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2. DIRECTION DEFINITION DemoCo’s Definition for the nature of Customer Centricity it will achieve in the future


The Direction Shaper Approach and Structure The Direction Shaping Dimensions

Stakeholder Input

Summary of Inputs

The objective of the SCHEMA® Direction Shaping approach is to take the relevant stakeholders in an organisation through a process of creating a definition of the nature of Customer Centricity that they want to achieve. This is based on a clear understanding that there is no such thing as a one-size-fits-all definition that is meaningful in terms of driving change.

Input has been sought from individual stakeholders as a first stage of the Approach. This was done by providing them each with a Spreadsheet-Based proforma with a description of the two ‘extremes’ of each dimension.

The inputs from each Stakeholder were brought together for each dimension and summarised in the series of charts shown over the next two pages.

The approach is based on 20 Dimensions of Customer Centricity that require clarity of direction and alignment among management teams. These dimensions cover the same scope as the Model that underlies the SCHEMA® Assessment and the positioning on each dimension informs the level of capability required in many of the Areas of the Model.

For example:

Number of stakeholders selecting each of the options on the ‘Current Capability’ scale shown by blue bars

17. Influencing of customer channel selection

The dimensions are not intended to run from ‘Good’ to ‘Bad’ but represent two opposite, but potentially valid, approaches to each one. They are:

10

Current

10

5

0

Highly Prescribed 0

1. Core Financial Focus

1 2 3 4 5 6 1 2 3 4 5 6

7 7

Free Choice

5

2. Timescales demanded for ROI

10

Stra tegy

3. Readiness for Building on the Basics 4. Approach to Change

Number of stakeholders selecting each of the options on the ‘Strategically Required’ scale shown by green bars

5. Style of Management 6. Approach to Understanding Customers 7. Opportunity for Competitive Advantage 8. Criticality of High Value Customers

They each provided a view of:

9. Differentiated or Vanilla Customer Experience

• Where they thought that DemoCo was currently positioned on the dimension

10. Nature of Relationships built with Customers

• Where they believe that DemoCo should be in 3 year’s time

11. Level of Satisfaction being Sought

• The relative (to the other dimensions) priority of achieving the change

12. Approach to Understanding the Experience 13. Customer inquisitiveness

The Stakeholders included in the initial exercise were:

14. Growth / Defence Emphasis

• John Jackson (Chief Executive Officer)

15. Level of Customer Targeting

• Brian Nixon (Chief Operating Officer)

16. New Media and Channel Adoption

• Laura Murphy (Finance Controller)

17. Influencing of customer channel selection

• Jill Watson (Director of Strategy)

18. Selling Culture

• Graham Smithe (Head of Direct Sales)

19. The Role of Influence

• Carole Heartsmere (Head of Partner Sales)

20. Visibility of Customer-related Performance

• Wayne Dibley (Head of Marketing) • Michael Paynton (Chief Technology Officer) • Hilary Tones (Head of HR)

2


Summary of Stakeholder Inputs 1. Core Financial Focus

6. Approach to Understanding Customers Current

10

10

10

5

0

Revenue 0

1 2 3 4 5 6 1 2 3 4 5 6

7 7

Experience-Based & Intuitive

Profitability

10

10

1 2 3 4 5 6 1 2 3 4 5 6

7 7

0

Short-term Value Requirement

Product and/or Brand 0

10

10

Stra tegy

Current

10

10

10

5

5

0

0

1 2 3 4 5 6 1 2 3 4 5 6

7 7

No Disproportionately Valuable Customers

Need to Move On and Innovate

Stra tegy

Current

10

10

10

1 2 3 4 5 6 1 2 3 4 5 6

7 7

0

Explicit Differentiation

Responsive & Agile

0

10

10

Stra tegy

Current

10

10

3

0

Current

10

1 2 3 4 5 6 1 2 3 4 5 6

7 7

Command and Control

High Involvement & Engagement

0 0

Current

10

5

1 2 3 4 5 6 1 2 3 4 5 6

7 7

0

Only by Customer Experience

Constant Listening 0

1 2 3 4 5 6 1 2 3 4 5 6

7 7

Pro-active Questioning

5 10

Stra tegy

Stra tegy

13. Customer inquisitiveness

Current

10

10

Current

10

5

1 2 3 4 5 6 1 2 3 4 5 6

7 7

HVC's must be a Core Focus

Data Collected at Every Opportunity

0 0

1 2 3 4 5 6 1 2 3 4 5 6

7 7

Data Collected when Needed

5 10

Stra tegy

Current

Stra tegy

14. Growth / Defence Emphasis 10

10

Current

10

5

1 2 3 4 5 6 1 2 3 4 5 6

7 7

New Customer Acquisition

Same for Everyone

0 0

1 2 3 4 5 6 1 2 3 4 5 6

7 7

Retain/Develop Existing Customers

5 10

Stra tegy

Current

Stra tegy

15. Level of Customer Targeting 10

10

Current

10

5

1 2 3 4 5 6 1 2 3 4 5 6

7 7

Operationally Excellent

Targeted Selling & Retention

0 0

5

5

5

10

10

10

Stra tegy

Just Enough for Repurchase

Stra tegy

10

5

5

7 7

12. Approach to Understanding the Experience

10. Nature of Relationships built with Customers

5. Style of Management

0

10

Stra tegy

5

5

1 2 3 4 5 6 1 2 3 4 5 6

5

5

5

Empowering & Inclusive

0

9. Differentiated or Vanilla Customer Experience

4. Approach to Change

10

0

10

10

0

Universal Delight

5

5

0

0

Analytical & Researched

8. Criticality of High Value Customers

3. Readiness for Building on the Basics

Planned & Structured

7 7

5

5

0

1 2 3 4 5 6 1 2 3 4 5 6

5

5

10

5

7. Opportunity for Competitive Advantage

Current

10

Still need to Fix the Basics

0

10

Stra tegy

2. Timescales demanded for ROI

0

0

Current

10

10

5

10

0

Current

5

5

Long-term Value Creation

11. Level of Satisfaction being Sought

Stra tegy

1 2 3 4 5 6 1 2 3 4 5 6

Stra tegy

7 7

Everyone Welcome


Direction Alignment

(Dimensions 1-4)

The Alignment Process The output from the previous pages was circulated in advance of an alignment workshop held with the Leadership Team to ensure that maximum time was spent where the greatest level of misalignment occurred At this workshop alignment was achieved on current and required positions for all dimensions except those shown below where the subsequent alignment activity was undertaken:

2. Timescales demanded for ROI Discussions were held with the Group Investment Board and the input received confirmed that ROI requirements for the new plan period are tightening and that 3 year pay-backs would no longer be acceptable for major investments. 9. Differentiated or Vanilla Customer Experience The new Brand Personality guidance notes were reviewed with the Service team and the future acceptability of some differential based on customer value confirmed as being in line with Brand. 12. Approach to Understanding the Experience Meeting held between Head of Research and the Digital and Social Manager to confirm the increasing role of on-line listening but with a continuing strong focus on NPS. 17. Influencing of customer channel selection New Multi-Channel Strategy document reviewed and meeting held with new Head of Self-Service. Confirmed increasing need to migrate customers to this channel.

1 Core Financial Focus

3 Readiness for Building on the Basics

Revenue

Profitability

Low Priority

High Priority

Still need to Fix the Basics

Low Priority

High Priority

The clear focus for judging performance will be in terms of operating profitability having taken into account all direct costs (and overheads wherever achievable). Costs will be allocated to products, business units and to individual customers or at least to groups of customers. Direct costs (cost of product, delivery, returns, commissions) will based on actual values from Accounting systems. Most interaction costs (at least direct marketing, service visits and complaints) will be based on accurate activity-based costing. A high level of confidence will have been built throughout DemoCo that the profitability calculations are at least useful if not 100% accurate.

There is a consistent understanding that many of the basics are not right in terms of the experience that customers have and DemoCo's ability to maximise the value of customers. Senior Managers and operational teams will be focussed (by targets and measures) on fixing the basics before moving onto more advanced or innovative activity. Points of failure and comparative performance to competitors will be clearly understood and taken extremely seriously.

2 Timescales demanded for ROI

4 Approach to Change

Long-term Value Creation

Low Priority

Short-term Value Requirement

High Priority

The absolute driving force behind most behaviours in DemoCo will remain short term value (in which ever way we define value). This will be mainly focused on current year value with limited assessment or targeting of the long-term value being created. Returns on customerrelated investments will be assessed over no more than 2 years and a break even will be required within 1 year. Lifetime value measurement will be focussed mainly on past value with limited attention being paid to predicted future value.

4

Need to Move On and Innovate

Planned & Structured

Low Priority

Responsive & Agile

High Priority

Change in customer-impacting areas of DemoCo will be far more driven by the formal, annual plans of the stakeholder groups. These plans will be recognised as commitments to the organisation and colleagues. They will be based on research of the perceived need for change and a structured analysis of the options. Plans will form 'living' reference points on an on-going basis with regular review and clear processes to allow them to be changed in response to opportunities or challenges throughout the plan period.


Direction Summary Dimension Summary Statements • More focussed on the profitability of the customer base than the number of customers, market share and customer spend.

Direction Summary Graphs 1 Core Financial Focus

11 Level of Satisfaction being Sought

Profitability

Revenue

Just Enough for Repurchase

Universal Delight

• Less willing to allow long term payback and ROI on investment made in Customer-impacting areas. • Re-focussed on getting the basics right all the time and less time on ‘interesting initiatives’. • More structured approach to driving customer-impacting change with a clearer commitment to documented strategy and plans.

2 Timescales demanded for ROI Short-term Value Requirement

• Greater empowerment to make tactical decisions ‘close to the customer’ and more collaboration on strategic decision-making. • Much more challenge to ‘received wisdom’ about customers and how they behave from research and deep analytics.

• Noticeably ‘better’ service for higher value customers but not explicit enough to be visible to other customers, • More opportunities for deeper engagement with DemoCo, for all customers, exclusively on-line for most, in person for higher value customers. • Far greater focus on driving more ‘WOW’ experiences that delight, as opposed to just satisfy, customers.

• More ‘real-time’ approach to understanding what the current customer experience is like, but with a continued focus on NPS. • Higher levels of training, motivation and system support for customer data collection at a wider range of interfaces. • Increased sales force focus on retaining the best customers as well as winning new customers, supported by KPI’s and pay.

• Active encouragement of lower value customers to move to selfservice channels and some withdrawal of access to physical channels. • Just enough reduced focus on the ‘Always be Selling’ ethos to dramatically reduce the number of sales complaints. • Major focus on advocacy as an objective and on advocates as a channel that are actively managed. • Much more active and visible reporting of Customer measures at all levels and meaningful review at all Board Meetings.

12

Data Collected at Every Opportunity

Responsive & Agile

New Customer Acquisition

5 Style of Management

Experience-Based & Intuitive

7 Opportunity for Competitive Advantage Product and/or Brand

Retain/Develop Existing Customers

15 Level of Customer Targeting Command and Control

6 Approach to Understanding Customers Analytical & Researched

Only by Customer Experience

HVC's must be a Core Focus

16 New Media and Channel Adoption Wait for the Proof

Same for Everyone

10 Nature of Relationships built with Customers Operationally Excellent

High Involvement & Engagement

Front-of-the-Wave

17 Influencing of customer channel selection Highly Prescribed

Free Choice

18 Selling Culture Always be Selling

9 Differentiated or Vanilla Customer Experience Explicit Differentiation

Targeted Selling & Retention

Everyone Welcome

8 Criticality of High Value Customers No Disproportionately Valuable Customers

Data Collected when Needed

14 Growth / Defence Emphasis

Empowering & Inclusive

• More targeted sales force activity with some types of customer being de-targeted for both acquisition and retention. • Substantial upgrade of social media presence and self-service technology for purchasing and receiving support.

13 Customer inquisitiveness

Still need to Fix the Basics

4 Approach to Change Planned & Structured

Pro-active Questioning

Constant Listening

3 Readiness for Building on the Basics Need to Move On and Innovate

• Slightly more recognition of the real competitive advantage that can be gained from the brand and the new product set. • Increased investment in the highest value 20% of customers as long as the basic service level to all customers is not affected.

12 Approach to Understanding the Experience Long-term Value Creation

Softly, Softly

19 The Role of Influence Support to all Selling Effort

Critical Sales Channel

20 Visibility of Customer-related Performance 'Need to know' Basis

Enforced visibility


Schema direction shaper