White paper measure_customer_experience


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White paper measure_customer_experience

  1. 1. Align Process Metrics to Measure CustomerExperience in a Telecom JourneyAuthor: Siddhartha Shankar Ray © Tech Mahindra Limited 2008
  2. 2. White Paper_Measure Customer ExperienceAbstractThis paper strives to explain the significance of measuring customer experience, identifying the rightmeasures and utilizing the Business Process Framework (eTOM) in the telecom journey.The endeavour is to analyse some of the Customer Relationship Management processes in order todesign effective metrics that align with the business requirements and impact customer experience.The customer experience measures have been defined keeping in line the expectations of the customerthrough the order, provisioning, billing and repair journey. It is obvious that the outcome of thesemeasures impacts the revenue and profitability of the organization, expressed in terms of EBITDA,revenue growth, ARPU and average minutes of usage.This paper also briefly describes a case study on how a FMEA template has been used to unravel thedistress levels of customers, with a view to retain existing customer base and reduce churn. 2
  3. 3. White Paper_Measure Customer ExperienceTable of ContentsWhat is Customer Experience?.....................................................4Why Customer Experience?.........................................................4Customer Experience Measures:..................................................5Aligning CE with CRM in eTOM framework:.................................6Process Performance Metrics(PPM).............................................6Case Study : Identify distressed Customers and design of PPM 10About Tech Mahindra .................................................................13References .................................................................................14Glossary .....................................................................................14 3
  4. 4. White Paper_Measure Customer ExperienceWhat is Customer Experience?Pine and Gilmore, introducing the concept of Customer Experience in HBR 1998 edition , describe CE asinfluencing people through engaging, authentic experiences that render personal value.According to Bernd Schmitt, "the term Customer Experience Management represents the discipline,methodology and/or process used to comprehensively manage a customers cross-channel exposure,interaction and transaction with a company, product, brand or service.In a telecom journey, the customer experience is a measure of effectiveness of the service provider toprovide the customer the desired product at the right time with optimum service availability. The customerexperience starts with the first contact with the customer and encompasses the order, provisioning, billingand repair journey of the customer.The design of customer experience measures may vary based on the product portfolio or geographicoperations. The communication service provider will need to focus on these scenarios listed below: • Do I provide my service on the day desired by the customer? • How do I perform relative to my competitors in terms of lead/cycle time? • How does my customer care processes impact my overall customer experience? • How do I measure the effectiveness of my billing process?The further sections will elaborate on the need of customer experience and use of eTOM framework inidentifying the customer experience measures.Why Customer Experience?Organisations which focus on Customer Experience measures and strive for continuous improvementhave created a niche in the market. A survey mentions that usually companies rely more on brand perceptions, but they are realizing thecustomer experience is the number one influencer of brand perception, so they’re paying more attentionto customer experience.”An effective customer experience measurement mechanism is able to identify and correlate theOrganisation performance metrics (ARPU, EBITDA, Revenue) with key process performance measures inprovisioning, billing and repair processes.The need for customer experience measures can be attributed to the following forces that are reshapingmarket forces (source: SAS Institute Inc. and Peppers & Rogers Group) 1. Marketers are losing control. 2. Customers become belligerent. 3. Products and price are at parity (CE as the new differentiator) 4. Multichannel choice adds complexity (Ensures Continuity, consistency and correctness of actions) 5. Marketers can’t treat different customers differently (Focus Investments on CE) 6. A short term focus prevails (Balance current revenue requirements with long term value) 4
  5. 5. White Paper_Measure Customer Experience81% of companies having strong capabilities and competencies for delivering customer experienceexcellence, outperform their competitors. Companies that excel in customer insight, interaction andimprovement—and those which have a strong customer orientation— are more likely to outperform theircompetitors.54% of organizations succeed if customer satisfaction or other measures of customer affinity form the Keyperformance Indicators (KPIs)Customer Experience Measures:In a telecom journey, Customer experience effectiveness can be broadly measured by the followingparameters • Ease to contact the Service Provider • Deliver of service on time • Correct and accurate billing • Issues(Faults) raised within the initial days of providing service(30/45 days) • Faults resolved within the stipulated SLA and closed to the satisfaction of the consumer • The same fault does not occur twice within the initial days of resolution(30/45 days)The following parameters needs to be considered while designing key customer experience metrics(source: Customer Experience Measurement What to Measure and Why, Cheryl Flink)1.Easily communicated: Teams and management understand what the metrics mean and can be unitedto act.2 Encourages variability: Metrics need to have variability in the scores. If all customers give uniformlypositive or negative ratings, or if the scale is not wide enough to detect differences, we will not be able tocreate accurate models.3 Sensitivity: Metrics need to be sensitive to change over time. It’s discouraging and frustrating to driveperformance improvements and not be able to detect corresponding improvements in metrics likesatisfaction and loyalty.4 Industry relevance: Not all metrics pertain to every industry.5.Financial outcomes: Customer experience metrics should correspond to financial outcomes. Oneshould be able to create models showing that improvements in customer satisfaction (or other metrics)have a clear financial ROI.6.Match to other data streams: The metrics across all data streams need to be the same. One shouldensure that questions and scales match exactly in all instruments, including mystery shop and customersatisfaction questionnaires, panel studies, contact center questions, etc. 5
  6. 6. White Paper_Measure Customer ExperienceAligning CE with CRM in eTOM framework: Figure 1: WLMS ArchitectureThe above WLMS architecture shows how a service provider can pick and choose from Fig 1. Hierarchy Level 2 1.1.1 Customer Relationship Management (source TMF)The above diagram (source eTOM v7.5 processes, TMF) focuses on the acquisition, enhancement andretention of a relationship with a customer. In this paper, we focus on the following sub processes andidentify a few process performance areas that affect customer experience. • Order Handling • Problem Handling • Bill Invoice Management • Bill Payments and Receivables ManagementIn the next section, we identify a few process performance metrics that will play a key role in enhancingcustomer experience.Process Performance Metrics(PPM) • ORDER HANDLING PROCESSThe order handling process depicted below defines the framework for accepting and issuing orders. Thetable below relates the process performance measures w.r.t the process.. Fig 2: Hierarchy Level 3 Order Handling (source 6
  7. 7. White Paper_Measure Customer ExperienceSl No Process Proposed Process Performance Measure (ppm)1. Determine Customer Order % of incorrect feasibility resulting in delay in Feasibility provisioning2. Issue Customer Orders % of inaccurate and incomplete orders3. Report Customer order % of customers not updated/incorrectly on Handling order progress4. Authorise Credit % of inaccurate credit verification attributed to bad debt/delay in realisation of payment.5. Track and Manage Customer % of orders not delivered within the Order Handling promised dateThe above process performance measures help to explain the performance of the order handling process,relative impact on other processes and gives early indications of customer experience in the orderjourney.• PROBLEM HANDLING PROCESSThe problem handling process, depicted below, defines the process of receiving the trouble reports fromcustomers and resolving them to the satisfaction of the customer. The process performance measureshave been briefly defined below .Fig 3. Hierarchy Level 3 Problem Handling (source TMF)Sl No Process Proposed Process Performance Measure (ppm)1. Create a new customer % of reports incorrectly created resulting in problem report repeat faults2. Isolate Customer Problem % accuracy in identifying the correct root cause to prevent escalation or repeat faults3. Track and manage customer % of escalation on open cases problem %of open cases not resolved within SLA4. Close customer problem % problems not closed properly resulting in repeats 7
  8. 8. White Paper_Measure Customer Experience • BILL INVOICE MANAGEMENT PROCESSThe Bill Invoice Management Process, depicted below, defines the process of creation of billing invoiceproduction of electronic or physical invoices, distribution to customers along with proper taxes, rebates,etc for the products and services delivered. The process performance measures have been briefly definedbelow.Fig 4. Hierarchy Level 3 Bill Invoice Management (source TMF)Sl No Process Proposed Process Performance Measure (ppm)1. Create Customer Bill Invoice % of faults/complaints received/accounted for due to wrong billing amount % of waivers provided out of the total billing amount2. Produce and Distribute Bill % of bills not received(physical/electronic) % of outstanding attributed to wrong billing address3. Apply Pricing, Discounting, % billing errors attributed to incorrect Adjustments and rebates mapping of rates, discounts etc %of billing complaints attributed to wrong plans/incorrect sell 8
  9. 9. White Paper_Measure Customer Experience • BILL PAYMENTS AND RECEIVABLES PROCESSFig 5. Hierarchy Level 3 Bill Payments and Receivables Management(source TMF)The above depiction of Bill Payments and Receivables Management Process defines the process ofcollecting enterprise revenue through pre-established collection channels and put in place procedures torecover past due payments. The process performance measures have been briefly defined below.Sl No Process Proposed Process Performance Measure (ppm)1. Manage Customer Payments % of collections to the billed amount % % of collections made within due date2. Collect past due payments % of first time billers defaulting on payment from Customer % outstanding to the total billed amount %of collections various buckets(soft recovery, hard recovery, legal etc)All the Process performance Metrics suggested so far has implicationsacross functions and cuts across process hierarchies. All the measureshave negative connotations to help locate the defects.The next section depicts a case study on identifying the right measures andusing FMEA to capture distress signals 9
  10. 10. White Paper_Measure Customer ExperienceCase Study : Identify distressed Customers and design ofPPMBACKGROUND:The study was initiated with a leading telecom operator in UK, to understand and develop a model foridentifying the potential distressed customers and design process metrics to effectively identify, resolveand monitor the same. The following gaps were identified in the existing process, which filtered distressedcustomers based on product (PSTN, Broadband), • No Generic standard, separate criteria for PSTN, BB • Considered distress based only on repair journey • Did not consider complaints and was unable to prioritize customers based on a combination of distressed factors • Included weighted duration of calls, which is based on skill level of customers.The challenge was to develop generic criteria, encompassing the provisioning and repair journey, andalso develop a mathematical model that prioritizes customers based on revenue generated and levels ofdistress.APPROACH AND SOLUTIONThe model below depicts the various customer inflection points in the customer journey and maps theincreasing distress levels, both in provision and repair process. Churn I In cr y re Complaints ne a ur sin Billing issues Jo ng g Repeat Fault Di er is om Fault not resolved within SLA / satisfaction tre r st ss Product/Service fails during its early life(30/45 days) s Cu Le Le Delay in Provisioning of product/service ve ve l l Delay in response to Query of prospect Customer Inflection points Fig 6. Distressed Customer ModelThe first inflection occurs when the customer makes the first contact with the Service provider. A delay inresponse opens the door for distress. As the journey progresses, the following inflection points play asignificant role in defining CE. • Delay in provisioning • Failure of product in early life period • Fault not resolved within SLA • Repeat Fault 10
  11. 11. White Paper_Measure Customer Experience • Billing Errors • ComplaintsA Customer will eventually churn, though not necessarily in the order mentioned above. However, aChurn Analysis does provide vital insights into the life of a distressed customer.The above model was built to identify the customer inflection points and the FMEA template was selectedto define the degrees of distress and the customers with a higher risk to Churn. Severity of Probability of Value of Risk Priority Distress (S) X Occurrence (P) X Customer (V) = Number (RPN)The Risk Priority Number (RPN) is defined as” the customer who has the highest level of distress andhence carries a high risk to Churn”. This a factor of the following • Severity of Distress: This is defined in a 1-10 scale based on number of days of delay in provisioning, number of repeat faults in the past month, duration of open fault, number of service requests in last 90 days . It also factors a few secondary criteria, which in itself does not qualify for distress but would carry a weighted average( number of calls per service request, number of engineer visits etc) • Probability of Occurrence: This takes into account the probability of the fault/event to occur and is calculated based on the current performance of the events(eg: Probability of a delay in provisioning, open faults etc) • Value of Customer: This was the only change made in the standard FMEA template wherein the Detection was replaced by Value of Customer. The purpose is to identify those customers who provide a high revenue to the organization and/or those who are pretty vulnerable as the competitor carries a similar plan. 11
  12. 12. White Paper_Measure Customer ExperiencePROCESS METRICSThe telecom operator already had a string of measures on Agent Level and product level Metrics.Similarly, there were various measures available at Enterprise level to measure the Customer Experience.The study recommended a hierarchy of process performance and business level metrics measures thatare linked and will help to predict enterprise wide CE. The same is depicted below Enterprise Level Metrics* Business Level Distressed Customer Process Agent Level* Product Level ** depicts development of metrics outside the scope of the study.The Enterprise Level Metrics is focused on the company wide Customer Experience measures, anddefines the performance of CE initiatives across the organization.The Business Metrics is designed for Senior Management at the level of General Manager/Senior.Manager. The metrics defines the performance of the distressed customer process and also identifies theflow of distressed customers to various buckets (Churn, complaints, Waivers and defaulters). Themanagement can then use this data to reflect on performance of various plans, retention programs, salescommitment and other parameters that affect these measuresSome of these metrics are briefly listed below. • Percentage of complaints from distressed customers • Percentage of distressed customers who churn within 90 days • % of waivers to first bill • Percentage First Bill defaultersThe Process Metrics are designed specifically for Process Owners, with an objective to understand theperformance of the process per se; eg: Open cases, calls abandoned, repeat calls/faults escalations etcSome of the process metrics are briefly listed below • Percentage of repeat faults • Percentage of open faults resolved within SLA • Percentage of calls abandoned • Percentage of escalated casesThe Process metrics can also be stratified to measure performance at each process block i. e time takento raise a service request, no. of service requests closed within one working day, etcThe Agent/Product level Metrics addresses the performance of the agents and is a function of AnswerLevel, Service Level, Online resolution, AHT and so on.Each of the metrics (business and process) were defined (numerator and denominator) and anoperational target was fixed as a baseline. This helped set up a balanced scorecard across the businessfor greater ownership and accountability. 12
  13. 13. White Paper_Measure Customer ExperienceAbout Tech MahindraTech Mahindra is a global systems integrator and business transformation consulting firm focused on thecommunications industry.With the convergence of media and telecom, the changing landscape of the telecom industry is becomingextremely competitive. As companies rapidly strive to gain a competitive advantage, Tech Mahindra helpscompanies innovate and transform by leveraging its unique insights, differentiated services and flexiblepartnering models. This has helped our customers reduce operating costs and generate new revenuestreams.Recognizing that margins from connectivity are rapidly falling and that future growth in revenues andmargins will only come from new applications, content and services, operators today are busy addressingbusiness opportunities revolving around Commerce, Content, Convergence and Customer Experience togain a sustainable Competitive Advantage.At Tech Mahindra, we understand this. Tech Mahindra is the Leading provider of IT Solutions to the Telecom industryFor over two decades, Tech Mahindra has been the chosen transformation partner for wireline, wirelessand broadband operators in Europe, Asia-Pacific and North America. Majority owned by Mahindra &Mahindra, one of the Top 10 industrial houses in India, in partnership with British Telecommunications plc(BT), world’s leading communications service provider, Tech Mahindra has grown rapidly to become the5th largest software exporter in India (NASSCOM 2009) and the first largest telecom software providerfrom India (Voice & Data 2009).Over 23,000 professionals service clients across the telecom eco-system, from our global network ofdevelopment centres and sales offices across Americas, Europe, Middle-east, Africa and Asia-Pacific.Committed to quality, Tech Mahindra adds value to client businesses through well-establishedmethodologies, tools and techniques backed by its stringent quality processes. Tech Mahindra is ISO9001:2000 certified and is assessed at SEI-CMMI Level 5. Tech Mahindra has also been awarded theISO 20000-1 (IT Service Management standard) and ISO 27001 (Security Management standard)certification for its development centers across India and UK.Tech Mahindra is certified at PCMM Level 5 for its people-care practices and is the third company in theworld to have been appraised for SSE-CMM Level 3.. 13
  14. 14. White Paper_Measure Customer ExperienceReferences • Pine, B. Joseph II; Gilmore, James (7/1/98), "Welcome to the Experience Economy", Harvard Business Review • Bernd H. Schmitt.; Bernd H. Schmitt (2003), Customer Experience Management: A Revolutionary Approach to Connecting with Your Customers, Wiley; 1 edition, ISBN 0-4712-3774-4 • The State of Customer Experience -Capabilities and Competencies(http://www.sas.com/offices/europe/denmark/pdf/20090323customer_intell igence_103820_0209.pdf) • Customer Experience Measurement What to Measure and Why (http://www.marketforceinfo.com/ knowledge_center/case_studies/MFI_Whitepaper_What_to_Measure_and_Why.pdf) • eTOM Framework from TMF Forum http://www.tmforum.org/browse.aspxGlossary CE- Customer Experience AHT Average Handling Time CRM Customer Relationship Management eTOM Enhanced Telecom Operations Map SLA Service Level Agreement FMEA Failure Mode and Effect Analysis TMF Tele Management Forum PSTN Public Switched Telephone Network BB Broadband ARPU: Average revenue Per User EBITDA Earnings before Interests, Tax, Depreciation and Amortisation 14