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

B2B A

uto

B2B A

uto

B2B M

fg.

B2B S

oftwar

e

B2B C

onstru

ctio

n

B2B S

ecurit

y

B2C F

in. S

vcs.

B2C F

in. S

vcs.

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