An answer to the Growth Imperative

IDEAS INTO ACTION PRESENTATION – MAY 2017

Pursuing Customer

Inspired Growth

Taking Bolder Steps: The 2017 IIA series present forward-looking conversations about taking difficult but essential steps

1. February: Digitising Supply Chains: The Fourth Industrial Revolution

2. April: Simplifying Service Operations: Unlocking the Triple Win

3. May: Pursuing Customer Inspired Growth: Our Answer to the Growth Imperative

June Special Event: Amazon is Coming: Are You Ready?

4. June: Making mergers work

5. August: Facing up to the future of Productivity: Productivity and the fully

automated work force

6. September: Resetting Cost: Leveraging Third Party Economics

20% – 50%

THE SITUATION

Corporate share valuations imply an ambitious growth imperative

3

Percentage of Australian Big

4 Bank valuations attributable

to growth

“We are very good at inorganic growth, but we don’t have the

DNA to enable us to grow organically”

“There are hundreds of top-line initiatives in our company but I am not

sure we are investing behind those which will move the needle and I am

not seeing results”

“Western markets are stagnating and emerging markets are now

growing at half the rate of a few years ago.”

THE CHALLENGE

Traditional approaches trade-off time and magnitude of impact

Approaches to growth

4

?M&A

New Product Development

Digital/Omni Channel Transformation

Enhance Sales Force

Effectiveness

Marketing Campaigns

Imp

ac

t

TimeframeSlowFast

Lo

wH

igh

Rallying around Blockbusters enables the organisation to go big and go fast

THE SOLUTION

Becoming truly customer-centric requires choosing the right place to start

Three pathways to achieve customer-centricity

5

Objective

Promise

Op model

Enablers

Drive rapid change in the customer experience by defining the goal-post then working through the operating model to the enablers

Align organisation, capabilities and performance standards first around a single blockbuster customer proposition, then expand across other Events

Change the mind-set, culture and capabilities before then pursuing alignment across the organisation’s operating model and promises

Logically robust… Immediate customer impact… More fundamental change…

…but realistically difficult …but requires agility …but pace can be very slow

‘Vision-Led’

Objective

Promise

Op model

Enablers

‘Enabler-Driven’

Objective

Promise

Op model

Enablers

‘Blockbuster’

Order of implementation: First Last

Segments

DISCOVER

Blockbusters have three key features – criticality, frequency and value – and can occur at multiple levels

Drives

Business Value

High Volume;

Frequent

High Emotional

Value to Customer

SME

Market

Leaving

home

Segment

Growing

Family

Event

6

Support work from home

Service disruption

Moving home

Moving abroad

Grow internationally

Child gets 1st phone

Cri

tic

ality

to

Cu

sto

me

r

Moving business

Growing business

Lost phone

Immigrating

Set up my business

Frequency

Leaving home

Growing family

First professional job

B2C

B2B

Client ExampleBlockbuster Discovery

THE SOLUTION

Is being “highly satisfied” enough in today’s market?

7

+25-100% (avg. 52%)

+13% avg

Fully emotionallyconnected

Perceive branddifferentiation

Highly satisfied

Not emotionalyconnected

-18% avg

Relative customer value by level of connectedness

Organisations that optimise emotional

connections outperform competitors

26% higher gross

margins

85% higher sales

growth

PCE METHODOLOGY

PCE Labs’ end-to-end approach to customer innovation is rapid, modular, scalable and in market in less than three to six months

8

DISCOVER

2-4 WEEKS

DESIGN

+4-6 WEEKS

DELIVER

+8-12 WEEKS

DRIVE

+3-12 MONTHS

Identify Blockbusters and understand

root causes

Design elements of proposition that

WOW and build the business case

Bring the design to life - develop, test,

and deploy a new value proposition

Implement, scale and roll-out the solution

across the organisation

Design + Consulting + Analytics + Agile = PCE Methodology

DISCOVER

ACTS, our proprietary tool measures full customer value, not just advocacy or satisfaction

ACTS Captured Customer Value

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ACTS, our proprietary customer value metric… …can be used in conjunction with NPS

× =% of value potential captured

$ spent per year$ sales potential in

near future

Conversion factor Potential value1 Captured value

×

ARE YOU

AWAREOF THISBRAND?

HAVE YOU

CONSIDEREDBUYING THIS

BRAND?

HAVE YOU

TRIEDTHIS

BRAND?

WHAT

SHAREOF YOUR SPENDDO YOU TRUST

THIS BRAND FOR?

% YES % YES × % YES × % SPEND

A C T SMissed opportunity

Churn and burn

35

40

25

20

30

15

5

10

00,0 0,5 1,0 2,01,5

NPS score

ACTS Score

DISCOVER

The ACTS survey identifies areas to focus to turn revenue potential into revenue growth

Client ACTS by segment (vs Challengers)

10

20%17%

28%36%

Competition

56%

23%20%34%

49%

22%

47%47%

80%

31%25%30%

49%

21%26%

43%

n.a. 0.3%

ACTS Score

1.8%

0.9%2.3%

1.1%

ACTS ScoreACTS Score

ACTS Score ACTS Score

Branch Retirees

A C T S

Loyalty Benefit Hunters

A C T S

Inertial Online

A C T S

Credit Shoppers

A C T S

Bargain Seekers

A C T S

DISCOVER

Blockbusters are critical to the customer and frequent in market

Discovering Blockbusters within a Segment

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Observations

• The most frequent events for Credit shoppers are buying or upgrading a car and staring a new job.

• The most painful events relative to its frequency are losing job, loan for school, and home downsizing.

• Frequent events which cause pain and can be potentially addressed are dream vacation/special purchase, buying a first home, and starting a new job.

Frequency

Purchase investment property

Bought or upgraded car

Bought a first home

Divorced

Moved to a new city

Lost wallet

Planned for retirement

Car accident

Started a new job

Dream vacation / special purchase

Required loan for school

Lost my job

Le

ve

l o

f P

ain

/ E

mo

tio

n

Recently Immigrated

Downsized home

Married

Had children

DESIGN

Having narrowed our focus on a Blockbuster, we think expansively about designing the proposition and customer experience

Proposition and Customer Experience Design

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Proposition Architecture

Your signature

domain

Set and forget

(grocery)

shopping

Penny wise,

pound wise

• Shared online budgeting and planning tool –with parents and flatmates

• New persona based bundles with discounts and ‘Easter eggs’

• App to see how furniture will fit in the room (AR) and enable joint purchases, lay-buys, etc.

• Personalised checklist generator for all grocery needs (w/ suggestions based on Q&A)

• Smart shopper app – smart shopping list, reminders, aisle finder and easy check-out

• Automated stock tracking and home delivery

• Online account and e-coaching sessions on every day finances

• First job package – goal saver and goal deals

• Shared credit card with parents with budgeting and tracking

Core product / service

elements and Price

Value-added adjacent products

and services

Information Search

Experience

Pu

rch

as

e

Ex

pe

rien

ceS

erv

ice

/

Su

pp

ort

E

xp

eri

en

ce

Product Use Experience

PCE ‘DELIVER’

Ideas are tested live for viability, desirability and feasibility in the LiveFlow lab

13

BOOTCAMP LEADERSHIP VISIT SOLUTION SESSIONTOOLS PRESENTATIONCOMMERCIAL VIDEO

A.T Kearney has used LiveFlow implementation methodology in both high value and high volume products across geographies

LiveFlow Overview

Representatives from all E2E BUs brought

together, one physical location, for ~8–12

weeks to experiment, diagnose issues,

and determine solutions and

improvements.

Principles

Customer Oriented Focus on ideas to improve end-customer experience, customers actively engaged as part of the process

1

CEO Visibility and SupportCEO Updates on Progress, CXO visits to LiveFlow

7

Focused on Doing Subset of live orders identified and tracked to completion

3

Practical SolutionsIssues, ideas, changes identified that can be implemented next business day

4

Collaborative E2E accountability within the LiveFlow team, champions identified to carry changes back to BUs

5

InnovativeNo sacred cows, no sensitive areas, everything is considered; if doesn’t work, try something else

6

Forward Looking Discuss and review changes impacting long term releases

2

WHAT ARE THE ADVANTAGES OF A LIVEFLOW

We use LiveFlow to quickly deliver tangible customer, frontline, organisational and commercial benefits

Typical LiveFlow Outcomes

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Transformed Customer

Experience

Lift in Sales Force

Productivity

• Build the case for change by delivering tested and proven solutions

• Drive change through engaging change agents at the grass-root level within the business

• Achieve material changes delivered through simplifying and improving processes

• Deliver fast and accurate products, service and billing, and reduce the back-log of orders "stuck in the pipe"

Lasting Organisational

Change Improved Efficiency

• Reduce end-to-end cycle times (in some cases 50%-70% reduction)

• Minimise variation in cycle times to provide consistency and reliability

• Simplify customer interaction to minimise customer effort and reduce rework

• Simplify the frontline role and streamline interface to operations

• Make it easier for the frontline to input good request

• Reduce the follow up loops and inefficiency in dealing with irate customers

IMMEDIATE

IMPACT &

GROWING

ADVANTAGE

Create ‘purpose in the

role’ to build the emotional commitment at an individual

level that motivates for change

PCE ‘DRIVE’

As sprints progress we embed the A.T. Kearney change methodology to scale up post proof of concept

The Vanguard

Group

Sequential De-Bottle-necking

Front Line Advisors

Purpose in the Role

Post-Change

Plan

‘Thinking’ PMO

Define the Vanguard

Group of key influences to drive viral change; Requires an in-depth analysis of the informal network to identify the ‘right’ group of credible influencers to shape opinions and spread change

Analyse how the

change should be

sequenced to drive major performance improvement by understanding cause –effect mechanisms to define the most efficient path to change

Establish a ‘Thinking’ PMO that goes beyond the check-the-box templates to maintain the focus of the organisation on the transformation over time

Establish Front-Line Advisors closest to the change in a two-way dialogue to identify

roadblocks and understand how to implement the change at a local level

Define a clear post-change

plan for how the underlying capabilities will be embedded into the

organisation during and after the change

1

2

3

4

5

6

15

WHERE CAN THIS BE USED?

The Blockbuster approach can be used to achieve multiple customer objectives

16

Objectives Approach

Launch of Blockbuster

propositions enabled

by PCE methodology

Growth

Cultural

Transformation

InnovationDigital

Transformation

NPSGrowth

Cultural Transformation

New Business Build

Some questions to consider

• Do you know your Blockbuster Opportunity?

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What would you lose if you tried?

• Can your organisation benefit from growth?

• Are your blockbusters expansive and emotional, yet

pragmatic and rapid?

• Do your Proof Of Concepts reach their full potential?

• Do you have a Live Lab that delivers significant releases each

Quarter?

GETTING STARTED

APPROACH PRINCIPLES

A.T. Kearney has created a dedicated global division, combining the best of multiple disciplines to build compelling new value propositions

18

Unconstrained

Customer Focus

Commercial

Viability

Tangible

Outcome Staging

Design emotionally expansive

propositions and experiences

Focus on which needs matter

most for each individual customer

Strive to Influencing behaviors

that drive outcomes consumers

desire

Human centered design thinking

Leverage scalable /

automated solution designs

Build business case into

potential solutions

Consider link to existing

product portfolio

Drive investment in the

future

Employ an agile and lean

methodology, focused on

testing, learning, and refining

Engage customers in co-

creation

Help build internal

capabilities around value

proposition design

Our approach and capabilities allows us to rapidly design and deliver market-beating propositions and experiences

Proposition and Customer Experience Labs

OUR TEAM

A.T. Kearney PCE Labs is a global team of designers, data scientists and entrepreneurs focused on CX innovation

Tatiana Goncharova

REGIONAL LEAD, EMEA

Michael Dunstan

REGIONAL LEAD, APAC

More than 7 years consulting and industry experience focusing on digital marketing, analytics, CX design and product development.

10 years consulting and industry experience, mainly across telecommunications, utilities, financial services.

Nigel Andrade

GLOBAL CO-LEAD PARTNER

Developed the PCE framework and stepped out of traditional consulting to build a new way of supporting clients reinvent and relaunch propositions across industries and markets

Steve Mulligan

GLOBAL DESIGN LEAD

Jeroen Lubbers

GLOBAL PARTNERSHIPS LEAD

More than 12 years experience in designing better ways for organisations to serve their customers, staff and key business partners.

10 years of experience working with partners and their products to support clients in achieving their business objectives.

Vladimir Lukin

GLOBAL DATA SCIENCE LEAD

More than 14 years of experience in predictive modelling, business forecasting and statistical consulting

Diego Casanova

MANAGER, AMERICAS

Proven success record of global consulting experience across multinational companies in retail, utilities and financial services

Ian St-Maurice

GLOBAL CO-LEAD, PRINCIPAL

Senior marketing consultant with over 20 years experience advising firms across industries including high tech, telecom on their toughest strategic marketing issues

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A.T. KEARNEY PCE LABS

ATK PCE Labs is a fully integrated part of A.T. Kearney – global in reach with deep customer and innovation expertise

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A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organisations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues.