McKinsey Telecoms. RECALL No. 02, 2007 - Customer Experience

8/2/2019 McKinsey Telecoms. RECALL No. 02, 2007 - Customer Experience

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Telecommunications

Customer Experience

RECALL No2


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3RECALL No 2 Customer Experience

Welcome ...... to the second issue of Recal l, a new publication forexecutives and board members that provides insightsinto marketing and sales in the telecommunicationsindustry.

In this issue, we focus on customer experience. McKinsey& Company defines customer experience as a brandsperceived, explicit, and implicit promises in terms of thecare received, the value delivered for the price, theproduct, the network, and the intangible benefits that tiethem all together. Our research shows that providing

best-in-class customer exper ience is one of the fewremaining ways that carriers can differentiate themselvesand drive customer retention. Three core beliefs guidethe thinking on customer experience performance:excellence requires a balance of both brand promise andfrontline execution based upon what people really value;

there is no one score that solves it all customer experiencemanagement is a detailed and analytically rigorousscience; and only return-driven customer experiencecreates real value for both the customer and the company.Based upon these three core beliefs, this issue of Recallprovides insights into managing the customer experience.

The first article is on The Science of ROI-FocusedCustomer Experience Management. Research showsthat it becomes increasingly more difficult each year tosatisfy customers and that telcos can run very fast in the

wrong direction attempting to do so. Instead, telcos

need to strongly link customer experience to businesspriorities and to focus on costefficiently boosting qualityin ways that mean a lot to customers.

The second article explains CE:O Customer ExperienceOptimum. Together with two leading research and

telecommunications institutions, McKinsey has developedand tested a new method for understanding whatreally drives customer satisfaction and what levers topull making the customer experience really actionable.

Read how McKinseys Customer Experience Optimumcan help managers achieve the highest returns possiblefrom their customer satisfaction investments.

Next, we illustrate insights on how operators canmanage the customer experience at their most importanttouchpoint the network, Net-to-Customer:Resolving the Quality Myth. McKinsey believes thatinstead of further investing millions into network access,many mobile operators face a largely perception-driven problem they can resolve much more cost efficiently.Learn why McKinsey s Net-to-Customer approachprovides managers with a fact-based way to balance capex

needs against customer demands. We close this issuewith an interview with Rainer J. Brkle of The Ritz-Carlton, who works at the heart of customer experiencein the most demanding service industry. Two importantsubjects emerged during the interview. First, employeeshave to identify very closely with what is defined in thecompanys core principles, which need to become a wayof life for each staff member. Second, its increasinglyimportantto continually measure and quantify the customerexperience in order to understand how trends are devel-oping and how to incorporate them.

We hope that you find this issue of Recall interesting andthat it provides you with unique insights and ideas thatare useful in your daily work. We look forward to yourfeedback and thoughts on relevant topics you would liketo see covered in this publication.

Jrgen Meffert

European Leader of McKinseys

Telecommunications Practice

Pedro Mendona

Leader of McKinseys

Marketing in Telecommunications Practice

Boris Maurer

Leader of McKinseys

Telecommunications Extranet

Thomas Barta

Leader of European

Telecoms Branding/ROI,

Editor Recall


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5RECALL No 2 Customer Experience

Contents01 The Science of ROI-Focused Customer Experience Management 7

02 CE:O Customer Experience Optimum 13

03 Net-to-Customer: Resolving the Quality Myth 21

04 Points of View 29

Appendix


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7RECALL No 2 Customer ExperienceThe Science of ROI-Focused Customer Experience Management

01 The Science of ROI-Focused CustomerExperience Management

Managers require hard data and real business acumento provide a relevant customer exper ience today.

Research shows that its becoming more difficult eachyear to satisfy customers. Taking the United Statesas an example, McKinsey & Companys analysis acrossmultiple industries reveals that, except for very recentimprovements in certain subsectors (e.g., the wirelessmarket), average customer satisfaction (CSAT) levelshave dropped significantly since the 1990s. In the fixed-line telecoms sector, for instance, average satisfactionlevels dropped 11 percentage points from 1995 to 2005.Thus, as telecoms struggle with the evolving natureof managing customer experience (CE), they confronta moving target it seems that the more effort they expend

on pleasing customers, the less pleased customers become.

This dynamic results from the typical approachescompanies take when addressing customer experienceissues, often featuring a lot of guesswork supported

by relatively few facts. McKinseys research shows thatcustomer experience in a given market, as well asthe industrys attitude towards fix ing it, typically gothrough three distinct phases (Exhibit 1), which will

be examined in greater detail:

Phase 1: Strive to make the customer experience aspositive as possible.

Phase 2: Look for one simple metric that will solveeverything.

Phase 3: Drive ROI-focused customer satisfaction.

Phase 1: Strive to make the customerexperience as positive as possible.

When signs of market saturation appear, companiesoften focus more intently on finding ways todifferentiate their offerings. As product features andfunctionality become commodities, companiesoften view improving customer satisfaction as a newdifferentiator, based upon the intuitive belief thatprofits will automatically result. This phase is typicallycharacterized by many (sometimes disjointed)initiatives rather than holistic approaches. For example,one telco, in devising a scheme for addressing customerexperience, analyzed complaints across its marketing,product management, operations, call center, and

other relevant departments. The company ultimatelyended up concentrating 85 percent of its initiatives oncall center issues, which accounted for only 24 percentof total complaints. Furthermore, managers hadlimited ability to measure satisfaction, relying insteadupon anecdotes such as letters to the CEO, warstories, and other subjective data. The company placeda strong focus on customer care, but its initiativesfeatured few links to real business issues and therefore,generated little business impact.

Phase 2: Look or one simple metric that willsolve everything.

By the early 2000s, several off-the-shelf customer satis-faction measurements appeared in the telecommunicationsindustry and elsewhere, which attempted to condensecompany performance into one overall score or to apply


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Typical phases in the customer experience journey01

basic transactional touchpoint measures (e.g., Howhappy were you with your last call to customer care, on ascale of 1 to 10?). Many companies in the most maturemarkets sought refuge in magical thinking, trying tofind the one perfect top-line metric that would resolveall customer experience issues. Large incumbents, inparticular, sought out metrics-based solutions as they

began to feel besieged by savv y attackers (which oftenemployed new segmentation approaches and werent

burdened by legacy systems or inert ia problems).

Unfortunately, most of these top-line metrics yieldedthe same results, i.e., they tended to stack up companiesin the same order regardless of whether the focus wascustomer satisfaction, willingness to recommend,or their derivations. Whats more, academics began torealize that achieving CSAT at any cost didnt auto-matically lead to improved total return to shareholders(TRS) performance.

The earliest academic studies had demonstrated linksbetween customer satisfaction and a number ofattributes linked to positive customer behavior, includinghigher usage levels, lower price elast icity, and lowerdefection rates. Fur thermore, financial benefits alsoemerged, as shown by a positive correlation betweenCSAT and TRS, and net cash f low. Analysts at the time

also noted that a 1 percent increase in CSAT correlatedpositively with market share gains of up to 4.6 percent.More recent studies, however, find little or norelationship between CSAT and f inancial performance.McKinseys primary research confirms that CSATover-performance (as measured by the most commonmetrics) bears no strong links to financial over-performance. Many large companies today in industriesranging from airlines to retail to financial services

achieve high customer satisfaction levels but, nonetheless,earn below-average financial returns (Exhibit 2).

So how can this be? Naturally, in any six-month period,there will be outliers: companies whose share pricesmove for reasons (such as mergers) that have little to do

with CSAT. There are also companies in the lower-right quadrant that are perennial CE all stars, whoseexcellent customer experience has long been pricedinto shares, leaving room for random variation in shareprice caused by unrelated factors.

More commonly, however, found in this quadrant arecompanies that appear to have overinvested intoCSAT or more specifically, invested into the wrong leversand past the point of positive returns. A company stuckin the mode of Phase 2 magical thinking will sometimestake drast ic measures (such as steep price cuts) to


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There are many companies with high CSAT and low financial returns02

engender customer loyalty without making a businesscase to justify it. Some companies overinvest intoexperience improvements for captive customers whohave little choice but to stay with the serv ice orindiscriminately improve service for low- and high-valuecustomers alike.

Phase 3: Drive ROI-ocused customersatisaction.

Today, more and more companies have begun to lookmore closely at the relationship between CSATand TRS within their customer bases, using their ownobjective data and survey information. Severalhigh-performing companies have adopted a new top-downCSAT focus that incorporates business variables suchas churn, cross-selling opportunities, and the need to

boost market share with a more precise understandingof how each touchpoint with a customer influences these

variables something that a single score cant provide.They view customer experience investments as a sourceof true competitiveness because such investmentscan be tied direct ly to profitability. Increasingly morecompanies embed CE within the organizational DNAin the sense that it has become part of internal/externalcommunication and evaluation activit ies led bythe CEO.

The most sophisticated companies today fully understandand integrate the customer-back perspective. Thisneeds-based approach seeks to identify the customersown list of priorities, which can range from companiesproviding a friendly and informative sales experienceto effectively resolving problems. Based upon this data,telecoms can begin to segment existing customers basedupon their most pronounced needs (e.g., product, price,network, or customer service) in order to design the best

policies and processes for maximizing customer value.These same companies continue to use other segmentationplans for other purposes, such as new customeracquisition.Companies use this customer-back data to build solidanalytical linkages between CE and overall satisfaction,and business performance. For example, one cablecompany noted that customer service drove customersatisfaction with its pay-TV products, while otherattributes, such as brand strength, value, and reliabilityplayed only secondary roles. The company used thisinformation to measure the impact of this more detailedCSAT on churn and customer-initiated service down-grades and upgrades, and found meaningful correlationsin each case: customers with the lowest satisfactionlevels across the key dimensions exhibited the highestrates of churn and engaged in the most service


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Done correctly, CSAT drives customer lifetime value in several ways03

downgrades and fewest upgrades. Conversely, the mostsatisfied customers revealed results that were the exactopposite.

With such data in hand, managers can take the mostappropriate actions from a return-on-investment (ROI)perspect ive. One hotel chain arrayed its options forimproving CE against the costs associated with each.It quickly identified three high-impact moments of

truth providing superior concierge services,recognizing customers by name, and offering superior

bed comfort that all provided positive ROI. Itdiscarded other options, such as offering larger rooms, anextra night free, and tailored in-room facilities

because they generated negative ROI. Customers didntvalue these improvements enough to pay extra forthem, so their cost exceeded the positive impact they

would have had on CE.

The highest-performing Phase 3 companies quicklydiscover that many CE improvements are self-funding.

Avoidable call center queries, for example, can beresolved with an appropriately configured IVR (interactive

voice response) system that doesnt create dissatis-faction and in many cases, better planning can eliminatea significant portion of service truck rolls. Savvycompanies also quickly make relatively inexpensive

adjustments to their marketing communications effortswhen it becomes necessary to realign customer perceptionwith reality, such as when hard data show a telcosobjective network quality to be significantly higher thancustomers think it is.

Business-informed CE thinking requires companies totake a cross-functional view that includes CE measurementon key touchpoints. Many service providers from telcos

to cable companies face multiple customer momentsof truth that, if mishandled, generate poor customerexperience. Examples for a cable company might includeon-phone, in-home, and plant-related touchpoints, whichcan expose multiple opportunities to make a differencefor customers (and the risks inherent in not doing so).

High performers focus on evolving a CE ethos through-out the entire organization, right up to the frontline

workers, where the right mindsets and behaviors cansupercharge a companys drive towards CE excellence.In a truly actualized organization, frontline employees during this stage often demand to see weekly CEscores and actively support one another in order to earnoutstanding scores.

Done right, CSAT drives customer lifetime value inseveral ways and at favorable ROI levels (Exhibit 3).


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Several interesting things happen once companies breakthrough the mediocre customer satisfaction barrierand achieve outstanding, business-focused CSAT perfor-mance. Positive word-of-mouth recommendationsskyrocket and customers actively upgrade their serviceplans, while cancellation rates, churn levels, and servicedowngrades plummet.

McKinseys research shows that achieving high customersatisfaction, especially for large incumbents with legacysystems and diverse customer bases, is not simple and

that telcos can run very fast in the wrong direction bypursuing a satisfy at any cost or one score mandate.Instead, telcos need to strongly link customer experience

with business priorities and to focus on cost-efficientlyboosting quality in ways that mean a lot to customers.This approach forces managers to banish the magicalthinking that hovers over many CSAT initiatives,allowing companies to pursue initiatives that create

value for both customers and shareholders.

By Fabian Barros, Adam Braff, and Markus Frerker


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13RECALL No 2 Customer ExperienceCE:O Customer Experience Optimum

McKinseys new approach to measuring and increasingcustomer satisfaction helps managers pinpoint thehighest returns possible.

The relationship between customer loyalty and customersatisfaction is a close-knit one if measured correctly.However, many of todays customer satisfaction measure-ments fail to provide actionable guidance on this pointor others. Thats because customer views are eitherexpressed in one simple score for the entire organization,thus offering little in terms of specifics, or in abstractterms such as 6.8 out of 10 for a given customer touch-point. And, for some magical reason, most companieshover in the 6.9 to 8.9 range regarding this latter metric with even the greatest companies rarely scoring a 10.

Worse yet, such metrics say little about the areas uponwhich managers should initially focus as improvementpriorities. For example, if both the call center and thenetwork generate low customer satisfaction levels, whichone should managers improve first? Some customersmight accept lower call center satisfaction levels, as longas the company offers broad product variety.

McKinsey & Companys research shows that in order tocreate truly profitable customer satisfaction, by balancing

various trade-off decisions to reach the customer optimum,managers need to answer a few key questions (Exhibit 1):

How important is each of the touchpoints to customersatisfaction? That is, how important is eachinteraction through which customers come into contact

with the company, including advertising, brick-and-mortar stores, and direct services, such as product quality?

To what extent does the company fulfill todays customerexpectations and how high is overall customersatisfaction? How good is the actual service being providedrelative to customer perception?

With which improvement actions can customer satisfactionbe increased precisely? What effect will these actionshave on loyalty and ultimately, on revenue?

Which actions aimed at improving loyalty are the mostprofitable?

Numerous off-the-shelf instruments exist for measuringcustomer satisfaction, and McKinsey agrees that onesimple score can provide an important vehicle for externalcommunication. But real profitability from customer

experience (CE) management requires managers todive deeper into the touchpoints, to look for the realexperience levers that drive profitable loyalty and tounderstand the optimum for customer experience andfor the respective budget allocation to reach this state.

CE:O: Customer Experience Optimum a newmethod or measuring and increasing returnsrom customer satisaction

Together with a highly regarded market research instituteand a leading global service organization, McKinseyhas developed and tested a new method for analyzingthese critical management questions concerningcustomer satisfaction. The approach is called CustomerExper ience Optimum (CE:O).

The foundation of CE:O is the knowledge that customer

02 CE:O Customer Experience Optimum


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satisfaction is the sum of all positive and negativecustomer experiences, spanning a long time frame andincluding all instances in which the customer hascome into contact with the company. As a rule, satisfiedcustomers do three things: they are loyal, theypurchase more frequently and in higher quantities, andthey recommend the company to others.

The task, therefore, is to determine exact ly what drives

customer satisfaction and to examine how to increase it.The CE:O approach aims to measure customer satisfactionon a much broader basis than previous methods did,focusing on four main steps:

1. Capture the importance of the individual touchpointsin overall customer satisfaction (differentiated accordingto competitors and segments).

2. Understand the relative performance of all relevanttouchpoints in the customers mind (using verbalizedscales such as I had to wait for five minutes).3. Deduce exactly which actions improve customer satis-faction per touchpoint and per individual experience driver.

4. Quantify the effect of the specific improvementactions on customer revenue.

Step 1: Capturing the importance o individualtouchpoints

A companys customer satisfaction strategy must centeron one key question: How important is a particulartouchpoint in terms of overall customer satisfaction?Ultimately, this question determines the level of resourcesallocated to maintaining or increasing the quality ofthat particular touchpoint. One could ask customers

direct ly about the importance of a specif ic touchpoint,but experience shows that responses to questions posedin this manner often reflect what sounds plausible ratherthan the reality. In the case of mobile phone serv iceproviders, the monthly bill doesnt rank among the topthree touchpoints but in reality, the monthly bill can

be a source of great annoyance if it contains errors.Therefore, for many people, this aspect is actual ly anextremely important determinant of satisfaction.

Here too, it pays to look for alternative methods.Reliable results are often the product of methods basedupon trade-off decisions: respondents must first ratetheir experiences and then weigh the touchpoints. Byasking customers to consider touchpoints relative toeach other, researchers can make a relative assessmentof what the customer perceives as important. In marketresearch conducted in the German mobile phone market,

The profit stars from customer experience lie well below the surface01


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customers ranked various touchpoints using the abovemethodology. One example result showed that billing

was considered the most important touchpoint forcustomers, followed by the network, the pricing system,and end-user devices.

Step 2: Determining present perormance

The second step involves determining how customers

rate service at individual touchpoints via specificexperience drivers. For example, when considering retailstores as a touchpoint, customer experience dr iversmight include the distance to the nearest store, storeappearance, waiting times, and fr iendliness ofshop staff. Service levels should be defined in such a

way that makes them comparable with operationalkey performance indicators (KPIs). For instance,companies should find internal ways to measurecustomer waiting times in order to verify how plausiblecustomer perceptions are, by making a directcomparison between customer survey responses andthe KPIs. This will highlight cases in which, forexample, a customer rates call center service worse thanthe corresponding KPI shows it to really be. Bettercommunication could bridge this gap relatively easily.This will indicate to a company the state of service levelsat the different touchpoints and experience drivers.

For example, customer satisfaction at the billingtouchpoint may already be very high and in comparison

with competitors the highest. But it may be thatcustomer satisfaction is low and significantly lagging

behind competitors at the touchpoint prices/tariffs.

The classic method for measuring these factors reliesupon numerical scales, e.g., 1 to 6, in which 1 meansbad and 6 means very good. However, its much more

powerful to use so-called verbalized scales. Forinstance, respondents could answer the question about

waiting times in stores by choosing between state-ments implying different service levels. The best servicelevel could be I had to wait less than two minutes, andthe worst service level I had to wait more than fiveminutes. The unbeatable advantage of verbalized scalesis that a company can derive from them exactly what itshould do to raise serv ice levels (Exhibit 2).

Customer expectations offer a sensible perspective,as they highlight where demand for higher service levelsis strongest. From the pool of the most importantexperience drivers, a company can select a certain numberupon which to focus in order to keep complexity atreasonable levels (e.g., a company may choose toconcentrate on the product range in stores and waitingtimes at checkout).

CE:O shows exactly what to do in order to improve experience and

satisfaction02


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Thus, Step 2 provides a complete picture, includingranked touchpoints, and highlights those service levelsthat make for satisfied customers. For example,respondents may indicate that they are only satisfiedin terms of experience drivers such as waiting times atthe point of sale (POS) touchpoint when the service levelthere has reached the highest level, e.g., when waitingtimes are less than two minutes. Conversely, customersmay be satisfied in terms of a different experience

driver when service has reached the middle level. Themore and quicker the customers want to change aparticular service level, the more important the experiencedriver is to them.

Step 3: Defning thresholds and targets

Urgent need for improvement arises when a touchpointproves highly influential, but the service in questionachieves only a poor rating. In these cases, an improvementin service levels must be considered if profitable. Animportance versus performance matrix has proven to bean excellent tool for showing this relationship (Exhibit 3).In the matrix illustrated in Exhibit 3, the touchpointsprices/tarif fs and end-user devices are bothin the area improve urgently, i.e., they are extremelyimportant for customer satisfaction, but customers

rate current service levels poorly. Provider strengths areshown in the area exploit in this case, networkand billing. Both touchpoints are important for customersatisfaction and have been rated positively.

The matrix is useful for general orientation on a high level,but a deeper look behind the reasons for theperformance is required. For example, customers may

be basically satisfied with service levels in the stores,

but a closer examination reveals that waiting times instores and the distance to the nearest store makecustomers dissatisfied, while they are very satisfied

with the experience driver quality of advice.

The key now lies in determining the right thresholdsfor performance. Customer satisfaction is not a linearelement. It can easily happen that a five-minute waitingtime in a store is as good as seven minutes but thatafter eight minutes, satisfaction drops significantly. So,not only is it key to understand the general relationship

between performance and loyalty but also the thresholdsat which satisfaction starts to drop or stops increasing(Exhibit 4).Both the prioritization matrix and the thresholds providea general orientation regarding on what to focus. Butthe advantage of the CE:O approach becomes apparent

CE:O clearly helps to prioritize touchpoint measures03


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CE:O helps to understand the exact thresholds for satisfaction at each

touchpoint04

when discussing real actions to take, since it deliversa detailed description of the service levels customersexpect, based upon verbalized scales which can belinked to operational KPIs. By doing so, the exact level ofservice, i.e. the optimum, expected by customers can

be determined.

Step 4: Finding the most proftableimprovements

Only a small number of companies can afford the luxuryof putting all service ideas into practice. Therefore,its key to select the few most profitable actions from theabundant pool of many. Primarily, the decisive factoris the extent to which each action will raise satisfactionlevels and strengthen loyalty.

McKinseys research shows that customer satisfactionclearly depends upon service levels at importanttouchpoints. If a company successfully raises satisfactionlevels so that customers previously rating serviceas poor now rate it mediocre, the customer satisfaction

with a touchpoint will improve. And so will depending upon the touchpoint the customers overallsatisfaction. This effect can be calculated for eachexperience driver. Exhibit 5 illustrates such a calculation.In the example, an improvement in service level from

the lowest to the middle level at the touchpoint prices/tariffs for the experience driver price value perceptionleads to an increase in overall customer satisfaction of0.47 percentage points, from 67.1 to 67.48 points.

If ratings for every prioritized experience driver couldbe improved by one service level, the resultingpotential increase in customer satisfaction would be 2.2percentage points, pushing it to 69.3 percent. Increases

in customer satisfaction have a positive effect on loyalty,which the approach measures using regressionmethods. For example, a customer satisfaction-to-loyaltyratio of 1 to 1.65 means that an increase of 1 percentagepoint in customer satisfaction stimulates a more thanproportional increase in loyalty of 1.65 percentage points.Just as one can apply exact quantitative measurementsregarding both the effect of improving service levelson customer satisfaction and the impact of improvingcustomer satisfaction on loyalty, the market researchand company data can also be used to calculate the revenueeffect of greater customer loyalty based upon threelevers: 1) churn reduction, 2) upsell/cross-sell, and 3)new business through recommendations.

Assume, for example, a company plans to improvein-store waiting times from five minutes to about two


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to five minutes for each customer. Research shows inone case that currently 51 percent of customers experiencea waiting time of five minutes or longer. If all of thesecustomers could be moved into the two- to five-minutes

bucket, the overall satisfaction would go up by 0.06percentage points. Translating this into loyalty (e.g., churn,upselling/cross-selling, and recommendation asmeasured by internal standards and average revenues)

would create an additional revenue potential of about

EUR 30 million for the company. In comparison, improvingthe distance to the nearest store (which wouldultimately mean building new shops) only yields aboutEUR 6 million annually. Following return oninvestment (ROI) logic, all possible investments cannow be calculated and approved or rejected. Theresult of the process is an action plan incorporating theinvestments with the highest returns.

This step highlights another benefit of CE:O. Its nowpossible to use objective data to quantify the contributionmade to revenue potential by these types of focusedimprovement actions and thereby f inding the optimumsplit of allocating internal budgets. Of course,estimating value in this way can never be precise butrather indicative. First of all, theres the fact thatresearch while attempting to be accurate will alwayshave to rely upon the sample being absolutely

representative and the conditions under which it wascarried out being perfect. Second, the correlation

between satisfaction and the different types of loyaltyis never perfect. However, CE:O does represent asignificant advancement in customer satisfaction research.It indicates areas in which there is a need to improveservice levels and for the first time, makes these effectstransparent and quantifiable. Using a method basedupon facts, Customer Experience Profiling produces

important results for quality decision making inmanagement, which is ultimately responsible for theROI of all activities (Exhibit 6).

What gets measured gets done

Successful customer experience management requiresregular assessments in order to highlight successes andreveal weaknesses. An initial CE:O can be followed byquarterly or monthly market research waves to determine

whether the actions were successful and to whatextent. These tracking waves are significantly smaller inscope and focus only on customer satisfaction withthe improved service levels.The CE:O profile lends itself well to cockpit monitoring,a method that provides management an overview ofchanges in service per formance. As a rule, one page is

Example: Tapping the full potential increases total satisfaction

from 67.1 to 69.305


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CE:O shows how much revenue improvements could generate06

sufficient for summarizing the current perception,operational performance, and target perception.Furt her data offer additional details that the readercan review when necessary. Ideally, the cockpitruns on standard software such as Microsoft Excel, sothat it can be easily adapted and developed. Acompany can also decide to integrate an incentive systeminto the cockpit to help emphasize alignment

with customer satisfaction and loyalty throughout the

organization.

Methods such as CE:O help managers recognize whereand how they can raise customer satisfaction and

RECALL No 2 Customer ExperienceCE:O Customer Experience Optimum 19

loyalty levels, and then identify the associated revenuepotential. The CE:O method also offers valuableindications as to which touchpoints will bring positiveROI performance and thus drive action plans and

budget decisions. Doing this r ight is crucial to success.At a higher level, the method enables managers toalign their companies even more closely with customerrequirements. For many companies, it becomes thenucleus for a much wider task the transformation into

a customer-driven organization.

By Thomas Barta, Wiebke Khler, and Sascha Lehmann


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21RECALL No 2 Customer ExperienceNet-to-Customer: Resolving the Quality Myth

Marketing meets operations as the clever matching ofnetwork performance, and customer satisfactionprovides an effective way to raise customer experienceand hence, is a best-practice example for ROI-driven

customer experience management.

In terms of customer experience, marketing andoperations enjoy strong links, since the quality of anet-work is in part driven by the perception of customersand the understanding of performance drivers. But dooperators get what they pay for in terms of mobile networkquality performance? McKinseys Customer ExperienceScoring approach can help find the answer.Some telecoms executives seem to think paying more to

boost quality makes sense, judging from the amounts

budgeted for capital expenditures to address the problem.We believe that instead of investing billions more intonetwork access, many mobile operators face a largelyperception-driven problem they can resolve muchmore cost eff iciently. To this end, McKinsey proposes afour-step, Net-to-Customer process to define andmanage real network priorities (Exhibit 1).

1. Identify network performance and perception drivers.Here, companies learn how well they perform in termsof network quality by comparing actual networkperformance and customer perceptions of networkquality the key is to prioritize according to customerperception.

2. Set target and threshold values.During this step, mobileplayers determine which network-related benefitsdrive customer consideration in terms of subscribing to

the service and how much investment would beneeded to capture those benefits.

3. Manage priorities. Operators separate real network

issues from perceived shortcomings, identifylocal market peculiarities, and rank top priorities anddetermine what to fix in those areas.

4. Implement the approach. The final step involves findingthe best way to embed the approach within theorganization, while managing across both functions andfootprint (i.e., geographic regions served).

Each of these steps will be discussed in greater detail,providing additional insights into the Net-to-Customerapproach to solving the network quality dilemma.

1. Identiy network perormance and perceptiondrivers

When attempting to assess network quality perceptionand performance, managers can quickly lose sight of theforest because of all the trees. Taking an overly global

view, at the country-wide network level, for example,can cause managers to overgeneralize and miss importantperspectives. On the other hand, proceeding on a too-granular level (e.g., a cell or zip code level) will likelyprovide too much detail. Instead, McKinsey recommendsproceeding at a midpoint between the two extremes specifically, at the base station subsystem (BSS) or basetransceiver station (BTS) levels, which tend to covercities and municipalities. They typically encompass dis-tinct local markets with clear-cut BSS/BTS user-facingnetwork elements linked directly to the local market.

03 Net-to-Customer: Resolving theQuality Myth


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Capturing perceptions. To understand customerperceptions regarding quality, operators can employMcKinsey & Companys BrandMatics approachleveraging the purchasing funnel. The purchasingfunnel models the way in which customers usuallyshop for and buy mobile services. For a postpaid customer,for example, the first step involves being aware ofthe various mobile brands on the market. Once aware ofa brand, the consumer considers whether to use it or

not, then either selects it as his or her main brand or notand later, remains loyal to it or switches to anothermobile carrier once the contract has expired. As customersmove through the funnel, they narrow the numberof brands on their list (hence, the name). Key analysispoints in the purchasing progression tend to be

between funnel stages: the point between awareness andconsideration, for example, or between considerationand purchase. Understanding why customers chooseone brand and drop another during these transitionscan provide significant insights into a brands strengthsand weaknesses.

In this discussion, the points of interest in terms ofperceptions lie between awareness and consideration(i.e., acquisition), and between main brand andloyalty (i.e., customer retention). These brand elementsinfluence purchasing behavior, and the BrandMatics

approach allows managers to systematically addresstheir brands funnel deficiencies by repositioning theiroffers and/or adjusting communications. In one case,the key direct network consideration drivers amongcustomers turned out to be the ability to call, theperceived (voice) quality of the call, and network reliability.

Companies dont operate in vacuums, so managersshould also assess their network perception compared

to those of competitors. Furthermore, McKinseyresearch shows that competitive strengths and weak-nesses among operators can vary significantly acrosscities and regions due to internal issues (e.g., differencesin network design or performance) and externaldifferences (e.g., local competitors or customer structures),

which makes it important to conduct research at theregional level.

Assessing performance. Managers usually require twotypes of data in order to gain a full picture of networkperformance: an operators own network statistics andcompetitor network performance. Operator-specificmeasures might consist of dropped calls, failed calls,and load levels. A source for this information istypica lly standard network statistics. These data canhelp managers surface internal company deficienciesand improvement areas. Competitor network performance

Methodology for defining and managing real network priorities 4 steps01


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23RECALL No 2 Customer ExperienceNet-to-Customer: Resolving the Quality Myth

should be measured from the users perspective in areassuch as call setup time, coverage, and signal strength.

Managers can obtain competitive information bymeasuring across networks using drive tests. An effectiveapproach involves designing a drive test route thatextends through a municipality in a way that aligns

with mobile user routines in a targeted segment.For example, a sample route focused on the business

segment might assume that customers live in thesuburbs, commute to the city center to work, and spend

weekends in the country. Using these techniques,operators can measure the perception-relevant aspectsof network performance not covered by internalstatistics. Managers will probably find that performancediffers across micro-markets due to a number offactors, including topological peculiarities, the qualityof local network functions, and locally-focusedcompetitors, which is why they need local data to confirmand address these differences.

Once managers collect data concerning both networkperformance and customer perceptions, they can beginto identify the real issues facing them. They will likelydiscover that their overall technical network performancealigns with perceived network quality in someregions. In others, they will face competitive shortfalls

in perception although the network performance issuperior while in yet other regions they could be marketleaders in perception even though the network isactual ly insufficient. Taking a prioritization approach

based upon this type of information can allow managersto address mismatches more cost efficiently. Forexample: Do technical mismatches in strong regionsreally require network investments? How canoperators leverage better performance (e.g., the ability

to call fast) to improve customer perceptions inmedium regions and what improvements or target levelsare needed for build-out in weak regions?

2. Set target and threshold values

The key challenge that managers face during this step isto match the market-research-based customerperception information with the collected technicalperformance data in order to identify and set targets thatmatter, and avoid over-/underspending. A good f irststep uses correlation analyt ics to match perception/performance pairs by city or region. Managers shouldsee solid correlations between technical performanceand matching customer network perceptions.However,the challenge involves matching the right pairs ofdata. For example, a customer statement such as I get aconnection when I want to call could match a number

Manage network quality around the satisfaction cliff02


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of technical performance parameters, such as averagecall drop rate or average blocking rate during peakhours. The pair that exhibits the strongest correlationshould thus be chosen (some data crunching is neededto filter out the right pair).

When setting targets, finding satisfaction cliffs canhelp managers to understand where customer satisfaction

thresholds or breakpoints occur. A satisfaction cliffrepresents the point at which customer satisfaction jumpsdue to improved technical performance. For example,one company found that once its call setup success ratehit 96 percent, it realized a signif icant surge incustomer ability to call satisfaction. Thus, reachingthe satisfaction cliff threshold became a key focus, butalmost as important, the company found that improvement

beyond this level didnt materially improve customerperceptions further. In other words, spending money toimprove performance beyond the satisfaction cliffmade little sense. The satisfaction cliff concept leveragesthe non-linear relationship between performance

and perception: weak performance creates poor customerperception and making improvements below thethreshold lifts perception but improvement beyondthe threshold doesnt further improve perception.Managers should fully exploit this non-linear effect byidentifying the threshold, rigidly targeting thethreshold value (i.e., avoid overshooting), and thenfocusing on fixing poorly performing regions toimprove overall customer perceptions (Exhibit 2).

McKinseys experience shows that companies often dopoorly when setting performance targets, overshooting

some satisfaction cliff thresholds by wide margins(and thus, wasting money), while settling for below-threshold performance on others (and hurting customersatisfaction levels). One operator, for example, set itsblocked-call rate in peak hours target one-third lowerthan the satisfaction cliff threshold, while anotherset a target that overshot its voice quality threshold bya significant amount. In the first case, the operatorunder-delivered in terms of customer needs, while in thesecond, the company overspent to deliver a level ofperformance not demanded by customers (and, in fact,not even detectable by the human ear!).

In the course of its work in this area, McKinsey hasgained several insights that can help companies settargets and threshold values:

Real priorities often differ by country and can becounterintuitive.The key drivers of network perceptionusually differ across markets, and customer toleranceof performance deficiencies often diminishes as marketsmature. Findings may also be counterintuitive: callsetup times may be more relevant than dropped calls,for example.

Not all customer perceptions are measured. Certainnetwork performance parameters may not bemeasured (e.g., voice quality or call setup time), andmanagers usually need to establish company-specificstandards (e.g., what to measure for call setup time).

Manage the variance, not the mean.While many companiesare used to managing average performance parameters(e.g., having one target number for call-drop rate for theentire network), McKinsey found that managing the

variance is much more important. Thus, tackling thelow performers first will make a huge difference.

Double-check and manually adjust data. Todaysconsumer perceptions are influenced by past experience(e.g., past regional billing system outages).In addition,companies often conduct drive tests ineffectively, leavingequipment in use during traffic jams or breaks.Furthermore, cross-checking and the manual eliminationof outliers are usually required.

Data sets may reveal full correlations only at the subsetlevel. Teams often find that they must dig deeply intotheir data in correlation analysis because subsets oftenprove to be the core drivers of performance and issues.

Companies should also consider running variations oncorrelations (e.g., peak/off-peak, indoor/outdoor;average, top, and bottom performers).

3. Manage priorities

Once an operator establishes its network goals and targets,reaching the level of customer satisfaction thattranslates into lasting value creation will require activemanagement. Developing a Network PriorityCockpit can help in this endeavor, since it integratesthe approach both vertically and horizontally across theoperators organization (Exhibit 3). Built upon astandardized tool (e.g., an Excel spreadsheet), the cockpitprovides both a vertical managerial alignment from topmanagement to the local level and a horizontaloperational alignment. The f irst ensures the systematic


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application of the approach by setting consistentpriorities and common targets that align with companystrategy. The second ensures that managers usecommon language, tools, and timing across local operationsand assists them in interpreting results and settingpriorities. It also helps operational managers determinestrategy and measure the impact of actions. Thecockpit provides details regarding technical performanceindicators (e.g., blocked-call rates or territory coverage

gaps) and their associated threshold values. Thesevalues can be ranked in terms of proximity to targets,providing managers with a prioritized list of issuesto attack.

The cockpit provides a systematic way to assessperformance across different regions and make networkand marketing recommendations. A region stillstruggling to meet local competitors, for example, mightact to improve the blocked-call rate of its poorly-performing BTS, while coordinating its marketingactivities to build customer awareness of the newfocused investments. Conversely, a region with goodoverall purchasing funnel performance might simplyneed to invest in order to support growth targets, whilestressing its high network quality perception inmarketing communications.

4. Implement the approach

The implementation of the Network Priority Cockpitrequires senior managements ongoing involvement.For example, oversight of Step 1 (Exhibit 1) measuringperformance and perception might be shared bythe chief technical officer and the chief marketing officer(CMO), since it dwells on both network and customerissues. These two, plus the chief financial officer, oversee

Step 2 the establishment of threshold values whilethe CMO leads Step 3 the creation of the NetworkPriorit y Cockpit. Finally, the companys CEO shouldtake charge of Step 4, implementation.

McKinseys experience shows that, effectively applied,this approach allows operators to substantiallyreduce capex outlays, while securing or improvingcustomer perceptions. Focusing on optimizingthose (controllable) elements that influence perceptionsand rigorously managing key threshold values allowmanagers to balance capex needs against marketingmeasures and thus achieve the greatest returns onoverall investments. Using this approach, one operatorfound that it could calibrate its network to allow 1percent higher congest ion rates, which would allow it toreduce cumulative radio capex by 6 percent. It also

RECALL No 2 Customer ExperienceNet-to-Customer: Resolving the Quality Myth

Network Priority Cockpit integrates the approach vertically and horizontally

across the client organization03


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discovered that by increasing customer satisfaction by1 percent, it reduced its annual churn by up to 4 percent.

The Net-to-Customer approach provides managers aneffective way to balance capex needs against customerdemands. Experience with the methodology showsseveral lessons learned:

Use good data. Having high-quality data makes orbreaks the effort dont underestimate the need tomanually review and adjust drive test and marketresearch data.

Closely involve regional teams. Execution happens atthe local level and on-ground staff can provide invalu-able input. Involve them in the project s setup and keepthem in the loop regarding emerging findings doing socan pay significant dividends.

Tightly manage third parties. The involvement of agencies(for market research) and technical service providers

(for drive tests) is common practice. These participantsshould be tightly managed for quality and timing ofdelivery setbacks can likely defer and even endangerthe project.

Link to the budgeting cycle and process. Emergingfindings may suggest that core assumptions regardingnetwork planning will have to be adjusted. Close

linkage to a (potentially concurrent) capex budgetingprocess allows for rapid reflection and the capture ofquick wins.

Drive as a cross-functional effort. Ramp-up andimplementation of the Network Priority Cockpit requiresupport from marketing, technology, and finance from chief off icers down to the operational level. Across-functional team will help avoid any handoverdelays or pitfalls.

By Thomas Barta, Fabian Blank, and Katrin Suder


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Rainer J. Brkle is the General Manager of TheRitz-Carlton, Berlin, and has overall responsibility forall activit ies of The Ritz-Carlton Hotels in Wolfsburg,Moscow, and Istanbul. In 1992, when he first

encountered the exceptional quality management andhigh service standards of The Ritz-Carlton HotelCompany, he went on to take up positions in The Ritz-Carlton hotels in Boston, Cleveland, Palm Beach,and Naples until he was assigned to Istanbul and later,Berlin, as General Manager. The Ritz-Carlton HotelCompany, headquartered in Maryland, USA, is the onlyservice company worldwide to have received the MalcolmBaldrige National Quality Award twice in succession.

McKinsey & Companys Telecommunications Practicerecently had the opportunity to speak with Rainer

J. Brkle about customer experience, as this topic is topof the agenda for many telecommunications companies.It is hard to imagine anyone more competent to speakon this crucial subject than Mr. Brkle, and the Recallteam at McKinsey was honored to have the chance to do so.Two important subjects emerged during the interview.First, employees have to identify very closely with whatis defined in the companys core principles. Second, itis important to continually measure and quantify thecustomer experience in order to understand howtrends are developing and how to incorporate them.

McKINSEY: What is the most diff icult request that ahotel guest has ever made to you?

RAINER J. BRKLE: Im faced with the most difficultrequest day after day in order to fulfi ll our Gold

Standards, as we call them, implementing the principlesand philosophy of our corporate color gold. To do this,

we have a Credo Card that each of us commits tofulf illing every day, every moment. The hardest task is

to really live up to this credo, The Ritz-Carltonsmission, whatever the situation. A five-star deluxe hotelhas a certain mystique. When our guests leave, wedont just want them to say that was great, but alsoI definitely want to go back there.

McKINSEY: It is known that most employees inthe hotel industry are not particularly well paid. Howdo you manage to get your people to take coreprinciples like that seriously to integrate that credointo their being and actual ly put into practice

what it stands for?

RAINER J. BRKLE: Youre absolutely correct insuggesting our staff is central to this. They are the onlyfacilitators of customer centricity or what we callguest delight. Thats why we spend a great deal of timeon the staff we hire. We select people who have aspecific talent the talent to intuitively and immediatelyreact the way we need them to. This means that ourpeople tend to do things a certain way. If their colleagues

behave like that too, they feel at home. The secret isto recruit people with the right attitude, the right talent.Thats the only way I can be sure of having interns whoarent just working for the money, but from conviction.Recognition is their reward, but it goes beyond that.Its not simply the recognition of the boss saying Youdid that really well, we want them to have an all-aroundsatisfaction with their lives, with what theyre doing.

04 Points of ViewInterview with Rainer J. Brkle, General Manager at The Ritz-Carlton

RECALL No 2 Customer ExperiencePoints of View


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31RECALL No 2 Customer ExperiencePoints of View

The Ritz-Carlton Credo Card


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McKINSEY: So, your staff really lives and breathes yourCredo Card, its not just a cool-looking piece of paper?

RAINER J. BRKLE: Our Gold Standards cover fivepoints, for example, our service values, which are Improud to work for The Ritz-Carlton. In other words,I am The Ritz-Carlton. Whats important here is a senseof pride and thats the key point that our employees

identify with us and that they feel at one with The Ritz-Carlton. Thats the only way to live our values.

McKINSEY: Do you find your guests gradually becomingspoiled? Do their expectations continually increase themore you meet them?

RAINER J. BRKLE: Youre touching on somethinginteresting. In worldwide surveys conducted last year,

we found that our guests expectations are muchhigher than those of guests who stay with competitors.Thats wonderful, but it means our staff has to domuch more both to fulfill and exceed these expectations.

The Ritz- Carlton as a brand has an enormousadvantage in that regard.

We are the only hotel group in Germany that analyzesthe satisfaction and expectations of our guestssystematically and neutrally, using an external researchcompany. Of course, we also have our own internalcriteria, such as our comment card (always on our guests

bedside table), information from our staff, and weapply metrics to the letters we receive. But the third-partysurvey quantifying the responses independently hasrevealed very clearly that repeat guests are much more

critical than first-time guests. And we can alsomeasure emotions.

McKINSEY: How do you do that?

RAINER J. BRKLE: Using an external researchcompany that asks questions that are not just about

whether all guests wishes were fulfi lled, so to say,our functionality, but whether they were also engagedemotionally. One of the questions is very radical:Can you imagine a world without The Ritz-Carlton?

You might say: well, other hotels are out there too.Ill give you a very extreme example to clarify whatI mean. A while ago, we had a situation in which a

bellboy was going from corridor to corridor returningshoes after theyd been cleaned. A mother camerunning towards him with a baby in her arms that wasturning blue. The baby couldnt breathe and she

had no idea what to do. The bellboy took the child, laid itdown gently and gave it mouth-to-mouth resuscitation.It began breathing again and survived. If you ask that

woman whether she can imagine a world without TheRitz-Carlton, shell say no, she cant. What I mean is that

you have to ask questions that go beyond the normalparameters to find out how far you have to go to inspirepeople so theyl l say Youre right, I cant imagine a

world without The Ritz- Carlton. Of course, there aremany other questions that are not so radical, such asDoes The Ritz-Carlton measure up to its promise?Thats also an emotional question.

McKINSEY: How often do you conduct these surveys?

RAINER J. BRKLE: A certain number of guests arecalled monthly and asked whether they mind giv ingus feedback on their stay. Interestingly, most peoplethink its a good idea and are very willing to take part.

McKINSEY: Who at The Ritz-Carlton group receives

this information?

RAINER J. BRKLE: It is collected and sent to the hotelseach month. Its very neutral, without a directional

bias of any kind. Our Qua lity Leader has the task ofdiscussing the feedback with the departments.Obtaining the information is just one side of the coin the other and much more important one is toevaluate the results and draw actionable conclusionsthat we then implement.

McKINSEY: Does it have consequences if performance

suddenly starts going downhill?

RAINER J. BRKLE: Yes, it definitely does. Its no longerthe case that all that counts is revenue: the figuresfrom our guest and staff surveys are important, too. Allthe incentives for senior management are based onthose results. We have a traffic light system: green, amber,and red. If an indicator is on red for a certain length oftime, you get a call from the head office the same way asif the profit is not in line.

McKINSEY: Where is your hotel on the scale right now?

RAINER J. BRKLE: All our indicators are on green.But I have to mention that the values are adjusted every

year. The company naturally has an interest ingrowing through the exercise, so a little more is expectedeach year.


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McKINSEY: Again on the topic of surveys, how do youfind out what is really important for a guest versus

whats less relevant and simply incurring costs?

RAINER J. BRKLE: Thats a very good question.Some 10 or 15 years ago, hotel managers used to simply

wander through the floors of their hotels issuinginstructions on what should be done differently. Today,

we have quality leaders, statistics, surveys, andspecif ic problems that are analyzed in greater detailin smaller groups. That means not that I am nolonger around but the statistic gives you a better under-standing of guest-relevant issues.

One example: from the various questions (which arealways the same for all the different types of guests),

we can identify what is important or not for a particulargroup. The statistics also help us to see how trendsare developing over several years, for instance, wherecleanliness of the rooms is concerned, the equipment

we provide, or the check-in process.

McKINSEY: Do you have an example of somethingthat many people once considered important that is notanymore?

RAINER J. BRKLE: Two examples occur to me. One isdress code. We now allow gentlemen to dine in ourgourmet restaurant on Saturday evenings without adinner jacket. That was unheard of five or ten yearsago. The second example is the global debate on smoking.This has resulted in a non-smoking policy in all TheRitz-Carlton hotels in the United States.

What we are also picking up on is that customers wantmuch more individualized service today than 10 or 15

years ago. This is naturally leading to a greater demandfor measurement and for our system of gatheringevery bit of information rather than the philosophy of

just rewarding customer loyalty with a bonusprogram. In this industry, its vital that customers receivethe service theyve always wanted. I suffer f rom anallergy, for example. If I sleep in a bed with a feathercomforter, my eyes will be red and swollen in themorning. So I expect the hotel to remember my needsand this throughout the world.

McKINSEY: Do you believe that telecommunicationscompanies can inspire their customers with the qualityof their service? Do you think this is important tocustomers and that telcos could do more in this respect?

RAINER J. BRKLE: Earlier, we discussed, how staffhas to identify with the company 100% you need totalalignment between staff and leadership. Lets take theexample of The Ritz-Carlton. When The Ritz-Carlton

was established in 1983, the founders had a vision. Theywanted to be the best. But in those days, the staff didntyet know what the leadership wanted. After two orthree years of this conflict, the leadership realized it was

crucial to sit down with the staff and talk. The CredoCard arose f rom that dialog. This wasnt just a rehash ofsomething that already existed, the staff membersgenerated the entire concept themselves. In the meantime,

weve revised this Credo Card six or seven times withour ladies and gentlemen. Its our mission statement inthe sense of this is how wed like to run our businessor this is how wed like to do this or that. Every employeehas to believe in it for it to work.

The best marketing for a company is living up to the promisethat corporations make in their advertising, especially inthe moment of truth when the employee meets the

customer and the promise has to be fulfil led. My teamis all I have they have to walk the talk. Particularlyin telecommunications and also in other sectors, thereare various fundamental problems that affect thestaff. Its very important to win over their trust. I haveto lay a foundation of confidence and faith in thefirm. Then, you can sit down and discuss what you wantto achieve together.

McKINSEY: Thats a tremendous summary. What youresaying is that there are two main themes. One is thatthe staff members have to identify very closely with what

is defined in the companys core principles the credohas to come alive and can only do that if your employeesabsorb it heart and soul. Second, you reiterated howimportant it is to actually quantify these things and develop

very detailed ongoing measurement in order tocontinually understand how trends are developing andhow to incorporate them.

RAINER J. BRKLE: Yes. This morning in our staffmeeting we discussed the fact that quality of executionis a continuous process in the service industry andis becoming ever more crucial. We dont just want ourcustomers to be satisfied, we want them to be inspiredand enthused. A tennis match is a good example. I haveto concentrate on the ball, not the scoreboard. Fromtime to time, I have to look at the score because I need toplay strategically, but the ball is what counts. Naturally,the three lynchpins of a company always need to be

RECALL No 2 Customer ExperiencePoints of View


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brought into balance: staff, customers, and thecorporation itself or rather, the investors. All threehave to be satisfied. Its not a question of which ismore important they all are. There are moments

when I wi ll shif t towards one more than another,but only to ultimately restore equilibrium.


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McKinseys Telecommunications Extranet is the gatewayto some of the best information and most influentialpeople in the telecommunications industry. The Extranetoffers selected McKinsey-generated information thatis not available in the general Internet.

Extranet users have access to selected McKinsey articleson subjects ranging from Industry & Regulation,Growth & Innovation, Sales & Marketing, Services& Operations, IT & Technology, Corporate Finance,Organization & HR, Corporate & Enterprise, andEquipment & Devices. Direct communication channelsensure that your questions and requests will be

addressed swift ly. The site is updated weekly w ith newarticles on current issues in the industry.

Through McKinseys Telecoms Extranet you can:

Obtain exclusive information free of charge and takeadvantage of an Internet portal specifically designed forthe industry.

Access cutting-edge business know-how, interact withother experts to gain new perspectives, and contactleading industry professionals.

Stay well-informed with daily industry news from factivathat you can tailor to your needs and interests.

General information about the site is available at:http://telecoms.mckinsey.com

Contact: [email protected]

RECALL No 2 Customer ExperienceAppendix

McKinseysTelecommunications Extranet


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The TelecommunicationsPracticeMcKinseys Telecommunications Practice serves clientsaround the world in virtually all areas of the tele-communications industry. Our staff consists of individuals

who combine professional experience in telecom-munications and related disciplines with broad trainingin business management.

Industry areas served include network operators andservice providers, equipment and device manu-facturers, infrastructure and content providers, integrated

wireline/wireless players, and other telecom-munications-related businesses.

As in its work in every industry, the goal is to helpMcKinseys industry clients make positive, lasting, andsubstantial improvements in their performance.

The practice has achieved deep functional expertisein nearly every aspect of the value chain, e.g., in capabilitybuilding and transformation, product development,operations, network technology, and IT (both in strongcollaboration with our Business Technology Office BTO),purchasing and supply chain, as well as in customerlifetime management, pricing, branding, distribution,and sales. Furthermore, we have developedperspectives on how new business models and disruptivetechnologies may inf luence these industries.



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Fabian Barros is an Associate Principal inMcKinseys Sao Paulo office. He is a coremember of the Telecommunications Practice

in Latin America. He has served telecom-munications clients, both integrated playersand wireless-only players, in North America, Europe,and several Latin American countries, with relevant workin customer experience, marketing, go-to-market andcall center operations, and [email protected]

Thomas Barta is an Associate Principal inMcKinseys Cologne office and a coremember of McKinseys European MarketingPractice, where he focuses on marketing inthe telecommunications industry, especially

branding and pricing. Since joining McKinsey in 2001,he has primarily served clients in the areas of telecommuni-cations and consumer goods/services across Europe.Prior to joining McKinsey, he worked for seven years in aglobal consumer goods company, most recently asEuropean Marketing [email protected]

Fabian Blankis an Associate Principal inMcKinseys Berlin office. He is a coremember of McKinseys TelecommunicationsPractice and the global Customer Lifecycle

Management (CLM) core group. He workswith telecommunications industry clients, mainly inemerging markets, focusing on marketing-, sales-, andnetwork-related [email protected]

Adam Braffis a Principal in McKinseysWashington, DC office and the leader of theNorth American Customer ExperiencePractice. He previously launched and co-ledMcKinseys Telecommunications Customer

Lifecycle Management Practice. He primarily servesclients in telecommunications and high tech on marketingand operations issues and leads the firms primarycustomer research efforts on customer experience acrosseight [email protected]

Markus Frerker is a Principal in McKinseysMunich office. He is a core memberof the Global Media & Entertainment and

Telecommunications Practices andleads the German media sector. Since joiningMcKinsey in 2000, he has advised clients primarily inthe media and mobile industries, especially broadcasters,packaged media companies, and mobile operatorsacross the entire value chain. His functional focus has beendedicated to strategy, marketing (including customerlifecycle management and multi-brand strategies), andM&A/postmerger [email protected]

Wiebke Khler is an Associate Principal inMcKinseys Hamburg office and a member of

the European Marketing Practice, whereshe co-leads the European CLM Initiative. Sheserves clients on marketing and sales topics on

international projects in industries, such as transportation/logistics, telecommunications, retail, pharma, andinsurance. Pr ior to joining McKinsey, she worked as VicePresident of CRM at a major European airline.

[email protected]

Sascha Lehmann is a Customer InsightsSpecialist in McKinseys Hamburg office. Heserves clients in different industries on

market research topics with a special focuson customer satisfaction research and

qualitative market research [email protected]

Katrin Suder is a Principal in McKinseysBerlin off ice. She is a member of theTelecommunications and High Tech Practices,focusing on mobile as well as software andservices. She has worked intensively with her

clients on a large variety of issues, ranging from strategyto operations and from product management to technologytopics. She holds a PhD in Physics and a BA in Germanand [email protected]

About the authors



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