customer worthy how complicated can digital click be chptr 5

8/2/2019 Customer Worthy How Complicated Can Digital Click Be Chptr 5

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Chapter 5

hw Cmplicated Can one Click fa Muse Be?

Aligning customer processes with company processes

In the previous chapters, we examined one customers series o contacts

across channels and media by stages in the consumer cycle. In this chapter,

we walk through a customer experience, digging deeper into the companys

contact management view, using the Matrix to connect the customers

journey to internal operations, systems, and department owners.

Again, we will start with the same lawn mower story rom the customers

perspective and add detail using the CxC Matrix building blocks. This Matrix

reduces the 15 stages o the consumer cycle to seven in order to make the

example easier to ollow.

Figure 5.1

CxC stage

Need Shop Buy Use

Awareness

Information

Selection

Negotiation

Contract

Logistics

Support

Customer

view

receive

email oer

search

research

standard

or deluxe

ree or

90 days

terms &

conditions

receive

product

product

query

Note: The CxC Matrix, which consists o 15 Customer Stages, is reduced

here to seven to make the example easier to ollow.


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:HowComplicatedCanOneClickoftheMouseBe?

Consumer cycle and CxC Matrix stages combined

The Customer View

CxC Matrix Stage 1 Awareness

Customer awareness or need new lawn mower generated by email.

By opening the email and clicking on the mower oer, the customer

moves rom the Awareness Stage to the Inormation Stage. Mar-

keting, advertising, and sales successully persuaded the customer to

gather inormation about ullling his need.

CxC Matrix Stage 2 Inormation

Customer opens promotional email, selects product, and is connected

to promotion-specic lawn mower web page. Customer reads inor-

mation, and clicks on links or more mower research. Additionally,

the customer enters the product name, model number, and the word

reviews into a Google search panel and begins reading review pages,

expert comments, and user comments. The customer also contacts

riends and neighbors about their lawn mower experiences.

CxC Matrix Stage 4 Selection

Customer renes mower needs and the eatures he wants based on

inormation, value considerations, and his own circumstances in

Matrix Stage 3, Identifcation (not shown). The customer then selects

his preerred mower type, brand, and a set o potential vendors. He

returns to the Acme Hardware Store website three more times in two

days and visits the manuacturers website our more times beoreconrming his selection.

CxC Matrix Stage 5 Negotiation

The customer clicks on the add to cart button on the website and

lls in his inormation. He experiments by adding and removing mower

add-on eatures and goes back and orth between model options. He

looks or ree shipping as he has seen rom other online vendors, and

he actors in assembly cost and time across each o his options. The

customer abandons the Acme Hardware Store online shopping cart

and heads to his local Acme Hardware Store with his email printed out


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and his web order page in hand. He also prints out competing oers

rom other vendors.

CxC Matrix Stage 6 Contract

The customer is greeted by a store salesman who takes him to the lawn

mower section. The customer agrees to the price and the special oer

to deliver the mower to his house and exchange his current mower. He

pays by credit card at the register and receives a receipt that explains

the stores return policy. It also oers extended warranty protection

or purchases over $50.

CxC Matrix Stage 7 Logistics

The customer arranges or the mower to be delivered between 3:00

and 5:00 p.m. and agrees to have his current mower near his driveway

or removal.

CxC Matrix Stage 12 Support

The customer mows his lawn or two weeks and notices a unny

sound when the mower is shutting o. He both calls support and goes

online to research his problem.

The CxC Matrix exposes some o the underpinnings o the companys

success in selling the mower by exposing each contact rom the companys

perspective.

Figure 5.2 Think Like a Customer (TLC) Stage

CxC stage Need Shop Buy Use

Awareness

Information

Selection

Negotiation

Contract

Logistics

Support

Customer

view

receiveemail oer

searchresearch

standardor deluxe

ree or90 days

terms &conditions

receiveproduct

productquery

Depart-

ment

akting &coc

aktingwb

PPC agncy

podctanagnt

patns

podctanagnt

coc

opations

distibtion

podctanagnt

sals

financ

sals

lgal

financ

opations

distibtion

shipping

patn

csto ca

opations

taining


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The Department View

What appears to the customer as simply clicking on an email, selecting a

couple o products, and hitting a buy button is a complex series o busi-ness rules, business arrangements, inter-company hand-os, and inorma-

tion exchanges connecting a minimum o 8 departments and as many as

14 systems.

Figure 5.3 Department Responsibility And Accountability Metrics & KPIs

1.Awarene

ss

2.Information

3.Identifica

tion

4.Selection

5.Negotiation

6.Contract

7.Logistics

8.Delivery

9.Acceptan

ce

10.$Collec

tion

11.Use

12.Care/Su

pport

13.Repair

14.Disposa

l

15.Commu

nity

Geography

Digital

Location

Third party

One-on-one

Community

akting

advtising pootion

conications

financ

podctanagnt

tail opations

-sllanagnt

sals

csto

sppot opations

sals

podctanagnt

distibtion

opations

sals

opations

dlivy

tail

distibtion

biz

conications

sals

thid patis


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customerworthy

This example shows a bit o the complexity that occurs on the company

side o this simple experience. The Department View oten stirs discussions

among department heads, line managers, and ront-line personnel who

relate vivid incidents o when the simple process went wrong.

Ater the nger-pointing and customer stories subside, individuals

quickly begin to identiy improvements, innovations, and alternative product

and service congurations that can be deployed at little or no expense.

Employees are requently surprised by how the Matrix connects depart-

ments and individuals across unctions. The customer perspective connects

the downstream and upstream impacts o each departments activities and

decisions, expanding the employees understanding o their roles in the

customer process, while educating them about the rest o the companys

operations.

This horizontal and departmental customer experience view is highly

summarized and easy to create or your own business. I recommend walk-

ing through this exercise with representatives rom these departments to

provoke customer-centric discussions.

Department-to-Department Hand-ofs

To ensure customer success, companies must capture and convey customer,

oer, service, and message component inormation rom department to

department. The Department View exposes the departments and individu-

als responsible or each element o each contact; or creating messages;

or delivering the messages; and all other activities related to ensuring the

contacts success. As contacts and messages become more tailored to spe-

cic customers, refecting the individual customers preerences and context,

the probability or errors grows, as does the cost o recovery. The probability

o errors also increases as products, services, delivery, payments, and ulll-

ment grow more fexible.

Orchestrating the best outcome rom stage-to-stage and department-to-

department is critical, not only to satisy customer needs, but also to realize

the optimum yield per customer, per contact, and per message slot.


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Figure 5.4 Departments-Customer Contacts

The Systems and Processes View

Cant Find My OrderOur Systems are Down View

The CxC Matrix Systems View (Figure 5.5) provides a summarized diagram

depicting the resources and capabilities required to meet each customers

expectations. Even this summarized customer story lists 18 dierent systems

managed by a mix o 17 departments and partners.


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customerworthy

This level o System View explains the inter-company operations required

to meet a customers needs. The view should be easily understandable by

everyone in the company without requiring them to have inormation tech-

nology, sotware, domain, or vendor knowledge.

The Systems View can be expanded to a much greater level o detail to

expose each specic system and the systems unctionality. System contact

expansions can expose individual transactions, processes, elds, eld values,

business rules, and treatments. This level o inormation is not necessary

across every system or every contact, but should be used when evaluating

alternative system solutions, upgrading or replacing a system, outsourcing a

system or unction, or critiquing the companys capabilities and perormance

or a set o contacts.

Figure 5.5 Customer Process


Aw

areness

Info

rmation

Se

lection

Neg

otiation

Co

ntract

Lo

gistics

Su

pport

Customer

view

receiveemail oer

searchresearch

standardor deluxe

ree or90 days

terms &conditions

receiveproduct

productquery

Depart-ment

akting &coc

aktingwb

PPC agncy

podctanagnt

patns

podctanagnt

coc

opations

distibtion

podctanagnt

sals

financ

sals

lgal

financ

opations

distibtion

shipping

patn

csto ca

opations

taining

System capaignanagnt

databas

ail

contntanagnt

wbsitanagnt

socialntwoking

coc erP

invntoy

anagnt

contactanagnt

bsinsspocssanagnt

ls ngin

contactanagnt

coc

odanagnt

invntoyanagnt

vndoanagnt

odanagnt

ail

cstolationshipanagnt

intlligntot

socanagnt

VOIP

The graphic below (Figure 5.6) provides a conceptual view o one com-

panys customer architecture and includes all o the systems responsibleor delivering customer contacts. This high level customer architecture view

is oten used by department managers, inormation technology managers,


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and vendors to initiate discussions about inter-operability, system and data

integration, system and unction outsourcing and new technologies, and

vendor sotware, service, and outsourcing possibilities.

Figure 5.6 Customer Architecture View

Inusing each contact with corporate objectives

This is where technology departments, operations, and business managers

unite their resources, talents, and innovations to execute each contact and

transaction with purpose and with specic and measurable revenue objec-

tives.

The previous CxC Matrix levels depict the state o a companys customer

experience as is. But the CxC Matrix challenges businesses to manage and

grow the value in each consumer stage by setting objectives, identiying therequirements or meeting specied objectives, and quantiying and measur-

ing the value o each stage and contact.

1.Awareness

2.Information

3.Identification

4.Selection

5.Negotiation

6.Contract

7.Logistics

8.Delivery

9.Acceptance

10.$Collection

11.Use

12.Care/Support

13.Repair

14.Disposal

15.Community

dict ail wb

otbondtlakting

ail

bann ads

potals

wb copon

CCm

Vru

dict TV

agggatos

CCm wb

chat

svic ato

collaboatos

flfillnt wb

logistics

collction lock box

billing

CCm

CCm logistics

tnpocssing

flfillnt

wb

CCm

patns

wb

contacts

sagtacking

wb

dict ail CCm

Vru

dict TV

3G

psonalization

ail

wb

psonalization dict sals

CCm

loyalty

continity

atoatd svic

ail

svic atoation

flfillnt fo shaing

wb

CCm

chat

VOLP

flfillnt

logistics ail

svic alts

CCm

CCm

ail slf hlp

knowldgbas

chat

dict ail

continity nwsltt

wb

CCm

Crm

potal


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customerworthy

Figure 5.7 Business Objectives


Awarenes

s

Informatio

n

Selection

Negotiatio

n

Contract

Logistics

Support

Customer

view

receiveemail oer

searchresearch

standardor deluxe

ree or90 days

terms &conditions

receiveproduct

productquery

Depart-ment

akting &coc

aktingwb

ppc agncy

podct

anagnt patns

podctanagnt

coc

opations

distibtion

podctanagnt

sals

financ

sals

lgal

financ

opations

distibtion

shipping

patn

csto ca

opations

taining

System capaignanagnt

databasail

contntanagnt

wbsit

anagnt

socialntwoking

coc

p

invntoy

anagnt

contactanagnt

bsinsspocss

anagnt

ls ngin

contactanagnt

coc

odanagnt

invntoyanagnt

vndoanagnt

odanagnt

ail

cstolationshipanagnt

intlligntot

socanagnt

VOIP

Objective a. poot

sto visitb. by

idiatly

p-sll

pootband, svic

p-sll

poot stovisit

p-sll

coss-sll svic

agnt

xtnd

waanty loyalty

nollnt

fficincy

coss-sll fal

fficincy

coss-sll fal

loyaltynollnt

Require-

ment

offanagnt

ail list

contnt

psonalizd

wb

in-stovisibility

localization

wb cooki

sit sach

ail cooki

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cstopofil

od/offanagntsyst

cdit sco

csto id

dynaicodanagnt

pocss

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nollnt

accss

socvisibility

taining

incntivpoga

falcapt

intlligntcall oting

taining

incntivs

off popts

Value pootion

cost potntialval

sachanagntcost

contnt cost

affiliat cost

affiliat/patn gainsha

pootioncost

pojctdcoss-sllvn

affiliatvn

15% incasclos sccss

add-onvn

fs

vn

nty costs

affiliat fs

dlivy cost

svic fs

fal bons

cost pint

off cost

incntiv cost

pojctdvn

By exposing the systems, departments, and parties accountable or each

contact, executives can clearly mandate objectives to the specic managers

responsible or accomplishing them at each contact.

Business objectives may start out simply as reduce cost or introduce


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service. These objectives may be dynamically modied by business, environ-

ment, and market circumstances.

Measuring perormance contact-by-contact

customer contact fow depicts company success

The Matrix delivers a quick view o customer fow and the success o each

customer stage and contact channel. We do this in order to identiy where

we have specic contact opportunities to grow revenue and reduce cost.

In this way, the entire company can gather around and ask simple ques-

tions like, How many customers in Stage One (Awareness) move to StageTwo (Inormation)? Nothing is simpler.

Figure 5.8 Customer Conversion Rate

The percentages show the survivor rate rom stage to stage as described

abovethey are at the bottom to show the overall survivor rate versus the

survivor rate in each cell.


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0 customerworthy

The potential value o each contact is explicitly measured by the number o

customers who pass through the contact and the downstream revenue, mar-

gin, and cost associated with each customer who experienced that contact.

Harness the power o your customer

Core to the CxC Matrix is monetizing each contact. Beyond simply track-

ing the sequence o contacts, the CxC Matrix calculates each contacts net

nancial impact. This is called monetization.

Each contact is monetized by looking at its cost and breaking it into

both cost and revenue components. Remember:

Each contact bears a cost.

Each contact has potential revenue, which is related to the

customers potential value.

The contact cost includes the cost o the channel/medium, the resources

required or crating and delivering the message, and all o the xed and

variable costs associated with contact handling.

You should assign costs to each contact in order to understand and

quantiy the impact o changes in customer fow, changes in transactional

or per item costs, and alternative resource and processes options.

A CxC Matrix completed with costs-per-contact lled in clearly shows thecost advantage o Internet and sel-service channels, as well as other lower-

cost contact congurations. However, when customer fow is overlaid onto

the cost Matrix, you can see when customers gravitate to lower-cost chan-

nels and when they preer higher-cost options. The Matrix provides a realistic

view that usually shows that rst time customers initially conduct business

through one combination o contacts, while repeat customers adopt another

combination o contacts across the stages o their consumer cycle.

The CxC Cost Matrix provides a set o tools to depict hypothetical contact

sequence scenarios using estimated customer fow and contact counts. It


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also provides a means or testing and observing service and contact con-

guration alternatives.

Figure 5.9 Estimated Costs for Contacts

Cost per purchased name $ 0.10 $150.00

In-person sales call $40.00 $500.00

Group presentation $350.00 $3,000.00

Sel-service interaction $0.01 $0.40

At-home sales call $25.00 $150.00

Outbound telemarketing $8.00 $35.00

Fax/mail $3.00 $5.00

Inside sales call $20.00 $100.00

Inbound telephone support $4.00 $75.00

Direct mail $0.25 $12.00

Email $0.03 $0.60

Inbound reerral $20.00 $500.00

Trade show $100.00 $6,000.00

Internal website $0.15 $12.00

Third-party web $0.05 $200.00

Partner sale $1.00 $100,000.00

The Matrix provides a means to quantiy each contacts contribution

to a customers propensity to purchase, as well as projections or probable

expense and contacts post-sale.

The CxC Matrix requires that every customer contact be inventoried,

monetized, analyzed, and prioritized.

The Simplest Measure

One o the reasons that the CxC Matrix is so powerul is that it stems

rom one key measure: did the customer buy something? In the case o the


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customerworthy

Matrix, this means that success is measured by getting customers to CxC

Matrix Stage Six: Contract. Every other contact has an explicit cost and only

potential revenue.

Stage Six, Contract, is the pivotal moment by which we can measure the

success o all prior stages. For this reason, we measure the success o each

stage rom one through fve by the percentage o customers who pass rom

stage to stage.

The Company Viewmonetization and the mower

Examining the mower program rom the companys perspective uncovers an

enormous number o contacts and the successul and unsuccessul contact

attempts made by the company and the targeted customers.

Employees who are not in marketing or sales can better understand

their customers mindset when they become aware o all o the messages

the company directs at customers to generate sales.

The mower campaign targeted 20,000 customers, o which 180 or 0.9

percent actually bought a targeted item (mower, hedge clippers, or barbecue

grill). An additional 230 targeted customers bought something during the

promotion period, but their purchases were not directly attributable to this

campaign.

For the 180 customers who made the target purchase, there were 4,000

customers who did not receive the email; 6,300 received the email but did

not open it. Another 8,900 customers opened the email but did not click on

the highlighted section that would have taken them to the company website.

Eight hundred customers clicked the link, and 270 o them spent more than

three minutes on the site viewing individual product pages. Thirty o the

website visitors bought the targeted product directly rom the website. Four

customers went through the entire purchasing process on the website up tothe point in the checkout process when the system requested their credit


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card number. Then they abandoned the purchase. Thirty-two customers went

directly to Google rom the web page and searched or the eatured item.

Figure 5.10 Surviving Customers/Leftover Potential

Awareness

Stage 1

800

270

Identiication

Stage 3

270

34

Contract

Stage 6

34

30

Collect $

Stage 9

30

530

236

4

30

What oer/

channel next?

What oer/

channel next?

What oer/

channel next?

What oer/

channel next?

$79,000

potential

What %?

$35,400

potential

What %?

$600

potential

What %?

$600

potential

What %?

Potential assumes $150 per customer; What %? calculates next ofer success rate.

The Matrix provides a means to quantiy each contacts contribution to a

customers propensity to purchase, as well as projections or probable ex-

pense and contacts post-sale.

The rear view window How did we get here?

The Matrix also correlates service, delivery, repair, and support costs and

activities with earlier customer contacts. So, in addition to calculating the

cost o each incident and the cumulative cost o customer acquisition

Matrix stages one through sixthe Matrix provides insight into which chan-

nels and contacts drive up post-sales expenses. The more detailed Matrix

views and models provide all o the components o the customer experience,

delivering even more inormation about potential causes and eects o each

prior customer contact.


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customerworthy

Figure 5.11 Customer Flow, SCP

1. Awareness

2. Inormation

3. Identiication

4. Selection

5. Negotiation

6. Contract

7. Logistics

8. Delivery

9. Acceptance

10. $ Collection

11. Use

12. Care/Support

13. Repair

14. Dispose

15. Community

Geography

1,4

00

1,0

00

900

600

250

145

145

138

130

145

130

40

21

9

130

Digital

400

145

95

7

0

62

58

50

47

47

50

45

12

4

4

80

Location

300

250

180

3

5

10

4

4

2

2

4

4

0

0

1

28

Thirdparty

150

62

49

4

4

40

28

28

20

19

28

19

7

2

1

41

One-on-one

800

650

420

350

60

0

11

21

21

27

390

580

210

41

3,4

00

Community

3,0

50

2,1

17

1644

1,0

99

422

235

238

228

219

254

588

638

237

56

3,6

79

Totalcustomers

perstage

6,1

00

933

473

545

677

187

-3

10

9

-35

-334

-51

402

181

C

ustomer

fow

30.5

9%

22.3

4%

33.15%

61.6

0%

44.3

1%

-1.2

8%

4.2

0%

3.9

5%

-15.9

8%

-131.50%

-8.6

7%

62.9

1%

76.3

7%

SCP$

$156,6

00

$48,6

00

$95

,000

$77,4

00

$25,4

00

$1,6

00

$4,0

00

$1,8

00

-$5,8

00

$5,80

0

$27,8

00

$6,4

00

$2,4

00


16/19


In the more detailed case on the prior page (Figure 5.10), the company

estimates that each customer is worth $200 in prots. This number is used

to quickly observe the opportunity available rom stage to stage: SCP (Stage

Channel Potential) = the potential additional revenue available per CxC Matrix

stage. SCP actors customer value times the customer's propensity to buy

based on similar customers perormance.

Note: Total Customers counts the identiable customers excluding

anonymous shoppers/visitors and de-duplicating customers appear-

ing in multiple channels within the same customer stage.

These numbers represent a subset o customers that entered the CxC

Matrix on the same day then ollows the group or 126 days, the company's

calculated customer lietime. All values are based on individual company

benchmarks.

The opportunity can be urther drilled down to channel, medium, system,

oer, and so orth.

This simple, customer-count-populated Matrix (Figure 5.11) shows therate at which customers move rom stage to stage, and it represents the

companys success in closing sales rom the customers in stages one through

ve. It also shows the customers who ail to move to a subsequent stage,

while also quantiying the total oreited value lost at each stage.

While no company converts 100 percent o its customers rom stage to

stage, this Matrix view quickly monetizes the potential value resident in each

cellstage and channel combinationand provides an estimate o the total

amount o prot to be gained by creating incremental improvements at each

customer stage and contact. The detailed contact view shows the potential

prot resident in each cell, which managers can use to make investment

decisions regarding the tactics best suited to grow perormance. The same

Matrix view then provides ongoing monitoring o tactical success.

Monetization is a primary benet o the CxC Matrix because it links

specic business decisions, that is, which messages to present and


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customerworthy

what their content should be, to long-term customer value.

The monetization of contactsthe core concept of the CxC Matrixis

implemented through the monetization of slots.

Companies generally assess the cost o an employees completion o a

task such as the per-item cost o billing, ordering, inventory, delivery,

shel space, and so orth. Some companies go so ar as to calculate

expenses associated with assessing customer tness or worthiness

through customer verications, credit checks, demographics and seg-

mentations, and customer le assessments, but ew try to assess a

customers uture value by estimating the amount o revenue thecustomer will generate over a lietime.

The Matrix highlights where your customer ceases to have contacts,

providing a date stamp and all o the earlier contact activities. The

stages where most customers are lost should be examined or correc-

tive action and treatments that grow revenue. Using customer lietime

value as a metric, you can calculate the benets o improving indi-

vidual Matrix cell perormance by estimating the increase in customers

who move through to the contract stage.

Recommended CxC Matrix monetization applications

Strategy

Value calculations can help make major investment decisions such as

whether to expand plant capacity, launch a new product line, or change

service levels. Managers construct a scenario or each option and compare

the expected values. Unlike scenarios built using conventional techniques,

scenarios based on the CxC Matrix ensure that all implications o a given

choice are considered. For example, a model or adding a new product linewould include the expected change in customer service volume. This helps

to avoid unanticipated results that can reduce or even reverse the benets

o a supercially attractive option.


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Revenue Enhancement

Every customer contact is an opportunity to increase customer value. By

assigning an explicit value to the contact, monetization encourages moreecient use o contacts that may be executed with little thought or ignored

altogether. For example, many rms never think to include advertisements

in packages they ship to customers. Others throw in a copy o their catalog

but dont measure the resulting sales. Only a handul o companies are

thorough enough to measure the value o sales rom their own catalog

and compare it with revenue they would generate i a third party paid to

insert its materials instead. A comprehensive inventory o customer contactsuncovers more opportunities than most businesses realize, rom Google ad

placement on a website, to messages embedded in call-on-hold scripts, to

cross-sell oers made at the close o a customer service inquiry to simply

asking your customers whether they know the name o someone else that

could benet rom your products and services.

Operations

Because monetization calculates the change in long-term value resulting

rom each contact, it gives operational managers a way to measure their

groups contribution to the entire organization. This avoids the departmental

myopia that can lead to decisions that are good or one area but harmul to

the larger organization. For example, a purchasing organization might nd

it can save money by using a lower quality supplier, even ater allowing or

direct impacts such as increased service costs, higher returns, and larger

warranty expenses. But a comprehensive customer value analysis would

include impacts on other departments, such as lower revenues rom loss o

repeat business, ewer sales o other company products, and ewer reerrals

by enthusiastic customers. This might result in a dierent decision that is

ultimately better or the company as a whole.

Forecasting

Exposing the impact o each customer contact creates a company-wide

network o risks and opportunity sensors that enable execution nimbleness.


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customerworthy

The nancial measures underlying monetization are based on projections o

non-nancial measures such as advertising impressions, sales calls, contact

center call volumes, website visits, opened emails, metered product and

service usage, and purchase quantities. These can be used to build budgets

and orecasts. Because the budgets are based on projections or specic

inputs, nancial variances can also be traced to specic sources.

Improved Predictive Model Performance

Traditional orecasts are oten based on statistical models that predict results

without describing the underlying business activities that cause them. This

makes it much harder to analyze the causes o any deviations. Similarly,

because the CxC Matrix projects customer activities over time, any revised

projections automatically include the uture impact o past variances. Thus,

a shortall in sales this quarter will automatically result in lower projections

or service calls in the uture, making it easier or companies to understand

the true implications o their current results.

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