This document discusses operationalizing voice of the customer (VOC) to ensure superior customer value across the entire customer experience. It introduces Market Value Solutions, a consulting firm that focuses on measuring and managing customer value using VOC to quantify value propositions in targeted markets. The document outlines Market Value Solution's expertise in customer value analysis and management. It then provides examples of companies that have deployed Market Value Solutions strategically and operationally. The rest of the document discusses topics like the evolution of six sigma, combining six sigma and marketing, and value-driven six sigma. It also provides details on Market Value Solution's modified DMAIC process and tools used in their approach. Finally, it summarizes two case examples of Market Value Solutions deployments

1. Operationalizing VOCTo Ensure the Delivery of Superior ValueAcross the Entire Customer Experience 2nd Customer Experience Summit March 22, 2010 Reginald W. Goeke, Ph.D. Market Value Solutions 814-234-2486 Reg@MarketValueSolutions.com www.MarketValueSolutions.com

2. Market Value Solutions MVS is a consulting group that focuses on the measurement and management of customer value. Different from most consulting firms MVS uses the VOC to quantify your firm’s current value propositions in your targeted markets More than just a research firm Focus on the effective deployment of VOC to drive business results Recognized thought leaders in customer value analysis and management -- authors of : Dominating Markets with Value: Advances in Customer Value Management – (2002) Value-Driven Channel Strategy: An Extension of Lean Thinking (2005) Competing for Customers and Winning with Value (2006) Strategic Six Sigma for Champions (2006) Six Sigma Marketing: From Cutting Costs to Growing Market Share (2009) Listening to the Voice of the Market (2009) Subject matter experts in the area of Customer Value Management for the American Productivity and Quality Center the International Quality and Productivity Center the Institute for the Study of Business Markets the Maryland World Class Manufacturing Consortium 2

3. Companies That Have Deployed Market Value Solutions Strategically & Operationally 3

4. A Little About You Name, company, responsibilities How do you define success of PI initiatives? Defects? Costs? Revenues? What drives your PI initiatives? VOB? VOC? VOM? What do you most want to get out of this workshop? 4

5. Topics We’ll Cover Today 3 Generations of Six Sigma Defect reduction Cost cutting Value creation Why Combine Six Sigma and Marketing Shifting from an Internal to an External Focus Value as the unifying element The key components of Value-Driven Six Sigma (and why we call it 6σM) Modified DMAIC of Six Sigma The 5 P’s of Marketing Two Deployments: DuPont Performance Coatings Case New Holland 5

6. 6s – Gen 1 Defect Reduction Mid- ’80s Motorola Customer Satisfaction 6 Defect reduction is a good thing!

7. 6s – Gen 2 Cost cutting Mid -90s GE Internal Focus 7 But are you cutting the right costs?

8. 6s – Gen 3 Shift from emphasis on cost cutting to revenue generation and market share Requires a focus on value creation and delivery Value from the perspective of targeted customer groups Value from the perspective of channels of distribution Requires shifting from an internal focus to an external focus This is the role and expertise of marketing Requires: Modifying the DMAIC process of Six Sigma Adding PROCESS to the traditional 4 Ps of marketing 8

9. 9 The Current State of Affairs * Six Sigma IQ & MVS, 2010

10. Moreover…. * Six Sigma IQ & MVS, 2010

11. Value-Driven Six Sigma(Six Sigma Marketing) A fact-based, data-driven, disciplined approach to growing market share by providing targeted product/markets with superior value Key elements: Customer value is the driving strategic metric Modified DMAIC Expands the traditional view of marketing to include not only Pricing, Product, Promotion, and Distribution, but also Processes Includes an emphasis on defect reduction, redefined as failure to provide satisfactory customer events across the entire customer experience 11

13. Justifiable price relative to product performance

14. Delivering best value in the industry

15. Providing best productivity for the moneyValue = Customer Loyalty Market Share Customer Acquisition Customer Value Requires a shift in measurement from Voice of the Customer (VOC) to Voice of the Market (VOM) 12

17. Six Sigma Marketing P/M Focus Competitive Analysis Opportunities Objectives Strategy Actions Budgets Define Measure/Analysis Improve/Control Tools: 1. Market Opportunity Analysis 2. P/M Matrix Tools: Market Value Model Competitive Value Matrix Customer Loyalty Matrix Competitor Vulnerability Matrix Tools: Cause & Effect Matrix Value Stream Mapping Touch point Monitoring Systems © 2009 Market Value Solutions 16

19. Product/Market Matrix DEFINE the product/service within the targeted market segments that your project will focus on Market Segment E Segment F Segment C Segment B Segment A Segment D Total Product VOM Product A VOM Product B VOM Product C Total

20. P/M Focus Competitive Analysis Opportunities Objectives Strategy Actions Budgets Define Measure/Analysis Improve/Control Tools: 1. Market Opportunity Analysis 2. P/M Matrix Tools: Market Value Model Competitive Value Matrix Customer Loyalty Matrix Competitor Vulnerability Matrix Tools: Cause & Effect Matrix Value Stream Mapping Touch point Monitoring Systems © 2009 Market Value Solutions Six Sigma Marketing 19

21. MEASURE : To Understand ValueThe Market Value Model ? Acquisition Market ShareRetention CTQ 1 ? CTQ 2 ? Quality ? CTQ 3 ? CTQ 4 Image ? ? Value .824 CTQ 5 ? CTQ 6 ? CTQ 7 ? Price 20

22. ANALYZE how that targeted market evaluates the value you provide versus that of your competitors, for example: High Outstanding Value Expensive Relationship Positive Value Performance Gap Your Company Quality = 8/10 Price = 8/10 Competitor 1 Negative Value Performance Gap Your Company Competitor 3 Competitor 2 Quality Evaluation Competitor 4 Discount Relationship Poor Value Low High Low Price Evaluation 21

23. ANALYZEthe loyalty of your customers, and the vulnerability of your competitors Customer Loyalty Matrix Competitor Vulnerability Matrix NPS = 73 NPS = 12 NPS = - 58 NPS = - 45 22

24. The VOM Survey Process Internal interviews with key individuals (provides organizational view of VOM) External interviews with customers Focus groups Depth interviews Other external information Complaints Call center input Observation Questionnaire development Fielding of VOM survey Analysis Market Value Model – Critical-to-Quality Factors & their Importance Competitive Value Matrix – Your Competitive Value Proposition Customer Loyalty Matrix – Enhance loyalty of current customers Competitive Vulnerability Matrix – How to target competitors’ customers Linkage of VOM to: Competitive planning for differential advantage based on superior value Focused process improvements for value enhancements and cost reductions

25. P/M Focus Competitive Analysis Opportunities Objectives Strategy Actions Budgets Define Measure/Analysis Improve/Control Tools: 1. Market Opportunity Analysis 2. P/M Matrix Tools: Market Value Model Competitive Value Matrix Customer Loyalty Matrix Competitor Vulnerability Matrix Tools: Cause & Effect Matrix Value Stream Mapping Touch point Monitoring Systems © 2009 Market Value Solutions Six Sigma Marketing 24

26. P/M Focus Competitive Analysis Opportunities Objectives Strategy Actions Budgets Define Measure/Analysis Improve/Control Tools: 1. Market Opportunity Analysis 2. P/M Matrix Tools: Market Value Model Competitive Value Matrix Customer Loyalty Matrix Competitor Vulnerability Matrix Tools: Cause & Effect Matrix Value Stream Mapping Touch point Monitoring Systems © 2009 Market Value Solutions Six Sigma Marketing:The Six Sigma/Strategy Linkage 25

27. Identifying Value-Based OpportunitiesThe Linkage from VOM to Competitive Planning Inferred from the model & other sources CTQs identified in the value model Customers' Customers' Qualifying Needs: Determining Needs: Value Screening Value Decision Equation Equation (2) Company Leverage Strength: for Differential Value Advantage Value Advantage (3) Competitive Performance Gaps Competitive Enhance Parity to Achieve Value Advantage Company (1) (4) Weakness: Critical Improve Value to Qualify If Related Need Disadvantage for Consideration is Important

28. Applying VOM to Competitive Planning 27

29. P/M Focus Competitive Analysis Opportunities Objectives Strategy Actions Budgets Define Measure/Analysis Improve/Control Tools: 1. Market Opportunity Analysis 2. P/M Matrix Tools: Market Value Model Competitive Value Matrix Customer Loyalty Matrix Competitor Vulnerability Matrix Tools: Cause & Effect Matrix Value Stream Mapping Touch Point Monitoring Systems © 2009 Market Value Solutions Six Sigma Marketing 28

30. 29 Change of Beneficiary Value Stream Analysis based on Market Opportunity #5 Value Based Strategies Lead toCritical Process Improvements Customer Experience Events Verification Critical Areas of Focus Notification

31. Does a Process Improvement Matter if it Doesn’t Impact the Customer Experience? 30 The goal of the Control phase is to reduce or eliminate customer defects throughout the customer experience.

32. DuPont Performance Coatings: A Pilot Deployment

33. The DPC Initiative Focus on automotive refinishing Paint brands include: Distributed through: 15 sales districts Approx. 1200 “jobbers” (3000 stock points) To some 45,000 collision shops in NA DuPont: long history of Lean and Six Sigma expertise Value at point of production ≠ value at point of consumption Objective: partner with jobbers to enhance value throughout the demand chain Pilot with two jobbers 32

35. Independent A, B, C

36. Large Multi-shop

37. Dealers

38. Fleets

39. IndustrialAttractiveness Size Growth Competitive Intensity Margins Ability to Compete People Products Market Presence Support Systems 33

40. DEFINE The Product/Market 34

41. The VOM Survey Process Internal interviews with key individuals (provides organizational view of VOM) External interviews with customers Focus groups Depth interviews Other external information Complaints Call center input Observation Questionnaire development Fielding of VOM survey Analysis Market Value Model – Critical-to-Quality Factors & their Importance Competitive Value Matrix – Your Competitive Value Proposition Customer Loyalty Matrix – Enhance loyalty of current customers Competitive Vulnerability Matrix – How to target competitors’ customers Linkage of VOM to: Competitive planning for differential advantage based on superior value Focused process improvements for value enhancements and cost reductions

42. MEASURE : To Understand Value 36 20% of Quality comes from the manufacturer. 80% of Quality is provided by the jobbers

43. ANALYZE: To Identify Gaps 37 Competitor 1 Jobber X Competitor 2 Competitor 3 Competitor 5 Value Performance Gap Competitor 4 How do you close the gap?

44. 38 Next Steps P/M Focus Competitive Analysis Opportunities Objectives Strategy Actions Budgets Define Measure/Analysis Improve/Control Tools: 1. Market Opportunity Analysis 2. P/M Matrix Tools: Market Value Model Competitive Value Matrix Customer Loyalty Matrix Competitor Vulnerability Matrix Tools: Cause & Effect Matrix Value Stream Mapping Touch Point Monitoring Systems Developing….

45. CNH: Tractors & Hobby Farmers A Case Study

46. A Fiat Group Company - Fiat Group makes these …

47. A Short History of CNH Shareholder Value Point of intervention Period of Change

48. A Switch From Customer Satisfaction To Value Measurement Spending $2 million annually on Customer Satisfaction in 2002 Customer Satisfaction Scores Rising Market Share Declining Results Showed No Direct Correlation Chairman dropped the program To… Increasing Focus on Value Measurement Processes Market Value Measurement Channel Value Measurement From …

49. New Holland’s Bread and Butter Product Line: Tractors Clearly, the metrics of customer satisfaction had little to do with business performance

50. Why Not? The only people rating their satisfaction with CNH products and services were their own customers. The metrics of customer satisfaction were myopic because they failed to enable competitive comparisons The metrics of customer satisfaction failed to account for the interaction of Quality and Price Purchase decisions are made by evaluating that trade-off. CNH measures failed to account for that.

51. Six Sigma MarketingAs Deployed at Case New Holland Focus on Tractors/Hobby Farmers Qualitative research Questionnaire Development Fielding of VOM survey Analysis Market Value Model – Critical-to-Quality Factors & their Importance Competitive Value Matrix – Your Competitive Value Proposition Customer Loyalty Matrix – Enhance loyalty of current customers Competitive Vulnerability Matrix – How to target competitors’ customers Linkage of VOM to: Competitive planning for differential advantage based on superior value Focused process improvements for value enhancements and cost reductions

52. Dealer Service 10g. Dealer responsiveness in solving problems 9t. Dealer problem solving ability 9o. Ability of dealer service people to do repair 9r. Ability of dealer to complete repairs when pro 10c. Technical knowledge of dealer repair personne 10f. Dealer performance on warranty claims 9w. Response time for dealer service 9s. Quality of shop repairs 9n. Dealer service responsiveness 9q. Product knowledge of dealer service people 9p. Diagnostic skills of field service people 10n. Willingness of service department to keep you 10j. Capacity of dealer repair facilities to handl 10i. Courtesy of dealer personnel 10b. Technical knowledge of dealer sales personnel 9u. Ability to get needed parts quickly 10k. Ability of service people to understand your need 10h. Ability of service people to answer your question Machine Reliability 9d. Reliability of the machine, that is it runs wh 9b. Amount of unscheduled downtime 9a. Number of repairs required 9c. Quality of workmanship of the tractor Order & Delivery 9v. Ease of placing parts orders 10q. Broad selection of tractors to choose from 10d. Delivery of machine when promised 10p. Convenience of dealer’s operating hours Evaluative Factors & Attributes

53. Voice of the Market Tractors/Hobby Farmers Acquisition Market Share Retention .229 Dealer Service Machine Operation .189 Quality .518 60% of Market-Defined Quality is dealer-based. Only 40% is machine-based Machine Productivity .149 Trial & Training .147 Value Image .101 Dealer Sales .139 Order & Delivery .074 Machine Reliability .073 .381 Model fit: R2 = .863 Price Critical-to-Quality Factors (CTQs)

54. Competitive Value MatrixHobby Farmers High Outstanding Value Expensive Relationship John Deere Quality Evaluation Case IH Kubota Massey New Holland Value Performance Gap What’s the basis of the gap? Discount Relationship Poor Value Low High Low Price Evaluation

55. Competitive Performance GapsQuality, CTQs, Price & Image The numbers are mean performance scores (averages) on each of the CTQs and value drivers. They represent the average ratings across the survey questions within each “bucket.” Advantages and disadvantages are defined in terms of statistical tests of significance

56. CTQ Gaps & Their Importance Differences between XYZ and the targeted competitor (Comp 1) Importance weights from the value model CTQ importance times the competitive performance gaps

57. CTQ Gaps & Their Importance Differences between New Holland and the targeted competitor (Comp 1 = John Deere) Importance weights from the value model CTQ importance times the competitive performance gaps

58. Value Performance Criteria (VPCs)Provide ActionabilityDealer Service (1 of 2) These are the actual survey questions that make up the “Dealer Service” CTQ 52

59. Value Performance Criteria (VPCs) Provide Actionability VPC Importance based on correlations with the CTQ Gaps & Gap Importance calculated as before

60. Value Performance Criteria (VPCs) Provide Actionability VPC Importance based on correlations with the CTQ Gaps & Gap Importance calculated as before

61. The Cause & Effect MatrixTargeting Processes: Linking X’s to Y’s These are the VPCs, with Gap Importance highlighted Targeted Processes Individual processes within the repair (service) value stream. Evaluations of the process (X) impact on the on the relevant VPCs (Y). 0 = No impact 3 = Low impact 6 = Medium impact 9 = High impact

62. Value Stream Mapping:Targeted Improvements Tractor Transmission Repair Value Stream Analysis based on Market Opportunity #5 Service: Repair Processes Scheduling Diagnosis Critical Areas of Focus Repair ©2008 Market Value Solutions

63. CNH +24% CE +17% AG +27% Full Year Sales Trends

64. Record Year Highest Earnings Per Share Highest Trading Profit Record Trading Cash Flow CNH Performance In 2007

65. Shareholder Value Point of intervention Period of Change

66. Six Sigma MarketingThe Value-Strategy-Process Linkage Strategic Focus VALUE Develop Value Model Identify & Prioritize Quality Drivers Competitive Value Matrix Competitive Strengths & Weaknesses Market Value Opportunities STRATEGY Action Programs Budget Business Performance Objectives Product/Market Strategy (Lead, Challenge…) Marketing Mix Objectives (5 Ps) PROCESS Calculate Value Gaps Identify Key Value Stream Cause & Effect Matrix Value Stream Mapping Prioritize Improvement Opportunities Lean or Six Sigma Initiatives 60

67. For More Information 61 Reg Goeke 814-234-2486 Reg@MarketValueSolutions.com www.MarketValueSolutions.com