How Complicated Can 1 Click Be
How Complicated Can one Click of a Mouse Be?
Aligning customer processes with company processes
In the previous chapters, we examined one customer’s series of contacts across channels and media by stages in the consumer cycle. In this chapter, we walk through a customer experience, digging deeper into the company’s contact management view, using the Matrix to connect the customer’s journey to internal operations, systems, and department owners.
Again, we will start with the same lawn mower story from the customer’s perspective and add detail using the CxC Matrix building blocks. This Matrix reduces the 15 stages of the consumer cycle to seven in order to make the example easier to follow.
Consumer cycle and CxC Matrix stages combined
The Customer View
CxC Matrix Stage 1 Awareness
Customer awareness for need “new lawn mower” generated by email. By opening the email and clicking on the mower offer, the customer moves from the “Awareness Stage” to the “Information Stage.” Mar- keting, advertising, and sales successfully persuaded the customer to gather information about fulfilling his need.
CxC Matrix Stage 2 Information
Customer opens promotional email, selects product, and is connected to promotion-specific “lawn mower” web page. Customer reads infor- mation, and clicks on links for 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 friends and neighbors about their lawn mower experiences.
CxC Matrix Stage 4 Selection
Customer refines mower needs and the features he wants based on information, value considerations, and his own circumstances in Matrix Stage 3, Identification (not shown). The customer then selects his preferred mower type, brand, and a set of potential vendors. He returns to the Acme Hardware Store website three more times in two days and visits the manufacturer’s website four more times before confirming his selection.
CxC Matrix Stage 5 Negotiation
The customer clicks on the “add to cart” button on the website and fills in his information. He experiments by adding and removing mower add-on features and goes back and forth between model options. He looks for “free shipping” as he has seen from other online vendors, and he factors in assembly cost and time across each of 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 and his web order page in hand. He also prints out competing offers from 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 offer 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 store’s return policy. It also offers extended warranty protection for purchases over $50.
CxC Matrix Stage 7 Logistics
The customer arranges for the mower to be delivered between 3:00 and 5:00 p.m. and agrees to have his current mower near his driveway for removal.
CxC Matrix Stage 12 Support
The customer mows his lawn for two weeks and notices a “funny” sound when the mower is shutting off. He both calls support and goes online to research his problem.
The CxC Matrix exposes some of the underpinnings of the company’s success in selling the mower by exposing each contact from the company’s perspective.
Figure 5.2 Think Like a Customer (TLC) Stage
The Department View
What appears to the customer as simply clicking on an email, selecting a couple of products, and hitting a “buy” button is a complex series of busi- ness rules, business arrangements, inter-company hand-offs, and informa- tion exchanges connecting a minimum of 8 departments and as many as 14 systems.
Figure 5.3 Department Responsibility And Accountability Metrics & KPIs
This example shows a bit of the complexity that occurs on the company side of this “simple” experience. The Department View often stirs discussions among department heads, line managers, and front-line personnel who relate vivid incidents of when the “simple” process went wrong.
After the finger-pointing and customer stories subside, individuals quickly begin to identify improvements, innovations, and alternative product and service configurations that can be deployed at little or no expense.
Employees are frequently surprised by how the Matrix connects depart- ments and individuals across functions. The customer perspective connects the downstream and upstream impacts of each department’s activities and decisions, expanding the employees’ understanding of their roles in the customer process, while educating them about the rest of the company’s operations.
This horizontal and departmental customer experience view is highly summarized and easy to create for your own business. I recommend walk- ing through this exercise with representatives from these departments to provoke customer-centric discussions.
To ensure customer success, companies must capture and convey customer, offer, service, and message component information from department to department. The Department View exposes the departments and individu- als responsible for each element of each contact; for creating messages; for delivering the messages; and all other activities related to ensuring the contact’s success. As contacts and messages become more tailored to spe- cific customers, reflecting the individual customer’s preferences and context, the probability for errors grows, as does the cost of recovery. The probability of errors also increases as products, services, delivery, payments, and fulfill- ment grow more flexible.
Orchestrating the best outcome from stage-to-stage and department-to- department is critical, not only to satisfy customer needs, but also to realize the optimum yield per customer, per contact, and per message slot.
Figure 5.4 Departments-Customer Contacts
The Systems and Processes View
“Can’t Find My Order”—Our 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 customer’s expectations. Even this summarized customer story lists 18 different systems managed by a mix of 17 departments and partners.
This level of System View explains the inter-company operations required to meet a customer’s needs. The view should be easily understandable by everyone in the company without requiring them to have information tech- nology, software, domain, or vendor knowledge.
The Systems View can be expanded to a much greater level of detail to expose each specific system and the system’s functionality. System contact expansions can expose individual transactions, processes, fields, field values, business rules, and treatments. This level of information is not necessary across every system for every contact, but should be used when evaluating alternative system solutions, upgrading or replacing a system, outsourcing a system or function, or critiquing the company’s capabilities and performance for a set of contacts.
Figure 5.5 Customer Process
The graphic below (Figure 5.6) provides a conceptual view of one company’s customer architecture and includes all of the systems responsible for delivering customer contacts. This high level customer architecture view is often used by department managers, information technology managers, and vendors to initiate discussions about interoperability, system and data integration, system and function outsourcing and new technologies, and vendor software, service, and outsourcing possibilities.
Figure 5.6 Customer Architecture View
Infusing 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 specific and measurable revenue objec- tives.
The previous CxC Matrix levels depict the state of a company’s customer experience “as is.” But the CxC Matrix challenges businesses to manage and grow the value in each consumer stage by setting objectives, identifying the requirements for meeting specified objectives, and quantifying and measur- ing the value of each stage and contact.
Figure 5.7 Business Objectives
By exposing the systems, departments, and parties accountable for each contact, executives can clearly mandate objectives to the specific managers responsible for accomplishing them at each contact.
Business objectives may start out simply as “reduce cost” or “introduce service.” These objectives may be dynamically modified by business, environment, and market circumstances.
Measuring performance contact-by-contact— customer contact flow depicts company success
The Matrix delivers a quick view of customer flow and the success of each customer stage and contact channel. We do this in order to identify where we have specific 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 Stage Two (Information)?” Nothing is simpler.
Figure 5.8 Customer Conversion Rate
The percentages show the survivor rate from stage to stage as described above—they are at the bottom to show the overall survivor rate versus the survivor rate in each cell.
The potential value of each contact is explicitly measured by the number of 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 of your customer
Core to the CxC Matrix is monetizing each contact. Beyond simply track- ing the sequence of contacts, the CxC Matrix calculates each contact’s net financial 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 customer’s potential value.
The contact cost includes the cost of the channel/medium, the resources required for crafting and delivering the message, and all of the fixed and variable costs associated with contact handling.
You should assign costs to each contact in order to understand and quantify the impact of changes in customer flow, changes in transactional or per item costs, and alternative resource and processes options.
A CxC Matrix completed with costs-per-contact filled in clearly shows the cost advantage of Internet and self-service channels, as well as other lower- cost contact configurations. However, when customer flow is overlaid onto the cost Matrix, you can see when customers gravitate to lower-cost channels and when they prefer higher-cost options. The Matrix provides a realistic view that usually shows that first time customers initially conduct business through one combination of contacts, while repeat customers adopt another combination of contacts across the stages of their consumer cycle.
The CxC Cost Matrix provides a set of tools to depict hypothetical contact sequence scenarios using estimated customer flow and contact counts. It also provides a means for testing and observing service and contact con- figuration alternatives.
Figure 5.9 Estimated Costs for Contacts
The Matrix provides a means to quantify each contact’s contribution to a customer’s propensity to purchase, as well as projections for probable expense and contacts post-sale.
The CxC Matrix requires that every customer contact be inventoried, monetized, analyzed, and prioritized.
The Simplest Measure
One of the reasons that the CxC Matrix is so powerful is that it stems from one key measure: did the customer buy something? In the case of the
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 of all prior stages. For this reason, we measure the success of each stage from one through five by the percentage of customers who pass from stage to stage.
The Company View—monetization and “the mower”
Examining the mower program from the company’s perspective uncovers an enormous number of contacts and the successful and unsuccessful contact attempts made by the company and the targeted customers.
Employees who are not in marketing or sales can better understand their customer’s mindset when they become aware of all of the messages the company directs at customers to generate sales.
The mower campaign targeted 20,000 customers, of 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 of them spent more than three minutes on the site viewing individual product pages. Thirty of the website visitors bought the targeted product directly from the website. Four customers went through the entire purchasing process on the website up to the point in the checkout process when the system requested their credit card number. Then they abandoned the purchase. Thirty-two customers went directly to Google from the web page and searched for the featured item.
Figure 5.10 Surviving Customers/Leftover Potential
Potential assumes $150 per customer; “What %?” calculates next offer success rate.
The Matrix provides a means to quantify each contact’s contribution to a customer’s propensity to purchase, as well as projections for 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 of each incident and the cumulative cost of customer acquisition— Matrix stages one through six—the Matrix provides insight into which chan- nels and contacts drive up post-sales expenses. The more detailed Matrix views and models provide all of the components of the customer experience, delivering even more information about potential causes and effects of each prior customer contact.
In the more detailed case on the prior page (Figure 5.10), the company estimates that each customer is worth $200 in profits. This number is used to quickly observe the opportunity available from stage to stage: SCP (Stage Channel Potential) = the potential additional revenue available per CxC Matrix stage. SCP factors customer value times the customer's propensity to buy based on similar customers performance.
Note: Total Customers counts the identifiable customers excluding anonymous shoppers/visitors and de-duplicating customers appear- ing in multiple channels within the same customer stage.
These numbers represent a subset of customers that entered the CxC Matrix on the same day then follows the group for 126 days, the company's calculated customer lifetime. All values are based on individual company benchmarks.
The opportunity can be further drilled down to channel, medium, system, offer, and so forth.
This simple, customer-count-populated Matrix (Figure 5.11) shows the rate at which customers move from stage to stage, and it represents the company’s success in closing sales from the customers in stages one through five. It also shows the customers who fail to move to a subsequent stage, while also quantifying the total forfeited value lost at each stage.
While no company converts 100 percent of its customers from stage to stage, this Matrix view quickly monetizes the potential value resident in each cell—stage and channel combination—and provides an estimate of the total amount of profit to be gained by creating incremental improvements at each customer stage and contact. The detailed contact view shows the potential profit resident in each cell, which managers can use to make investment decisions regarding the tactics best suited to grow performance. The same Matrix view then provides ongoing monitoring of tactical success.
Monetization is a primary benefit of the CxC Matrix because it links specific business decisions, that is, which messages to present and what their content should be, to long-term customer value.
The monetization of contacts—the core concept of the CxC Matrix—is implemented through the monetization of slots.
Companies generally assess the cost of an employee’s completion of a task such as the per-item cost of billing, ordering, inventory, delivery, shelf space, and so forth. Some companies go so far as to calculate expenses associated with assessing customer fitness or worthiness through customer verification, credit checks, demographics and segmentation, and customer file assessments, but few try to assess a customer’s “future value” by estimating the amount of revenue the customer will generate over a lifetime.
The Matrix highlights where your customer ceases to have contacts, providing a date stamp and all of the earlier contact activities. The stages where most customers are lost should be examined for corrective action and treatments that grow revenue. Using customer lifetime value as a metric, you can calculate the benefits of improving individual Matrix cell performance by estimating the increase in customers who move through to the contract stage.
Recommended CxC Matrix monetization applications
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 for each option and compare the expected values. Unlike scenarios built using conventional techniques, scenarios based on the CxC Matrix ensure that all implications of a given choice are considered. For example, a model for adding a new product line would include the expected change in customer service volume. This helps to avoid unanticipated results that can reduce or even reverse the benefits of a superficially attractive option.
Every customer contact is an opportunity to increase customer value. By assigning an explicit value to the contact, monetization encourages more efficient use of contacts that may be executed with little thought or ignored altogether. For example, many firms never think to include advertisements in packages they ship to customers. Others throw in a copy of their catalog but don’t measure the resulting sales. Only a handful of companies are thorough enough to measure the value of sales from their own catalog and compare it with revenue they would generate if a third party paid to insert its materials instead. A comprehensive inventory of customer contacts uncovers more opportunities than most businesses realize, from Google ad placement on a website, to messages embedded in call-on-hold scripts, to cross-sell offers made at the close of a customer service inquiry to simply asking your customers whether they know the name of someone else that could benefit from your products and services.
Because monetization calculates the change in long-term value resulting from each contact, it gives operational managers a way to measure their group’s contribution to the entire organization. This avoids the departmental myopia that can lead to decisions that are good for one area but harmful to the larger organization. For example, a purchasing organization might find it can save money by using a lower quality supplier, even after allowing for 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 from loss of repeat business, fewer sales of other company products, and fewer referrals by enthusiastic customers. This might result in a different decision that is ultimately better for the company as a whole.
Exposing the impact of each customer contact creates a company-wide network of risks and opportunity sensors that enable execution nimbleness.
The financial measures underlying monetization are based on projections of non-financial 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 forecasts. Because the budgets are based on projections for specific inputs, financial variances can also be traced to specific sources.
Improved Predictive Model Performance
Traditional forecasts are often 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 of any deviations. Similarly, because the CxC Matrix projects customer activities over time, any revised projections automatically include the future impact of past variances. Thus, a shortfall in sales this quarter will automatically result in lower projections for service calls in the future, making it easier for companies to understand the true implications of their current results.