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Enhancing the Understanding of the Total Customer Experience Through Linkage
February 17, 2005
Dave Kreiner Manager, Total Customer Experience and QualityTechnology Solutions Group
2/21/2005 2
Why are we here?• Purpose: Share how HP is using linkage analysis to
improve the Total Customer Experience, from the point of view of a “Customer Loyalty Practitioner”
• Results: You will have gained a unique (different) perspective on linkage which may help determine whether this approach is right for you and your organization.
• Steps: • The business case for linkage• Defining linkage• Share the linkage journey• Lessons learned
• Capabilities:• This presentation• Content Experts• Your Questions
2/21/2005 3
Those Nagging Questions That Keep Me Up at Night…1. How can I help the organization
understand the Total Customer Experience when it is measured with multiple surveys ?
2. How can I help the organization understand the financial impact of improving customer loyalty?
3. How can I help the organization to prioritize internal process improvements based on customer loyalty?
Will I survive this presentation? (will YOU survive this presentation?)
2/21/2005 4
There are at least two trends that are driving the recent interest in and growth of linkage analysis and modeling:
− Desire for improved managerial confidence in and support for decisions regarding where/how to invest organizational resources
− Growing need to understand and align performance management within and beyond organizational boundaries
…and linkage helps minimize “silo” behavior of research
Rationale for linkage research and analysis
2/21/2005 5
Linkage research and analysis is rapidly-growing as an area of importance to marketers and marketing researchers. Linkage research and analysis is aimed at establishing:
• How key business results are related to effective management of customer experiences and relationships
• How successful customer experience/relationship management, in turn, is linked to and driven by effective alignment of people and processes within an organization.
• A more robust decision making process
Focus of linkage analysis
2/21/2005 6
Step # 1: Defining Linkage Approach• Understand the Big Picture• Within the Survey Structure • Downstream from the Survey• Upstream to the Survey• Develop a Business Performance Chain
2/21/2005 7
Linkage Defined
Downstream AnalysisOverall Customer
Perceptions to Business Results
Upstream AnalysisInternal Process or
employee data to customer perceptions
Within the Voice of the CustomerTransactional/Relationship/Image
2/21/2005 8
Downstream and Upstream Linkage
CustomerRevenue &Profitability
CustomerRevenue &Profitability
Share ofIT Budget
Share ofIT Budget
OverallCustomer
Loyalty
OverallCustomer
Loyalty
Easy toUse
Products
Easy toUse
Products
Easy toFind & BuyProducts
Easy toFind & BuyProducts
CustomerService &Support
CustomerService &Support
ProductQuality
andReliability
ProductQuality
andReliability
First TimeProblem
Resolution
First TimeProblem
Resolution
Total TimeTo ProblemResolution
Total TimeTo ProblemResolution
Number ofRepeat
Contacts orSite Visits
Number ofRepeat
Contacts orSite Visits
Number ofHours toResolveProblem
Number ofHours toResolveProblem
InternalProcess
Measures
Customer Experience Measures BusinessResults
Measures
Brand Imageand
Reputation
Brand Imageand
Reputation
Purchase &Ownership
Costs
Purchase &Ownership
Costs
DownstreamUpstream
2/21/2005 9
Business Performance Chain
L5
VOW
L4Operational
Metrics
L3Transactional
Surveys
L2Product Specific
Surveys
L0FinancialResults
L1Relationship
Surveys
Phase 1 Phase 2Phase 4 Phase 3
Phase 5
Phase 6
2/21/2005 10
The Linkage Challenge
• The ideal situation for analyzing and integrating data from multiple streams would involve common data points for which all relevant measures are available.
• Unfortunately, the ideal situation almost never exists, especially at a single point-in-time.
• As a result, linkage typically is a matter of approximating the business model by “piecing things together.”
2/21/2005 11
Step # 2: Develop a Enterprise Blueprint• Blueprint puts definition and detail into the
Business Performance Chain• Blueprint provides the framework for linkage• Blueprint will improve the strategic relevance of
survey data• Agreement by key stakeholders helps move
project forward
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General Architecture: Map of Measures (as seen externally by customers, not internally)
Expe
rienc
eA
ttach
men
tProvider ofSolutions
Provider ofSolutions
ProductsProducts
SoftwareSoftwareHardwareHardware ConsultingConsultingOutsourcedOutsourced ProductSupport
ProductSupport
ServicesServices
Transactions, Events, and Moments of TruthTransactions, Relationships, Events, and Moments of Truth
2/21/2005 13
Step # 3: Linkage Within the Voice of the Customer • Determine which surveys should be included• Align scales to enable linkage• Develop “bridge measures” to enable linkage
across survey instruments
2/21/2005 14
Bridge Modeling
u As the name suggests, bridge modeling is a technique that makes it possible to link data across multiple, separate survey instruments, in order to create one overall chain of effects.
u A necessary requirement for performing such modeling is the presence of common survey items across the multiple surveys being linked.
– The survey items that are common across the multiple surveys, and that are used to link these surveys are called “bridge measures.”
– The bridge measures should be identical (or nearly identical) in their wording and scale type across the surveys being linked.
– Once the path from a lower-level bridge measure to a higher-level measure has been quantified, the projected impact of the lower-level measure can be incorporated into ROI simulations and other “what-if” scenarios.
2/21/2005 15
OverallSatisfaction
With Support
OverallOverallSatisfactionSatisfaction
With SupportWith Support
InstallationInstallationInstallationChannelChannelChannel
Remote withPhone
Remote withRemote withPhonePhone
Remote withPart
Remote withRemote withPartPart
Repair andReturn
Repair andRepair andReturnReturn
Advanced UnitReplacement
Advanced UnitAdvanced UnitReplacementReplacement
TechnicalCourier
TechnicalTechnicalCourierCourier
Sub-ContractedOn-Site
SubSub--ContractedContractedOnOn--SiteSite HP CE
On-Site
HP CEHP CEOnOn--SiteSite
Linking Transaction Surveys to Relationship Surveys: The Bridge Model
Overall Overall Satisfaction Satisfaction With SupportWith Support
CustomerCustomerLoyaltyLoyalty
TransactionSurveys
TransactionTransactionSurveys Surveys
RelationshipRelationshipSurveys Surveys
2/21/2005 16
Step # 4: Linkage to Downstream Business Results • Enterprise Blueprint provides the framework for
linkage assessment Critical success factors:
•Availability of appropriate data
•Establishment of common “unit of analysis”
•Appropriate tools and techniques of linkage analysis and modeling
– Not simple correlations
2/21/2005 17
Getting &Using
Getting &Getting &UsingUsing
BuyingBuyingBuying
HP Spend $$HP Spend $$HP Spend $$Customer
Loyalty
Customer Customer LoyaltyLoyaltyCompany
Imagery
CompanyCompanyImageryImagery
.xx
.xx.xx .xx
OverallPre-SalesSupport
OverallOverallPrePre--SalesSalesSupportSupport
Improving “Overall Pre-Sales Support” by 1 rating point on average . . . …leads to a “X$”
increase in HP Spending by the average B2B customer
Projected Impact of Improving “Overall Pre-Sales Support” on IT Budget Dollars Spent with HP
.xx
2/21/2005 18
Step # 5: Future Work
• Linkage of customer experience to operational performance and employee engagement
• Develop an end to end proof of concept model• Improve ability to match and merge data sets• Develop more operational models for specific
businesses
2/21/2005 19
TCE business performance chain
Business results
Market share
Gross margin
0
Business
HP Business Performance Chain
‘Proof of Concept’ quantitative linkage is being established
Quantitative linkage has been established.
Legends
HR In the process of defining employee engagement and experience.
Employee engagement and experience
Other
VoW
Level 6 5
People processes
Peoplemanagement
Employees
TCE and organization performance
CLI
4 3 2 1
Key driversOperational
metrics
Customers
Linking employees – customers – business results
2/21/2005 20
Lessons Learned
• Enterprise Blueprint enhances the process• Obtaining the appropriate data is a struggle – Align these
resources early• Position initial work to senior leadership as proof of
concept • Engage business leadership• Position as decision support process vs a high end
market research process • Scope creep – others joined on – willing to share • Hard work – keep plugging on data availability• Collaborative effort with the supplier• There may be a better mousetrap!
2/21/2005 21
2/21/2005 22
Advancements in Analytical Protocols § Not just correlations§ A variety of other analytical techniques that
are better suited for linkage analysis and modeling:§ HLM (Hierarchical Linear Modeling)§ LCA (Latent Class Analysis)§ PCR (Principal Components Regression)§ PLS (Partial Least Squares)§ Regression (e.g. Logit models)§ SEM (Structural Equations Modeling)