Driving Growth and Profitability through Customer Experience & Process Transformation
2
Customer Experience & Business Process Improvement
Complementary – or Conflicting – Approaches?
Different – or similar – toolkits?
Same stakeholders?
3
Case Example:Reed Construction Company
Growth Challenges
$150MM growth objective
Business Development capacity
Project Execution discipline and scalability
Lack of infrastructure – process or technology
2000
2002
2004
2006
2008
2010
$0 $30 $60 $90
$120 $150
Revenue Growth(Millions)
4
Customer Experience Approach to Transformation
CX & Economic Baseline
Leverage Points for
Improvement
Customer Experience & Process
Transformation Plan
Implementation and
Employee Engagement
Measurement & Plan
Refinements
5
Customer Experience Baseline
Promoters Passives Detractors $-
$200 $400 $600 $800
$1,000 $1,200 $1,400 $1,221
$952
$477
Average Revenue per Year(,000)
Detractors
Passives
Promoters
8%
32%
60%
Net Promoter Score
NPS = 52
Customer Loyalty is high … Happy customers spend more each year
Promoters Passives Detractors $-
$200
$400
$600
$800
$1,000 $914
$639
$289
Average Lifecycle Profitability (,000)
Happy customers are far more profitable over their lifecycle
Customers identified their key pain points
Sub-contractor mgmt.
Project close-out (“punchlist”)
Ability to meet schedule
“Competitive” Project Cost
Quality of construction
Quality of Supervision
Project Team / Company Relationship
Responsiveness
0% 20%
40%
60%
80%
100%
Better than Competition Worse than Competition
CLOSEOUT & FINAL
COMPLETION
Construction Company – Enterprise Process Model
6
PROJECT SCOPE/ DESIGN
GC INQUIRY & QUALIFICATION
RFP àAWARD
PROJECTà
C U S T O M E R E X P E R I E N C E C Y C L E
à
MANAGE CAPITALAND FINANCIALS
MANAGE EQUIPMENT & FACILITIES
D E V E L O P P R O J E C T M A N A G E M E N T C A P A B I L I T I E S E N A B L I N G P R O C E S S E S
AWARENESS-TO-INQUIRY
DEVELOP/MANAGEIT / TECHNOLOGY
PROPOSALREVIEW
à àPOST-CONSTR.
SERVICES
A C Q U I R E C U S T O M E R S
REFERRAL
INQUIRY – TO - AWARD CONTRACT-TO-CLOSEOUT
EXTEND CUSTOMER RELATIONSHIP
ESTABLISH PROJECT
SCOPE
REVIEW RFQ RESPONSES
PROPOSAL DEV.
D E L I V E R P R O J E C T S
CONTRACT REVIEW
GENERATE/ LEVERAGE
REFERRALS
SELL POST-CONSTRUCTION
SERVICES
CLOSEOUT-TO-REFERRAL
DEVELOP & FOSTER A CUSTOMER-DRIVEN CULTURE
DEVELOP/ MAINTAIN ARCHITECT CHANNEL
DEVELOP/ MAINTAIN CHANNEL COMMUNICATIONS
D E V E L O P & M A N A G E C U S T O M E R S & C H A N N E L S
MANAGE PEOPLE
DEVELOP/ MAINTAIN BROKER CHANNEL
ISSUE RFQ
CONSTRUCTION PROCESS
PROJECT CLOSE-OUT
DELIVER PROPOSAL
B&F PROPOSAL
à à
BUILD BROKER / ARCHITECT
RELATIONSHIPS
PRE-RFP ACTIVITIES
SUBSTANTIONAL COMPLETIONàà
BUYOUT & SCHEDULING
PROJECT MOBIL-IZATION
WEEKLY / MONTHLY REVIEWS
PROJECT ACCOUNTING & BILLING
PROJECT PLANNING & DOCUMENTATION PROJECT REPORTING
MANAGE SUBCONTRACTORS
Projects drag out at the end - needlessly
Good subcontractors inspire confidence in
your work
Good supervisors understand the job upfront – and handle issues early
Quality of management is highly variable – everyone has their own way of doing business
We rely on the network of two people to secure
projects
7
2000
2002
2004
2006
2008
2010
2012
2014
2016
$0
$20
$40
$60
$80
$100
$120
$140
$160
Revenues
Construction Company – Actions and Results
Core Process Redesign Construction process, end-to-end New technology design & implementation Leverage of internal & external best
practices
Business development process design Lead generation and tracking Salesforce.com installed DocuSign to streamline contracts and
paperwork
Employee engagement Employee engagement survey Linkage to CX Training & Onboarding Talent mgmt. & career planning processes
Key Actions Company Results
Revenue up 60% + Profits up 50% Customer NPS up +10 points
8
Case Example:Security Software Company
Growth Situation Strong product position (Forrester) Technology delivery process is
undisciplined and internally-driven Drivers of customer decision-
making unknown Lack business process maturity
leading to inconsistent service
2007 2008 2009 2010 2011 2012$0
$30
$60
$90
$120
$150
Revenue Growth(Millions)
9
Customer Experience BaselineSecurity Software company
Promoters Passives Detractors$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000 $117,678
$77,759 $56,963
Average Revenue per Year
Detractors
Passives
Promoters
14%
24%
63%
Net Promoter Score
NPS = 49
Customer Loyalty is high … Happy customers spend more each year
Promoters Passives Detractors $-
$100,000
$200,000
$300,000
$400,000
$500,000 $470,712
$272,157
$170,889
Average Lifecycle Profitability (,000)
Happy customers are far more profitable over their lifecycle
Key Driver of NPS and Profitability
Met-20
0
20
40
60
80
100
-14
48
87
NPS by ROI Performance
Barely met / Did not meet
Surpassed / Overwhelmingly
Exceeded
“How well did we meet your ROI/TCO expectations?”
Customer Lifecycle Metrics support increased technical investment – that drives loyalty and profitability
POC / Scope / System Design
Quote / Revisions
Purchase & Contracting
Transition
Operation & Support
Renewal / Repurchase/
Referral
Customer Experience
Awareness (Prospect)
Consideration & Inquiry
(Evaluation)
Configuration / Implementation
(Post-award execution)
Training (Post-award execution)
Trained Customers:- 10% better support scores- 15% more satisfied- Represent only 50% of
Total customers
Support customers have NPS scores 30 points
higher than others
Customers with higher levels of Professional Services have NPS
scores 40 points higher than others
High ROI customers have NPS scores 40-80 points
higher than others – Profitability is $55k - $75K
higher
Highly Satisfied clients are 50%-100% MORE profitable ($40k-$60k
per year increase)
11
Enterprise Process Model & Customer-driven Priorities
SECURITY NEEDS/ AWARENESS à INQUIRY à
SCOPE / DESIGN
RFP / RFQ
àINSTALL
PRODUCTà
C U S T O M E R E X P E R I E N C E C Y C L E
à
MANAGE PROJECT EXECUTION & OUTCOMES
MANAGE CAPITALAND FINANCIALS
MANAGE EQUIPMENT & FACILITIES
M A N A G E P R O D U C T S E N A B L I N G P R O C E S S E S
AWARENESS-TO-INQUIRY
CREATE AWARENESS
GENERATE LEAD/
INQUIRY
DEVELOP/MANAGEACQUISITIONS & ALLIANCES
MANAGE VENDOR RELATIONSHIPS
ORDERà TRAIN USERS
àNEXT GEN PRODUCT
INPUTà USEà
UPGRADE/ REPURCHASE/
RETENTION
A C Q U I R E C U S T O M E R S
àREFERRAL
INQUIRY-TO-ORDER ORDER-TO-INSTALL
DEEPEN CUSTOMER RELATIONSHIP
MANAGE LEAD
DESIGN & QUOTE
ORDER
S E R V I C E C U S T O M E R S
SUPPORTUPGRADE/FIX/
FEATURE REQUESTS
ONBOARDINGGENERATE/ LEVERAGE
REFERRALS
CROSS-SELL EXISTING CLIENTS
INSTALL-TO-REFERRAL
DEVELOP/ MAINTAIN SALES REP CHANNEL
DEVELOP/ MAINTAIN CHANNEL COMMUNICATIONS
D E V E L O P & M A N A G E C U S T O M E R S & C H A N N E L S
MANAGE TALENT
MANAGE PRODUCT STRATEGY/LEFECYCLE
LAUNCH PRODUCTSMANAGE PRODUCT PROFITABILITY
DEVELOP/ MAINTAIN PARTNER CHANNEL
MANAGE RFQ
RELEASE PLANNING
DEVELOPMENT & QA/TESTING
VALIDATION/ BETA TESTING
RELEASE / GA
D E V E L O P P R O D U C T S
FEATURE REQUESTS
Install it perfectly + fix it right the first time approach
Scope and Design for High ROI
Customer-driven product priorities
12
Security Software Company
Actions and Results
Implementation & Support quality Focus on First- contact resolution Virtual staffing model with improved
onboarding Online database of solutions
ROI-focused sales efforts Design and Proof-of-concept scope Salesforce.com installed Engineering support to sales efforts
Customer-input to Product development priorities Customer council to prioritize efforts Enterprise-driven solution landscape
Key Actions Company Results
Revenue up 80% Profits up 80% Customer NPS up +10 points
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
$0
$50
$100
$150
$200
Annual Revenue Growth (MM)
13
Business Process vs. Customer ExperienceDifferences experienced as CPO and CXO
Business Process Transformation
• Operations mgmt.• Customer Service• Product managers• HR, IT, Finance• Vendors
• Financial: unit costs, ABC, cost savings, ROI
• Time: Cycle time• Quality: Defect rate, error rate
• ERP / core operational systems• Financial and HRIS systems data• CRM / go-to-market systems
Customer Experience Transformation
• Sales and Marketing• Customer Service• Product managers• HR, IT, Finance• Customers / Segments / Personas• Distributors / Channel partners / Vendors
• Financial : CPL, CPA, CLV, Revenue growth, Share of Wallet, ROI
• Time: Cycle time, SLA performance• Quality: Conversion rate, CSAT/NPS, %
Detractors
• ERP / core operational systems• Financial and HRIS systems data• CRM / email marketing systems• Website analytics & UX• Social media sites• VoC systems
Primary Stakeholders
Common Metrics
Systems typically in
scope
14
Business Process vs. Customer ExperienceCommon Tools and Approaches
Business Process Transformation
• SIPOC / Process mapping• Pareto / Histogram• Fishbone / Root cause
analysis• Activity-based costing• Control / Run charts• 5-S• CTQ
• Kaizen / Work-Out sessions
• Lab, Pilot• Release planning
Customer Experience Transformation
• Customer Journey Mapping• Pareto / Histogram• VoC driver analysis
• Marketing yield analysis• KPI / Scorecards• UX improvements• Product functionality req.
• Focus Group, Market research, conjoint analysis
• Alpha, Beta Test• Product roadmap / plan
Common Tools
Common Approaches
+
+
Customer Experience and Business Process improvements need linkage – and are complementary approaches
Business Process
Customer Experience
> Drives Brand differentiation > Creates customer adoption +
“demand – pull”> Focuses process priorities> Drives revenue growth
> Ensures Brand consistency> Builds sustainability &
scalability> Drives efficiency &
effectiveness
Customer Experience Strategies have consistently identified 30% - 40% profit growth – without additional marketing or aggressive cost cutting
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%40%
35%
40%
30%32%
27%
33%35%
Average Margin Improvement Identified
16Source: Tucker & Company analysis