Implementation of a Global Customer Loyalty Process Year 1: Successes and Lessons Air Products & Chemicals
Air Products and Chemicals l $5. 5 B Sales, 17, 000 employees worldwide l Complex, highly matrixed organization – 2 Business Groups and 4 regions worldwide • 6 Divisions with sales to >50 countries – 16 business units with multiple product lines – Varying size, complexity and autonomy l Serve multiple markets with a variety of different business models – – – 2 Industrial chemicals & gases Electronics (semiconductor industry) Petrochemical & energy Home Healthcare Performance Materials
Air Products And Chemicals Customer Loyalty Process The Challenge (Spring 2001)… l CEO: – Develop a single, global approach to measure how effectively we are satisfying customers l Business Units: – We don’t need a one size fits all corporate solution but… – We need actionable information to support our strategy and the tools to identify opportunities & take action 3
“Customer Loyalty Process” Key Elements l Ongoing process to capture and utilize the Voice of the Customer 1. 2. 3. 4. Listen to key customers Understand the messages Focus on opportunities Take Action l Using a company-wide model for “Customer Loyalty” – Measures the strength of the customer relationship l Delivers credible, actionable information and is linked to other key business processes – – – 4 Strategy development/validation Customer segmentation (needs based) Continuous Improvement
Customer Loyalty Process Continuous Improvement by using the Voice of the Customer Listen to LISTEN Customers Understand & UNDERSTAND Communicate External Input Understand: • Loyalty Survey • Strengths & areas of weakness • Call Reports • Complaints • Customer Scorecards • Internal Data • Accts Receivable • Retention Rates Identify Key Drivers Communications -Internal/External Input to: • Segmentation • Sales Process & Business Strategy • Other Customer facing processes 5 Focus on FOCUS Opportunities Take Action & Sustain ACT Improvement Continuous Improvement (CI) Key Elements • Integrate Voice of the Customer with an Improvement Process • Resources • Prioritize Customer requirements with business objectives • Identify and foster organizational buyin on Critical Customer Requirements • Leadership Support • Meaningful goals & measures • Action Teams Deployed • Communications • Accountability • Apply Learnings • Sustain Gains
Global Customer Loyalty Survey Objective: Credible, actionable information l “Meaningful” sample of existing customers – Key customers as defined by the business units – 20 minutes long in “major” local languages l Rotated through Air Products on a quarterly basis (12… 24 month cycle) l Survey Components – “Core” elements utilized globally • Loyalty, Brand, problem resolution & verbatim – Business specific performance attributes • Importance, performance & competition • Basis for “actionable” information • As developed by the business units 6
Key Survey Deliverables l A “relationship metric” (Loyalty) that distinguishes between business models l Analysis of performance attributes l Competitive Comparisons l Effectiveness at “Problem Resolution” l Access to verbatim improvement suggestions l Account specific issues (“Red Alerts”) 7
Customer Loyalty Model SECURE CUSTOMERS Satisfaction FAVORABLE CUSTOMERS VULNERABLE CUSTOMERS Rebuy INDIFFERENT CUSTOMERS Recommend AT RISK CUSTOMERS 8
Customer Loyalty Responses Metric distinguishes between business models 21% Secure is “geographic” B 2 B Median Division A High switching costs 9 Division B Division C Division D Low switching costs
Loyalty Driver Analysis Business Specific Performance Attributes The correlation between an attribute and Loyalty High Relative Strength Critical Issues Attribute Impact Most Important to Customers Maintenance Items Secondary Issues Low Performance Gap The Customers’ perception of our performance relative to their need 10 High
Loyalty Driver Analysis Business Division H Relative Strength Critical Issues Attribute Impact High Low Secondary Issues Maintenance Items Performance Gap High 1 Communicate regarding new products 2 Sales reps visit frequently 3 Sales reps have tech knowledge 4 Sales reps take ownership for problems 7 Sales reps effectively coordinate resources 8 Sales reps take time to understand 10 Easily reach a knowledgeable CS rep 11 CS reps resolve problems quickly 12 Provide delivery confirmation 13 Provide complete/accurate invoices 15 Consolidated invoices minimize burden 16 Provide error-free delivery 17 Provide consistent/reliable product 22 Help you operate your site safely 25 Respond to supply problems 30 Easy to reach a knowledgeable TS rep 32 Product increases productivity/efficiency 33 Provide innovative products/services 34 Provide safety experts 36 Ability to place orders online easily 37 Provide needed information online 38 Understand your e-business needs 39 Easy to do business with 42 Help you lower cost of business 43 Products & services are a good value 44 Manage activities in an integrated manner 45 Understand your business needs Sales Support Product Supply Technical Support 11 Customer Service E-Business Capabilities Overall Supplier Relationship
Communicating the Results via Online Access l Provided open access* for all results to all employees (17, 000) on line l Up front filtering tools to focus on “User Relevant” information l Advantages: – Cost effective – Flexible – Easily updateable l Challenges: – Training & Understanding 12 * Note: We maintain absolute confidentiality of anonymous respondents
Results made available to the entire enterprise online 13
Turning Data into Action “Where the rubber meets the road” l Integrating the Voice of the Customer into our Continuous Improvement Process l Critical Success Factors – – – Business Leadership support Accepted improvement process tied to the annual business operating cycle Credible customer input Meaningful tools to focus on opportunities Measurement & Accountability • • 14 Annual individual performance metrics Scorecards, etc
Customer Loyalty is a Key Input for our Continuous Improvement Process Cycle tied to annual operating plan What Prepare Focus & Prioritize How Plan Do It Implement Learn Start of fiscal year Customer Loyalty Voice of the Customer • Develop understanding of key drivers and gaps from the Customers’ perspective • Align with business strategy and objectives (financial & non-financial) • Establish high level plan & identify resources 15
A Tool to Focus on Opportunities Quality Function Deployment Customer Input on their needs & our performance Critical Customer Requirements Business Input on goals and the impact of improvement QFD that is completed with a cross functional team And facilitated by an “expert” Results in a remarkable buy-in for the results 16
QFD/House of Quality l Used for “turning” customer input into product, process and organizational direction setting l Not “new”; around since the 1970’s Reference: “Quality Function Deployment, Linking a Company with its Customers” by Ronald G. Day Customer Attributes Planning Matrix Inputs • Customer Need • Our Performance • Competitive performance • Business Goals • Business/sales impact Contribution 17 Critical Customer Requirement Organizational Capabilities
Examples of Customer Improvement Opportunities l Division A – Responsiveness – Problem Resolution l Division B – Lowering Cost of business – Problem Resolution l Division C – Invoicing & ease of order placement – Problem resolution l Division D – Lowering Cost of business – Flawless execution/Problem Resolution 18
Celebrate the Successes l Initiated a global, one company Customer Loyalty Process (Voice of the Customer) l ~2500 key customers worldwide responded – Key messages are evident l Established a leverage point to drive action – Customer Loyalty & Continuous Improvement l Demonstrated value to many “in the middle” “I wish I knew at the start what I know now” 19
The Future direction… l Evolving the survey content based on feedback from internal & external customers l Provide added value by enabling analysis for customer segments within a business unit l Examine linkages between : – Customer Loyalty & Financial Performance – Employee Engagement & Customer Loyalty l Improve our ability to collect sufficient, valid customer contact data (especially in B 2 B) l Integrate complaint feedback with survey l “Remind” the organization that Customer Loyalty does not equal a survey ! 20
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