Transforming Customer Experience: From Moments to Journeys

Why do companies need to manage the entire customer experience? New analysis reveals that the entire customer journey - the series of interactions with a brand - is more important than any single touchpoint experience. Leading companies identify and effectively manage a few "key journeys." When companies perfect managing the entire customer journey, they reap significant benefits—including enhanced customer and employee satisfaction, reduced customer churn, increased revenue, lower costs, improved organizational collaboration, and competitive advantage. Presented at the Harvard Business Review webinar. For more on customer decision journeys: http://mckinseyonmarketingandsales.com/topics/customer-decision-journey

Published in: Business, Technology

Transforming Customer Experience: From Moments to Journeys from McKinsey on Marketing & Sales

Transcript

1. Customer Journey Transformation: The idea, the impact & how to start Any use of this material without specific permission of McKinsey & Company is strictly prohibited September 2013 Presented on Harvard Business Review webinar
2. McKinsey & Company | 1 Today’s discussion 1 A Journey-based approach to customer experience: what it is, and why it’s a better way 2 The path to impact: multiple wins across CSAT, cost, revenue, and employee sat 3 How to get started: a practical approach to a journey-based transformation
3. McKinsey & Company | 2 The Customer Journey concept Product Marketing Online Retail Care Customers interact with organizations on journeys that cut across individual touchpoints that different functions tend to optimize Onboarding journey Problem resolution journey Renewal and repurchase journey 1
4. McKinsey & Company | 3 Journey examples ▪ Onboarding ▪ Technical service ▪ Contract rolloff ▪ Address change ▪ Product upgrade ▪ Repair ▪ Billing Anchored in how customers think about it An event that marks the defining experience of key life-cycles of a customer Typically multi-touch, multi- channel and cross-functional An evolution in thinking over traditional touchpoint (or “moment of truth”) approaches of customer interactions happen during a multi-event, multi-channel journey>50% What is a Customer Journey and how is it different? Customer Journey 1
5. McKinsey & Company | 4 Touchpoints matter, but journeys matter more 100 0 Day 90 CSAT performance at touchpoints vs. overall Journey Field services touch point CSAT 90 + 80 + 40 Onboarding journey CSAT – 50% drop over 1st 90 days Day 1 Call center touch point CSAT 85 Percent first-time-right at each stage of Installation journey 1 65% 90% 85% 95% 90%Logistics Network Field force Sales End-to-end delivery
6. McKinsey & Company | 5 Journeys are 30% more strongly correlated with business outcomes Customer satisfaction Willingness to Recommend 0.58 +36%0.43 0.60 +28%0.47 +19% 0.59 0.50 -0.25 +33% -0.33 Likelihood to stay/renew Likelihood to cancel/churn 1 Touchpoints Journeys
7. McKinsey & Company | 6 Most companies face challenges in delivering a full end-to-end experience ▪ Typically more than one person is responsible for the E2E experience ▪ Most companies are organized functionally and hard-wired to deliver touchpoints ▪ At the frontline, limited visibility into customer outcomes and cross- functional handoffs ▪ Metrics and incentives often touchpoint-based (e.g., first call resolution, AHT, transactional satisfaction) ▪ Performance data often stored in silos and challenging to assess E2E performance 1
8. McKinsey & Company | 7 Journey-led transformations deliver impact across multiple dimensions FUEL REVENUE GROWTH Churn, upsell, acquisition IMPROVE CUSTOMER SATISFACTION ENGAGE EMPLOYEESLOWER COST TO SERVE 20 to 30% 15 to 20% 20% 10 to 15% 2
9. McKinsey & Company | 8 0% 2% 4% 6% 8% 10% 12% 14% 6.0 6.5 7.0 7.5 8.0 -2% 0% 2% 4% 6% 8% 8.0 8.4 8.8 9.2 9.6 Companies that excel in delivering journeys tend to win in the market SOURCE: 2011 McKinsey Multi-Industry Survey; company financial statements 1 Average of satisfaction with each company’s three key journeys L D J I H Journey satisfaction1, 2011 G F Revenue growth – PayTV industry 2011 vs. 2010 Revenue growth – Insurance industry 2011 vs. 2010 Journey satisfaction1, 2011 N M E K C B A 2
10. McKinsey & Company | 9 Customer “Journeys” 3 6 5 4 1 Define a clear, compelling value proposition-delivered through Journeys Continuously innovate the end- to-end Journey experiences Use Journeys to define metrics and governance system Optimize operational processes & systems to ensure consistent delivery Use Journeys to reinforce front-line culture Companies who excel at delivering customer experience display six hallmarks 2 2 Know the Journeys that matter, and why they matter
11. McKinsey & Company | 10 Sign up (sales) Welcome (care) Install (field) First Bill (care, billing) Journey Leakage 100% 90% 81% 72% 63% 90% 90% 90% 90% One company transformed their onboarding journey Pain points ▪ Long call, many T&Cs ▪ Many options on pricing/ product ▪ Multiple handoffs ▪ Multiple calls for new customers ▪ Missed appointments ▪ Sales price vs. what is billed ▪ How to use 2
12. McKinsey & Company | 11 Impact A car rental company worked to deliver speed in the airport pickup journey ▪ Identified “on-site rental” as journey that mattered and speed as key driver ▪ Journey fundamentally multi-touch – web booking, call center, bus, car selection, checkout – no one touch owned “speed” ▪ Drove cross-functional program to differentiate on speed: – Pilot program in several locations with all functions – Frontline-led, lean process management to generate innovation ideas – Developed “playbook” for all locations – Each region sponsored by one member of exec team On-site rental CSAT Index Growth in service revenue Labor cost -10%+ 5%+ 2 100 AfterBefore 190
13. McKinsey & Company | 12 78% 100% -22% 80 100 -20%7,8+13% End of pilotBaseline 6,9 2,7 +35% After the pilotBefore the pilot 2,0 17% 100% -83% End of pilotBaseline Overall CSAT Index Employee satisfaction score (sales back-office) Response average (scale of 1 to 4) Installation waiting time Index Repeat work rate index Problem calls Clients with 4+ calls in 6 days, indexed SOURCE: McKinsey A telecom redesigned their installation journey to drive efficiency 2
14. McKinsey & Company | 13 A four-part approach to Journey-based transformation TIMING SOURCE: McKinsey Customer Experience Service Line Identify key journeys Understand current performance Redesign experience and engage front line Sustain at scale ▪ Define clear CE objective ▪ Top-down Exec sessions ▪ Launch bottom-up quant research ▪ Map key journeys ▪ Diagnose performance ▪ Identify pain points ▪ Size, prioritize opportunities ▪ Launch cross- functional teams (root cause analysis) ▪ Engage frontline & pilot ▪ Engage customers ▪ Track impact ▪ Set longer-term impact aspiration ▪ Cascade journey metrics ▪ Adjust organization (if needed) ▪ Implement solutions at scale ▪ Drive continuous improvement 3-6 months 12-18 months 3
15. McKinsey & Company | 14 Top-down approach: pick 1-2 journeys to start SOURCE: McKinsey Customer Experience Service Line JOURNEY EXAMPLES COMPANY OBJECTIVE CUSTOMER OBJECTIVE ▪ Acquire the right customer, build engagement, and bill with minimal cost Onboarding ▪ Get up and running painlessly at my own pace, with no surprises and minimal effort ▪ Bill and collect accurately and quickly Making a payment ▪ Consistent, transparent bill, with flexible options; company willing to work with me to maximize value ▪ Set up the move, retain the right customers, complete the move, and collect payment Moving ▪ Simple, smooth, hassle-free move with no hidden fees or administrative burden ▪ Identify, communicate, and implement the required change in a timely manner Changes Price, terms, or product ▪ Easy to flex product to meet evolving needs, mine to manage, with transparent pricing and recognized loyalty ▪ Take the call, fix the issue, teach self-help over time Resolving a problem ▪ Solve my problem, help me understand why it happened and how to prevent, and follow through to confirm the fix 3
16. McKinsey & Company | 15 Bottom-up analysis to capture customer priorities 3 How to get started ▪ Select subset of journeys to focus on, with narrow scope of channels and touchpoints ▪ Assemble cross-functional dataset ▪ Ensure data across all sources can be linked at subscriber level ▪ Identify most common paths, sources of leakage, and contribution to end-objective
17. McKinsey & Company | 16 Drive cross-functional performance in each Journey, all the way to the front line ▪ Take a customer perspective across the chain ▪ Capture as much customer feedback as possible ▪ Simplify and standardize end-to-end process ▪ Define a cadence for end-to-end improvements ▪ Set clear objectives for the entire end-to-end chain ▪ Translate objectives into cascading KPIs ▪ Define clear governance, roles and responsibilities ▪ Build capabilities, e.g., problem-solving, advocacy ▪ Work together across the entire chain ▪ Increase role-modeling and coaching by managers Process Efficiency Voice of the Customer Organization & Skills Mindsets & Behavior Performance Management 3
18. McKinsey & Company | 17 Why this approach works SOURCE: McKinsey Customer Experience Service Line ▪ End-to-end Journey teams inherently cross-functional ▪ Journey-based approach forces a rethinking of org boundaries ▪ Outcomes & metrics cut across silos, often in new ways Forces cross- functional design at working level ▪ Program typically sponsored by CEO, with dedicated CE leader ▪ All executive team members sponsor cross-functional initiatives ▪ Single journey fact base forces all functions/execs to come to the table Drives top- down leadership commitment Engages the frontline ▪ Frontline teams empowered to design & test solutions ▪ Creates culture of innovation and ownership Forces focus and prioritization ▪ Prioritizes initiatives for rapid impact at scale ▪ Strained process/policy/IT roadmaps have to be streamlined ▪ Sacred cows within siloes cannot be hidden / defended 3
19. McKinsey & Company | 18 A recap of our discussion: 1 A Journey-based approach to customer experience: what it is, and why it’s a better way 2 The path to impact: multiple wins across CSAT, cost, revenue, and employee sat 3 How to get started: a practical approach to a journey-based transformation
20. McKinsey & Company | 19 Questions?
21. McKinsey & Company | 20 Staying Connected Principal, Seattle Ewan_Duncan@mckinsey.com @EwanRDuncan @McK_MktgSales www.McKinseyonMarketing&Sales.com www.youtube.com/McKinseyCMSO Forum www.slideshare.net/ McK_CMSOForum Principal, Dublin Conor_Jones@mckinsey.com Principal, Seattle Alex_Rawson@mckinsey.com

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Tuesday, April 14, 2015