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

2/21/2005 12

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)