White paper measure_customer_experience

© Tech Mahindra Limited 2008

Align Process Metrics to Measure Customer Experience in a Telecom Journey

Author: Siddhartha Shankar Ray

White Paper_Measure Customer Experience

Abstract

This paper strives to explain the significance of measuring customer experience, identifying the right measures and utilizing the Business Process Framework (eTOM) in the telecom journey.

The endeavour is to analyse some of the Customer Relationship Management processes in order to design effective metrics that align with the business requirements and impact customer experience.

The customer experience measures have been defined keeping in line the expectations of the customer through the order, provisioning, billing and repair journey. It is obvious that the outcome of these measures impacts the revenue and profitability of the organization, expressed in terms of EBITDA, revenue growth, ARPU and average minutes of usage.

This paper also briefly describes a case study on how a FMEA template has been used to unravel the distress levels of customers, with a view to retain existing customer base and reduce churn.

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Table of ContentsWhat is Customer Experience?.....................................................4Why Customer Experience?.........................................................4Customer Experience Measures:..................................................5Aligning CE with CRM in eTOM framework:.................................6Process Performance Metrics(PPM).............................................6Case Study : Identify distressed Customers and design of PPM 10About Tech Mahindra .................................................................13References .................................................................................14Glossary .....................................................................................14

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What is Customer Experience?

Pine and Gilmore, introducing the concept of Customer Experience in HBR 1998 edition , describe CE as influencing people through engaging, authentic experiences that render personal value.

According to Bernd Schmitt, "the term 'Customer Experience Management' represents the discipline, methodology and/or process used to comprehensively manage a customer's cross-channel exposure, interaction and transaction with a company, product, brand or service.

In a telecom journey, the customer experience is a measure of effectiveness of the service provider to provide the customer the desired product at the right time with optimum service availability. The customer experience starts with the first contact with the customer and encompasses the order, provisioning, billing and repair journey of the customer.

The design of customer experience measures may vary based on the product portfolio or geographic operations. The communication service provider will need to focus on these scenarios listed below:

• Do I provide my service on the day desired by the customer?• How do I perform relative to my competitors in terms of lead/cycle time?• How does my customer care processes impact my overall customer experience?• How do I measure the effectiveness of my billing process?

The further sections will elaborate on the need of customer experience and use of eTOM framework in identifying the customer experience measures.

Why Customer Experience?

Organisations which focus on Customer Experience measures and strive for continuous improvement have created a niche in the market.

A survey mentions that usually companies rely more on brand perceptions, but they are realizing the customer experience is the number one influencer of brand perception, so they’re paying more attention to customer experience.”

An effective customer experience measurement mechanism is able to identify and correlate the Organisation performance metrics (ARPU, EBITDA, Revenue) with key process performance measures in provisioning, billing and repair processes.

The need for customer experience measures can be attributed to the following forces that are reshaping market forces (source: SAS Institute Inc. and Peppers & Rogers Group)

1. Marketers are losing control. 2. Customers become belligerent. 3. Products and price are at parity (CE as the new differentiator) 4. Multichannel choice adds complexity (Ensures Continuity, consistency and correctness of

actions)5. Marketers can’t treat different customers differently (Focus Investments on CE)6. A short term focus prevails (Balance current revenue requirements with long term value)

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81% of companies having strong capabilities and competencies for delivering customer experience excellence, outperform their competitors. Companies that excel in customer insight, interaction and improvement—and those which have a strong customer orientation— are more likely to outperform their competitors.54% of organizations succeed if customer satisfaction or other measures of customer affinity form the Key performance Indicators (KPIs)

Customer Experience Measures:In a telecom journey, Customer experience effectiveness can be broadly measured by the following parameters

• Ease to contact the Service Provider

• Deliver of service on time

• Correct and accurate billing

• Issues(Faults) raised within the initial days of providing service(30/45 days)

• Faults resolved within the stipulated SLA and closed to the satisfaction of the consumer

• The same fault does not occur twice within the initial days of resolution(30/45 days)

The following parameters needs to be considered while designing key customer experience metrics (source: Customer Experience Measurement What to Measure and Why, Cheryl Flink)

1.Easily communicated: Teams and management understand what the metrics mean and can be united to act.

2 Encourages variability: Metrics need to have variability in the scores. If all customers give uniformly positive or negative ratings, or if the scale is not wide enough to detect differences, we will not be able to create accurate models.

3 Sensitivity: Metrics need to be sensitive to change over time. It’s discouraging and frustrating to drive performance improvements and not be able to detect corresponding improvements in metrics like satisfaction and loyalty.

4 Industry relevance: Not all metrics pertain to every industry.

5.Financial outcomes: Customer experience metrics should correspond to financial outcomes. One should be able to create models showing that improvements in customer satisfaction (or other metrics) have a clear financial ROI.

6.Match to other data streams: The metrics across all data streams need to be the same. One should ensure that questions and scales match exactly in all instruments, including mystery shop and customer satisfaction questionnaires, panel studies, contact center questions, etc.

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Aligning CE with CRM in eTOM framework:

Figure 1: WLMS Architecture

The above WLMS architecture shows how a service provider can pick and choose from

Fig 1. Hierarchy Level 2 1.1.1 Customer Relationship Management (source TMF)

The above diagram (source eTOM v7.5 processes, TMF) focuses on the acquisition, enhancement and retention of a relationship with a customer. In this paper, we focus on the following sub processes and identify a few process performance areas that affect customer experience.

• Order Handling• Problem Handling• Bill Invoice Management• Bill Payments and Receivables Management

In the next section, we identify a few process performance metrics that will play a key role in enhancing customer experience.

Process Performance Metrics(PPM)

• ORDER HANDLING PROCESS The order handling process depicted below defines the framework for accepting and issuing orders. The table below relates the process performance measures w.r.t the process.

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Fig 2: Hierarchy Level 3 1.1.1.5 Order Handling (source

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Sl No Process Proposed Process Performance Measure (ppm)

1. Determine Customer Order Feasibility

% of incorrect feasibility resulting in delay in provisioning

2. Issue Customer Orders % of inaccurate and incomplete orders3. Report Customer order

Handling% of customers not updated/incorrectly on order progress

4. Authorise Credit % of inaccurate credit verification attributed to bad debt/delay in realisation of payment.

5. Track and Manage Customer Order Handling

% of orders not delivered within the promised date

The above process performance measures help to explain the performance of the order handling process, relative impact on other processes and gives early indications of customer experience in the order journey.

• PROBLEM HANDLING PROCESS The problem handling process, depicted below, defines the process of receiving the trouble reports from customers and resolving them to the satisfaction of the customer. The process performance measures have been briefly defined below

.Fig 3. Hierarchy Level 3 1.1.1.6 Problem Handling (source TMF)


1. Create a new customer problem report

% of reports incorrectly created resulting in repeat faults

2. Isolate Customer Problem % accuracy in identifying the correct root cause to prevent escalation or repeat faults

3. Track and manage customer problem

% of escalation on open cases%of open cases not resolved within SLA

4. Close customer problem % problems not closed properly resulting in repeats

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• BILL INVOICE MANAGEMENT PROCESS The Bill Invoice Management Process, depicted below, defines the process of creation of billing invoice production of electronic or physical invoices, distribution to customers along with proper taxes, rebates, etc for the products and services delivered. The process performance measures have been briefly defined below.

Fig 4. Hierarchy Level 3 1.1.1.10 Bill Invoice Management (source TMF)


1. Create Customer Bill Invoice % of faults/complaints received/accounted for due to wrong billing amount% of waivers provided out of the total billing amount

2. Produce and Distribute Bill % of bills not received(physical/electronic)% of outstanding attributed to wrong billing address

3. Apply Pricing, Discounting, Adjustments and rebates

% billing errors attributed to incorrect mapping of rates, discounts etc%of billing complaints attributed to wrong plans/incorrect sell

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• BILL PAYMENTS AND RECEIVABLES PROCESS

Fig 5. Hierarchy Level 3 1.1.1.11 Bill Payments and Receivables Management(source TMF)

The above depiction of Bill Payments and Receivables Management Process defines the process of collecting enterprise revenue through pre-established collection channels and put in place procedures to recover past due payments. The process performance measures have been briefly defined below.Sl No Process Proposed Process Performance Measure

(ppm)1. Manage Customer Payments % of collections to the billed amount

% % of collections made within due date2. Collect past due payments

from Customer% of first time billers defaulting on payment% outstanding to the total billed amount%of collections various buckets(soft recovery, hard recovery, legal etc)

All the Process performance Metrics suggested so far has implications across functions and cuts across process hierarchies. All the measures have negative connotations to help locate the defects.The next section depicts a case study on identifying the right measures and using FMEA to capture distress signals

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Case Study : Identify distressed Customers and design of PPM

BACKGROUND:The study was initiated with a leading telecom operator in UK, to understand and develop a model for identifying the potential distressed customers and design process metrics to effectively identify, resolve and monitor the same. The following gaps were identified in the existing process, which filtered distressed customers based on product (PSTN, Broadband),

• No Generic standard, separate criteria for PSTN, BB• Considered distress based only on repair journey• Did not consider complaints and was unable to prioritize customers based on a combination of

distressed factors• Included weighted duration of calls, which is based on skill level of customers.

The challenge was to develop generic criteria, encompassing the provisioning and repair journey, and also develop a mathematical model that prioritizes customers based on revenue generated and levels of distress.

APPROACH AND SOLUTIONThe model below depicts the various customer inflection points in the customer journey and maps the increasing distress levels, both in provision and repair process.

Fig 6. Distressed Customer Model

The first inflection occurs when the customer makes the first contact with the Service provider. A delay in response opens the door for distress. As the journey progresses, the following inflection points play a significant role in defining CE.

• Delay in provisioning• Failure of product in early life period• Fault not resolved within SLA• Repeat Fault

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Delay in response to Query of prospect

Delay in Provisioning of product/service

Product/Service fails during its early life(30/45 days)

Repeat Fault

Fault not resolved within SLA / satisfaction

Billing issues

Complaints

Churn

Customer Inflection points

Increasing Distress Level

Custo

mer

Jou

rney

Delay in response to Query of prospect

Delay in Provisioning of product/service

Product/Service fails during its early life(30/45 days)

Repeat Fault

Fault not resolved within SLA / satisfaction

Billing issues

Complaints

Churn

Customer Inflection points

Increasing Distress Level

Custo

mer

Jou

rney


• Billing Errors• Complaints

A Customer will eventually churn, though not necessarily in the order mentioned above. However, a Churn Analysis does provide vital insights into the life of a distressed customer.

The above model was built to identify the customer inflection points and the FMEA template was selected to define the degrees of distress and the customers with a higher risk to Churn.

The Risk Priority Number (RPN) is defined as” the customer who has the highest level of distress and hence carries a high risk to Churn”. This a factor of the following

• Severity of Distress: This is defined in a 1-10 scale based on number of days of delay in provisioning, number of repeat faults in the past month, duration of open fault, number of service requests in last 90 days . It also factors a few secondary criteria, which in itself does not qualify for distress but would carry a weighted average( number of calls per service request, number of engineer visits etc)

• Probability of Occurrence: This takes into account the probability of the fault/event to occur and is calculated based on the current performance of the events(eg: Probability of a delay in provisioning, open faults etc)

• Value of Customer: This was the only change made in the standard FMEA template wherein the Detection was replaced by Value of Customer. The purpose is to identify those customers who provide a high revenue to the organization and/or those who are pretty vulnerable as the competitor carries a similar plan.

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Severity ofDistress (S)

Probability of Occurrence (P)

Value of Customer (V)

Risk Priority Number (RPN)

X X =


PROCESS METRICS

The telecom operator already had a string of measures on Agent Level and product level Metrics. Similarly, there were various measures available at Enterprise level to measure the Customer Experience. The study recommended a hierarchy of process performance and business level metrics measures that are linked and will help to predict enterprise wide CE. The same is depicted below

* depicts development of metrics outside the scope of the study.

The Enterprise Level Metrics is focused on the company wide Customer Experience measures, and defines the performance of CE initiatives across the organization. The Business Metrics is designed for Senior Management at the level of General Manager/Senior. Manager. The metrics defines the performance of the distressed customer process and also identifies the flow of distressed customers to various buckets (Churn, complaints, Waivers and defaulters). The management can then use this data to reflect on performance of various plans, retention programs, sales commitment and other parameters that affect these measuresSome of these metrics are briefly listed below.

• Percentage of complaints from distressed customers• Percentage of distressed customers who churn within 90 days • % of waivers to first bill • Percentage First Bill defaulters

The Process Metrics are designed specifically for Process Owners, with an objective to understand the performance of the process per se; eg: Open cases, calls abandoned, repeat calls/faults escalations etcSome of the process metrics are briefly listed below

• Percentage of repeat faults • Percentage of open faults resolved within SLA• Percentage of calls abandoned • Percentage of escalated cases

The Process metrics can also be stratified to measure performance at each process block i. e time taken to raise a service request, no. of service requests closed within one working day, etc

The Agent/Product level Metrics addresses the performance of the agents and is a function of Answer Level, Service Level, Online resolution, AHT and so on.

Each of the metrics (business and process) were defined (numerator and denominator) and an operational target was fixed as a baseline. This helped set up a balanced scorecard across the business for greater ownership and accountability.

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Enterprise Level Metrics*

Distressed Customer Process

Agent Level* Product Level *

Business Level

Enterprise Level Metrics*

Distressed Customer Process

Agent Level* Product Level *

Business Level


About Tech Mahindra

Tech Mahindra is a global systems integrator and business transformation consulting firm focused on the communications industry.

With the convergence of media and telecom, the changing landscape of the telecom industry is becoming extremely competitive. As companies rapidly strive to gain a competitive advantage, Tech Mahindra helps companies innovate and transform by leveraging its unique insights, differentiated services and flexible partnering models. This has helped our customers reduce operating costs and generate new revenue streams.

Recognizing that margins from connectivity are rapidly falling and that future growth in revenues and margins will only come from new applications, content and services, operators today are busy addressing business opportunities revolving around Commerce, Content, Convergence and Customer Experience to gain a sustainable Competitive Advantage.

At Tech Mahindra, we understand this.

Tech Mahindra is the Leading provider of IT Solutions to the Telecom industry

For over two decades, Tech Mahindra has been the chosen transformation partner for wireline, wireless and broadband operators in Europe, Asia-Pacific and North America. Majority owned by Mahindra & Mahindra, one of the Top 10 industrial houses in India, in partnership with British Telecommunications plc (BT), world’s leading communications service provider, Tech Mahindra has grown rapidly to become the 5th largest software exporter in India (NASSCOM 2009) and the first largest telecom software provider from India (Voice & Data 2009).

Over 23,000 professionals service clients across the telecom eco-system, from our global network of development centres and sales offices across Americas, Europe, Middle-east, Africa and Asia-Pacific.

Committed to quality, Tech Mahindra adds value to client businesses through well-established methodologies, tools and techniques backed by its stringent quality processes. Tech Mahindra is ISO 9001:2000 certified and is assessed at SEI-CMMI Level 5. Tech Mahindra has also been awarded the ISO 20000-1 (IT Service Management standard) and ISO 27001 (Security Management standard) certification for its development centers across India and UK.

Tech Mahindra is certified at PCMM Level 5 for its people-care practices and is the third company in the world to have been appraised for SSE-CMM Level 3.

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http://www.techmahindra.com/services/services.aspx


References

• Pine, B. Joseph II; Gilmore, James (7/1/98), "Welcome to the Experience Economy", Harvard Business Review

• Bernd H. Schmitt.; Bernd H. Schmitt (2003), Customer Experience Management: A Revolutionary Approach to Connecting with Your Customers, Wiley; 1 edition, ISBN 0-4712-3774-4

• The State of Customer Experience -Capabilities and Competencies(http://www.sas.com/offices/europe/denmark/pdf/20090323customer_intelligence_103820_0209.pdf)

• Customer Experience Measurement What to Measure and Why (http://www.marketforceinfo.com/knowledge_center/case_studies/MFI_Whitepaper_What_to_Measure_and_Why.pdf)

• eTOM Framework from TMF Forum http://www.tmforum.org/browse.aspx

Glossary

CE- Customer Experience

AHT Average Handling Time

CRM Customer Relationship Management

eTOM Enhanced Telecom Operations Map

SLA Service Level Agreement

FMEA Failure Mode and Effect Analysis

TMF Tele Management Forum

PSTN Public Switched Telephone Network

BB Broadband

ARPU: Average revenue Per User

EBITDA Earnings before Interests, Tax, Depreciation and Amortisation

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http://www.tmforum.org/browse.aspx

http://en.wikipedia.org/wiki/Special:BookSources/0-4712-3774-4

http://en.wikipedia.org/wiki/International_Standard_Book_Number

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White paper measure_customer_experience