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Sharing Best Practice – Increasing consumer loyalty and revenue from a focus on Total Customer Experience Sharing Best Practice Increasing consumer loyalty and revenue from a focus on Total Customer Experience

HP Total Customer Experience best practise sharing

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Page 1: HP Total Customer Experience best practise sharing

Sharing Best Practice –Increasing consum

er loyalty and revenue from a focus on Total C

ustomer Experience

Sharing Best PracticeIncreasing consumer loyalty and revenue from a focus on Total Customer Experience

Page 2: HP Total Customer Experience best practise sharing
Page 3: HP Total Customer Experience best practise sharing

Contents• Executive Summary 1–2

• Customer retention and acquisition in retail banking 3 – 8

• From customer passion to competitive advantage 9–20

• Focus on people: Getting customer focus into the organisation’s DNA 21–24

• Initiatives to improve Total Customer Experience 25– 48

- The select and buy experience

- Initial use and learn experience

- Recognition of HP Best Practices in Total Customer Experience

- Supporting the customer experience

- HP Passport: the key to identifying up and cross-sell opportunities

- Building customer relationships on trust

• Conclusion 49–52

Page 4: HP Total Customer Experience best practise sharing

1 – Executive Summary

Retail banking, like any other consumer business, is a competitive market. And in recent years it hasbecome even more so. Customers are becomingmore knowledgeable, and switching bankingproviders – a rare activity not too long ago – has become commonplace.

A lot of effort is now being expended by banks to retain existing customers as well as acquire new ones. An increased focus on the customerexperience is informing many current initiatives.Banks realise that the benefits that can beachieved from focusing on customer satisfaction at all levels of the business are impressive. Brand loyalty and satisfied customers yield greatincreases in revenue and profit, and can also help attract new customers.

At HP, as one of the world’s leading consumerbrands, we have always placed a premium oncustomer satisfaction. But in recent years, we havemade an even greater effort to help our customersachieve their goals and provide a consistent andfulfilling experience to all customers, regardless of how and why they interact with us. We call this the Total Customer Experience (TCE). Of course,concentrating on Total Customer Experience is not a purely altruistic gesture.

Providing customers with a TCE makes goodbusiness sense for us because it has a knock-oneffect in terms of profit and growth.

So Total Customer Experience is the businessimperative of making all decisions based on aconsideration of how to continually improve theway a customer interacts with your company’speople, partners, products, services and solutions.

And we’re not alone in realising the importanceof this. Research house Forrester1 claims that more and more companies are adopting stricterdiscipline in their customer experience efforts and utilising user-centered design approaches to capture more value from their self-servicechannels.

We have taken an innovative approach toreinforcing our customer-centric culture andthrough a focus on execution, we have made it an intrinsic aspect of all the company’s dailyoperations. In the consumer market, the initiativeswe have put in place have delivered significantbenefits in terms of increased market share andincreased margin. This booklet outlines some ofthese initiatives with elements that translate well to the challenges faced by retail banks.

1 Trends 2005: Customer Experience, Bruce D. Temkin, Forrester,October 29, 2004

Executive Summary

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Executive Summary – 2

Fig 1. The economics of customer loyalty

The cost of defection• Companies lose 15–20% of their

customers every year

• The average customer with a problemeventually tells 9 other people

• 91% of unhappy customers will never buy from you again

Profit boost from retention• An increase in customer retention

of just 5% can boost profits by 25–85%

• Loyal customers are not as price sensitive

Reducing the cost of acquisition• Acquiring a customer costs 5–7x more

than retaining one

• Satisfied customers on average tell 5 other people about their good treatment

Sources: Griffen, “Customer Loyalty: How to Earn It, How to KeepIt” 1997 Global Accounts MOST Study--TMO MRIG Holly PhillipsMPG US Central Region Study, 1997--Dave SandAndersen ConsultingThe White House Office of Consumer AffairsThe Harvard Business ReviewThe Gartner Group

Growth from retention• A very satisfied customer is 6x more

likely to repurchase your product than a customer who is just satisfied

• Loyal customers spend 5–6% more of their budget with HP than customers who are not loyal

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3 – Customer retention and acquisition in retail banking

In the retail banking industry, the battle for marketshare is fierce and everyday competitors arethinking up ways to attract their rivals’ business. A certain amount of customer turnover isinevitable, but some businesses think they canafford to lose some customers because they canreplace them with new ones. However, this is both risky and costly.

It costs up to seven times more to acquire onenew customer than to retain one, and in thefinancial industry, the costs reach anotherstratosphere: acquiring one new customer can exceed $350. Of these, 20 percent are veryprofitable, 20 percent cost money to retain, andthe remaining 60 percent pay for themselveswhile generating marginal revenue, according toHarvard Business Review2.

In Frederick Reichheld’s seminal book, The LoyaltyEffect3 , he argued that a five percent increase in customer and employee retention can increaseprofits between 25 percent and 100 percent.

This fact, which is familiar to most banks’marketing departments, closely relates to HP’sown research into the beneficial effects ofimproved loyalty as seen in Figure 1. Thisalignment makes sense because, although HP and retail banks might at first seem like verydifferent businesses in very different industries,there is actually a lot of common ground.

2 http://www.thewisemarketer.com/features/read.asp?id=50

3 The Loyalty Effect Frederick Reichheld, Harvard Business SchoolPress, 1996

Customer retentionand acquisition inretail banking

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Customer retention and acquisition in retail banking – 4

1 point increase in Loyalty Score*

+1.7% increase in market share

+1.2% increase in gross margin

Fig 2. Customer loyalty impact

Source: Internal and informal research by the HP global marketing finance team, across business units. It is expected that further more complete studies would reinforce thecorrelation that businesses with higher market share and gross margins have higher CLI scores.

*Customer Loyalty Index = % of customers that are very satisfied and definitely would repurchase and recommend HP

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5 – Customer retention and acquisition in retail banking

Managing the customer experience acrossdifferent channels

Branches have traditionally been the main servicechannel for banks, but towards the end of the1990s, many decided to start closing branches to reduce costs, and that had a very negativeimpact. While operational costs may have beenreduced, a lack of focus on the customerexperience meant that the impact on loyalty and satisfaction, and therefore revenues, was not adequately taken into account.

Now the trend is reversing. While branchnumbers remain fairly static, they have been the subject of renewal as banks look to modernisethe look and feel and make the best use of thepersonal interaction the branch provides. At thesame time, banks are still encouraging customerstowards Internet self-service, kiosks and ATMs, toreduce the volume of low-value interactions in thebranch and at the call centre.

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Customer retention and acquisition in retail banking – 6

As banks realise, the key to managing this withouthaving a negative impact on customer satisfactionand loyalty is to harmonise the channels. In thepast, different services and processes wereencountered in each channel. For example,customers could transfer funds in the branch up to an unlimited amount, but in the call centre,transfers were limited by destination and amount.And it was different again on the Internet. Thisremains a challenge for some banks trying toencourage self-service, because inconsistenciesand frustrations usually result in the customerphoning the call centre for an explanation andexecution of the desired activity.

If banks want to push customers to the Web, theyneed to keep them going back there as first portof call. They need to offer more on the Web thanjust 24-hour access, and most importantly theyneed to ensure customer information is sharedacross channels – not just personal details andaccount balances, but also a detailed history ofinteraction. The benefit of doing this effectively isthat up-sell and cross-sell, which have traditionallybeen the domain of the branch and the callcentre, can now be effectively executed online.

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7 – Customer retention and acquisition in retail banking

The requirement for integration doesn’t stop atchannels either. It also applies to different types of products and services. For large bankinggroups with business units or subsidiarycompanies selling products such as mortgages,insurance or investment funds, customers who buyone or more of these products increasingly expecta joined-up customer experience.

Bank services have to be sold, supported andmaintained, just like other products. Bankinggroups with any retail business have to seethemselves as consumer brands, and many look at the brand awareness work done in otherindustries such as beverages, fashion, personaltechnology or luxury goods as a model for theirown marketing activities.

Unlike other companies, a bank’s level ofinformation on its clients and ongoingrelationships mean that support and maintenanceactivities provide different challenges andopportunities. There are similarities with productcompanies, but banks have the advantage ofknowing all their customers – they are required to by law.

So they have at least some of the informationrequired to help keep profitable customers loyal,and can develop this knowledge further. They arein regular contact at all stages of the life cycle, so there is clearly a lot of opportunity for furtherenhancing the customer experience, and as aresult, the bank’s bottom line.

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Customer retention and acquisition in retail banking – 8

When a good customer experience strategyemerges, large banking groups can sometimesfind it challenging to ensure it is widely adoptedor shared across the business. This is particularlythe case when a silo approach is taken todelivery channels and lines of business (cards,deposits or loans for example). And it’s evenmore problematic for groups with subsidiaryinstitutions in different countries. In some regions,they may have a reputation for not being verycustomer orientated. But in other regions, wherethey might have acquired a local bank with agood reputation, they have not taken on boardthe best practices and implemented them morewidely.

Ideally, different parts of the group should learnfrom each other, but there is often a lack ofshared initiatives between markets.

Cross-channel collaboration and seamlessintegration of new strategies are both keyrequirements. But a firm must also take a more subjective perspective and consider howdifferent generations of its customers will adapt to and interact with new channels. It is vital thatmore mature customers are not alienated orintimidated by new channels that are supposed to be aiding them.

In the face of today’s more changeable loyalties,some banks have assigned a senior executive to lead a company-wide approach to customerexperience. Their remit is to conduct thorough self-examination to uncover the hurdles that get in customers’ way and stop them from achievingtheir goals and becoming loyal and satisfiedcustomers. They are also focused on developingan organisation-wide culture that is more openand innovative and much more executionorientated in its customer focus.

HP faces similar challenges to banks in needing to upgrade, cross-sell and maintain products andservices throughout the consumer life cycle andacross different channels. We feel that ourexperience in pursuing and benefiting from theHP’s Total Customer Experience vision canprovide useful examples for retail bank initiatives.

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9 – From customer passion to competitive advantage

Total Customer Experience vision, mission, and structure

HP’s strategy is to distinguish itself in the market by offering the best combination of high tech, lowcost and best customer experience. As part of ourstrategy, “best customer experience” is not simplyan option for HP – it is a business imperative and a crucial element of our success.

At HP, we consider Total Customer Experience to be the customer’s overall impression of our company based on their experiences with HPpeople, partners, products, services and solutionsat every touch point. But this overall impression isgreater than the sum of these experiences. It is also what they read about and hear from others,encompassing both emotional and rationalcustomer perceptions.

From customer passion to competitiveadvantage

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From customer passion to competitive advantage – 10

Total Customer Experience – a definition

Total Customer Experience is the customer’s overallimpression of HP, based on his or her experienceswith HP people, partners, products, services andsolutions at every touch point.

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11 – From customer passion to competitive advantage

HP’s vision is to consider every interaction with a customer as an opportunity to improve theirexperience and our relationship. At its most basiclevel, Total Customer Experience involves just threethings: identifying the customers, their goals andhow we can help them achieve these goals.

These tasks become more complex when there are millions of customers with different levels ofrelationship dealing with your company acrossmultiple customer touch points and accessingmany different products and services. So it isimportant to consider the different stages of thecustomer life cycle, and regularly measuresatisfaction and other criteria to map progress in improving the customer experience.

At HP, we take a global approach to customerexperience. Our Total Customer Experience andQuality programme works across business groups and regions to ensure consistency and alignment of programmes. At the same time, our pan-HPTotal Customer Experience Council is networkedwith Segment Total Customer Experience andQuality Councils which, in turn, are networkedwith Total Customer Experience & Qualitybusiness groups.

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From customer passion to competitive advantage – 12

HP strategyTo offer a portfolio of products, services and solutions that are high-tech, low cost and deliver the best customer experience

High

-tech

Best customer experience

Customer

Low cost

Focusedinnovation thatdrives real value

Affordabletechnology thatoffers the bestreturn oninvestment

The best customer experience with HP and HP technology

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13 – From customer passion to competitive advantage

Factors that ensure customer loyaltyTotal Customer Experience research has shownthat two factors play the biggest role in ourcustomers being highly satisfied, highly likely torepurchase, and highly likely to recommend:

• HP’s quality

• HP’s brand reputation

Aligning the brand promise

One should not underestimate the importance of a company’s brand – it represents everything acustomer (or potential customers) feels towards a company. Every time a logo appears, whetheron a high-street store, TV, website or billboard, thebrand will trigger an immediate reaction. Thatreaction must be positive in order to have yourcustomer select and buy your product or service.

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From customer passion to competitive advantage – 14

Aligning HP’s brand promise to customer segments• To our enterprise and public sector customers we say:

Demand more• To our small and medium business owners we say:

Get more• To our consumer we say:

Enjoy more

In the consumer market specifically, the top loyalty drivers are:

• Product experience

• Brand image

• Support and shopping experience

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15 – From customer passion to competitive advantage

Assuring Total Customer Experience across theconsumer life cycle

In considering Total Customer Experience, HPtakes into account a number of different stages in the customer life cycle, from the first contact with the company through to becoming a loyalchampion for the products. In the consumermarket we distinguish:

• Awareness and consideration

• Selection and purchase

• Initial experience (first 30 days)

• Product usage and learning experience (support)

• Repurchase and recommendation

At each of these stages, the customers’ needs are different, although they do expect a certainconsistency of experience.

In order to identify areas for improvement, HPmeasures customer satisfaction and other elementsat each stage through regular surveys to identifyareas for improvement.

Armed with this information, we can then improvefurther the Total Customer Experience by analysingthe data and implementing improvement projectsusing Six Sigma methodology. This allows us todrive improvements across all business areas,including accountability and support structures,manufacturing, R&D and management quality.

By running such programmes, we are able toreduce the number and timescale of issuesrequiring resolution while increasing first-time fixrates, for example. By doing so we are able tofurther bolster Total Customer Experience levels.

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From customer passion to competitive advantage – 16

Relationship

Useage and learning Initial experience

Selection and purchase

Repurchase and recom-mendation

Awareness andconsideration

HP’s three pillars of Total Customer Experience in the consumer market

Vision Deliver experiences that make it easy, simple and rewarding for consumers to achieve their desired intent.

Mission Achieve worldwide customer loyalty leadership by providing the best Total Customer Experience in the IT industry.

Objectives Deliver integrated, competitive experiences across customer touch points.

Build stronger relationships with HP customers to earn greater loyalty.

Transform to a customer-centric culture.

Fig 3. Customer life cycle

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17 – From customer passion to competitive advantage

Measuring the Total Customer Experience

One important way we gather feedback from our customers is through customer surveys. Wecombine different research and measurementstrategies to understand where we are doing agood job, where we have gaps and what weneed to do to improve. Then we develop actionplans, and set goals and benchmarks forimprovement using the customer dimension in the Balanced Scorecard.

Customer satisfaction surveys are conductedmonthly to measure satisfaction across differenttouch points. Analysis of the survey results drivesaction plans for improvements. Senior executivesresponsible for TCE across the wider consumersegment work with individual business units toidentify any reasons for changes, make necessaryimprovements and set performance objectives.Examples of areas that are measured in theconsumer market include:

• Select and buy satisfaction ratio

- Sales representative recommendation

- Demonstration unit readiness

- In-store product availability

• Product experience satisfaction

- Product-failure rates

- Support-call rates

- Initial set-up experience satisfaction rates

• Support satisfaction rate

- First-time problem resolution rate

- Call centre service levels

- Product repair turn-around time

Financial

Customers

Operational excellence

Employees

Balanced scorecard

Shareholder value

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From customer passion to competitive advantage – 18

We also make sure that we capture complaints,suggestions or compliments about our people,processes, products and services via a ‘Log aCustomer Concern/Compliment’ link at our @hpemployee portal. When an entry is made in thistool, the feedback is routed to the appropriatemanagement team within each region or country.

This Voice of the Customer (VOC) tool is designedto enable all employees to easily log a customercomplaint; or to let the correct group know when a customer provides a compliment. In this way, we can be certain we’re leveraging the directfeedback we receive from customers to everyone’sadvantage”.

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19 – From customer passion to competitive advantage

Satisfaction surveys are carried out across allconsumer types – from the casual customer through to the valued customer who oftenaccesses HP information online or uses a range of products. In addition to satisfaction surveys, HP conducts a customer loyalty survey across all stages of the life cycle once a year and this is benchmarked against competitors. From this,we calculate the loyal customers and those at risk.

As well as these scheduled surveys, we can drill down in more depth if we want to assess aparticular issue. This could include, for example,benchmarking support quality against thecompetition because the normal touch point surveys just measure satisfaction.

There are challenges in managing the massiveamounts of data that come from the surveys and in turning it into useful information. Several yearsago, measurement was managed very differently at Compaq and pre-merger HP, and even withindifferent lines of business. But through initiativessuch as the Back to Excellence programmedetailed in this booklet, this has been streamlinedand made more efficient.

Any large organisation looking to measure TotalCustomer Experience and customer loyalty needsto align the different surveys across experiencesand products, and keep all answers standardisedand consistent.

Standardising the measurement techniques inplace makes it easier to identify the reasons forany aberrations in satisfaction and loyalty scoresand to make improvements. At HP, it used to bethat every month’s results would bring surprises.But after several years of dedication to TotalCustomer Experience we can predict the resultsand there is much more consistency. Thisdemonstrates the success we have had inproviding customers with a quality experience no matter what part of HP they deal with or what channel they use.

HP regularly surveys customers(of HP and its competitors) toassess and track loyalty. Resultsare tabulated by geographyand product category.Opportunities and vulnerabilitiesare exploited and addressed.

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From customer passion to competitive advantage – 20

Fig 4. How does HP measure customer loyalty?

Loyal (CLI)

Overall Satisfaction

Likelihood to repurchase

Likelihood torecommend

At Risk (CRI)

Customer Loyality Index (CLI) and Customer at Risk Index (CRI) are definedas the % of customers giving the following responses:

Customer Loyalty Index (CLI) score– Customer at Risk Index (CRI) score

Net Customer Loyalty Index (nCLI)

Completely/very

Completely/very

Definitely would

Somewhatdissatisfied ordissatisfied

Probably/definitely would not

Probably/definitely would not

and or

orand

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21 – Focus on people

The key to embedding TCE considerations into the very fabric of an organisation is to make it as important as cost and revenue, to ensureeveryone’s focused on it. This requires top-downsponsorship and prioritisation of the customerexperience. Employees should understand it is a key component of business success. It alsorequires that processes are built from the groundup with TCE in mind, so any new initiativeautomatically takes TCE into account.

If employees are to always consider the customer, it is useful to set objectives that ask everyone whatthey do, or are supposed to do, for customers in their daily job. Even those who aren’t directly in touch with the customer do things that can impact a customer in a positive or negative way.Measurement drives behaviour. If you tell themthey’re being measured on these metrics, they will react. Because it is part of the Pay for Resultsprogramme, HP top executives are also rewarded,based on specific TCE results.

Focus on people:Getting customerfocus into theorganisation’s DNA

How does HP drive TotalCustomer Experience results?• Clear and measurable customer experience

expectations and objectives for employees are pervasive.

• Various parts of our organisation worktogether collaboratively to ensureexperience consistency and relevanceacross customer touch points.

• Ensure regular visibility(progress/performance) at all levels of theorganisation, through sharing survey resultsand balanced scorecards.

• Employee rewards are tied to customerexperience performance.

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Focus on people – 22

HP has found that asking these questions, andbuilding them into strategic decisions, makes TCEtangible for the employees, so they understandthe objectives and measurements. It helps balanceTCE against other cost and opportunity criteria.This is an important way to achieve a customer-centric culture.

HP has senior managers who work with all theproduct groups in the consumer space to knittogether a TCE strategy that fits both vertically interms of product category and horizontally acrossthe consumer segment. Although dedicated seniormanagement oversees all purchasing, product andsupport experiences, it is part of everyone’s joband responsibility to ensure these are viewed bycustomers as market leading. Apart from trainingemployees in this matter, every employee has oneor more customer-related objectives in theirperformance plan.

Total Customer Experience training• Motivates employees to learn about TCE and

to put it into practice in their day-to-day job by implementing a fun, motivational e-learning tool.

• Benefits: Creates a unified purpose and team spirit across employee population. Time invested in training yields returns in the form of greater customer satisfaction.

• Easy tracking and steering of employeeparticipation. HP launched its TCE e-learningtraining ‘Putting The Customer First’ last yearand measured a participation rate of 81.1%for all employees of HP worldwide.

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23 – Focus on people

“Make TCE real for employees. Make itapplicable for their job so it’s taken intoaccount every day. Even those whoaren’t directly in touch with the customerdo things that can impact a customer ina positive or negative way.”Rob van Mierlo, TCE and AssuranceManager, Imaging & Personal SystemsGroup, HP EMEA

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Focus on people – 24

Advice• Not having resources to invest isn’t necessarily a

barrier. It’s choosing the right areas to focus on• Ensure the self-service experience doesn’t result

in frustration and more service calls• Make sure your measurements of customer

experience and satisfaction are used to make continual improvements

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25 – Initiatives to improve Total Customer Experience

Within the different stages of the customer lifecycle, HP has taken many initiatives to improvethe customer experience. These range acrossdifferent stages of the consumer life cycle fromincreasing awareness, providing a betterexperience when selecting and buying products,to improving the customer experience while usingand learning about HP products.

Across these, HP has developed a strategy where we can evolve the customer’s experience as their situation changes – but always withcontinuity and consistency that help engendersatisfaction and loyalty.

As a customer traverses from consideration andawareness, to select and buy, setting the productup, using it and getting support where needed,

their experiences need to relate to and build on each other. And this needs to be the casewhether they are accessing content online,interacting with an agent via email or instantmessaging, or contacting the call centre. For this reason, horizontal integration across stages of the life cycle and different customer touchpoints is crucial.

HP has also worked to horizontally integrateacross business groups handling differentcategories of product. Whether it’s digitalcameras, photo printers, ink jets, laser printers or scanners, there needs to be some commonalityand consistency of experience so it doesn’t feellike the customer is buying from and beingsupported by a different company.

Initiatives to improveTotal CustomerExperience

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Initiatives to improve Total Customer Experience – 26

Handling these two horizontal challenges can bedifficult for a company as broad and global asHP. But we have established a clear brandidentity – connecting with the customer on aphysical level and also an emotional level –internalising what it feels like to do business with HP.

Consumers of any kind want the companies they deal with to have a customer-centric culture.Ultimately, the customers of banks and HP wantvery similar things:

• Accurate answers

• Available when convenient for customer

• To not be shunted around

• Friendly people who take ownership of problems

• To be recognised as a person rather than anaccount number

Through the following initiatives, and the identityand privacy management best practices thatsupport them, we have developed excellence in giving customers what they want.

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27 – Initiatives to improve Total Customer Experience

The select and buy experienceHP has improved its e-business infrastructure and developed an integrated customer experienceby aggressively consolidating portal, stores andextranet platforms and improving the contentmanagement infrastructure.

HP.com is a critical customer touch point for thecompany. It was recently enhanced to support the new HP brand campaign and raise visibilityand access to HP’s industry leading portfolio ofproducts and services.

New customer segmentation-based navigation,thanks to HP Passport, is resulting in an increase in content relevancy and improved customerexperiences. Online purchasing was streamlined for those consumer and small-to-medium business(SMB) customers wishing to buy directly from HP.

Ongoing eMarketing efforts on HP.com areproducing more than $150 million in sales leads a month and that’s just in the U.S.

HP.com: HP’s public website

• 4.5 million visitors a week

• Customised for 64 countries

• Available in 35 languages

• 10,000 products and services

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Initiatives to improve Total Customer Experience – 28

Best computer manufacturer

Best printer

Best PDA

Best all-in-one

Best scanner

Best computer service desk

Initial use and learn experienceThe most important factor in a customer’sexperience with HP is undoubtedly the quality andinnovation of the products themselves. And in thisregard, HP’s reputation for excellence is welldeserved.

Our annual R&D investment of nearly $4 billion(USD) fuels the invention of products, solutions and new technologies. We produce an averageof 11 patents a day worldwide.

HP Labs provides a central research function for the company which is focused on inventing newtechnologies to improve our customers’ lives.

A good example of the results can be found inthe Netherlands, where HP swept the board in2003, winning the prestigious PC Consumentmagazine’s Consumer PC awards for sixcategories: Computer Helpdesk; Printer; Scanner;All-in-One; DVD Writer; and PDA.

Our R&D centres get systematic feedback fromcustomer satisfaction surveys which they integrate in their product development activities.

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29 – Initiatives to improve Total Customer Experience

But the product experience is about more than justthe physical product. It also reflects how easy theproduct is to fully understand and set up, whatassistance HP can provide consumers to get themost out of the product, and how we can makeregular use of the products as easy as possible. In these areas, HP has undertaken many projects.Two good examples are the Getting Started WebSite for HP Photosmart Digital Cameras, and theAutomated Supplies Replenishment Service.

The initial experience: Getting Started Web Site for HP Digital Cameras

This interactive site, which can be found atwww.hp.com/go/myhpr707, provides easy-to-useand up-to-date support. It helps customers get upand running quickly, and better understand how to get the most from their product. Customers canalso easily register and purchase accessories.

The benefits of the site for HP are that it engagescustomers early on. It highlights depth of HPexpertise through content that is updated quicklyand cheaply. Customers can often answer theirown questions and resolve their own issues. Aswell as helping HP obtain customer information to feed CRM programmes, the site also generatesafter-market accessory and extended warrantyrevenues.

Automated supplies replenishment service

This feature is built into the software that supportsHP products and automatically prompts thecustomer to re-order consumable supplies (forexample, printer ink or toner) when their on-handsupply is low. Orders can be initiated with just a few clicks making the process especiallyconvenient, easy and efficient.

For HP, this engages customers regularly inpositive interactions. It reduces the likelihood ofbrand defection and increases margins when acustomer buys direct from HP. It also helps identifyhigh-value customers.

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Initiatives to improve Total Customer Experience – 30

Recognition of HP Best Practices in Total Customer Experience• HP won STAR Awards for Best Practices in

Leveraging Customer Feedback, from the Serviceand Support Professionals Association (SSPA),March 05

• This was given to HP for demonstrating the bestuse of customer feedback throughout the supportand product development processes. Keyperformance metrics include: capturing andcommunicating customer feedback throughoutthe organisation, efficient escalation processes,and customer advocacy

• HP’s online consumer store, hpshopping.com,integrated in HP.com, has been ranked as oneof the top business-to-consumer e-commerce sitesfor its excellence in online customer service inthe 7th Annual e-tailing group Mystery ShoppingStudy, January 05

• The e-tailing group, inc., a shopper-centric e-commerce consulting firm, applaudedhpshopping.com for delivering an overall pre- and post-shopping experience while alsocreating a positive personalised experience for the customer

• HP won two STAR Awards from the Service and Support Professionals Association (SSPA), Oct 2004

- The WebSTAR award recognised HP forexceptional customer service and technicalsupport via the Web. The award honourscompanies that appreciate the impact theInternet has on technical support and havehelped to set benchmarks against which otherorganisations can measure their level of onlinetechnical support. HP has refined its website tobe easier to use and responds to e-mail in lessthan one hour.

- The High Call Volume award recognised HP forthe quality of customer support deliveredthrough its call centres. Companies that receivethis award handle more than 10,000 requestsper month for a wide array of products whilemaintaining a high level of customersatisfaction. HP’s investments ranging fromadditional agent training to dynamic callrouting have helped to solve customer issuesfast and effectively.

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31 – Initiatives to improve Total Customer Experience

Supporting the customer experience Customer support is a crucial factor whenmeasuring customer satisfaction. Customers canaccept that technical faults or glitches occur overthe lifespan of a product, but they want to see the problem solved. Effective customer supportoperations are therefore key in increasingcustomer loyalty and customer value.

When the Compaq-HP merger took place, theconsumer-focused groups in Europe took theopportunity to review the existing supportinfrastructure with the aim of improving TCE. While still focusing on calls as a touch point theywant to push more support enquiries to the Weband increase the personalisation and relevance of this self-service channel.

The support function was 100 percent outsourcedto a range of partners and locations acrossWestern Europe. Although support was managedinternally, all delivery of support was through 11 business partners operating at 24 sites. Adecision was made to reduce this to two partnersand nine sites.

What we looked for in the partners was ademonstrated understanding of our model. A lot of companies in the support and call centreenvironment are more in the business of sellingwarm bodies, and this is not what we wanted. We wanted to outsource a model, not justoutsource calls.

Cracks in the woodwork

• Many of the business partners had littlevisibility of internal processes. A lack ofsuitable training, confusion over processesand different contractual agreements meantthat the partners couldn’t respond to customerqueries in a satisfactory way.

• Similar issues relating to the transition arose.This meant that sometimes customers werepassed from pillar to post with no clearindication of how their problem was going to be addressed.

Solving the problems

• Close day-to-day contact with partners andsharing of best practice: focus on actualproblem solving and sharing of findingsallowed the team to identify and fix the most severe problems quickly.

• Moving to a more traditional contract with the business partners: partners were able toincrease their staffing levels without impactingthe profitability of their agreement with HP.

• Retraining: partners have gone through a retraining programme to embed a fullerunderstanding of the technology as well as the processes.

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The consolidation of contact centres took sevenmonths to complete, but the immediate benefitswere improved clarity and ease of management. We also reduced internal managementheadcount, cost of staff and the overheadsassociated with multiple sites. This has allowed HPto better leverage the volumes to reduce unit costof each support instance.

Execution and ongoing improvements

Like any new model, the need for a fewperformance enhancements became apparent once the consolidation had begun. Faced with thechoice of making each change as the need arose,or making them in batches as part of a largerprogramme, we chose the latter. We launched the Back to Excellence programme with the aim of significantly improving TCE rates.

Through monthly surveys, the team closelymonitored customer satisfaction levels. Shortlyafter the merger, customer satisfaction levelsstarted to drop below expectations and somethinghad to be done.

It has always been assumed that in order toincrease customer satisfaction organisations must invest and swallow the cost. But through the changes we made, we managed to increasecustomer satisfaction ratings for Western Europe,and be more cost-effective at the same time.

Tangible benefits

• Reduced number of calls to solve problems by half

• Increase in customer satisfaction rating by 25 percentage points

• Reduced operational costs

Previously when a customer had a problem andcalled HP, they might have contacted HP fourtimes before the problem was solved. This was notonly frustrating to the customer, but also costly forHP. By reducing the number of calls required toone or two, we improved overall satisfactionscores by 25 percentage points within a ninemonth timeframe and reduced the operationalcost of providing this support.

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“It has always been assumed that, inorder to increase customer satisfaction,you must invest and swallow the cost. But our experience has shown that it ispossible to actually reduce costs whileboosting satisfaction.”Mark Bakker, Director of SupportOperations for Consumer Operations,Imaging and Personal Systems Group, HPEMEA

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Advice• Consolidate support infrastructure to simplify

management• If you use third-party providers, outsource the

model, not just the calls• Extend TCE training to support partners, as well as

internal management

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HP Passport: the key to identifying up and cross-sell opportunitiesThroughout the stages of the customer life cycle,effective use of authentication and identitymanagement technology and processes in boththe Internet and call centre channels lays thefoundation for improving the customer experienceand identifying opportunities to increase revenue.

The type of products we sell can easily be boughtelsewhere by consumers. So services and supportare crucial. We constantly need to think aboutwhat the customer experiences when theyinterface with us. Do we remember who they are,or are they forced into redundant registrationprocesses? Is there understanding of linkagesbetween products the customer owns andcustomer services they have accessed in the past?What opportunities do we have to up-sell andcross-sell? Answering these questions requires abase identity to work across different areas.

HP Passport (HPP) provides login andauthentication functionality for more than 100 HPapplications serving millions of HP customers. It is a single login service that lets customers registerwith HP Passport-enabled websites using a singleuser identifier and password of their choice.

It stores basic personal information – user ID,password, name, e-mail address, country andlanguage preferences – so customers don’t haveto retype it when they return to one of HP’s manywebsites in the future. Its purpose is to:

• Give customers easy access in a secure and user-friendly way

• Help us gain insight into the interactions of new and existing customers

A variety of websites use HPP to offer resourcesand information to HP’s partners and customers.

For example:

• For channel partners and internationaldistributors, the Knowledge Gateway providesa single entry to access comprehensivetechnical information about HP products.

• For the consumer community, Digital ImagingInstant Share eService enables consumers whopurchased an HP Photosmart 812 Camera toeasily share still images.

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Learn more about potential customers

A bank has to have information about theircustomers. But at HP we need an evolutionarymodel to encourage our customers to tell us about themselves. We categorise various states of identity:

• Anonymous

• Self-identified

• Self-identified and verified

• Self-identified, verified and entitled

This model is common for Web interfaces acrossindustries – HP and banks are no different in thisregard. Even banks will have anonymous userscome in and look at their public content. The trickis, can they do something with an anonymoususer and graduate them to the other states?

Retail banks should perhaps ask themselves howmuch loan information they want to makeavailable on the public site. If they provide rateinformation, a customer might just use it for

comparison and move on elsewhere. So theyneed to look at ways that they can offer the userof the site value – maybe just the rate information,or maybe something else – to justify asking them to register and reveal information aboutthemselves that can mark the start of arelationship. The bank can now evolve that person through the stages of the life cycle all theway up to taking a loan and then going intosupport mode – viewing balances, repaymentschedules and even refinancing electronically.

HP Passport

• Uniquely identifies customers across HP.com

• Enables user self-registration

• Provides common authentication, accesscontrol and session maintenance

• Enables adherence to the HP Privacy policy and to emerging privacy standards

• Increases application security

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Use for personalised marketing

The best customer experiences come from contentthat is heavily personalised, but because of the cost of producing it, this is not always appropriate for all customers. At HP, our high-value-entitledcustomers get very personalised content. But in the self-identified group we try to get them toparticipate in marketing programmes. Weencourage them to provide enough data aboutthemselves so we can tailor our marketing betterand get them to respond.

The results from this marketing have been verygood. For example, on direct mail a response rateof 5-6 percent is usually seen as a huge success,and we regularly achieve well above this.

With our customised e-newsletters, the customerreceives regular information from HP that isrelevant and useful. Newsletter content isspecifically tailored to criteria such as the productsthe customer owns; how long they’ve ownedthem; customer demographics, interests, hobbies,and geography.

The newsletters help strengthen brand perceptionand value, and with strict application of ourprivacy policies, establish HP as a ‘trustedadvisor’. The newsletters heighten brandpreference, improve new product awareness, and generate incremental revenue from after-market and complimentary product sales

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The foundation to make this happen:Infrastructure availability and scalability

Managing the authentication infrastructure on aglobal scale and dealing with internationalisationand localisation issues can be a challenge,especially when combined with the need forredundancy of software, hardware and datacentres.

Any service interruptions to HP Passport couldresult in loss of revenue or an impact to customersatisfaction. In order to support this substantialbase of customers, the team is focused on a range of projects that provide high availability andscalability. HP manages the authentication of

over 11 million customers so we require very highavailability. If we fail, there’s a direct impact onrevenue and also brand image.

Retail banks have different challenges regardingwebsites, in that they usually only have one thatthey need to manage authentication for. But there is a similarity in scale, the volume of users, andthe critical role that authentication and IDmanagement systems have for the business.

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Security architecture

Sound identity management processes aresomething that organisations must have. Withfinancial regulators becoming much stricter aboutbanks’ control and auditability of internal andexternal access to systems, the choice is comply or be fined.

Single sign-on authentication is only one elementof identity management. To effectively supportcustomers and keep tight business controls, youneed to recognise identity management is awhole suite of things and use the right tool for thejob. This includes functions such as access controland provisioning of users. And as you move fromanonymous users to entitled customers – and thecomplexity rises with the sensitivity of the content– more sophisticated measures such as expiringpasswords and digital certificates can be used.

While it isn’t feasible to apply the same level of authentication security to each customer, it isnecessary to be able to evolve them up the chainby building the infrastructure and architecture to support a graduation model that is flexible in various domains.

Especially in large organisations with disparatenew and legacy systems that have to beinterfaced internally and externally, there is nosingle vendor or platform that can handle thisneed. So the answer is to choose authenticationand identity management technology thatsupports a federated model.

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At HP, we use our own identity managementproducts, including Select Access, Select Identityand Select Federation. This is particularlyimportant given the number of partners andcustomers we must deal with. If we are workingwith a retail distribution partner that has staffgenerating orders from within their own system,we can’t expect them to rip out their identitymanagement system and replace it with the onewe use. Instead they need to be integrated.

As well as running its own authentication andidentity management to support the consumerbusiness, HP has provided many otherorganisations, including banks, with a modernsecurity architecture that ensures personalisedhandling of any given customer. This dictates howcustomers can access data or how a particularcustomer is authenticated for a transaction.

Benefits of HP Passport

Single log-in and authentication

High availability

Evolutionary model

• No redundant registration process that could make people decide to stop interaction

• Easier to identify up and cross-sell opportunities • Personalised marketing possibilities with increase in direct

mail response rates

• Avoid cost of downtime (revenue loss and negative impact on brand)

• Move anonymous users from public website to prospects·Collecting more information results in better marketing with higher conversion rates

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Building customer relationships on trust HP has an established and mature global privacyframework covering values, principle, policiesimplemented through best practice standards andtools. The privacy framework is measured throughcompliance assurance programmes and externalbenchmarking.

HP’s privacy programme is recognised as beingone of the best in the industry. Here are some ofthe best practices and tools HP uses to monitorprivacy on its websites:

• Privacy Rulebook: The best practice PrivacyRulebook and Reference Guide definesworldwide privacy policy and provides rules andguidelines for implementing customer privacy ona global basis. References are made to strictercountry-specific rules that may apply and beabove the baseline implemented globally. Theserules outline the worldwide requirements forcustomer privacy, including references forvarious government regulations. These rulesapply to all customer data used to conduct one-to-many communications.

• The Privacy Impact Assessment Service, PIA, is a systematic process for evaluating aproposal or project in terms of its impact upon customer and partner privacy. PIA provides information regarding the collectionand processing of customer information to verify that the information will be collected,processed, transferred, maintained, used, andstored in accordance with customer privacylaws, local legislation, and the client’s specificprivacy policy.

Why HP cares about privacy

• It’s a competitive advantage to HP. It allows HP to share employee information worldwideand process global customer informationanywhere.

• It’s fundamental to HP’s culture. Compliancewith local regulations is part of the HP standards of business conduct.

• It’s fundamental to HP’s respect for employeesand customers privacy and is an importantcomponent of providing a trusted relationshipwith our customers and employees.

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Privacy is an integral part of HP’s corporatephilosophy and it is integrated into our corporate,social and environmental responsibilities, and ourstandards of business conduct. At the highestlevels it is integrated into the things that thecompany feels are important.

HP takes more of a European view of privacy. We say that personal information is owned by theperson it involves and we are only stewards ofthat information. To engender loyalty we realisewe have to respect people’s privacy choice andtheir preferences and only contact them in waysthat they agree to.

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Embedded privacy leads

The senior executives responsible for privacy in the consumer sector have privacy leads in majorportions of the business that they contact routinely.These leads live in the businesses. They are not full-time privacy professionals, but they understandprivacy, they understand the things that are goingon in their business and they act as a conduit forinformation that needs to be passed up, but alsofor things that have to be passed down to thebusiness. We have some full-time people, but wehave a much larger pool of part-time privacyleads that we work with on a routine basis toensure that our privacy programme is not onlyintegrated into the business, but that it supportsthe goals and objectives of the business.

As a result, all HP staff, in any business group,know that when they are doing something new and different, privacy needs to be a part of thatprocess. We are trying to design privacy intothese new innovative business processes asopposed to bolting it on after the decisions havebeen made. We are very proud of what we callthe Design for Privacy philosophy.

Privacy done for privacy’s sake is not reallyeffective. What we try to do is show thebusinesses that privacy is a value, that doingprivacy well will build the business not interferewith it, and to do that you need to get in early inthe process.

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HP privacy leadership

• #1 of 50 top companies nominated for Most Trusted Companies for Privacy award, in a study conducted by TRUSTe and the Ponemon Institute in January 2005.

• Customer Respect Group Surveys

- #1 among 100 U.S. companies for online customer respect andexperience, June 2003; #2 June 2004

- #1 for online customer respect, High Technology Sector, April 2003,April 2004

• Computerworld Magazine

- Among top 3, Fortune 100 Privacy Leaders, June 2003

• International Association of Privacy Professionals (IAPP)/Ponemon InstituteTrust and Privacy Survey

- Ranked #5 overall, #1 in technology – June 2004

• Industry Leadership

- Chief Privacy Officer member of International Association of PrivacyProfessionals (IAPP) Board

- Founding grantor for IAPP Privacy Professional Certification Programme

- IAPP/HP Privacy

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More revenue from privacy

HP has a formula that says good privacy equalstrust and loyalty, which increases revenue. That iswhy we try to build privacy into the front end of our business processes so we can do a good job.A large Canadian bank did a study that helpedquantify the value of their privacy programme andon an annual basis their privacy programme wasadding about C$300 million of value a year totheir bottom line.

That figure speaks very powerfully to any businessleader. If an organisation knows the lifetime valueof the average customer, the acquisition cost ofnew customers and the numbers of people who opt in and out of receiving communication, it ispossible to calculate the cost of not handlingprivacy concerns well. If people start opting out because they are contacted too often orinappropriately, potential revenue is lost. On the other hand, every opt-in can pave the way to a new customer or new products and servicessold to an existing customer – and, therefore, add revenue.

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“Privacy done for privacy sake is notreally effective. It is important to show allemployees that privacy is a value, thatdoing privacy well will build the businessand not interfere. To do that you need toget in early in the process for anybusiness decisions.”Daniel Pradelles, EMEA Customer DataPrivacy Manager, HP

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Advice• Ensure all senior management are committed to

privacy and understand the business benefits• Back up top-level support with policies and

standards – a privacy rulebook is a good format• Find privacy champions within business units to

liaise with privacy leads and spread the word

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49 – Conclusion

There are many similarities in the challenges faced by HP and retail banks in trying to increasecustomer satisfaction, loyalty and revenue. And we feel that the keys to success are also similar.

Benefiting from an organisation-wide focus on TCE requires the participation of all employees. Top management should provide leadership andpromote the vision as an integral part of strategy.Employees should be incentivised through clearobjectives to maintain a focus on the customerexperience. And they should be provided with the tools to make this focus part of their dailyactivities.

Effective measurement and benchmarking ofcustomer satisfaction, loyalty and organisationalperformance are crucial if the organisation iscommitted to continual improvement andenhancement of its processes.

And this measurement should consider thedifferent stages of the customer life cycle, fromawareness through to ongoing support and furtherproduct and service acquisition.

Equally important is the tight integration ofdifferent channels and lines of business within the organisation, which must all have the sameapproach to delivering a consistent customerexperience. Identity management and privacypolicies should underpin this experience, and helpto improve ease of use for the customer. Theseareas, when handled well, should also improvemarketing efforts and enable the organisation to easily evolve relationships with customers and prospects.

Conclusion

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51 – Conclusion

“The key to achieving benefits from afocus on Total Customer Experience ismaking people understand it’s a keycomponent of business success, just asimportant as revenue and profit.Training can help people to understandthe infrastructure and how the processeswork, but to truly embed customer focusinto the DNA of the organisationrequires a perspective shift andsponsorship all the way up to theexecutive level.” Bill Nolte, Worldwide TCE Lead, Imaging and Personal Systems Group, HP

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Advice• Get top-down sponsorship, but make TCE

a daily thought process for all employees• Integrate across touch points, but also

product groups to ensure consistency of customer experience

• Constantly evaluate and fine tune your efforts

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If you want to learn more about HP’s TCE initiativesand how they could apply to your business, contactus at [email protected].

© Copyright 2005 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

5983-2320EEE. June 2005