Customer experience: A practical approach based on measurable outcomes

Business white paper

Table of contents

Executive overview 3Defining objectives and measures 3Focusing on specific segments 3Measurable outcomes 4Operations focused measures 4

Defining customer experience 5Customer context 5Dimensions of customer experience 5

Making customer experience real 6Actionable areas 6Programs and projects 7

Conclusion 10HP enabling business transformation for the CME industry 11HP Industry Advisory Program 11

3Executive overviewAchieving excellent customer experience is a common strategic goal for many Communications Service Providers (CSPs) today. Top telecoms of the globe have realized this and have cited customer-centric goals and programs for their future growth. Achieving leading customer experience is equally relevant in both high-growth and in maturing markets. For the former, factors such as sales channels experience and network coverage can affect customer acquisition. For the latter, factors such as customer intimacy, innovative products, and service quality can help protect the customer base and maintain ARPUs. The rewards of being able to attract, delight, and keep customers can be enormous. A study from Bain & Company suggests that a five percentage point shift in customer retention consistently resulted in 25100 percent profit swings.1

Despite the broad recognition of the importance of customer experience, the challenge for many CSPs is translating this strategic goal into a well-defined, holistic plan of action. To address this issue and arrive at a practical approach to achieving excellent customer experience, this paper seeks to:1. Describe over-arching objectives of a customer

experience program.2. Define measurable outcomes that become the basis for specific

customer experience program objectives.3. Understand the contextual aspects of a customer and arrive at a

cognitive model that describes the dimensions on how a customer may perceive his or her experience with a service provider.

4. Discuss areas for which a CSP may define customer experience programs, for each dimension of customer experience.

5. Provide examples of specific programs and projects and discuss key success factors.

Defining objectives and measuresFocusing on specific segmentsLaunching customer experience programs must take into account two general objectives. The first is improving the mean customer experience across the customer base; resulting in an average result that is higher than its competitors. This objective supports broad investments in organizational and technological infrastructure but tend to overlook specific customer segments.

The second objective is to enhance the experience of focused customer segments. There are two concepts behind this second objective. The first is fairly self-explanatory. Irrespective of the types of products and services availed of, a CSPs customer base can be segmented into value-based segments; whether this is based on revenue, such as in the case of high-end postpaid subscribers, profitability, such as in the case of prepaid subscribers with high billable consumption, or based on future value, as in the case for mobile data subscribers who often represent an emerging, high growth market. Programs and projects can be targeted towards these high-value segments as these can result in greater financial return. The second concept involves segmenting a customer based on the level of advocacy; whether the customer is a promoter, passive or a detractor. Research on the net promoter score, which is the percentage of customers who are promoters of a brand minus the percentage who are detractors, has indicated a strong correlation between a companys growth rate and the percentage of its customers who are promoters. Programs and projects can be initiated to strengthen, protect, promote or manage various advocacy segments.

In line with both concepts, customers can be plotted against a grid of customer value and level of advocacy. Customer experience programs can be targeted towards desired segments. For instance, high-value, satisfied customers should be protected through loyalty programs and can be targets for cross and up-sell campaigns. Programs can be run to strengthen the experience provided to high-value but low-advocacy customers to mitigate the risk of churn. Promotions can be run for satisfied but low-value customers to increase their uptake of products and services thereby increasing value. Finally, low-value, dissatisfied customers may be difficult to convert and have a high-propensity to churn. Unless there are significant numbers in this segment, because of the limited value it may be difficult to have a pay-off that justifies significant investments catering exclusively towards low-value, dissatisfied customers. Instead, the challenge may be to lower the cost to serve these customers.

1 Reichheld, Frederick. The Loyalty Effect: the forces of loyalty versus chaos, Bain & Company, http://www.loyaltyrules.com/loyaltyrules/BB_Loyalty_effect_essay_4_Forces_loyalty_chaos.pdf. Accessed on September 27, 2011

4Measurable outcomesIt is important to define the goals and metrics of a CSPs customer experience as these measurable outcomes form the basis of both planning for and evaluating the success of customer experience initiatives. If we examine the typical measures of customer experience, whether direct customer measurements such as results of customer surveys or bottom-line measures such as churn rates, it becomes apparent that there is a need to translate customer experience goals and metrics into targets that design, marketing and sales, operations and supporting teams can act upon. Adopting an operational measure based approach has the advantage of providing CSPs a span of control over the factors of success for their customer experience program and provides the opportunity to build in customer-focused quality practices into daily operations.

Operations focused measuresIn structuring a customer experience initiatives detailed objectives and measures of success, it is recommended that CSPs develop a set of goals and measure geared towards achieving operational results. Good starting points include examining aggregate performance measured and end-to-end processes.

Aggregate performance measures, such as availability and Mean Time Between Failure, are baseline measures for the quality of service enjoyed by a customer. A support team capable of proactive incident to resolution processes can resolve issues before they generate complaints. It is important to note that aggregate measures do not only track the efficacy of operations teams, but also track the capability of the design teams responsible for the parameters and constraints of the infrastructure.

End-to-end processes include: concept-to-market for product development and lifecycle (PDLC) management, lead-to-cash for the service fulfillment, incident-to-resolution for customer experience assurance and plan-to-provision for infrastructure development and lifecycle (IDLC) management. Each of these end-to-end processes should have one or more macro goal. Example includes: launching products within three months, activating services within one hour of a sale, resolving more than 95 percent of issues within defined service levels or provisioning a computing resource pool within one day from request. Each end-to-end process can be decomposed into increasingly granular levels, across the various units involved. At each component processes and level of granularity, the macro goals are likewise decomposed into more specific, operational measures.

A CSP can structure a results-based customer experience initiative with the end in mind by designing programs and projects around meeting and exceeding desired operational measures.

In complement to the operational measures focus, the other methods provide means to validate the impact to both the customers and the CSP. Direct measurement, such as through surveys or technical tests, can be performed at the prior to or at the start of a customer experience program to establish a baseline. After this, it needs to be performed only periodically to measure progress. The use of operational measures, as proxies for customer experience, removes a CSPs reliance on potentially time-consuming, expensive and complex direct measurements.

While direct measurements track the impact to customers, bottom-line measures track the impact to the CSP. In contrast to direct measures, measures such as churn and sales figures are typically already collected and made available as part of regular management reporting. The use of operational measures provides a CSP the means to identify and manage areas of improvement that can affect the bottom-line.

Figure 1:Customer value and advocacy grid

Strengthen

Promote

ProtectHigh

Low

PassiveDetractors Promoters

Level of advocacy

Customer experience programs and projects can be tailored to specific customer segments. These can range from protecting segments, to migrating customers across segmentsand even to minimizing the exposure from uneconomical segments.

Lower cost to serve

AverageValue

5Defining customer experienceCustomer contextModeling customer experience begins with understanding the complete context of a customer; which includes not only information about the customer itself but also about a customers relationships and affiliations. From a CSPs point of view, the holistic customer provides a data set of events, characteristics and attributes, historical information and patterns of behavior which can be used as an aid to decision making. This customer information model includes sources from:Customer: Through information about the customer such as

characteristics and attributes, the offers, products and services availed of, current and historical account and usage information, interactions with the service provider, and records from third party sources (such as credit scores).

Connections: These are other entities related to the customer through direct association, such as through customer and account hierarchies, or through interactions, such as call and messaging interactions. The aggregate of individual information and interactions can indicate patterns of behavior that a service provider can use to advantage.

Communities: These are the broader groups that a customer can belong to. This can relate to clearly defined market segments, whether demographic or psychographic, or through affiliation via social networks. Communities provide larger patterns of behavior that a service provider can use.

Dimensions of customer experienceA customers experience with a CSP spans through several dimensions as influenced by the wants and needs from a holistic context. A customer may have a collection of logical vs. emotional, baseline vs. aspiration, and stated vs. unstated wants and needs.

These needs are shared with and influenced by a customers connections and communities.

In line with this, a customers experience is the sum of the direct and shared from interactions with a CSP or through the use of its services. In addition, a customer may also frame his or her experience based a logical assessment of benefits and trade-offs. Finally, a customers experience is also shaped by the emotional attachment to and qualitative value placed on a CSPs brands, products and services.

As a framework in understanding the cognitive process behind customer experience, we can categorize the types of experiences into 4 distinct dimensions:Products and economic benefit: This is a customers direct and

shared perceptions about the benefits and associated costs of a CSPs offerings, products and services towards meeting wants and needs.

Quality of service: This is a customers direct and shared perception of the efficacy, availability and reliability of the services provided by the CSP.

Quality of interactions: This is a customers direct and shared perception of the ease, utility and performance versus expectations of interactions with a CSP; whether directly, indirectly through automated channels or through an extended network of dealers and affiliates.

Emotional appeal: This is the qualitative and intrinsic value placed by the customer, including the connections and community, on patronizing the CSP. This can range from a perception of how a CSP fulfills its brand promises, the prestige, or other socio-economic associations to add to an accumulation of good will towards the CSP.

Table 1:Analysis of types of customer experience measures

Type Examples Benefit Considerations

Direct measurement Market research: Customer surveys, focus group discussions and others

Quality testing: Drive by testing, Mean Opinion Score (MOS) testing, automated call testing tools and others

Direct measurement of a customers experience

Expensive and time consumingPossibly complex results that needs to be translated to

operational actionsNeed to correlate results to financial impactCan be disruptive to operations if existing units used to

collect data

Bottom-line measures Churn rates Impact to sales and marginCost to serve; cost of operations

Direct calculation of financial impact

Typically available only after the fact in periodic reportsNeed to translate results to operational objectivesNeed to correlate results to actual customer experience

Operational measures Process-based measures: first call resolution, average resolution and activation times, and others

Use-based measures: drop call rates, bit rates and others

Aggregate measures: availability, service levels and others

Direct control of many success factors and improvement programs are within a CSPs span of control

Measures and quality initiatives should be built into processes

Modeled actions and results should be correlated to actual customer experience

Need to translate results to financial impact

6Making customer experience realActionable areasThe dimensions of customer experience cater to a very wide range of possible programs and projects. In order to structure the effort a CSP invests, the dimensions can be segmented into actionable areas. These areas represent different business functions that can be addressed individually or as a group through a combination of process, organizational and technological programs. A total of 12 actionable areas have been identified.

Products and economic benefit:Portfolio of offers and products: How well a CSPs offers

and products are able to meet a range of broad and specific wants and needs across the various segments that make up its customer base.

Product development and lifecycle management: The ability of a CSP to introduce new and innovative offers, products and services that enhance a customers experience or to address wants and needs. This also includes the ability of a CSP to withdraw offers, products and services that are no longer substantially relevant to the customer or economically viable to the CSP.

Suppliers, partners and the developer community: These are the entities with whom a CSP works with to produce, sell, fulfill, support, and manage its customers, offers, products, and services. In an increasingly data-driven landscape, these entities can help a CSP provide the content, services, and preferred delivery models to customers.

Quality of service:Devices and points of service delivery: A customers perception of CSPs services is immediately affected by the method through which these were accessed. These can range from personal, detached or fixed devices such as a mobile phone, fem-to-cell access point, or satellite dish, respectively. There can also be a virtual point of delivery such as in the case for streaming content delivered over the internet.

Technology operations: The ability of a CSP to perform fulfillment and assurance over the services and underlying resources. Ideally a CSPs operations team should be able to anticipate and proactively respond to issues; meeting or improving upon defined service levels and working in coordination with customer-facing teams.

Supporting network and IT infrastructure: The quality of a service can be affected by design constraints such as capacity, built-in redundancies or density of coverage. The availability, reliability, security, and recoverability of the network and IT resources can directly contribute to a customers experience.

Quality of interactions:Customer facing units: Units who directly interact with customers

and are typically responsible for pre-sales, sales and fulfillment and post-sales services. These units can interact with customers face-to-face, such as front office personnel and account representatives, or remotely, such as outbound or inbound call center agents.

Figure 2:Customer experience perception model

A customers experience, both direct and shared with connections and communities, with a CSP spans through several dimensions; as influenced by wants and needs.

Products & Economic Benefit

Quality of Service

Emotional Appeal

Quality of Interactions

Customer

CommunitiesConnections

7Channels and dealer network: A CSP can provide pre-sales, sales and post-sales services through automated channels such as portals and kiosks. CSPs can also indirectly serve customers through channel partners such dealers. Some of these partners may then recruit lower-tier resellers to form a dealer network accessible to customers.

Back-office, supply chain, and administrative support: Units without direct access to customers but whose functions impact customer experience. Examples include credit analysts who may approve or disapprove post-paid applications, inventory specialists who plan for which phone units become available and fraud specialists who can detect theft or hacked accounts.

Emotional appeal:Marketing and brand management: The units who build the CSPs

corporate and product brands. These encompass a wide range of brand-building activitiesfrom traditional multi-media advertising to non-traditional techniques such as event-based marketing and product placements.

Community relations and social responsibility: Units and activities geared towards building goodwill with communities where the CSP operates.

Corporate communications, regulatory affairs and affiliations: The formal positions and interactions with stakeholders such as investors, news, analyst regulators, and the public. This also includes the perceptions a CSP may have based on its affiliations with related or allied entities.

Programs and projectsStand-alone or inter-related programs and specific projects can be defined for each actionable area. While there are many possible initiatives, a CSP will be subject to constraints on regulatory restrictions, time, money, and people. It is crucial to

choose the right set of initiatives to ensure that each will receive adequate investments.

Based on our experience while working with leading service providers across the world, specific examples of initiatives that have produced significant benefits are provided below:Concept-to-market and fulfillment transformation: A competitive

differentiator for CSPs is the ability to launch new products rapidly and efficiently leading into an excellent fulfillment experience. This can be achieved by shortening the concept-to-market and end-to-end lead-to-cash process while increasing the quality of results. In our experience, starting with a robust, standards-based design supported by streamlined processes can considerably accelerate project completion whilst mitigating risk.FastWebs, a leading converged-service provider in Italy, slogan is one step ahead. This is a commitment on simple and competitive services focused on customer satisfaction. FastWeb was challenged by a rapidly growing service portfolio and increasingly sophisticated operations and business processes were getting more sophisticated. Business expectations included improving service implementation efficiency for launching new services and changing existing ones, meeting concept to delivery time-frames, and increasing efficiency and improving controls. FastWeb turned to HP Solution Consulting Services (SCS) to develop a standards-based approach to provisioning processes, architecture, application integration, and data model standardization. An example was the redesign of large account provisioning that satisfied the requirements of the business units.2

2 Carlini, Antonio, interview by Martyn Warwick, TelecomTV, May 21, 2010. http://www.telecomtv.com/comspace_videoDetail.aspx?v=4737&id=c26cc842-5ba0-470e-9b9d-c92b4a93db96. Accessed on September 27, 2011

Figure 3:Actionable areas for customer experience

The dimensions of customer experience cater to a very wide range of possible programs and projects. In order to structure the effort a CSP invests, the dimensions can be segmented into actionable areas.

Suppliers, Partners and the Developer Community

Product Development and Lifecycle Management

Portfolio of Offers and Products

Corporate Communications, Regulatory Affairs and Affiliations

Community Relations & Social Responsibility

Marketing and Brand Management

Devices and Points of Service Delivery

Technology Operations

Supporting Network and IT Infrastructure

Customer Facing Units

Channels and Dealer Network

Back-office, Supply Chain and Administrative Support

Customer

CommunitiesConnections

8Customer experience assurance transformation: A CSP can deliver enhanced customer experience by proactively managing issues and shortening the incident to resolution process while increasing quality of results. This can be achieved by integrating customer support processes across customer facing and operations teams, in conjunction with implementing leading Operations Support Systems (OSS). In our experience, a transformation program composed of process, organizational, and technological initiatives is proven to deliver results.Telenor subsidiary Total Access Telecommunications (DTAC), one of the leading telecom providers in Thailand, implemented an HP solution enabling it to monitor network performance and customer experience from a single center. Then DTAC CEO Tore Johnsen said that it would enable the company to boost service-offering capacity, which would in turn increase its revenue and glue customers to its network.3 Gunnar Somby, Senior Advisor, OSS Systems for DTAC remarked We needed the tools to cover the whole organization end-to-end. HP helped us do that by giving us a consolidated view, that is, what we need to make the customer experience much better.4 The HP solution resulted in double-digit percentage increases in first call resolution and more than halved the number of alarms managed.

Customer insight transformation: Traditional business intelligence solutions and reporting solutions require structured data and typically have a degree of latency before the results are available. The results often must be analyzed and then interpreted into operational actions. However, increasingly customer information is stored in unstructured forms in social networks and in shifting patterns of behavior. Also, there is greater demand for CSPs to be agile enough to understand and react to customers in real time. In HPs experience, achieving deep customer insight requires a blend of traditional and next-generation analytics supported by agile processes integrated into Business Support Systems (BSS) and OSS.

3 Srivish Toomgum, DTAC Boosted by HP solution, The Nation (Thailand), November 21, 2009

4 Somby, Gunnar, interview by Martyn Warwick, TelecomTV, July 21, 2009. http://www.telecomtv.com/comspace_videoDetail.aspx?v=3888&id=c26cc842-5ba0-470e-9b9d-c92b4a93db96. Accessed on September 27, 2011

Table 2:Sample customer experience initiatives

Dimension Key areas Sample initiatives

Products & economic benefit

Portfolio of offers and productsProduct development and lifecycle managementSuppliers, partners and the developer community

Value-based customer segmentation and a balanced portfolio Integrated product development lifecycle processesService broker and other 2-sided business models

Quality of service Devices and points of service deliveryTechnology operationsSupporting network and IT infrastructure

Device management and advanced policy controlOSS transformationCloud-based service delivery Infrastructure development lifecycle processes

Quality of interactions Customer facing unitsChannels and dealer networkBack-office, supply chain and

administrative support

Integrated lead to cash and incident to resolution end-to-end processesProfile-based processes and service delivery using advanced

customer analyticsEmployee empowerment

Emotional appeal Marketing and brand managementCommunity relations & social responsibilityCorporate communications, regulatory affairs

and affiliations

Integrated brand building activitiesCommunity outreach programsSustainable corporate practices

9France Dominican Telecom introduced the Orange Telecom brand to the Dominican Republic in 2000 and quickly became a leading provider. Analyzing customer feedback and intelligence was critical for Orange to maintain its competitive advantage and continue to grow the business. Traditional methods allowed Orange to analyze only a small portion (approximately eight percent) of customer interactions. Orange needed a tool that would automatically perform extensive analysis of customer interactions in order to gain comprehensive insight into call trends. Orange leveraged a suite of Autonomy solutions to automatically analyze interactions and apply the results to agent coaching and training, and to deliver real-time intelligence for business process improvements. As a result, Orange experienced a 30 percent reduction of call center costs, gained a 25 percent increase in management productivity, automated process, gained root cause behavioral understanding, and improved campaign effectiveness by 10 percent.5

Each of these examples represents comprehensive programs that include quick win projects, which can be completed within three to six months, to demonstrate business benefit early. When planning and initiating their own customer experience programs, it is important for CSPs to consider what the key success factors are. HPs track record of delivering business results is a result of careful planning and a holistic approach, leveraging on proven methodologies and industry frameworks and supporting intellectual capital. HP has stored these assets in HP COSMOS; a unique, model-based repository that facilitates rapid re-use. In addition, HPs success is hinged on the quality of its people; bringing in the right mix of skills and experiences. Finally, as both a provider of innovative solutions as well as a systems integrator, HP ensures that the technologies that best fit the CSPs needs are used.

It is recommended that CSPs consider this same mix of key success factors when planning for and executing its own customer experience programs.

5 Orange Telecom Case Study. Autonomy. www.autonomy.com. Accessed on September 29, 2011

Figure 4:Transformation initiatives

Impacts: Products & economic benefit Quality of service Quality of interactionsInitiative Components: Program management & governance Architecture and service design Implementing fulfillment solutions Optimizing product development teams Implementing standard goals and metrics Process (concept to market, lead to cash)

Impacts: Quality of service Quality of interactionsInitiative Components: Program management & governance Architecture; linking design and operations Implementing assurance solutions Optimizing operations centers and teams Linking front and back office support Implementing KQIs and KPIs Process (incident to resolution)

Impacts: Products & economic benefit Quality of service Quality of interactions Emotional appeal Initiative Components: Program management & governance Architecture Traditional business intelligence solutions Unstructured data, social media and

real-time operational analytics Transforming BSS/OSS

Products & Economic Benefit

Quality of Service

Emotional Appeal

Quality of Interactions

Customer

CommunitiesConnections

Products & Economic Benefit

Quality of Service

Emotional Appeal

Quality of Interactions

Customer

CommunitiesConnections

Products & Economic Benefit

Quality of Service

Emotional Appeal

Quality of Interactions

Customer

CommunitiesConnections

Concept-to-Market and Fulfillment Transformation

Customer Experience Assurance Transformation Customer Insight Transformation

10

ConclusionWhile customer experience is broadly recognized as an important strategic goal, the challenge is in translating this into a plan of action with clear and, most importantly, agreed objectives and measures. More than simply increasing the average level of customer experience, a CSP should consider focused programs on specific value and level of advocacy segments that can provide the best return on investment. Operational measures, bottom-line measures and direct measurements of customer experience form the basis of structuring and evaluating the success of customer experience initiatives.

To achieve excellence in customer experience, a CSP has to consider the direct and shared experiences of a customer, his or her connections and community. These experiences can be modeled across four perception dimensions: products and economic benefit, quality of service, quality of interactions, and emotional appeal. As the range of possible initiatives across these dimension are very wide, 12 actionable areas have been identified by this paper and examples were provided. Specifically, in our experience, transforming capabilities around concept-to-market and fulfillment, customer experience assurance, and customer insight have provided CSPs a mix of quick-win and comprehensive projects that can deliver accelerated business benefits. Finally, key success factors were provided. These include leveraging on proven methodologies, industry standards, and intellectual capital, using a team with skill and experience and using the best-fit solutions.

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HP enabling business transformation for the CME industryHP Communications and Media Solutions (CMS) assists the worlds top communications and media companies to transform their customers experiences and exceed business objectives of cost efficiency, innovation, and revenues. HP CMS draws upon more than thirty years of hands on telecom industry experience and proven leadership in combining network and IT technologies.

HP Solution Consulting Services (SCS) practice delivers a comprehensive suite of industry business consulting services designed to transform a CSPs from a technology centric business to a customer-centric business through:CME industry thought leader business consultantsleveraging

global reach with local capabilitiesA proven track record of defining and executing business

transformation to large CSPs, worldwide

A proven methodology to guide and orchestrate a completely customized transformation strategy on any scale

A model-based approach that attacks problems in a systematic way, synchronizing interdependencies between operations, organization, and technology

HP Industry Advisory ProgramThe HP Industry Advisory Program is a unique program of HP Solution Consulting Services (SCS) that delivers innovative thought leadership, addressing key industry business issues for our clients. The HP Industry Advisory Program is built-on the global knowledge, expertise, and experience of HP SCS Business Consultants and HP proven methodologies, industry frameworks and intellectual capital to deliver true business value, leveraging the speed and ease of use of collaborative social media tools.

Turn your business challenges into opportunities with the help of HP Solution Consulting Services, visit http://www.hp.com/go/scs.

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Copyright 2011 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. The only warranties for HP products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein.

4AA3-7403ENW, Created October 2011

Executive overviewDefining objectives and measuresFocusing on specific segmentsMeasurable outcomesOperations focused measures

Defining customer experienceCustomer contextDimensions of customer experience

Making customer experience realActionable areasPrograms and projects

ConclusionHP enabling business transformation for the CMEindustryHP Industry Advisory Program