referrals to
new households =
2.5% - 3%
 Yes

Does Service Climate = Employee Retention?
A working climate
that supports service
quality also creates
measurable financial
benefits.
6-month Teller and Rep Attrition by Overall Service
Climate Rating
Teller Sales Rep
6-monthattritionrate
1-6 Rating
7-10 Rating
1.6 times higher
1.8 times higher
 Yes

Customer Impact Assessment (CIA)
• CIA helps answer these questions
– Which customers/employees are likely to be affected?
– How will their experience be different from today?
– What specific customer/employee behaviors and attitudes might change?
– How are those changes to be measured?
– What effect on revenue or cost will result?
• CIA program consists of
– On-line orientation course for executives and project sponsors
– Full-day training course for project managers
– Tools for hypothesis-development and impact calculation
– Company data source directory
– Project prioritization guidelines
– CIA categories included in cost-benefit calculation
A systematic approach for estimating and measuring project
“ripple effects”

Some CIA case studies . . .
1. Emergency Card Replacement – Cost-saving project
• CIA reveals unexpected revenues
2. Back-office Consolidation – Efficiency project
• CIA mitigates expected negative impacts to customer and employee
satisfaction
3. Teller Training – Service Climate
• CIA reverses cost savings initiative

Case Study 1:
Emergency Card Replacement
• Summary
– As part of a service-level agreement with a new vendor, WaMu introduced
a new process for emergency replacement of debit cards
• Primary objectives
– Reduce cycle time to meet vendor requirements
– Reduce cost of replacement through process efficiency improvements
• Hypothesized “ripple effects”
– Lower cost to serve through fewer calls and escalations
– Greater fee revenue by providing card more quickly
– Less negative and more positive word-of-mouth
– Increased customer satisfaction

What CIA Uncovered
• Decreased cost to serve
– Savings of ~$12 per instance was achieved through reducing average
number of customer contacts required to get card
– Savings of ~$1 per instance from fewer teller (rather than ATM)
transactions
• Increased revenue
– ~$10 of lost fee income/instance was regained as a result of faster debit
card replacement
• Attitudes and intentions
– Increased customer satisfaction
– Increased likelihood to recommend
– Improved reputation relative to competitors
– Improved word of mouth

Impact to Attitudes/Intentions
Distribution of Customer
Satisfaction Ratings
U
nacceptable
2
3
4
5
6
7
8
9
O
utstanding
%ofCustomers
Before After
Critical incident results in bi-modal
satisfaction curve: they love us or hate us
0
2
4
6
8
10
12
14
U
nacceptable
2
3
4
5
6
7
8
9
O
utstanding
Satisfaction with Emergency Card Replacement Experience
NumberofPeopleYouToldAboutYour
Experience
Positive
Neutral/Mixed
Negative
Dissatisfied customers told
3 times more people about
the experience than
delighted customers
Impact of ECR Satisfaction on Word-of-Mouth

Case Study 2:
Back-office Consolidation
• Summary
– Several loan fulfillment centers were closed; one new center was opened;
existing loan business was migrated to remaining centers.
• Primary objectives
– Increase operational efficiency
– Decrease labor costs
• CIA objective
– Monitor changes in customer and loan officer satisfaction
– Mitigate possible negative satisfaction impacts

Mitigating Customer Impact
• Existing front-line
satisfaction survey was
ramped up from monthly
to weekly monitoring
• Satisfaction threshold
levels agreed on for
triggering action
• Operational task force
monitored satisfaction
levels over 4-month
period until transition
reached steady-state C11
IndividualValue
OctW
eek
4
Oct W
eek
2
SeptW
eek
4
Sept W
eek
2
Aug
W
eek
5
Aug
W
eek
3
Aug
W
eek
1
July
W
eek
3
July
W
eek
1
June
W
eek
3
June
W
eek
1
M
ay
W
eek
3
M
ay
W
eek
1
8.50
8.25
8.00
7.75
7.50
_
X=8.154
UCL=8.508
LCL=7.799
Before After
1
All Fulfillment Centers Weekly OSAT
Satisfaction levels improved during
transition period

Case Study 3:
Teller Training – Service Climate
• Summary
– Overall Service Climate ratings among one department‟s employees
dropped significantly over 6-month period, from 6.56 to 5.98 (10-pt scale)
- Out of 35 questions on the survey, the largest decrease was
“Management encourages me to take training” (7.0 to 6.12)
• Reason
- Management had cancelled training as a cost reduction effort
• Result
– Statistical analysis shows that employee satisfaction ratings are strongly
correlated to employee attrition
• Attrition among exempt employees is nearly twice as high if Service
Climate rating is lower than 7 out of 10
Short term cost reduction outweighed
by the cost to replace/retrain/motivate staff

Cost of Low Satisfaction
• Low Service Climate Rating = Higher Teller and PFR turnover
• Direct correlation of multi-million dollar save to the business line
in replacement costs for tellers and PFRs
6-month Teller and PFR Turnover by
Overall Service Climate Rating
Teller PFR
6-monthturnoverrate
1 - 6 Rating 7 - 10 Rating
.

Conclusion
WaMu “Voice of the Customer” System in Action
• Initiating cross-functional collaboration
• Facilitating the use of VOC to align initiatives
• Assessing organizational support for providing effective service
• Providing on-going analysis of Critical-to-Customer (CTC) priorities to
anticipate and monitor the effects of changes in service
VOC analytics aligned with business lines enables us to quantify
opportunities and risks in efficiency efforts by:

Questions?
Thank You

Michael Matza, SVP
Service Excellence
206.849.4727
matza@comcast.net

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