Customer experience:

Customer

experience:

Number 1, Winter 2016

Creating value through

transforming customer journeys

Customer experience:

Creating value through

transforming customer

journeys is written by experts

and practitioners in McKinsey

& Company’s Customer

Experience Service Line, a

joint venture of the Service

Operations and Marketing &

Sales Practices, along with

other McKinsey colleagues.

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Table of contents

Introduction

Putting behavioral psychology

to work to improve the customer

experience

Applying the principles of behavioral

psychology can improve the quality

of customer interactions and build

brand recognition as a customer-

centric organization.

Improving the business-to-

business customer experience

Adopting a customer-centric mind-

set is just as critical in B2B dealings

as it is when serving retail customers,

but players face special challenges

that can trip them up.

Are you really listening

to what your customers

are saying?

Too many companies squander the

treasure that is customer feedback.

The solution is systematically

measuring the customer’s voice

and integrating it into a culture

of continuous feedback.

Developing a customer-

experience vision

To provide a distinctive experience

for customers, an organization must

unite around the goal of meeting

their true needs. Done well, the

effort can power a vast amount of

innovation.

From touchpoints to journeys:

The competitive edge in seeing the

world through the customer’s eyes

To maximize customer satisfaction,

companies have long emphasized

touchpoints. But doing so can

divert attention from the more

important issue: the customer’s

end-to-end journey.

Leading and governing the

customer-centric organization

The uniquely cross-functional nature

of effective customer-experience

efforts puts a premium on smart

governance. Clearly deﬁned

leadership, behaviors, and metrics

are the places to start.

Using rapid process

digitization to transform the

customer experience

Transforming the customer

experience requires a level of

speed and precision that traditional

approaches can’t meet. The best

practitioners do it in real time.

The secret to delighting

customers: Putting employees first

The main hurdle in customer

experience is translating boardroom

vision into action at the front line.

Empowered employees are the key.

Making the right diagnosis of

your customer experiences

The complexity of dealing with

customers, channels, and

competitors is only growing. Getting

ahead often requires stepping back

for a comprehensive view.

ABOUT

MCKINSEY

CAPABILITIES

72 82

Designing and starting

up a customer-experience

transformation

To successfully initiate a broad

improvement program, decide on a

structure, select the sequence that’s

right for your type of company, and

don’t forget to recruit change agents.

Linking the customer

experience to value

Many customer-experience

transformations stall because

leaders can’t show how these efforts

create value. Patiently building

a business case can fund them,

secure buy-in, and build momentum.

Almost every successful company recognizes that it is in the business of customer experience.

Many businesses understand that it’s no longer enough to compete on products and services;

how a company delivers for its customers is beginning to be as important as what it delivers.

Customers—whether they’re airline passengers, online retail consumers, or IT-services

outsourcers—not only increasingly dictate the rules but also expect high levels of satisfaction

from the savviest practitioners and the sleepiest industry participants alike. Companies

that work to master this dynamic become superior competitors.

As leaders of McKinsey’s Customer Experience Service Line, we are delighted to present this

first volume of Customer experience: Creating value through transforming customer

journeys. The compendium represents the collective thinking of our experts and practitioners,

developed through years of working with customer-experience leaders around the world.

Our experience teaches us that the best customer-experience efforts begin with a “customer

back” perspective driven by the customer’s wants, not a company’s traditional organizational

structure. That makes the task of organizing and governing customer experience unique even

among organizational designs that rely on cross-functional collaboration. The articles in

this volume explore the critical elements of an effective customer-centric strategy, which can

deliver benefits to customers, employees, and the bottom line. These include the central role

of customer journeys, rather than touchpoints, in organizing and measuring improvement efforts;

the importance of establishing a vision to bridge the gap between board direction and front-

line engagement; the key role of measurement systems that allow a company to hear the voice of

its customers; and the essential link between customer experience and value creation that

can elude even the best-intentioned efforts.

We hope this volume enriches your understanding of the benefits of improving customer

experience and spurs creative thinking about ways to overcome challenges in the process. We

invite you to share your thoughts and feedback.

Ewan Duncan

Director, Seattle

Ewan_Duncan@

McKinsey.com

Harald Fanderl

Principal, Munich

Harald_Fanderl@

McKinsey.com

Nicolas Maechler

Principal, Paris

Nicolas_Maechler@

McKinsey.com

Kevin Neher

Principal, Denver

Kevin_Neher@

McKinsey.com

About this compendium

Customer experience: Creating value through transforming customer journeys Winter 2016

What do my customers want? This is the question

that every executive asks and that the savviest

executives are asking more frequently than ever.

Technology has handed customers unprece-

dented control over the experience of purchasing

goods and services. The process increasingly

plays out in fluid, hypercompetitive, and always-

on markets with many channels and touchpoints,

or individual interactions.

More and more, customers expect the levels of

satisfaction they receive from leaders such as Amazon,

Apple, and Google—and they expect this from even

the sleepiest corners of markets across all industries.

Meanwhile, leading service providers also differ-

entiate themselves through technology. Advanced

analytics gives them rapid customer insights, so

they can move with unprecedented speed and agility.

Most companies therefore operate in complex, highly

unsettled business environments. Customers

increasingly dictate the rules. Three-quarters of them,

research finds, expect “now” service, within five

minutes of making contact online. Similar percentages

want a simple experience and use comparison apps

when they shop for consumer goods. Moreover, they

not only expect providers of services and products

to do business on digital platforms but also insist on

a “social” experience. They put as much trust in online

reviews as in personal recommendations (Exhibit 1).

Many businesses already understand that it’s no longer

enough to compete on products or services. In our

work, we find that how an organization delivers for

customers is beginning to be as important as what

it delivers. Companies that make it easier for them to

connect in what they regard as a positive way tend

to make inroads on the competition. The best will adapt

their processes, cultures, and mind-sets to manage

the entire customer experience skillfully—which bene-

fits not only consumers but also employees and the

bottom line.

But other companies, for many reasons, fail to deliver

a compelling customer experience. A lot of man-

agers think about it in very narrow terms, focusing

only on individual topics and forgetting about the

overall system for delivering value. Some excel at spe-

cific kinds of interactions with customers but

ignore the fuller experience, both before and after

the purchase. Others concentrate on fixing their

operations but forget to look at them through the eyes

of the customer. And most organizations still tend

to underestimate the importance of the internal cul-

tural changes needed to achieve and sustain a new

approach to the customer experience. The list goes on.

Introduction

Ewan Duncan, Harald Fanderl,

Nicolas Maechler, and Kevin Neher

Customer experience: Creating value through transforming customer journeys Winter 2016

Companies reap great rewards when they transcend

these challenges and transform their approach so

that they focus on the right things. Across industries,

successful projects for optimizing the customer

experience typically achieve revenue growth of

5 to 10 percent and cost reductions of 15 to 25 percent

within just two or three years. Moreover, companies

offering an exceptional customer experience can

exceed the gross margins of their competitors by more

than 26 percent while they make their employees

happier and simplify their end-to-end operations.

Customer experience: Creating value through

transforming customer journeys represents the fruit

of several years of research and hands-on work

by McKinsey’s global Customer Experience Service

Line in helping its clients build outstanding capa-

bilities. The articles here reflect our latest thinking

on the hallmarks of successful customer-experience

programs—thinking that we have distilled from

our work with leading players around the world.

Central to these efforts is a focus on identifying, under-

standing, and mastering the customer journey:

the complete end-to-end experience customers have

with a company from their perspective. That journey

has a clearly defined beginning and end spanning

the progression of touchpoints. Customers don’t know

or care who in a company owns the individual

experience of billing, onboarding, service calls, and

so forth. From their perspective, these are all part

of one and the same journey.

The effort of perfecting the most important journeys

for customers can be hard, but companies can

give them experiences that make them want to come

back by focusing on the task. In the process, they

will reap sizable rewards: more satisfied customers

Exhibit 1

Customer behavior and expectations are changing.

Customer Experience 2015

Introduction

Exhibit 1 of 2

Now

75%

of online

customers expect help

within 5minutes.

For me

61%

of customers

are more likely to buy

from companies that deliver

custom content.

Can I?

70%

of app users

prefer added functionality

over “look and feel” of app.

Simple

75%

of consumers

have used comparison

apps for consumer goods.

Private

60%

of US consumers

are concerned

about privacy of online

transactions.

Social

79%

of consumers

trust online reviews

asmuch as personal

recommendations.

Source: McKinsey Digital Labs

and employees, higher revenues, lower costs, and

improved organizational collaboration. Our work has

taught us that the most successful programs of the

most successful practitioners have six hallmarks. The

articles and case studies in this volume will explore

in depth the strategies and tactics that shape them.

Define a clear customer-experience

aspiration and common purpose

In large, distributed organizations, a distinctive

customer experience vitally depends on a deeply

rooted collective sense of conviction and purpose

to serve the customer’s true needs. This basic

fact must become clear to every employee through a

simple, crisp statement of intent: a shared vision

and aspiration that’s consistent with a company’s

brand value proposition as well as authentic; in

the always-on era of ubiquitous video and social media,

inconsistencies will be exposed quickly. The most

recognizable example of such a shared vision may be

the Common Purpose

of The Walt Disney Company:

“We create happiness by providing the finest in

entertainment for people of all ages, everywhere.” The

statement of purpose should then be translated

into a set of simple principles or standards to guide

behavior all the way down to the front line.

Customer journeys are the framework that allows

a company to organize itself and mobilize employees

to deliver value to customers consistently, in line

with its purpose. When most organizations focus on

the customer experience, they think about touch-

points, the individual interactions through which

customers engage with parts of the business and

its offerings. But this siloed focus misses the bigger—

and more important—picture: the end-to-end

experience of customers. Only by looking at it through

their eyes, along the journeys they take, can com-

panies begin to understand how to improve the cus-

tomer experience in a meaningful way (Exhibit 2).

Although functionally aligned organizations can have

difficulty orienting themselves to the common

purpose, the journey serves as its critical link with

the activities of individual functions. In this way,

the widely distributed operations of thousands of

employees in very different areas can deliver a

great customer experience.

Develop a deep understanding of what

matters to customers

Customers on their journeys hold companies to high

standards—the best products, which never break

or require upgrades and are immediately available,

purchased with the help of high-caliber employees,

at rock-bottom prices. How can companies determine

which of these factors are the most critical to the

customer segments they serve? Which generate the

highest economic value? Understanding the most

important journeys, customer segment by customer

segment, helps a business maintain focus and have

the greatest impact on the satisfaction of its customers

and its own bottom-line performance.

Fortunately, the advent of big data and advanced

analytics has helped organizations parse the factors

that drive not only what customers say about the

things that satisfy them but also the actual customer

behavior that creates economic value. Similarly,

multiple sources reflecting the voice of the customer—

including surveys, social media, and the real-time

chronicling of the shopping experience—can illumi-

nate the current performance of companies in

managing their customers’ journeys. Once they have

identified the most important journeys and defined

their strengths and weaknesses, the process of

redesigning and prototyping can begin.

Use behavioral psychology to manage the

customer’s expectations

Leading customer-experience players understand

that deftly shaping perceptions of underlying opera-

tional improvements in the delivery of products

Introduction

Customer experience: Creating value through transforming customer journeys Winter 2016

or services can generate significant additional value.

One tool such organizations find increasingly effective

is behavioral psychology, used as a layer in the design

process. For example, they can design the sequence

of interactions with customers to end on a positive note.

They can merge different stages of interactions to

diminish their perceived duration and engender a

feeling of progress. And they can provide simple options

that give customers a feeling of control and choice.

Reinvent customer journeys using

digital technologies

Customers accustomed to the immediacy, person-

alization, and convenience that define digital natives

such as Amazon and Google now expect the same

kind of service from established players. Research

shows that 25 percent of customers will defect after

just one bad experience.

Exhibit 2

Best-in-class companies optimize customer journeys, not just touchpoints.

Customer Experience 2015

Introduction

Exhibit 2 of 2

Customers experience companies through end-to-end experiences, not touchpoints

Individual touchpoints may perform well even if the overall experience is poor

Sales and

onboarding

Touchpoint

satisfaction

End-to-end

journey

satisfaction

Change to

account

Moving/new car Resolving

a problem

Agent Call center Web Support

90% 85% 85% 90% 60%

Source: McKinsey Digital Labs

“I want to improve . . .” journey

Customer-experience leaders can become even better

by digitizing the processes behind the most important

customer journeys. In these quick efforts, multi-

disciplinary teams jointly design, test, and iterate

high-impact processes and journeys in the field,

continually refining and rereleasing them after input

from customers. Such methods help high-performing

incumbents release and scale major customer-

vetted process improvements in under 20 weeks.

This methodology helps customer-experience leaders

speed up their operations. Data show that they

also significantly outperform their competitors,

generating cumulative shareholder returns that

are 35 percentage points higher than the broader

market.

But to achieve those results, established

businesses must embrace new ways of working.

Introduction

Use customer journeys to empower the

front line

Every leading customer-experience company has

motivated employees who embody the customer and

brand promise in their interactions with consumers

and are empowered to do the right thing. Companies

centered on customers engage them at every level

of the organization; employees work directly with

them in retail settings, take calls, and get out into

the field. In the early years, for example, Amazon

famously staged “all hands on deck” sessions during

the year-end holidays, a tradition that lives on in

the employee-onboarding experience.

Some organi-

zations create boards or panels of customers to

provide a formal feedback mechanism.

We’ve distilled four simple rules from leading prac-

titioners for building a sense of engagement on

the front line. First, listen to employees and establish

mechanisms to address their issues and needs.

Next, hire for attitude, not aptitude—in other words, if

you want to provide friendly service, hire friendly

people. Interviewing prospective employees in groups,

as JetBlue Airways does, is one way to observe how

they interact. Then, give your people a purpose, not

rules, so that the company sets clear expectations

and lets employees know that it trusts them to do their

jobs. Finally, tap into the creativity of your front-

line employees by giving them the autonomy to do

whatever they can to improve the customer experience

and fix problems themselves.

To improve constantly, establish metrics

and a governance system

The key to satisfying customers is not just to measure

what happens but also to use the data to drive action

throughout the organization. Leading practitioners

start at the top, with a metric to measure the cus-

tomer experience, and then cascade downward into

their key customer journeys and performance

indicators. To move from knowledge to action, com-

panies need proper governance and leadership.

Best-in-class organizations have governance structures

that include a sponsor—a chief customer officer—and

an executive champion for each major kind of cross-

functional customer journey.

Full-time teams carry out their day-to-day work

in the existing organization because to succeed, the

transformation must take place within normal

operations. To foster understanding and conviction,

leaders at all levels must role model the behavior

they expect from these teams, constantly communi-

cating the changes needed. Formal reinforcement

mechanisms and skill-building activities at multiple

levels of the organization support the transfor-

mation, as well.

Mastering the concept and execution of an

exceptionally good customer experience is a daunting

challenge, but an essential one in today’s rapidly

changing business environment. We hope that these

articles and case studies inform your under-

standing of what customers want and your strategies

for creating value by improving their experiences

with your company.

The Common Purpose is the intellectual property of The Walt

Disney Company. See Theodore Kinni, Be Our Guest: Perfecting

the Art of Customer Service, second edition, Lake Buena Vista,

FL: Disney Institute, 2011.

“The disappointed customer,” Thunderhead, August 6, 2015,

thunderhead.com.

The 2015 customer experience ROI study, Watermark Consulting,

June 2015, watermarkconsult.net.

Brad Stone, The Everything Store: Jeff Bezos and the Age of Amazon,

ﬁrst edition, New York, NY: Little, Brown and Company, 2013.

The authors wish to thank Will Enger and Kai Vollhardt for

their contributions to this article.

Ewan Duncan is a director in McKinsey’s Seattle ofﬁce,

Harald Fanderl is a principal in the Munich ofﬁce,

Nicolas Maechler is a principal in the Paris ofﬁce, and

Kevin Neher is a principal in the Denver ofﬁce.

Brooke Boyarsky, Will Enger, and Ron Ritter

Developing a customer-

experience vision

To provide a distinctive experience for customers, an

organization must unite around the goal of meeting

their true needs. Done well, the effort can power a vast

amount of innovation.

Developing a customer-experience vision

Almost every successful company recognizes that it is

in the customer-experience business. Organizations

committed to this principle are as diverse as the

online retail giant Amazon; The Walt Disney Company,

from its earliest days operating in a small California

studio; and the US Air Force, which uses an exotic

B2B-like interface to provide close air support for

ground troops under fire. Conversely, companies that

are not attuned to a customer-driven marketplace

are remarkably easy to spot. Consider the traditional

US taxi industry, which is facing significant new

competition from the likes of Lyft and Uber. Customer-

service standouts clearly understand that this is

central to their success as businesses.

Knowing that your organization is primarily in the

customer-service business is not, however, enough

to achieve organizational change. To build internal

momentum for initiatives to develop a unique cus-

tomer experience, a company must understand how

that helps it perform distinctively in the market.

The conviction and shared aspiration that stem from

understanding the customer experience an organi-

zation wants to deliver can not only inspire, align, and

guide it but also bring innovation, energy, and a

human face to what would otherwise just be strategy.

The story of one US airport’s efforts to define a

distinctive customer experience illustrates how such

a transformation can take shape.

Defining aspirations

The customer experience an organization wants

to provide can vary widely. For some companies, this

transformed experience represents a step change.

For others, the aspiration may, at least in the short

term, require only more modest changes. Either

way, the aspiration will translate into an overall

mission and, ultimately, into guiding principles

for frontline behavior.

One caveat: it is easy to err by aiming too low. In our

experience, looking at historical performance and

at whatever helped satisfy customers in the past can

often make marginal tweaks seem good enough.

Understanding the fundamental wants and needs

of customers must be a step in determining what a

great experience for them should look like.

For example, five years ago, a taxi company might

have thought that decreasing the wait time when

a customer ordered a cab would be sufficient. But

some companies saw a competitive opportunity

in addressing the wishes of customers trying to deal

with a transportation challenge by getting more

control, comfort, and safety, as well as lower costs.

Understanding and addressing customer needs

more effectively is a key reason successful start-

ups disrupt industries in today’s more customer-

centric marketplace.

We find that several key questions commonly

underpin successful stories and strategies:

 What is a company’s appetite for change in the

near term? Is the goal to change the customer

experience fundamentally or simply to improve it

at the margins?

 What is the gap between the needs and wants of

customers and what they actually experience?

 How can the company gain a customer-

experience advantage against competitors?

 At which point in the experience should the

company concentrate to have a real impact?

 How do the overall capabilities of the staff

support the customer experience the company

wants to provide?

It is vital to define an aspiration centered on what

matters to customers—and on how it affects your

business. There may be no customer-experience

location more demanding than major airports, and

executives at one recently discovered how power-

ful and counterintuitive the responses to these

questions can be. The executives formed a broad

Customer experience: Creating value through transforming customer journeys Winter 2016

change team and spent several months determining

what the airport should aim to deliver. Their aspiration

at once captured the simplicity of the goal and the

daunting complexity of the task: to provide the most

enjoyable and efficient way possible for travelers

to get from one destination to another.

The effort to deliver that experience started with a

multilayer diagnostic. It involved complex analyses,

passenger tracking (via Wi-Fi) that yielded more

than a million data points in the first few weeks,

and employee focus groups that concentrated on

the issues that matter to employees and customers.

Traditional shop-floor observations were included

as well. Combining these inputs, the airport’s team

developed a profile of what makes customers satisfied

(or dissatisfied) with airports, as well as actionable

insights that led directly to the design of a new

customer-experience program (exhibit).

There were surprises because initial ideas about what

matters to customers were not always accurate, so

the airport was at risk of being pulled into aspects of

its operations that did not really matter. Among the

drivers that did, such as moving smoothly through

security, what really satisfied customers was not

always obvious. For example, satisfaction with inter-

actions involving the Transportation Security

Exhibit

The customer-experience program was designed to solve an airport’s problems

serving travelers.

Customer Experience 2015

CX vision

Exhibit 1 of 1

Source: McKinsey analysis

Appearance of grounds

Ease of drop-off

Displeased

Neutral

Delighted

Outdoor signs

Ease of leaving

Trafﬁc ﬂow

outside

Retail variety

Retail

proﬁtability

Retail quality

Retail total

Retail cost

Food and beverage speed

Food and beverage

(3 drivers)

The airport was not

delighting passengers on

the important drivers of

satisfaction

9 10

For the important

drivers of satisfaction,

the airport was only

meeting expectations

1 2 3 4 5 6 7 8 9 10 11

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

Average customer-satisfaction score (1–10; 1 = lowest; 10 = highest)

Importance, % of total satisfaction

Comfort SpeedEase Other

Bag-delivery speed

Restroom cleanliness

and availability

Availability and quality of

postsecurity seating

Relevant and timely

journey information

4 Entertainment for

long-stay passengers

7 Check-in process

8 Perception of efﬁciency

and courtesy of TSA

9 TSA checkpoint layout

10 Passenger processing

through TSA

5 Finding check-in and

Transportation Security

Administration (TSA)

6 Finding ground

transportation

Administration (TSA) had more to do with the

customers’ perceptions of the way its officers behaved

than with time spent standing in line.

Understanding customers and their journeys

Gathering and segmenting data are classic starting

points in understanding customers. But data are

not enough. Successful customer-experience efforts

apply a human filter to the collected data to ask

overarching questions. Exactly who are my customers

as individuals? What motivates them? What do

they want to achieve? What are the fundamental

causes of satisfaction? Obviously, tackling these

questions requires a concerted analytical effort, which

helps an organization design and implement a

more sophisticated program and, critically, persuade

employees to embrace its goals.

The airport turned to the Compass Model,

drawn

from Disney—one approach to understanding different

types of customers. The points of the compass help

an organization plan a customer-satisfaction program

by identifying emotional mind-sets, wishes, and

needs. In the airport’s case, the compass showed

the following:



north: needs, or what the customer desires

from the experience. Some needs are stated, but

it is important to understand that many are

not. I need to transfer to an aircraft to begin an

air-travel journey might be one need.



west: wants—the underlying objective or purpose

of travelers, stated, unstated, or perhaps not

even fully recognized by them; for example, I want

a really positive end to my business trip that

leaves me feeling good, relaxed, and in a positive

mind-set to go home.



south: stereotypes, or preconceived notions,

positive or negative, that customers have about the

airport experience. A customer might expect

this: Curbside will be a hassle. TSA lines will be

long and hard to predict. There will be no time

to eat. And the airline may lose my bag, so best to

carry it onboard.



east: emotions that customers have or are likely to

experience; for example, I feel rushed and annoyed

that this is so hard to deal with. I’m anxious

about getting to the gate and missing my flight.

I really need this trip to be behind me.

Organizations can bring the customer’s perspective

into focus through something as simple as these

four points. This approach also helps employees align

their perspectives with a customer-experience

program and connect much more effectively with

customers. Of course, it can also be used to better

understand and ultimately support employees—the

people who must deliver great service.

How employees deliver

A year into the airport’s transformation, a member

of its board shared a leadership insight that struck at

the central role employees play in delivering a

superior customer experience and the organizational

challenge it poses for management. “I will care

about what you say when I believe you care about me,”

the board member recalled one frontline worker

saying to him. At the airport, 18,000 people work for

more than 60 entities. All customer-experience

leaders understand that they can provide a great

experience only through frontline workers.

Such a customer experience begins with employees

who know about it, care about it, and are well

positioned to deliver it. In the case of an airport, it

can’t be provided by employees who must wait

45 minutes in the cold in a staff-shuttle line, have no

real “backstage” area to step away from customers

during breaks, lack training outside their own narrow

technical tasks, or resent leaders who never ask for

(or even appear to care about) their input.

Developing a customer-experience vision

Customer experience: Creating value through transforming customer journeys Winter 2016

During the airport’s diagnostic stage, staffers from

many organizations were regularly seen avoiding

contact with customers: marching through the airport,

hats pulled down, heads bowed, work badges

removed on their way to their places of work. Were

these just grumpy staff members? Far from it. Focus

groups revealed that employees tried to avoid dealing

with travelers’ questions because the employees

had no answers. Many lacked practical tools to help

customers or even training in basic navigation

around the airport complex. The upshot: organizations

must make frontline workers customer-experience

leaders by bringing them closer to customers. Trans-

forming the customer experience requires an

engaging employee experience.

Creating a shared aspiration

The highly diverse, frontline nature of superior

customer-experience programs requires a shared

aspiration, which can serve as a guiding light

for strategic decisions and execution. Otherwise,

a corporate strategy to improve the customer

experience will go only so far.

At Disney, for example, all cast members share an

aspiration they call the Common Purpose: to

“create happiness.”

In the military or in organizations

such as the US National Aeronautics and Space

Administration, stakeholders follow “commander’s

intent,” a shared aspiration that can unify all

interested parties around a mission. Commander’s

intent also succinctly describes what constitutes

success for the operation. It includes the operation’s

purpose and the conditions that define the end

state, as well as the mission, the concept of oper-

ations, and the tactical behavior needed for

the desired outcome.

The airport’s broad leadership team came together

in a series of sessions to agree on an ultimate purpose.

Discussions involved more than 60 entities as

diverse as airlines, coffee vendors, the local police

department, the TSA, and janitorial contractors.

The shared aspiration the group decided on was

“to delight and value each guest with the finest airport

experience in the world.”

The work that followed sought to apply this aspiration

to a set of thematic objectives that would begin

to frame the airport’s customer-experience transfor-

mation and the way stakeholders would achieve it.

For the airport, this effort yielded a list of outcomes

covering the customer’s end-to-end airport experience:



safety: assuring the safe and secure conduct of

all guests and staff (an obvious and paramount

objective in an airport)



comfort: improving the quality of the experience

in seating, entertainment, restrooms, inter-

actions with employees, and architectural and

design style



ease: helping customers find their way around

the airport, understand what to do while

there, get help, and learn the best way to spend

their time on-site



speed: compressing wait times, creating early

bag-drop options, and navigating congestion

Executing change

In our experience, this kind of simple formulation

can serve as a powerful foundation for channeling

problem solving and innovation to unite team

members at all levels. Large, diverse organizations

need simplicity and structure to execute at scale.

To believe in a customer-experience program and to

engage with it actively, employees must know that

leadership clearly understands the situation, has an

organized way to move forward, and is serious

about change.

Three things create this strong basis for action: a

definition of the degree of change desired, a strong

understanding of what matters to customers, and

a shared aspiration and framework for change.

Innovation teams formed to achieve these objectives

generate high-impact ideas. A large part of building

a common aspiration involves seriously engaging front-

line leaders in this kind of practical innovation.

People can fully engage their minds with the problem

at hand, see progress, and feel entrusted with the

goal of promoting change. Metrics reflecting the stages

of the customer’s end-to-end experience are also

essential to reinforce its overall quality.

Thus, with a shared aspiration clearly defined, airport

administrators and team members organized

groups of employees around the four customer themes:

safety, comfort, ease, and speed. The teams then

doubled down on the employee experience with a care-

and-recognition effort. Mixed teams, with stake-

holders from the airline, car-rental, retailing, law-

enforcement, and airport staffs, actively worked

to develop ideas, including new apps to navigate

around the airport, new forms of entertainment,

layout changes, and a curbside valet and bag check

at parking garages.

Throughout the whole organization, from the board

level down, the most critical idea was a simple

focus on the conduct of all staff members across the

airport’s 60-odd entities. The employee team

developed five defined points as the bedrock of a

great customer experience:

 Remain mindful of surroundings, and stop

unsafe behavior.

 Pick up trash or report an area that needs attention.

 Display appropriate body language and use

a calm tone of voice.

 Make eye contact and smile.

 Stop and proactively offer to assist with the next

step in the customer’s journey.

These points provided the link between the staff and

the underlying customer-experience drivers. Not

one of the frontline employees needed to understand

the complex regressions used to identify customer

preferences. They could simplify what was needed so

well that all of them, regardless of employer, could

follow through with effective action.

Two years after the project’s launch, more than 50 staff

members gather every other week to reinforce and

advance this level of shared aspiration by solving

problems, developing innovations, and demonstrating

distinctive examples of the behavior the project

was designed to encourage. Average retail spending

per passenger at the airport is more than 15 percent

higher than the pretransformation baseline. On

the front lines, engagement among stakeholders is

also on the rise. TSA officers recognize curbside

staff members. Airline employees acknowledge peers

from competitors. The CEO and his staff are out

on the front lines interacting with employees and

working to realize the goals that form the living

manifestation of the customer-experience strategy.

If you carry the aspiration forward, it is even possible

to envision a return, someday, to the spirit of the

early days of flying, when an airport was a place where

visitors felt privileged to spend time.

Developing a customer-experience vision

The Compass Model is the intellectual property of The

Walt Disney Company. See Theodore Kinni, Be Our Guest:

Perfecting the Art of Customer Service, second edition, Lake

Buena Vista, FL: Disney Institute, 2011.

The Common Purpose is the intellectual property of The Walt

Disney Company. See Kinni, Be Our Guest.

Brooke Boyarsky is a consultant in McKinsey’s

Dallas ofﬁce, where Will Enger an associate principal;

Ron Ritter is a principal in the Miami ofﬁce.

Nicolas Maechler, Kevin Neher, and Robert Park

From touchpoints to journeys:

The competitive edge in

seeing the world through the

customer’s eyes

To maximize customer satisfaction, companies have long

emphasized touchpoints. But doing so can divert attention from

the more important issue: the customer’s end-to-end journey.

From touchpoints to journeys: The competitive edge in seeing the world through the customer’s eyes

When most companies focus on customer experience

they think about touchpoints—the individual trans-

actions through which customers interact with parts

of the business and its offerings. This is logical.

It reflects organization and accountability, and is

relatively easy to build into operations. Companies

try to ensure that customers will be happy with the

interaction when they connect with their product,

customer service, sales staff, or marketing materials.

But this siloed focus on individual touchpoints

misses the bigger—and more important—picture:

the customer’s end-to-end experience. Only by

looking at the customer’s experience through his or

her own eyes—along the entire journey taken—can

you really begin to understand how to meaningfully

improve performance.

Customer journeys include many things that happen

before, during, and after the experience of a product

or service. Journeys can be long, stretching across

multiple channels and touchpoints, and often lasting

days or weeks. Bringing a new customer on board

is a classic example. Another is resolving a technical

issue, upgrading a product, or helping a customer

to move a service to a new home. In our research, we’ve

discovered that organizations that fail to appreciate

the context of these situations and manage the

cross-functional, end-to-end experiences that shape

the customer’s view of the business can prompt a

downpour of negative consequences, from customer

defection and dramatically higher call volumes

to lost sales and lower employee morale. In contrast,

those that provide the customer with the best

experience from start to finish along the journey can

expect to enhance customer satisfaction, improve

sales and retention, reduce end-to-end service cost,

and strengthen employee satisfaction.

This is especially true in today’s multitouchpoint,

multichannel, always-on, hypercompetitive consumer

markets. The explosion of potential customer inter-

action points—across new channels, devices, appli-

cations, and more—makes consistency of service

and experience across channels nigh impossible—

unless you are managing the journey, and not simply

individual touchpoints. Indeed, research we con-

ducted in 2015 involving seven EU telecom markets

found that when consumers embarked on journeys

that involved multiple channels their experience was

materially worse than during single-channel experi-

ences, whether those experiences were digital or not.

The trouble with touchpoints

Consider the dilemma that executives faced at one

media company. Customers were leaving at an alarming

rate, few new ones were available for acquiring in

its market, and even the company’s best customers

were getting more expensive to retain. In economic

terms, a retained customer delivered significantly

greater profitability than a newly acquired customer

over two years. Churn, due to pricing, technology,

and programming options, was an increasingly famil-

iar problem in this hypercompetitive market. So

was retention. The common methods for keeping

customers were also well known but expensive—

tactics like upgrade offers and discounted rate plans,

or “save desks” to intercept defectors.

So the executives looked to another lever—customer

experience—to see if improvements there could halt

the exodus. What they found surprised them. While

the company’s overall customer-satisfaction metrics

were strong, focus groups revealed that a large

number of customers left because of poor service and

shoddy treatment over time. “How can this be?”

one executive wondered. “We’ve measured customer

satisfaction for years, and our call centers, field

services, and website experience each score consis-

tently over 90 percent. Our service is great!”

As company leaders probed further, however, they

discovered a more complex problem. Most customers

weren’t fed up with any one phone call, field visit,

or other individual service interaction—in fact, most

customers didn’t much care about those singular

touchpoint events. What was driving them out the

Customer experience: Creating value through transforming customer journeys Winter 2016

door was something the company wasn’t examining

or managing—the customers’ cumulative experience

across multiple touchpoints, multiple channels, and

over time.

Take new-customer onboarding, for example, a journey

that spanned about three months and involved an

average of nine phone calls, a home visit from a tech-

nician, and numerous web and mail interactions.

At each touchpoint, the interaction had at least a

90 percent chance of going well. But average cus-

tomer satisfaction fell almost 40 percent over the

course of the entire journey. The touchpoints weren’t

broken—but the onboarding process as a whole was.

Many of customers’ numerous calls during the process

represented attempts to clarify product information,

fix problems with an order, or understand a confusing

bill. Most of these service encounters were positive

in a narrow sense—employees answered the questions

or solved the issues as they arose—but the under-

lying problems were avoidable, the root causes left

unaddressed, and the cumulative effect on customer

experience was decidedly negative. The company’s

touchpoint-oriented, metric-driven way of thinking

about customer experience had a large blind spot.

Solving the problem would be worth hundreds of

millions of dollars, but the company needed a whole

new way of thinking about and managing its service

operations to identify and reimagine the customer-

experience journeys that mattered most.

More touchpoints, more complexity

The problem encountered by the media company

is far more common than most organizations care to

admit and is often difficult to spot. At the heart of

the challenge is the siloed nature of service delivery

and the insular cultures, behaviors, processes, and

policies that flourish inside the functional groups that

companies rely on to design and deliver their ser-

vices. In many cases, these groups are also the keepers

of the touchpoints that shape and measure how the

company’s activities meet the customer’s—say, an in-

store conversation with a sales rep, a visit to the

company’s website, or a query to the company’s call

center. Whether because of poorly aligned incentives,

management inattention, or simply human nature,

the functional groups that manage these touchpoints

are constantly at risk of losing sight of what the cus-

tomer sees (and wants)—even as the groups work

hard to optimize their own contributions to the cus-

tomer experience.

The media company’s sales personnel, for example,

were measured and rewarded for closing new sales—

not for helping customers navigate a complex menu

of technology and programming options to find the

lowest-price offer that met their needs. Yet frus-

tration about complex pricing for high-end equipment,

The functional groups that manage touchpoints are constantly

at risk of losing sight of what the customer sees (and

wants)—even as the groups work hard to optimize their own

contributions to the customer experience.

confusion about promotions, and surprise over

program lineups were all frequent causes of dissat-

isfaction later in the process, as well as frequent

sources of queries to the company’s call centers. Exec-

utives knew that each of these discrete items was a

challenge—but only when they took a broader end-to-

end view did it become apparent that even though

each individual link in the service-delivery chain

appeared healthy, the cumulative effect was quite

the opposite.

The answer isn’t to replace touchpoint management

and thinking. Indeed, the expertise, efficiencies,

and insights that functional groups bring to bear

are important, and touchpoints will continue to

represent invaluable sources of insights—particularly

in the fast-changing digital arena. Instead, com-

panies need to recognize and address the fact that—

at least, in most cases—they are simply not wired to

naturally think about the journeys their customers

take. They are wired to maximize productivity and

scale economies through functional units. They

are wired for transactions, not journeys.

So how should companies tackle this issue? In our

experience, six actions are critical to managing

customer-experience journeys (articles elsewhere in

this volume explore several of these topics in depth):

 Step back and identify the nature of the

journeys customers take—from the customer’s

point of view.

 Understand how customers navigate across the

touchpoints as they move through the journey.

 Anticipate the customer’s needs, expectations,

and desires during each part of the journey.

 Build an understanding of what is working and

what is not.

 Set priorities for the most important gaps and

opportunities to improve the journey.

 Come to grips with fixing root-cause issues

and redesigning the journeys for a better end-to-

end experience.

The amount of time it can take to identify journeys,

understand performance, and redesign the experience

can vary widely from company to company. For

companies seeking only to fix a few glaring problems

in specific journeys, top-down problem solving

can be enough. But those that want to transform the

overall customer experience may need a bottom-up

effort to create a detailed road map for each journey,

one that describes the process from start to finish and

takes into account the business impact of enhancing

the journey and sequencing the initiatives to do so.

For many companies, combining operational, mar-

keting and customer, and competitive-research data

to understand journeys is a first-time undertaking,

and it can be a long process—sometimes lasting several

months. But the reward is well worth it; creating

a fact base allows management to clearly see the

customer’s experience and decide which aspects

to prioritize.

Journeys explained

To better see how customer journeys work, let’s look

at a measurable and routine service event—say,

a product query—from the point of view of both the

company and the customer. The company may

receive millions of phone calls with questions about

its product, and it is imperative to handle each of

these calls well. But when customers are asked to

recall their side of the experience months later,

it is highly unlikely that they would describe such calls

simply as a “product question.” That’s because the

call has a context, and understanding it is the key to

understanding customer journeys (Exhibit 1).

From touchpoints to journeys: The competitive edge in seeing the world through the customer’s eyes

Customer experience: Creating value through transforming customer journeys Winter 2016

The customer might have been trying to ensure

uninterrupted service after moving, for example, or

was confused about renewal options at the end of

a contract, or was trying to fix a nagging technical

problem. A company that effectively manages its

customer journeys would still do the best job it could

with the individual transaction—but its agents would

also understand the context for the call, address

the root cause for the customer’s query, and create the

feedback loops to help the company continuously

improve the wide range of upstream and downstream

interactions that surround (and sometimes cause)

the call. That is a broader lens than most call centers

apply (see sidebar, “A customer-journey scorecard”).

Most executives we talk to readily grasp the journey

concept but wonder whether perfecting journeys

pays off in hard-dollar outcomes. Our research, in the

form of annual cross-industry customer-experience

surveys that span pay TV, retail banking, auto

insurance, and other sectors, shows that it does. Com-

panies that excel in delivering journeys tend to

win in the market. In both the insurance and TV

industries, for example, better performance on

Exhibit 1

An excellent customer experience must last the entire journey.

Customer Experience 2015

Touchpoints to journeys

Exhibit 1 of 3

Source: McKinsey analysis

The customer

buys a

new house

The customer contacts

the electric utility’s

call center and provides

the moving date

The utility sends

the customer a

conﬁrmation letter

and a ﬁnal meter-

reading card

The call center has

the billing department

mail the customer a

corrected bill

The customer reads

the meter at the

old address, marks

the card, and mails

it to the utility

The customer reviews

the bill and contacts

the call center about an

error on it

The customer moves

into the new house

The billing

department tags

the old and new

addresses to

indicate the move

The service depart-

ment arranges

for the activation on

the moving date

The billing department

sends the customer

the ﬁnal bill for the old

address

The billing department

sends the customer

an initial statement and

an explanation

of payment options

The service department

activates service at the

new address and reads

the meter

Customer

Provider

journeys correlates strongly with faster revenue

growth; in fact, in measurements of customer satis-

faction with the firms’ most important journeys,

a one-point improvement on a ten-point scale corre-

sponds to at least a three-percentage-point increase

in the revenue-growth rate (Exhibit 2).

Moreover, the companies that perform best on

journeys have a more distinct competitive advantage

than those that excel at touchpoints; in one of the

industries we surveyed, the gap on customer satisfac-

tion between the top- and bottom-quartile compa-

nies on journey performance was 50 percent wider

than the gap between the top- and bottom-quartile

companies on touchpoint performance. Put simply,

most companies perform fairly well on touchpoints,

but distinctive performance on journeys can set a

company apart.

Why are journeys so much more effective at driving

results? For one thing, our research suggests that

journeys are more predictive of desired outcomes. In

most industries, the three journeys that matter most

to customers account for more than 25 percent of

total customer satisfaction. Indeed, across industries,

performance on journeys is substantially more

strongly correlated with customer satisfaction than

performance on touchpoints—and performance

on journeys is significantly more strongly correlated

with business outcomes such as revenue, churn,

and repeat purchase. In other words, delivering a dis-

tinctive journey experience makes it more likely

Exhibit 2

Higher satisfaction leads to higher revenue growth.

Customer Experience 2015

Touchpoints to journeys

Exhibit 2 of 3

Revenue growth, 2010–11, %

Source: McKinsey analysis

6.0

–2

6.5 7.0 7.5 8.0 8.5

9.0 9.5

Average satisfaction with each company’s 3 key journeys (on a 10-point scale), 2011

Pay TV

Auto insurance

From touchpoints to journeys: The competitive edge in seeing the world through the customer’s eyes

Customer experience: Creating value through transforming customer journeys Winter 2016

that customers repeat a purchase, spend more,

recommend to their friends, and stay with your

company (Exhibit 3).

Journeys versus touchpoints: Some

practical examples

Consider the case of the local operating entity of a

global insurance player. Market leadership in one of

its largest lines of business, car insurance, was under

siege by both established players and new entrants.

Executives knew that they would have to innovate in

order to differentiate their offering. They also knew

that for a long time the fragmented nature of their cus-

tomer experience had been a problem: many of their

customers bought their product and managed

their claims via a broker. When a car needed repair

Exhibit 3

Journeys are signiﬁcantly more strongly correlated with overall outcomes

than are touchpoints.

Customer Experience 2015

Touchpoints to journeys

Exhibit 3 of 3

Customer satisfaction

Touchpoints

Journeys

Willingness to recommend

0.24

0.52

0.23

0.47

+117%

+104%

values

Electric utilities

0.30

0.52

0.28

0.45

+73% +61%

Health insurance

0.32

0.53

0.31

0.49

+66%

+58%

Cable/satellite TV

0.32

0.50

0.28

0.45

+56%

+61%

Hotels

Coefficients are r

values of a multiple-regression model predicting outcome as a function of touchpoint satisfaction vs

journey satisfaction.

Source: McKinsey US cross-industry customer-experience survey, June–Oct 2015 data

after an incident, a local mechanic typically managed

the process, with little involvement from the car insurer.

With so many individual touchpoints outside the

company’s control, the insurer struggled to provide a

consistently high-quality and repeatable experience.

Research identified consistent and clear communi-

cations as one of the most important elements of

customer experience. Improving the experience

started with offering insurance policies that were easy

to read, understand, and compare with those of

competitors. But even more important to customers

was securing answers to questions regarding the

status of their car while under repair. What was being

replaced or repaired? When would they get the

car back?

A customer-journey scorecard

Managers should know what a customer journey entails:

Episodes

A journey is a specific, discrete experience in the customer life cycle. The act of simply purchasing a product

in a store is a touchpoint within a customer’s journey. Researching and then buying a new product and getting

it up and running at home would constitute the full journey as the customer sees it.

End-to-end experiences

It’s not enough to measure customer satisfaction on any single touchpoint; what matters is the customer’s

experience across the entire journey. It’s common to generate high individual touchpoint-satisfaction scores

and unacceptably low scores across the end-to-end journey.

Language

Do managers describe journey events in the way a customer would (for example, “upgrading my product

or service”)? Or do they lapse into company-speak (for example, “shipping new equipment”)?

Channels

Often multitouch and multichannel in nature, a “new-product onboarding” journey might begin with a website

visit, then a sales call, then a second website visit, followed by a store visit, then a technical-help call during

the activation or installation stage.

Duration

Journeys are often longer than you think. For example, the onboarding journey in the cable industry can

extend through two or three billing cycles. (Most calls in the first few months are actually onboarding-related

issues and inquiries.)

Repetition

Journeys are repeatable—and can be repeated for a meaningful percentage of customers.

From touchpoints to journeys: The competitive edge in seeing the world through the customer’s eyes

Customer experience: Creating value through transforming customer journeys Winter 2016

The effort made it apparent that there was potential

to resolve a critical frustration for customers during

a very important part of their overall customer

journey with the insurer. It also revealed the oppor-

tunity to build a deeper engagement and relation-

ship. So the company set out to provide an end-to-end

communications “glue” to what had been a multi-

touchpoint, multiparty customer journey.

Executives rapidly created a prototype using a sample

of 20 current customer cases. Each day, the com-

pany would track where the case was and provide a

simple update to the customer via email or text.

The company set up “personal contacts” for each cus-

tomer who would send the emails, serve as a single

source of contact, and phone the customer directly if

there was a material update to be announced, such

as a delay in finishing the work. Overall, every effort

was made to personalize communication during

an important phase in the customer’s journey. By the

end of the pilot, the company had learned a number

of lessons related to the appropriate frequency of con-

tact, the importance of using the customer’s pre-

ferred channels, and timing communications. The

company also learned how to scale the service

without adding substantial costs, largely by using

underutilized call-center resources at off-peak hours.

The impact was profound. Net promoter scores for the

customer journey climbed by 15 percentage points,

and by 50 points for difficult cases, such as when

repairs were first attempted but eventually the car had

to be declared a total write-off. Delighted customers

sent thank-you notes to the company, and brokers

and mechanics reported significant improvements

in their dealings with customers, who were now

much better informed.

Or consider the European energy retailer that identified

the “home moving” journey as a particular point of

dissatisfaction among its customers, as well as a signi-

ficant source of churn. The company mobilized a

cross-functional team (service, sales, marketing, and

IT) to understand what was happening—from the

customer’s viewpoint—along the journey to prompt

these high levels of customer dissatisfaction. What

the team found was a basic journey that was per-

forming poorly across the various functions and

departments that supported it.

The journey’s design suffered from several features

that imposed unnecessary inconvenience and anxiety

on customers when moving. For example, customers

had to contact the company no earlier than ten days

before their move date to provide all of the necessary

details—otherwise the IT systems would not record

the information. An organized customer, one who

called perhaps a month before the move date to set

everything up, would find that his or her move details

were never recorded. Customers also had only

one method—voice calling—to contact the company.

Once the customer had notified the company of

moving plans, he or she would receive several different

forms of communication. Upon examination, the

team found that some of the communications were

redundant, while others contradicted other accu-

rate pieces of communications. All this generated

additional anxiety and confusion.

Poor communication, in fact, was the single largest

reason that customers called into the call centers, and

it was another source of dissatisfaction. Customer-

service agents had no method of tracking where the cus-

tomer was on his or her moving journey. More often

than not, this meant that agents had to hand off the

inquiry to a back-office team for further investi-

gation and problem resolution. The back-office team,

inundated with these types of inquiries, suffered

delays in getting back to the customer with a resolution,

naturally producing additional calls to the call

center—and so on.

In most cases, companies are simply not naturally

wired to think about the journeys their customers take.

Thinking about customer journeys—instead of

traditional touchpoints—can require an operational

and cultural shift that engages the organization

across functions and from top to bottom. For the

companies that master it, the reward is higher

customer and employee satisfaction, revenue and cost

improvements, and an enduring competitive advantage.

The authors wish to thank Conor Jones and Laird

Rawsthorne for their contributions to this article.

Nicolas Maechler is a principal in McKinsey’s Paris

ofﬁce, Kevin Neher is a principal in the Denver ofﬁce,

and Robert Park is an associate principal in the

London ofﬁce.

The good news was that, for the first time, the

company understood the benefit of taking an end-

to-end view of the customer journey and the

importance of understanding how interdependent

individual touchpoints were along the journey.

Several improvements were designed and imple-

mented rapidly to address the key problem areas. The

moving journey was redesigned into a signature

customer journey for this energy-retail company:

customers now have the flexibility to provide the

company with their move information at a time that

suits them. They also have the option to use a

phone, the web, or a smartphone app to contact the

company; all essential communications are now

delivered consistently in a single “home movers” pack.

Finally, the company now incorporates into the

home-movers pack discount vouchers for do-it-yourself

stores, tradespeople, and restaurants in the area—

creating a welcoming cluster of local businesses (the

businesses also happen to be customers of the energy

retailer’s small and midsize business unit, thus creating

a positive customer experience across all customer

segments). The result? A 50 percent increase in

customer satisfaction from the starting position, and

a 15 percent reduction in the company’s customer-

service cost. Employee satisfaction increased by

20 percent and churn related to this journey was cut

by more than half.

From touchpoints to journeys: The competitive edge in seeing the world through the customer’s eyes

Nicolas Maechler, Sanjeev Sahni, and

Martine van Oostrum

Improving the business-to-

business customer experience

Adopting a customer-centric mind-set is just as

critical in B2B dealings as it is when serving retail

customers, but players face special challenges

that can trip them up.

Improving the business-to-business customer experience

Many discussions of customer-experience strategies

begin with a flawed assumption. When executives

delve into the competitive advantages of building a

more customer-centric organization, they very

often focus on interactions with retail buyers—the end

consumers. But in our experience, a customer-

centric mind-set is just as critical in the B2B space,

and more and more executives are developing B2B

customer-experience strategies with striking results.

B2B customer-experience index ratings significantly

lag behind those of retail customers. B2C companies

typically score in the 65 to 85 percent range, while

B2B companies average less than 50 percent. This gap

will become even more apparent as B2B customer

expectations rise. Digitization and the rising use of

smartphones are establishing new standards for

fast, seamless customer service in all settings. Real-

time responsiveness and easy-to-use apps for

daily banking chores or ordering groceries are setting

a high bar for speed and ease of doing business in

B2C industries, and these expectations are migrating

to B2B. One sign of changes to come: a logistics start-

up called Shipster has translated retail tracking and

tracing apps to B2B international shipping by putting

live tracking of international shipments on apps for

web and mobile phones for all its customers.

Such developments are making improved customer

experience at least as critical for B2B companies as

for B2C players. In our experience, customer-

experience leaders in B2B settings have on average

higher margins than their competitors. In cases

where companies have undertaken broad transforma-

tions of their customer-experience processes, the

impact among B2B and B2C players has been similar,

with higher client-satisfaction scores, reductions

of 10 to 20 percent in cost to serve, revenue growth

of 10 to 15 percent, and an increase in employee

satisfaction.

Consider one IT-services provider that found itself

battling emerging low-cost players in a maturing

industry. Executives realized that customer

satisfaction was increasingly becoming a way to stand

out from its lower-cost rivals, but its net promoter

scores were much lower than those of its peers. To

respond, the company launched a customer-

experience transformation in 2012. The company

redesigned a set of 20 customer journeys end to end,

addressing all dimensions of customer experience—

process, customer tools, performance management,

and employee mind-sets. After 12 months, its negative

net promoter score had turned positive, and a

year after that, the company was outperforming the

industry average.

As with B2C customer-satisfaction improvements,

benefits to the bottom line can include “stickier”

customer loyalty, which can also accrue more quickly

than is typically seen in B2C settings. For example,

another IT-services provider served 30,000 employees

at a large global client. Each employee reported

multiple small incidents each year. Minor though the

incidents were, the overall volume caused so much

dissatisfaction that the client threatened to switch pro-

viders. The company responded by making drastic

improvements to its incident management, broadening

the focus from only severe incidents to also include

minor, high-frequency incidents that annoyed every-

day users. A 45 percent reduction in incidents followed,

leading one of the company’s clients to cite the incident-

reduction program as the reason for renewing and

expanding the scope of its contract with the company.

Understanding a complex experience

Make no mistake, however. In fundamental ways,

a B2B company’s customers and their buying

patterns are more complex than those of a business

focused on retail customers. Indeed, a B2B com-

pany requires specific strategies to differentiate itself

via customer experience.

First, in B2B there is not one single customer; ensuring

a great and consistent experience for all isn’t always

possible. For example, one European corporate bank

wanted to optimize its corporate-lending process.

This process entails providing multimillion-euro

Customer experience: Creating value through transforming customer journeys Winter 2016

loans to client organizations to meet strategic

objectives, such as the purchase of new machinery

or growth through acquisitions.

Taking up the customer journey it sought to improve,

the bank faced multiple stakeholders in many of the

individual client organizations it served. Many had

differing needs. Others would only participate in

different parts of the lending journey. The CEO and

CFO of a client organization might participate in

initial strategic discussions to explore different finan-

cial solutions but then leave it to the company’s

treasury department to negotiate the loan terms. Legal

teams worked out the details of the contract, and

payments officers arranged interest payments. To

understand the perspectives of these different

stakeholders and their needs, the bank typically had

to undertake a complex mapping exercise.

Such a plurality of stakeholders also creates complex

buying behaviors. Even though B2B purchases are

commonly assumed to stem from rational decisions,

in our experience they hardly ever do. Overall total

cost of ownership is never the only decision factor.

Other factors also influence decisions, such as long-

standing relationships with procurement teams and

the general reputation of suppliers.

What’s more, B2B companies are often one step

further removed from the ultimate user of their prod-

uct than B2C companies are, so buyers and users

of B2B services are typically distinct. Consider an

auto-component manufacturer in India whose

buyers consist of the automaker’s procurement group,

while its true end users are the carmaker’s R&D

team and its shop-floor workers. To address both

groups, the component manufacturer created a

client-coverage matrix by mapping its sales force to

the procurement team, its own R&D team to the

carmaker’s R&D team, and finally its manufacturing

head to the automaker’s shop-floor manager. This

structure helps the component maker better respond

to the automaker’s varied needs. For example, the

component maker can choose when it’s time for

the automaker’s R&D team to test new designs

for future car models and react quickly when it does;

it can accommodate the shop-floor team’s need

to maintain just-in-time inventory.

Another challenge to B2B customer-experience

efforts is the fact that customer journeys are simply

more complex than those for retail customers.

B2B companies often have more offerings and services

than B2C companies. The offerings are also highly

tailored to individual customer needs and often consist

of different products and services bundled together.

In our experience, most B2B companies have far more

critical customer journeys on which to focus than

the ten that many B2C players average. B2B journeys

also tend to be long, complex, and quite technical,

and consist of a continuous interaction of services and

sales touchpoints. Journey experience and oper-

ations are often fragmented by account and location,

involving multiple teams in different departments.

For example, the export-financing journey of one

financial institution involved four organizations:

the financial institution itself, the importer, the

exporter, and an export-insurance company. The

journey required one and a half to two years to

complete and included many highly technical com-

ponents that bedeviled redesign efforts. Among

the technical elements that required expertise to

redesign were detailed financial data, as well as

extensive compliance inputs and risk assessments.

The financial institution therefore included a lawyer

and a financial analyst in its customer-experience-

redesign team to ensure enough technical expertise

to address these elements.

Improving the experience

Although B2B customer-experience improvements

can often be challenging, lessons we’ve learned

from working with leading practitioners can help in

tackling some of the more fundamental customer-

experience problems, as part of both incremental

improvements and broad transformations. They

include taking the following actions.

Mapping all customers. An elevator manufacturer

supplied elevators to large office buildings and

residential complexes. Contracts were negotiated with

the buildings’ facility-management teams, and

the manufacturer understood well what satisfied this

group. However, the manufacturer overlooked two

major customer groups. Presidents of housing-owner

associations turned out to be strong influencers

in purchase decisions on elevators. What’s more, the

actual users of the elevators, the residents or office

employees, experienced elevator performance on a

daily basis. Their complaints ended up with facility

managers. The company started to map the entire

journey and all of its relevant stakeholders, and started

to track customer satisfaction for each of these

groups separately, finding new insights about how to

boost key stakeholders’ satisfaction.

The investigation revealed that a key element in

customer satisfaction for housing-owner associations

was proximity to their vendors. Presidents of these

associations are now involved in all key moments

of the journey, including face-to-face meetings

with sales representatives and field technicians.

In addition to providing the desired proximity,

the elevator manufacturer made its activities and the

status of breakdowns more transparent for both

the housing association and facilities managers.

Creating tracks. B2B journeys often grow complex

because they must accommodate the special

needs of small percentages of the client base. Such

relationships require specific tailoring, extra ser-

vices, or additional checks. Splitting the journey into

standard and specialty tracks can minimize complexity

for a majority of clients, resulting in easier journeys

for clients and significantly lower costs.

One European corporate bank radically redefined

the customer journey into three tracks, helping clients

and employees better understand how complex

international financing deals could get approved. An

express track was set up for relatively easy deals

that entailed low risk and could be executed with fewer

checks, smaller teams, and shorter timelines.

An advanced track for more difficult deals included

extensive auditing, the addition of senior executives

to the working team, and more interactions with

the client. Between these two was the standard track.

After reviewing a proposal, loan officers map the

risk indicators and choose the track that includes the

most conservative approach to processing the deal

(exhibit).

Managing rework and incidents. Rework is often

a cause of significant delay for a B2B customer,

extending the length and increasing the complexity

of B2B customer journeys. The culprit is often

internal control procedures, internal auditing, or

compliance requirements. For example, an IT-

services provider required its internal purchasing

department to validate the acquisition of new

equipment purchased for clients, which delayed the

completion of transactions by more than two

weeks. However, customer expectations were quite

different, given that some equipment and IT ser-

vices such as cloud space can be purchased in a matter

of minutes from online vendors such as Amazon.

But smartly front-loading internal auditing by, for

example, preapproving batches of similar purchases

allowed the IT-services provider to remove the

time-consuming control procedures from the customer

journey, improving satisfaction.

Digitizing journeys. Digitizing the customer experience

is a lever often left unused by B2B companies. There

is great potential in the B2B realm in using concepts

such as self-service, online interfaces, and automated

decision rules. For example, the use of digital “track

and trace” interfaces enables B2B clients to see the

Improving the business-to-business customer experience

Customer experience: Creating value through transforming customer journeys Winter 2016

status of their customer journeys in real time. Some

organizations even take social-media technology

to the work floor, with community interfaces to help

flag and track continuous journey-improvement

initiatives and share ideas. Other organizations create

client applications, where all the information and

interaction about a supplier’s equipment is made avail-

able, including its age, working information from

equipment sensors, its next scheduled maintenance

visit, and an open box for user feedback.

Creating journey transparency and work cells. To

navigate through the complexity of B2B customer

relationships, some leading practitioners strive to

build greater transparency into the customer-

experience-improvement process. For instance, the

European corporate bank in the earlier example

typically took three to four months to complete a loan

approval, while best practice in the industry was

five weeks. During the process, no one at the bank

could tell the client the exact status of the loan

application or what to expect for immediate next steps.

Back-office departments did not feel responsible

for the client experience. For the most part, loan appli-

cations were little more than a stack of files to process.

To reform the process, the bank started by making

the customer journey more transparent, both

internally and externally. Internally, it became clear

for the first time for many participating depart-

ment teams, such as legal, payment operations, and

risk, how their work contributed to an overall

journey and which colleagues were responsible for

other parts of the journey. For clients, the bank

Exhibit

Tracks are determined by client and loan characteristics.

Customer Experience 2015

B2B

Exhibit 1 of 1

How to use

Review proposal, mapping risk indicators against

matrix; choose the track corresponding to the indicator

that falls farthest to the right—in this case, choose

the “standard” track.

Aim

Direct the application to the right track based on

risk indicators.

Impact

Remove unnecessary work on low-risk applications

and deepen analysis of higher-risk ones.

Risk Express Standard Advanced

1 Total client loan exposure

2 Risk rating

3 Collateral unchanged since last renewal?

4 Negative payment behavior (late payments, overdraft, other)

5 Breaches of other loan terms?

6 Material change in business environment?

Source: McKinsey analysis

Low

Low Medium

Yes

None

Medium

Few

Yes

High

Many

Yes

created a “journey guide” that explained the process

of applying for a loan in simple, visualized steps.

Next, each time the bank initiated a corporate-loan

application, a dedicated end-to-end work cell was

created, consisting of managers from each depart-

ment dedicated to that specific loan. In a joint kickoff

with the entire work cell, the account manager laid

out the client’s needs, establishing timelines for each

step in the journey. This enabled accountability

and made sure a deal was not lost in, for example, the

legal department for two weeks. A journey coor-

dinator orchestrated the journey and monitored end-

to-end journey key performance indicators.

The relationship manager was responsible for

guiding the client through the entire journey, so the

client worked with one consistent face instead of

being handed over to a different representative many

times during the journey. Finally, a journey

dashboard tracked the pipeline of clients through the

corporate-lending journey and monitored the

status of each client.

Results were impressive. While in the past, relation-

ship managers spent only 30 percent of their time

working directly with clients, they could now increase

that to as much as 65 percent because they did not

need to chase deals through internal departments.

Rework was significantly reduced, as handovers

were minimized and the entire team was aligned on

the specifications of the end product from the start.

At the first stage of improvements, the bank did not

manage to reduce the time the journey took to com-

plete. Still, being able to tell the client how long the

process would take represented a major improve-

ment in customer satisfaction by itself. Later, the

throughput time shrank as well, and satisfaction

increased even more.

Although customer-experience improvement is

typically associated with B2C players, it is at least

as critical in the B2B setting. While the nature

of B2B relationships makes the reform challenge

more difficult, with regard to customer and journey

complexity, the competitive advantages and significant

bottom-line gains that flow from it make the effort

worthwhile.

Nicolas Maechler is a principal in McKinsey’s Paris

ofﬁce, Sanjeev Sahni is an associate principal in the

Dubai ofﬁce, and Martine van Oostrum is an associate

principal in the Amsterdam ofﬁce.

Improving the business-to-business customer experience

How healthy are your customer experiences? Whether you are embarking on a broad trans-

formation of your customer relationships or simply trying to understand the status quo, successful

customer-experience strategy starts with clarity on current performance. The task has never

been more critical or challenging. Customer expectations of superior service are escalating, feed-

back is proliferating across social-media channels, and competitors are innovating at an

accelerating pace. Furthermore, many companies face the additional complexity of discerning

performance in operations spanning multiple geographies and business units.

Getting ahead increasingly requires stepping back for a comprehensive view and building the

infrastructure to continue taking stock of performance. A well-run customer-experience

diagnostic can yield a wide range of benefits and should answer a series of essential questions.

For example, what really matters to your customers, and what are the factors that drive

satisfaction and behaviors? How do customer experiences compare, relative to expectations

and competitors? And, finally, where is there opportunity to improve performance, and what

will it take to achieve?

For an airline with an aspiration to achieve top-tier performance, addressing these questions

over a two-week diagnostic quickly surfaced the performance gaps that mattered most to cus-

tomers, highlighted strengths from which the airline could build competitive advantage, and

generated alignment among the executive team. For example, the airline determined that reliability—

especially on-time performance—disproportionately drove satisfaction. This fact base revi-

talized efforts at improving customer experience and significantly raised satisfaction scores while

lowering costs.

Fortunately, a data-driven diagnostic can provide the tools to achieve remarkable clarity. The

emergence of big data and advanced analytics has created the ability to parse the discerning

factors that drive not only stated satisfaction but also actual behavior that creates economic

value—for example, the elements that attract and retain customers, as well as those that encourage

them to move upscale. In the hands of decision makers, these insights can often directly inform

future investments in product and service improvement.

Similarly, multiple sources that reflect the customer’s voice—including direct surveys, social media,

and mystery shopping—can be used to pinpoint current performance. This can be used to map

relative strengths and gaps versus customer expectations and competitor performance. Finally, a

Making the right diagnosis of

your customer experiences

The complexity of dealing with customers, channels, and competitors is only growing.

Getting ahead often requires stepping back for a comprehensive view.

Ethan Hawkes, Kai Vollhardt, and Maxence Vancauwenberghe

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Customer experience: Creating value through transforming customer journeys Winter 2016

robust diagnostic not only identifies quick fixes but also includes assessment of deeper aspects

of health, including frontline culture, senior-team alignment, and the development of a compelling

value proposition. It can frame the full opportunity and shine a light on the best path forward.

The diagnostic process itself also provides an opportunity to engage frontline workers in customer

interaction and build essential senior-team alignment. By adopting elements of a proven

approach, it’s possible to truly understand and transform performance on customer experience.

That said, diagnosing customer experience can be complex. Customer satisfaction derives from a

range of factors, including service, product, brand, and pricing. Knowing the relative importance

of each is valuable for deciding where a diagnostic exercise should focus. For the purposes of this

article, we focus primarily on diagnosing elements associated with products and service.

In our experience, there are three critical steps in approaching and conducting a successful

diagnostic. The first is knowing when and how to conduct it. It is also important to know how to

combine benchmarks and best practices to conduct a robust assessment. Finally, learning

from the lessons of leading companies that successfully carry out diagnostic exercises is invaluable

in refining priorities and defining goals.

Conducting a diagnostic

There are logical times to step back to assess performance on customer experience in a

comprehensive manner:

 ▪

At the outset of a transformation. Clearly, the outset of a transformation is a critical time

to conduct a diagnostic. A rigorous diagnostic helps build consensus on baseline

performance, identifies the most promising opportunities, and helps inform how likely it

would be to reach targets.

 ▪

During times of significant change. There are also times of less dramatic transformation

that merit examining the state of consumer experiences in less comprehensive fashion. For

example, a multifaceted assessment often makes sense when there are multiple sources of

change or rapid shifts taking place on the competitive landscape. These might include growth

of a new customer segment, changing customer preferences, or dynamic new competitors.

Who should initiate a diagnostic? Ideally, formal sponsorship by a member of the C-suite senior

team will ensure visibility and accountability for results. The typical duration of a diagnostic can

vary depending on complexity, resourcing, and objectives. However, many organizations find

that anywhere from 4 to 12 weeks allows time for sufficient rigor—including insights incorporated

and synthesized from multiple sources—without continuing so long that momentum toward

action suffers. A broad diagnostic that examines many business units, customer segments, and

geographies takes more time. Similarly, duration will also depend on how deep a fact base is

needed and the degree to which various stakeholders need to be involved.

Making the right diagnosis of your customer experiences

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Customer experience: Creating value through transforming customer journeys Winter 2016

Once they’ve completed their work, many diagnostic teams build elements from the effort into

the ongoing work of a senior team, using it to align improvement initiatives with high-impact

opportunities and to track progress.

Identifying journeys

Transforming an organization’s processes and culture to focus on customer journeys requires

both top-down, judgment-driven evaluation and bottom-up, data-driven analysis. In our experience,

these approaches work best when companies pursue them in parallel. The top-down approach

spurs leadership engagement, focuses organizational energy, and allows a company to move

quickly on known issues—often fixing policies or capturing quick wins that can be pursued from

headquarters. The bottom-up approach creates a comprehensive data set that will set priorities

and investment decisions, as well as shape a more complete road map for operational work

(Exhibit 1).

From the top down . . .

To launch the top-down approach, an executive working session, drawing on existing research, is

often sufficient to identify the most significant journeys and the pain points within them—the specific

service shortcomings that damage customers’ experiences. That research is typically fragmented

and often includes data on the customer volume for a given journey, reasons for call-center complaints,

and obvious gaps in performance on the lowest-performing journeys, including the disconnect

between promises made in marketing materials and the services actually delivered.

Consider how executive sessions of this type directed attention to key customer-journey

problems at three companies. At one fixed-line telecommunications company, the executive

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Exhibit 1

Transforming an organization’s customer experience requires both top-down,

judgment-driven evaluation and bottom-up, data-driven analysis.

Customer Experience 2015

Diagnosing

Exhibit 1 of 2

Bottom-up approach

Integrated fact base on customer journeys

• Voice of the customer

• Touchpoint/operational data

• Frontline engagement

Value drivers and improvement areas at a

journey level

Top-down approach

Executive workshops

Targeted frontline/customer interviews

Rough assessment of value drivers

Build excitement

Focus on no-brainers

Start shaping the plan

Granular priorities

Journey-level strategy

Value at stake

Source: McKinsey analysis of data provided by ClickFox (a company in which McKinsey is a minority shareholder)

Customer experience: Creating value through transforming customer journeys Winter 2016

ABOUT MCKINSEY CAPABILITIES

team focused on customer research that revealed a 50 percent dissatisfaction rate with the

installation process. At a leading energy player, the team targeted the 40 percent churn the company

experienced when customers moved. And at another telecom company, executive sessions

homed in on the long-running concern about lost revenues caused by the 40 percent of new fiber-

optic customers who cancelled before installation or in the first 90 days of their contract.

In each case, the executive attention led to a concerted effort to fix the targeted journeys. Mean-

while, leadership’s engagement in “walking the walk” generated a groundswell of support for

improvement programs and broader organizational transformation. In most cases, this initial top-

down work identifies early wins for the program, often in the form of policy or process changes

that can be implemented quickly and centrally. Those early wins set the tone for the rest of

the transformation.

. . . and from the bottom up

In recent years, dramatic improvements in data and analytic technologies have allowed

companies to take on much more scientific and robust approaches to assess their customers’

experiences. Today, vast amounts of interactions and opinions are captured in data: digital

logs, social media and blogs, call recordings, frontline comments and logs, pictures, and videos.

This represents a wealth of very specific information from which to pull insights to improve and

better manage customer experience. In addition, data storage has largely become a commodity,

and analytical tools like ClickFox

help connect these data to provide a view over time of each

customer’s touchpoints and to help businesses identify patterns and opportunities in these journeys

on a nearly real-time basis.

Combining this connected interaction data with more traditional surveys and input representing the

voice of the customer such as interaction recording, customer surveys, observations, and focus

groups allows companies to surface new insights and conduct customer-experience programs more

effectively. Specifically, we have seen this approach create value in three main ways:

 ▪

Understanding actual customer journeys. Not all customers undertake the same

journey in purchasing a product, experiencing a service, or performing a transaction. Their

paths vary, based on personal preferences, available channels, and the way processes are

organized. As one utility-company executive puts it, “There are dozens of ways to pay your

bill.” Understanding this diversity and connecting it to customer-satisfaction levels is fundamental.

The insights aid in understanding the specific elements encouraging customers to become

extremely dissatisfied “detractors” or delighted “promoters” but are less useful for parsing the

majority of average customers going through their journeys. For instance, one telecom-

munications company in the United Kingdom was able to pinpoint the situations where reinstalling

Internet services in a new house was the most problematic and then to address them.

 ▪

Prioritizing investments. Tying customer journeys to satisfaction scores allows companies

to understand precisely which journeys mean the most to the bottom line and align the

possible investments in technology, people, and incentives with expected returns. It also allows

companies to understand all the other business factors that a journey affects and the total

Making the right diagnosis of your customer experiences

value at stake. Journeys will typically affect the cost to manage customers through people

assignment or calls required to handle the journey. Revenues associated with the journey

are also affected, for example, from cross-selling when a customer is taken on board. Finally,

there may be other business impact, such as the ability to detect and prevent fraud. One

outcome of the diagnostic is a business case at a journey level, which helps set priorities for

capturing value from improving the customer experience. For instance, a credit-card player

in the United States realized that the value in the customer’s journey to replace his card was

not only in making the customer happy but also in being able to quickly revise some bill-

payment terms to line up better with the customer’s spending level.

 ▪

Identifying frustrations and happiness. Finally, a data-based diagnostic can be much

more precise in identifying the events affecting customer frustration or happiness. In particular,

it allows a company to link customer satisfaction to specific operational elements such as

the time it takes to complete the journey, the number of steps that each channel requires,

or the way the customer interacts with agents. From there it is possible to understand precisely

the break points in the customer experience. It also makes it easier to track and set target

goals for these journeys. For instance, one utility realized that customers working to arrange

their payments or secure bill-payment extensions were not much affected by whether a

payment arrangement was approved. Rather, what mattered most was the number of interactions

required to arrange a payment schedule. When customers had to endure more than two calls

in the same day, satisfaction scores dropped by more than 15 percent. Moreover, the analysis

allowed the utility to identify customers shopping across channels to get better arrangements,

due to poor alignment between digital and agent-contact channels.

One firm’s experience

One US financial institution conducted a bottom-up diagnostic, with a goal of developing a road

map to take on the top three industry leaders in customer experience. The diagnostic team’s first

step was to aggregate all the customer interaction data in ClickFox, which was a significant

undertaking: it collected about one billion individual interactions across 25 sources, including web,

mobile, phone, interactive-voice-response, branch, email, texting, and mail channels. With that

information in hand, the team was able to identify each pathway customers had taken, over a one-

year period. They grouped these into a dozen thematic journeys from a customer standpoint,

with a clear starting point, a set of interactions, and a completion point. These journeys included

experiences like “making money move,” “managing my account,” and “filing a dispute.”

Next, the team linked these individual customer journeys to a set of business outcomes it wanted

to improve. The outcomes included customer-satisfaction scores determined by surveys, con-

firmed transactions, the cost to deliver the journey, and sometimes the revenues or spending

generated as part of the journey. When the team combined the findings with a solid understanding

of competitors, it had a unique fact base to understand precisely which journeys it needed to

improve, and by how much, in order to reach customer-satisfaction goals and achieve maximum

impact from investment. The team was even able to identify, in high-priority customer journeys,

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which pain points to eliminate, where to invest to deliver a pleasing experience, and the overall

business case to improve one journey versus another.

For example, the team was able to identify the “dispute” journey as one of the key sources of

overall net promoter score. Within the dispute journey, it identified the ability to self-inquire about

specific transactions, as well as communication of the dispute outcome, as key areas to improve

in order to please customers. It was able to see that customers did not appreciate having to “hop”

through several channels to perform a given task, such as making a payment. The company

could also see that it was significantly underperforming competitors on that dimension. These

insights provided the keys for management to make significant improvements quickly.

Finally, with the ability to refresh data on a near-real-time basis, the team was able to track these

journeys continuously and verify whether the improvements it was implementing were producing

results in operational performance and customer satisfaction.

Benchmarking and best practice

Too often, efforts to improve customer experience focus only on aspects of performance such as

specific operational metrics or enabling tools without first understanding the integrated elements

required to create and sustain truly distinctive customer experiences (Exhibit 2). That is why,

in our experience, we find it critical to conducting a successful diagnostic to first outline what

dimensions and performance criteria to analyze.

We suggest beginning by looking at performance through these three lenses and asking a series

of critical questions:

 ▪

Customer’s point of view. What matters to the customers? How is performance relative

to competitors on these aspects?

 ▪

Journey assessment. How solid are the underlying processes and frontline capabilities

for key journeys?

 ▪

Leadership alignment. To what extent does leadership have a shared view on current

performance and on the aspiration for improved customer experience?

For one insurance company with a goal of achieving top-tier customer-experience performance,

looking at its business through these lenses proved revealing. From the customer point of view,

engagement with the company occurred across multiple touchpoints, rather than just one. Whether

a customer’s specific expectations were met or not directly affected customer-satisfaction levels.

Therefore, it was especially important that all information, say, concerning the settlement of a claim,

was consistent among all touchpoints and communicated in an understandable and friendly manner—

whether verbally, in writing, or visually. This would help customers feel that all employees had equal

access to the latest customer touchpoint history, which had not been the case with this insurer.

Making the right diagnosis of your customer experiences

Customer experience: Creating value through transforming customer journeys Winter 2016

The plot thickened with the journey assessment. This included analysis of internal processes to

assess how they contributed to the customer experience as well as to efficiency along the

customer journey. Such analysis of touchpoints often reveals process overlaps or services for

which little or no demand exists. In the case of the insurance company, internal management

processes often ended up adding no value for customers. During this research, almost 40 percent

of the frontline staff mentioned that the current processes provided no incentives to think about

customer satisfaction—all processes had been purely focused on efficiency.

In order to assess how aligned leadership is on advancing customer-centric goals, it is important

to create a common understanding on today’s performance. In this example, the team at the

insurance company used multiple sources of insight to rapidly develop a baseline. These included

input from structured management interviews to assess leaders’ current understanding and

aspirations, as well as online evaluations including frontline feedback, social-media analysis,

proprietary survey results, mystery shopping, interviews, third-party reviews, and more. Multiple

sources are valuable for identifying consistent themes and building a nuanced view of per-

formance. Running these actions led to big surprises at the insurance company—while the relevant

managers anticipated the results for their own departments, they were shocked when they

looked into the interfaces between departments. The performance was far from what it should

have been. These results were the starting point in setting a common goal in customer

experience—not only in each department but also across them. This was a huge cultural change

in this organization, driven solely by creating transparency across departments.

With clarity on best practice, the next step is to benchmark current performance.

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Exhibit 2

It is important to understand the integrated elements required to create and sustain truly

distinctive customer experiences, as shown from these three different perspectives.

Customer Experience 2015

Diagnosing

Exhibit 2 of 2

Journey assessment

How robust are the underlying

processes and frontline capabilities

for key journeys?

• Generate transparency regarding

current work ﬂows

• Identify weak points in process

ﬂows and at key interfaces

• Analyze networking among HQ,

ﬁeld ofﬁces, and service providers

Customer’s point of view

What matters to customers? How

is performance relative to competitors

on these aspects?

• Generate transparency regarding

customer expectations

• Align processes and end products

with customer requirements and

expectations

• Identify improvement levers from

a customer perspective, including

rough estimate of potential

Source: McKinsey analysis of data provided by ClickFox (a company in which McKinsey is a minority shareholder)

Leadership alignment

To what extent does leadership have a

shared view on current performance

and the aspiration?

• Conduct interviews with board and

senior leaders in order to understand

current performance

• Run workshops to set a joint

aspiration on customer orientation

• Gain understanding on mind-sets

and behavior across levels on

customer orientation

Customer experience: Creating value through transforming customer journeys Winter 2016

ABOUT MCKINSEY CAPABILITIES

Lessons learned from leading companies

Successful diagnostics have a number of common characteristics, though they often lead to

markedly different outcomes. Shared success factors include anchoring insights in a fact base,

drawing on multiple sources that reflect the voice of the customer, and engaging the organi-

zation, from senior leaders to the front line.

For example, a rapidly growing cruise line recently launched a customer-experience diagnostic

to broadly understand opportunities for improvement. For years, the primary source of insight

had been a post-trip survey that rated aspects of the trip. Results of this survey were closely moni-

tored by senior management and informed operational and product- and service-design

decisions. However, even though scores were consistently high, repeat-purchase rates were far

below what the company thought they should be.

During the diagnostic, the team was able to link individual results to passenger records, including

call-center interactions, support interactions, cruise data, and repeat-purchase information.

What was once a simple survey of self-reported satisfaction now offered a whole new level of

insights, including quantification of a clear link between satisfaction and repeat-purchase

rates. It also showed which aspects of the experience created value and where the largest gaps

in performance were.

Most interesting, the diagnostic took a journey-based view and examined performance not only

of the experience on board but also of the booking process and postcruise follow-up. While the

experience on board—the primary focus of the survey—was consistently excellent, significant

opportunities to improve the full experience, before and after the trip, were identified. While most

efforts had been aimed at perfecting the time on board, issues in the six months leading up to

the cruise and weeks after offered significant opportunity. A revised survey found a decline in sat-

isfaction after the cruise. This led to a redesign of the end-to-end pre- and postcruise customer

experience. By better managing communication, ironing out issues with billing, and introducing

additional choices in postcruise flight options, the cruise line achieved significant upticks in both

attraction and retention.

A robust customer-experience diagnostic is the cornerstone of any successful customer-

experience transformation. A growing and rich set of customer feedback provided through multiple

channels can provide a competitive edge to those able to draw insights from big data analysis.

Ethan Hawkes is an associate principal in McKinsey’s Chicago ofﬁce, Kai Vollhardt is an associate

principal in the Munich ofﬁce, and Maxence Vancauwenberghe is the head of McKinsey’s

partnership with ClickFox and is based in the New York ofﬁce.

McKinsey & Company is a minority shareholder of ClickFox and serves clients using the ClickFox platform

and capabilities.

Making the right diagnosis of your customer experiences

Dilip Bhattacharjee, Keith Gilson, and Hyo Yeon

Putting behavioral psychology

to work to improve

the customer experience

Applying the principles of behavioral psychology can

improve the quality of customer interactions and build

brand recognition as a customer-centric organization.

Putting behavioral psychology to work to improve the customer experience

It’s an all-too-familiar story. As a leader at your com-

pany, you’ve made enhancing your customers’

experience a priority. You’ve invested in products, in

people, and in the service-delivery processes to

put your customers first. Yet when you tally customer-

satisfaction survey results and other metrics of

customer experience, your spirits drop. You see that

customer-satisfaction scores are not improving in

line with the changes that you know customers can

see each day in the services you are delivering. They’re

not even moving as much as your minimum estimates.

Executives at far too many companies share this

disappointment. Naturally, you’d like to receive credit

for the effort of improving your customers’ experi-

ence. But you also know that there are significant eco-

nomic benefits in going beyond simply improving

products and services by paying equal attention to

customer expectations and how customers perceive

their treatment at individual touchpoints and

throughout the full customer journey. It is possible,

for example, to share the same level of operational

performance with competitors yet secure higher brand

recognition as a customer-centric organization.

In a wide range of industries, it is also possible to

reduce churn, improve cross-selling, and boost

customer referrals.

Leading players in improving customer experience

understand this. One tool they find increasingly

effective is to apply the principles of behavioral

psychology to smartly design products and services

to improve the quality of customer interactions.

Behavioral scientists tell us that these interactions

are influenced powerfully by considerations such

as the sequence in which customers encounter pain-

ful and pleasurable experiences. By focusing on

these principles and implementing them masterfully,

companies can design and manage service encoun-

ters to maximize customer satisfaction. They can also

improve the chances that customers will give them

recognition and credit for all their investments in the

experience offered.

Behaving well, and badly

A vast body of research within the field of behavioral

psychology offers valuable insights into how cus-

tomers experience service interactions and form their

opinions and memories of those encounters. Research

undertaken by Nobel laureate Daniel Kahneman

and George Loewenstein forms the foundation upon

which the practical principles have been developed.

In addition, work by pioneers such as Dan Ariely, Uri

Gneezy, John List, and Richard Thaler has also

had a significant impact on how individuals make

decisions. Based on this work, McKinsey has

developed a framework for categorizing common

actions that attempt to spur particular behaviors

from individuals in consumer and other settings. The

framework is called CHOICES, which is an

acronym for context, habit, other people, incentives,

congruence, emotions, and salience (Exhibit 1).

Customer interactions are inﬂuenced powerfully by

considerations such as the sequence in which customers

encounter painful and pleasurable experiences.

Customer experience: Creating value through transforming customer journeys Winter 2016

Exhibit 1

The CHOICES framework of behavioral drivers created by McKinsey’s Behavioral

Insight Lab helps determine relevant interventions.

Customer Experience 2015

Behavioral Psychology

Exhibit 1 of 3

People gauge information relative to

other, mostly implicit benchmarks

Prime: Playing German music in a

wine store signiﬁcantly increases sales of

German wine

McKinsey’s Behavioral Insight Lab developed the CHOICES framework based on the work of Dan Ariely, Uri Gneezy, Daniel Kahneman,

John List, George Loewenstein, and Richard Thaler.

Source: McKinsey analysis

Context

People often act and judge

without deliberation, following habits

or mental shortcuts

Expect errors: To reduce the risk of

customers losing cards, ATMs usually return

the card ﬁrst, then dispense cash

Habit

People are inﬂuenced by what other

people do, say, or think

Tell about others: Tax fraud is reduced

by ~15% when taxpayers are informed that

most people actually do not commit fraud

Other people

People respond to “objectively”

better offers

Give immediate gratiﬁcation: Little treats

for good deeds today (eg, cash for going to the

gym) can help ﬁght procrastination

Incentives

People act to preserve a positive and

consistent self-image

Activate commitments: Public commit-

ments work better than promises to oneself

(eg, to quit smoking)

Congruence

People are inﬂuenced by emotions

and the physical state of their bodies

Create “yes” emotions: A photo of a happy/

attractive person had the same demand effect for

a bank as a mortgage-rate cut of 100 basis points

Emotions

People take in messages that are

easier to process and remember

Show consequences: Regular information

on energy usage and price increases drives

energy consumption down more than twice as

effectively as yearly updates

Salience

CHOICES

Drivers of behavior Examples of interventions

In work specific to customer experience, one pilot

study at a consumer-services firm found that

improvements in net promoter scores accrued from

behavioral-psychology initiatives rather than

from improvements in operations (Exhibit 2).

In other work, leading researchers Richard Chase

and Sriram Dasu identified three major factors that

occur during customer-journey experiences and

drive customer perceptions and levels of satisfaction.

These principles can often be applied at little

additional cost and help to ensure that companies

receive credit for the experience they deliver:



Sequence. Days, weeks, and months after

using a product or service, customers tend to

disproportionately recall the high and low

points of their customer journeys and not all

the individual aspects of it. Moreover, how a

company sequences high points in relation to low

points can materially change the perception

of the service received: in particular, unpleasant

endings have a strong negative impact. Recognizing

this bias in human perception, hotel chains,

for example, have largely eliminated the need for

business travelers to wait in line for checkout

in the morning by collecting their payment infor-

mation at the beginning of the overnight-stay

journey. They also offer their loyal customers

complimentary breakfasts as the last touchpoint.

By replacing a low point at the end of the stay

with a high point and time savings before depar-

ture, hotels create a positive bump in their

stay experience.



Segments. The frequency of high and low points

of interaction also affects how services are

perceived. Companies have noticed that when

customers encounter all negative experiences

during one touchpoint and the company deliberately

splits pleasant experiences into multiple touch-

points, it can improve the perception of service.

At Disney parks, design engineers intersperse

lines for popular attractions with multiple plea-

surable experiences to reduce the negative

impact of the long wait time. For example, the

popular attraction The Twilight Zone Tower of

Terror has three different themed waiting areas,

a staging video shown while customers queue

in a room that looks like a 1920s hotel lobby, cos-

tumed cast members interacting with guests,

and cooling fans and mist. Similarly, many large

trade shows combine all payment and regis-

tration requirements up front, ideally before the

event, and disperse the distribution of popular

events, speakers, and samples throughout the show.

Exhibit 2

Behavioral-psychology initiatives raised customer-experience scores in one

consumer-services pilot.

Customer Experience 2015

Behavorial Psychology

Exhibit 2 of 3

Baseline

After improving

operations

After implementing

behavioral-psychology

initiatives

Score after pilot

Net promoter score

–22

9 25

Before n = 58, after n = 28.

Source: McKinsey analysis

Putting behavioral psychology to work to improve the customer experience

Customer experience: Creating value through transforming customer journeys Winter 2016

 Control. Customers want to feel like they are in

control of their journey as well as other immediate

aspects of their life affected by the customer

journey. The more empowered, engaged, and

updated they are in the course of the journey,

the less likely they are to assign blame to the com-

pany when things go wrong. A home-repair

company knew from its consumer-satisfaction

surveys that customers cared the most about

the time it took for a repair worker to visit the home

and fix the problems. However, when the com-

pany ran a pilot test, it was surprised to find that

customer-satisfaction scores went up when

customers were offered options for scheduling, even

if each option offered meant the customer would

wait longer than the company’s average wait time.

Rewiring customer touchpoints and journeys

Many companies take advantage of these principles

to improve the customer perception of the services

received. Airlines and movie theaters allow customers

to select their seats, providing customers with a

sense of control. Most online retailers understand the

value of allowing customers a sense of control and

strive to keep their website displays, placement of but-

tons, and other functions consistently in line with

customer habits. That said, there are also multiple

examples across the industry where companies lose

the opportunity to take advantage of behavioral-

psychology principles. Contrast the examples of these

online retailers with some cable companies and

banks that routinely change the interactive-voice-

response menus for callers, thus frustrating custo-

mers. Most airlines spend substantial resources on

aircraft interiors, check-in, and in-flight service,

but some are only now starting to invest in the last step

in the passenger’s journey to avoid ending on a bad

note. One airline devotes resources to helping fliers

collect their baggage and find transportation.

Another airline now prebooks a car service. Several

others actively monitor the gate readiness of ground

crews to avoid delays, all with the intent of providing

a positive feeling to arriving passengers.

How can companies take advantage of these principles

more systematically? The best practitioners we’ve

observed work to rewire individual touchpoints as well

as the most important customer journeys (Exhibit 3).

In doing so, they establish a foundation for a customer-

centric reputation that can serve as a powerful ele-

ment of their enterprise brand.

Touchpoints

Companies looking to bring some of these approaches

to their own customers’ experience should start by

taking a critical look at each touchpoint within their

typical customer-experience journey, with an eye

to incorporating approaches derived from the three

principles. These are some common goals:

 Work through bad experiences early so that

customers recollect the more positive, later

elements of the interaction.

 Segment pleasure and combine pain for your

customers so that the pleasant parts of the journey

form a stronger part of customers’ recollections.

 Finish on a strong, upbeat note, as the customer’s

final interactions will have a disproportionate

impact on his or her memory of the service.

 Provide customers choice, giving them a sense

of control.

 Stick to habits and prevent any surprises, again

giving customers more peace of mind and

thereby increasing their satisfaction with the

services received.

Journeys

While winning at individual touchpoints is very

important, it is not sufficient to have isolated wins

Exhibit 3

Reworking touchpoints creates improved perceptions of service.

Business Practice Principle

Walt Disney

World

Families select and pay for their meal plans

and restaurant reservations before starting

their vacation, avoiding the need to pay after

each dining experience at the park

Get bad experience over

with early

Amazon

1-click ordering reduces the pain of entering

payment details each time while checking out,

whereas the pleasure of shopping is repeated

with each checkout

Segment pleasure,

combine pain

Cathay Paciﬁc

Flight attendants memorize the names of

passengers in premium cabins in order to say

good-bye by name as ﬂiers deplane

Finish strong

Pizza Hut

Provides detailed real-time updates on order

status to customers

Create a sense of control by

showing where the order is

Norwegian

Cruise Lines

Pioneered “Freestyle Cruising,” which gives

customers choice over when they dine, where

they dine, and when to see entertainment

Give customers choice

Ritz-Carlton

Hotels

Greets guests with a welcome email before arrival

and personalized welcome letter in the room

Create a sense of control by

sticking to habits

Customer Experience 2015

Behavorial Psychology

Exhibit 3 of 3

Source: McKinsey analysis

Putting behavioral psychology to work to improve the customer experience

Customer experience: Creating value through transforming customer journeys Winter 2016

in a few channels, devices, or applications. In addition

to redesigning the discrete touchpoints that make up

a customer journey, companies need to take a critical

look at their most important customer journeys—

which could last from several days to several weeks—

in order to manage customer perceptions throughout

the entire journey.

Redesigning the entire journey to incorporate the

principles of behavioral psychology listed above

has the potential to yield sustained improvements in

customer satisfaction.

For example, a leading home-mortgage company has

embedded many of these principles in the process

of approving mortgage applications. It consolidated

all the information it requires from prospective

borrowers and asks for it up front. This serves to

dispatch negative customer experiences early in

the 90- to 120-day approval journey. Thereafter, the

company schedules regular touchpoints where

agents proactively provide positive news to customers

as the process moves forward through various

steps. This spreads the pleasure or good news over

multiple touchpoints. The company also offers

customers options for ways to interact with the com-

pany. Customers can go into an online system at

any time and have full transparency into the status

of their application, including the expected lead

time before the application moves to the next step,

thus preventing surprises and providing a sense

of control. Finally, the lender works to finish the

process on a strong positive note, as the loan approval

is the very last interaction that customers experi-

ence during this journey.

Obstacles and remedies

The field of using behavioral-psychology principles

in customer interactions by applying sequence,

segments, and control is growing rapidly. Applying

these often requires little additional investment

and enables companies to earn credit for their improve-

ments in service delivery.

One issue we commonly see emerge is that many

initiatives to harness behavioral psychology in

improving customer experience prove to be little more

than disjointed trials. This is understandable.

It is often difficult for companies to move to more

systematic interventions at scale and to integrate

them with broader transformations of their customer

journeys. That’s unfortunate, because when inte-

grated with a broader program and underlying oper-

ational improvements, behavioral-psychology

initiatives can help ensure customer-service invest-

ments have sustained impact. In this context they

will have an amplifying effect on improvements made

in service delivery.

Our work has explored the variety of ways that

companies can break down some of these challenges

into smaller bits. One critical issue is the inability

Finish on a strong, upbeat note, as the customer’s ﬁnal

interactions will have a disproportionate impact on his or her

memory of the service.

to quantify the impact of customer-experience

initiatives (see “Linking the customer experience

to value,” on page 82). It’s also a challenge when

the existing operating model is not solid enough to

integrate behavioral programs into, and when

siloed functions represent a roadblock to more sys-

tematic improvement efforts (see “Leading and

governing the customer-centric organization,” on

page 64). Finally, company cultures that resist

embracing rapid and systematic prototyping of new

digital initiatives are likely to find it difficult to

refine behavioral elements in their customer inter-

actions to improve service (see “Using rapid process

digitization to transform the customer experience,”

on page 52). By breaking down these barriers, more

companies can find it possible, with minimal

investment, to capture the incremental value that

lies in smartly applying behavioral principles.

Richard Chase and Sriram Dasu, The Customer Service

Solution, Columbus, OH: McGraw-Hill Education, 2013.

Dilip Bhattacharjee is a principal in McKinsey’s

Chicago ofﬁce, Keith Gilson is a senior expert in the

Toronto ofﬁce, and Hyo Yeon is a digital partner in the

New Jersey ofﬁce.

Putting behavioral psychology to work to improve the customer experience

Dilip Bhattacharjee, Jesus Moreno, and

Francisco Ortega

The secret to delighting

customers:

Putting employees first

The main hurdle in customer experience is

translating boardroom vision into action at the front

line. Empowered employees are the key.

The secret to delighting customers: Putting employees ﬁrst

Once upon a time, a little girl visited a Disney theme

park. Sadly, while there, she dropped her favorite

doll over a fence and into a mud puddle. When members

of the park staff retrieved the doll, it was a mess.

So they made it a new outfit, gave it a bath and a new

hairdo, and even took photos of it with other Disney

dolls before reuniting it with the owner that evening.

“Pure magic” was the way the girl’s mother described

the doll’s return.

What may be most remarkable about this fairy-tale

ending, which has since become part of Disney’s

institutional lore, is what didn’t occur. The theme-

park team didn’t panic, consult a corporate script

on what to do in such a situation, or anxiously seek

advice from managers so as not to botch their

response to a small—but real—crisis for one of its

customers. That’s because, at least in this case,

the team’s understanding of what needed to be done

for the young customer grew automatically from a

systemic cultural emphasis that Disney puts on front-

line customer service.

Such devotion pays dividends. Our research finds

that emotionally engaged customers are typically

three times more likely to recommend a product and

to purchase it again. With an eye to these benefits,

many companies are making customer experience a

strategic priority. Yet, in our experience, we find

that they typically struggle to gain traction with

their efforts.

Improving customer experience is difficult to get

right, because the primary hurdle is translating

boardroom vision for a superior customer experience

into action at the front line. The additional value

that comes from focusing efforts on important cus-

tomer journeys, rather than individual touchpoints

(see “From touchpoints to journeys: The competitive

edge in seeing the world through the customer’s

eyes,” on page 14), makes the task of training and

deploying effective frontline workers all the

more complex.

Technological advances have made it much easier for

companies to understand customers on an individ-

ual basis. Even so, engaging with customers is still

undertaken largely through personal contact. And

there’s no shortcut to creating emotional connections

with customers; it requires ensuring that every

interaction is geared toward leaving them with a

positive experience. That takes more than great

products and services—it takes motivated, empowered

frontline employees. Creating great customer

experiences requires having an engaged and energized

workforce, one that can translate individual expe-

riences into satisfying end-to-end customer journeys

and can continue to improve the journeys to main-

tain a competitive edge. By appropriately motivating

and rewarding such employees, a company will

demonstrate its commitment to the employees’ work

and will thus align their interests more closely with

its own customer-strategy goals.

There are many ways to build frontline-employee

commitment to superior customer experience. In our

work with leading players, we have distilled four

approaches to worker development and management

that repeatedly show up in successful efforts. First,

leading companies listen to their employees and

seek to tackle their problems and needs. They hire

with attitude, not aptitude, in mind and work to

build on attitudinal strengths as part of employee

development. They build motivation by instilling

shared purpose in frontline workers rather than

by applying behavioral rules. Finally, they tap into

the creativity of frontline workers by assigning

autonomy and responsibility as a way to stimulate

innovative thinking.

Putting employees first in practice: One

bank’s experience

In the past few years, numerous companies around

the world have embarked on customer-experience

transformation efforts. But only a handful of them

have made mobilizing frontline workers a pivotal

element in their transformation journey. Such is the

Customer experience: Creating value through transforming customer journeys Winter 2016

case for a Latin American bank—whose customer-

experience strategy over a two-year period produced

a double-digit improvement in profitability per

client and customer acquisition while reducing churn

10 to 20 percent, gaining it widespread recognition

for customer and employee satisfaction.

A few years ago, the bank was a leading player in a

very competitive market in Latin America. Although

the market was experiencing healthy growth rates,

several international banks were competing for advan-

tage. In order to win against well-diversified and

funded competitors, the bank opted for an ambitious

customer-experience strategy in order to differ-

entiate itself in the long term. To pursue the strategy,

the bank embarked on a multiyear customer-

experience transformation program built upon two

pillars. The first entailed designing and delivering

a world-class customer experience. The second had to

do with developing the culture, skills, and behaviors

that would allow its frontline employees to deliver

such an experience.

The bank assembled a multidisciplinary transfor-

mation team to tackle the change programs for both

customers and employees. The team included

process engineers, line managers, and HR specialists.

In addition to a framework to address the contours

of a superior customer experience, the team developed

an overall framework to cover all employee experi-

ences (exhibit). To transform the employee experience

and frontline workers’ engagement with the com-

pany and its customers, the team used an integrated

and comprehensive set of interventions: a deep

understanding of the employees’ needs, using quanti-

tative surveys and qualitative research, including

focus groups and individual interviews; a redesign

of the employee value proposition; an overhaul

of key HR practices such as recruiting and selection,

capability building, and performance management;

Exhibit

Transforming the customer experience requires a methodical approach to understanding

and engaging employees.

Customer Experience 2015

Delighting customers

Exhibit 1 of 1

Employee lens

Employee

understanding

Employee value

proposition

Culture and

conviction

Selection

Training

Performance management

Source: McKinsey analysis

and a set of initiatives aimed at building a true

customer-centric culture. These included promoting

symbols, such as company mascots with different

personalities, name tags and stationery, rites and cel-

ebrations such as breakfast with management, an

award ceremony during the annual convention for

leaders, and a peer-recognition portal. Manage-

ment reinforced these efforts with repeated messages

and encouraging habits such as demonstrating

transparency in sales.

Deploying the program in waves over the course of

more than two years, the team worked to motivate

and empower frontline employees to build an emo-

tional connection with the bank’s customers, delib-

erately emphasizing the principles derived from other

successful employee-development efforts described

earlier. They included the following.

Listening to employees. During the initial phase

of the transformation, the bank devoted a significant

effort to thoroughly understanding employees’ needs

and wants. It segmented employees based on their

attitudes, requirements, and preferences and analyzed

the key attributes that motivated and attracted

each type of employee; it also categorized the main

behavioral traits. This allowed the bank to tailor

value propositions for its employees to their concrete

needs and preferences. Using polls, surveys, and

focus groups, the team was able to segment whether

an employee’s attitude toward work was active or

passive, map how conditional his or her level of com-

mitment to company goals was, and gauge the

behaviors that would motivate performance. For

instance, based on its analysis, the bank changed its

nonfinancial benefits for employees, introducing

a system of points that the employees could redeem.

For example, a parent could receive a day off to

attend a child’s school party, or a young employee

might earn a discount for a mortgage rate.

Beyond one-off changes, the company put in place

several mechanisms to better listen to employees on

an ongoing basis. For instance, it created contests

in which frontline teams would propose improvement

ideas twice a year: one for improving employee

experience and the other for improving customer

experience. The teams ended up implementing

several of the ideas, while the company centrally

sponsored others that benefited a broader range

of company functions.

Hiring for attitude, not aptitude—and then

reinforcing attitude.

To ensure that it recruited the

best talent to deliver a great customer experience, the

bank completely overhauled its recruiting and

selection processes. Management changed several

job descriptions to emphasize customer service as

a key element for evaluation during the recruitment

process. It also changed the interview process

from a system based on one-on-one interviews by

managers to a process that evaluated the service

attitude of the candidates in realistic environments.

For instance, the bank built a simulated branch

in its recruiting department where candidates were

placed in role-play situations to test their attitude

and behavior toward customers and colleagues. It also

included additional filtering criteria that would

ensure the right behaviors toward customers, such as

honesty and integrity in relationship managers.

Finally, the bank introduced a welcome pack that

would help improve how new employees were

brought on board, including a manual to help new hires

navigate the company, a letter from the president,

and brochures with tips. These measures resulted in

a 5 to 10 percent increase in the satisfaction scores

of customers served by new employees.

Other companies have also discovered the connection

between hiring customer-oriented people and

ensuring friendly service. JetBlue Airways, for exam-

ple, has embedded this philosophy in its hiring

process. To recruit frontline staff with a natural ser-

vice bent, it uses group interviews. Watching how

applicants interact with one another enables hiring

managers to assess their communication and people

The secret to delighting customers: Putting employees ﬁrst

Customer experience: Creating value through transforming customer journeys Winter 2016

skills to an extent that wouldn’t be possible in a one-

on-one setting.

Having hired people with the right attitude, leaders

need to ensure they reinforce the behaviors they

want to see. Although Disney hires janitors to keep

its parks clean, everyone else in the organization

knows that they share the responsibility for main-

taining a clean and pleasant environment. Asked

why he was picking up paper in the restroom, one team

leader replied, “I can’t afford not to.” As Disney

executives tell it, every leader is telling a story about

what the company values.

Instilling frontline workers with purpose, not rules.

Bank leadership understood early on that imposing

strict rules on frontline customer representatives

has its limits. Instead, it opted to provide a common

purpose of meeting customer needs that employees

could apply to every imaginable situation—as well

as the criteria that would allow them to appropriately

adjust their behavior, especially in the absence of

a specific rule or protocol (see “Developing a customer-

experience vision,” on page 8, on the role of common

purpose in promoting customer satisfaction). In order

to mobilize and engage frontline workers as much

as possible, leadership decided to build the common

purpose and service criteria by using a bottom-up

approach, rather than by mandating change. A group

of employees was selected by their peers based on

their merits and attitude in customer service, and

they were entrusted with the responsibility of creating

the common purpose and service criteria. While

the common purpose gave meaning to employees’

work, the service criteria chosen—such as safety, prox-

imity to customers, image, and diligence—defined

concrete behaviors that guided the front line to act in

alignment with the common purpose.

To keep the common purpose from lapsing into

some kind of conceptual framework, the company

reinforced the concept and the service criteria

through several mechanisms. For instance, frontline

leaders are awarded pins in recognition for rein-

forcing certain service criteria with their teams. The

leaders display these pins proudly in the band that

holds their name tag. Corporate image and communi-

cation provide another reinforcing mechanism.

Each of the service criteria is represented by a color,

and the bank color-codes most of its corporate

communications to more closely associate them with

the criteria.

Tapping into frontline creativity. The customer-

experience transformation brought new mechanisms

to capture and disseminate ideas from the front

line, such as a biannual contest to generate ideas to

improve customer and employee experience. Although

these mechanisms demonstrated positive impact,

bank leadership decided it wanted to do more to boost

positive customer experiences in order to stay ahead

of competitors. So it set out to accelerate the pace

of continuous improvement and innovation generated

at the front line. Its approach was to roll out a pro-

gram to incorporate several lean-management prac-

tices across all areas and all organizational levels,

with a focus on sustaining and improving the customer-

experience strategy.

Currently, hundreds of teams in the bank hold daily

huddles; in these 15-minute discussions, they talk

through results and key performance indicators, many

of them related to customer experience. They

also bring to the surface improvement ideas and share

customer-experience stories that reinforce

the customer-service culture. The main improvement

ideas are picked up again in weekly structured

problem-solving sessions, where they are either

solved and assigned to team members for

implementation or elevated to more senior leaders

for tackling in similar problem-solving sessions

with other areas of the organization. Through these

and several other standard practices that the bank

has implemented, it has been able to accelerate the

velocity of innovation and continuous improvement

to stay in front of competitors.

Strategists know that technological changes have

made it easier for customers to shift their loyalties

based on how satisfied they were with their buying

experiences. But for companies looking to improve

their performance, the personal interaction between

customer and frontline employee may still be the

most important link of all.

Dilip Bhattacharjee is a principal in McKinsey’s

Chicago ofﬁce, Jesus Moreno is an associate principal

in the Santiago ofﬁce, and Francisco Ortega is a

director in the Buenos Aires ofﬁce.

The secret to delighting customers: Putting employees ﬁrst

Line Hartvig Müller, Andrea Peyracchia, and Vik Sohoni

Using rapid process

digitization to transform the

customer experience

Transforming the customer experience requires a level

of speed and precision that traditional approaches can’t

meet. The best practitioners do it in real time.

Using rapid process digitization to transform the customer experience

Time was that a company with the next big

thing could bank on a year or so of cushion until

competitors caught up. No more. Fast-track

product development, advanced software techniques,

and the ready availability of digital channels have

made products dramatically easier to commoditize.

Such changes are one reason the battle for com-

petitive differentiation has increasingly shifted to

the quality of the customer experience. For

their part, customers accustomed to the immediacy,

personalization, and convenience that characterize

digital-marketing pioneers such as Amazon and

Google now expect the same service from all players,

raising the stakes.

In our experience, customer-experience leaders

start with a differentiating purpose and focus

on improving the most important customer journey

first—whether it be opening a bank account,

returning a pair of shoes, installing cable television,

or even updating address and account informa-

tion. They then improve the steps that make up that

journey. They design supporting processes with

customer psychology in mind, managing expecta-

tions around such things as wait times, and

surprising customers with unexpected rewards

toward the end of the journey to maximize pleasure

and enjoyment. They also foster a service culture

that emphasizes consistent, high-quality touchpoints.

And they innovate continuously, looking outside

as well as in to cast a broad net for ideas. Finally, they

are zealous about tracking and acting on feedback

to improve steadily and rapidly.

But to achieve the speed and precision that the

competitive marketplace demands, leaders are put-

ting aside traditional approaches to transforming

their digital customer profile. Instead of stepwise

design-and-build approaches that culminate in

a big-bang launch months later, they achieve rapid

process digitization using concurrent-design

approaches in which elements are added and refined

in a continual cycle of testing and learning. Using

this method, multidisciplinary teams codesign high-

impact processes and journeys in the field, iterating

and rereleasing designs quickly—often in real time—

based on direct customer input. Weaker designs

fail faster and stronger ones succeed sooner under

this approach, with the result that high-performing

incumbents can release and scale major, customer-

vetted process improvements in under 20 weeks.

And because rapid process digitization incorporates

continuous improvement from the pilot stage to

large-scale rollout, initiatives are far more likely to

be sustained over time.

That is not to say that accelerating an organiza-

tion’s customer-experience transformation via rapid

digitization is easy. Among other challenges, it

requires established businesses to embrace new ways

of working and adopt methods that will be foreign

to standard approaches and the existing operating

culture. Yet the payoff can be compelling.

Putting aside old approaches

In many organizations, process design has tradi-

tionally been managed sequentially. Product or

business managers have an idea. They hand that idea

off to IT. The technology team develops it, then hands

it back to the business to review. All told, it can take

months before customers see the improved process.

Only then, after having committed all that time,

does the business find out if its answer is the right one.

Such stepwise process-improvement approaches

are too slow and insular to give companies the

lift they need in today’s environment. And because

they don’t incorporate customer feedback until

late in the game, businesses often learn only after

the fact that they invested in the wrong areas

and made improvements that do not deliver a dif-

ferentiating experience.

Another consideration is that the existing process

environment is often too complex. IT legacy systems—

many already stretched—often feature a jumble

of patches and work-arounds that make them hard to

integrate or update efficiently.

Customer experience: Creating value through transforming customer journeys Winter 2016

In addition, many processes were not designed with

today’s digital and multichannel environment in

mind. One bank, for instance, figured out that its cur-

rent customer process for setting up an overdraft

account took 10 to 15 days to complete. Automating

those steps to a mobile environment would be impos-

sible. The bank needed something simpler and faster

that would take a 15-day process down to five minutes.

Transforming the customer experience in this way

requires a different approach—one that is more

responsive, integrated, and customer led. An iterative

test-and-learn approach allows companies to move

the needle more quickly and with greater accuracy

(Exhibit 1).

Digitizing the customer experience

Using rapid process digitization, teams redesign one

customer journey at a time, then build capabilities to

scale quickly, with a goal of releasing a basic version

in under 20 weeks.

To meet its customer goal of extending digital engage-

ment, for instance, Starbucks recently launched

a new mobile ordering service. The company’s objec-

tive was to make the coffee-buying journey a

differentiating experience by allowing customers

to preorder their favorite beverage. To get there,

Starbucks had to create a new set of processes that

integrated the company’s mobile loyalty program and

point-of-sale applications. It also had to reengineer

the flow of line operations. Cross-disciplinary

teams, comprising operations, IT, and business

managers, hunkered down together and mapped out

needed processes, even going so far as to build

a fully functional mock store within the company’s

Seattle headquarters.

Exhibit 1

Integrated, customer-led design delivers better, faster results.

Customer Experience 2015

Rapid process digitization

Exhibit 1 of 2

Source: McKinsey analysis

Radical digitization delivers products

and processes in evolutionary way

Traditional approach builds full digital

platform over long period of time

Time

Radical digitization

delivers value in waves

Traditional projects

take big-bang approach

Building critical skills for the digital age

· Fully integrated business/IT teams

· Customer-ﬁrst approach driven by business, not IT

· Continuous testing (beta testing, piloting prototype, A/B testing)

· Continuous releases of technology functions

Customer value

In our work, we’ve seen many customer-experience

leaders follow a similar approach to transforming

their customer profile. Rather than digitizing lots

of elements, they focus on selective transforma-

tion, singling out the handful of customer journeys

that matter most to key segments; mapping how

those journeys flow across functions, channels, and

devices; and identifying where the key pain points

are. Then they reimagine what an optimal journey

experience would feel like from a customer point

of view, ensuring the resulting processes intersect

cleanly with social, mobile, and cloud technologies

and deliver a superior customer experience.

Instead of waiting until prerelease models have

been perfected, successful players release basic proto-

types when they’re minimally viable. Then they

rapidly cycle improvements through live tests with

customers until the process meets predefined

customer requirements.

Achieving these results requires three things: free-

ing up a dedicated cross-disciplinary team,

employing rapid process digitization, and scaling

up completed processes.

Creating the team

A rapid-process-digitization team needs a C-suite

sponsor with the authority and organizational

clout to provide a clear customer mandate and the

ability to shift thinking away from incremental

process improvement and toward bolder experimen-

tation. Senior stakeholders should be physically

co-located in the development room, where they can

demonstrate the organization’s commitment, provide

the necessary clout to remove impediments, and

procure needed analytics and subject expertise.

Other resources are critical, too:

Business and product expertise. The team should

include three or four members from the affected busi-

ness areas. At least one should be a product manager

with enough experience to provide institutional

insight and enough at stake from the eventual

results to have a vested interest in the process. The

business team also plays a role in keeping parties

such as the legal department, risk specialists, and

lean-operations experts informed throughout

the development cycle.

Technology and analytics resources. Rapid

process digitization requires expertise in agile

software development, business analytics,

architecture, and solution design. Six to eight people

is about the right range—just big enough to provide

the requisite number of developers, testers, and

middleware and back-end personnel, but not so large

as to become cumbersome.

Change-management resources. Organizations new

to working with concurrent design often benefit

from having a change navigator on their team. This

individual, often a leader in lean operations, can

bring an outside perspective from other industries or

functions to help managers consider different ways

of approaching similar customer and business issues.

As teams begin to accustom themselves to rapid-

process-digitization practices, they may find they

have less need for a dedicated change manager. One

leading Netherlands-based bank, for instance, now

has close to 160 active digitization teams. Concurrent

design has become the bank’s de facto way of working.

Putting rapid process digitization into action

Rapid process digitization begins with envisioning

a superior journey from the customer point of view.

With the team housed together in a dedicated

physical space, the goal is to toss aside traditional

notions of working and use customer data and

intelligence to reimagine the richest, most efficient

and engaging way of satisfying customer needs

and expectations. Basic prototypes are then ushered

into real-time customer testing, where concepts are

validated, refined, and rereleased in continual cycles

until they meet agreed-upon performance thresholds.

Using rapid process digitization to transform the customer experience

Customer experience: Creating value through transforming customer journeys Winter 2016

Digitization teams rapidly and continually learn

and test their new knowledge throughout the

development cycle. Before they nail down the final

design, they review and minimize business-

investment risk and ensure that digital initiatives

deliver maximum customer value. For example,

one telecommunications company wanted to respond

to customer feedback that indicated families

wanted greater visibility into their kids’ mobile data

consumption. The company thought it had the

perfect solution—a new toggle button on a download-

able app that would allow parents to reduce or

extend data minutes for any family member on their

plan. While IT and business teammates hashed

out a basic prototype, other team members quickly

rolled out a text-based poll to 50,000 customers,

selected at random from their high-value family seg-

ment, to see if the plan was on the right track. The

response showed customers loved the idea but hated

the app. What customers wanted instead was a

text or email alert that gave them several response

options. That early feedback allowed the team

to refine the proposed solution rather than invest

heavily in a feature that would have missed the mark.

In our experience, most rapid-process-digitization

initiatives are completed in 20 weeks or less

(Exhibit 2). The actual length depends on the com-

plexity of the design, the performance of the

minimum viable product, and customer feedback.

Such products are necessarily imperfect. The

idea is to create a solution that will be good enough

for early adopters. Teams then improve on that

baseline in the field using actual customer behavior

and feedback. Those insights tell teams where

to prioritize and what features to keep, refine, or

discard. After the launch, ongoing refinements

continue to be made to maintain and improve the

system based on customer use and uptake.

Scaling up

New capabilities should be scaled quickly to trans-

form all key customer journeys. Some companies

do this process by process. One bank, for instance,

organizes its rapid-digitization teams by theme:

one works on all journeys and products related to

credit, another works on investment products, and

so forth. Other companies take a journey-by-journey

approach. Regardless of the approach, businesses

looking to bring digital initiatives to scale must estab-

lish clear standards and performance metrics so

what is learned is gathered and communicated consis-

tently in order to continuously improve the program.

Scaling also requires the human-resources function to

be actively involved, since most organizations will

face gaps in critical digital skill sets, many of which are

in high demand.

One bank’s experience

Based on customer feedback, one retail bank knew it

needed to make significant improvements to its

process by which customers open accounts. The chief

marketing officer (CMO) took nine seasoned business

and IT staffers for a period of four weeks and convened

a rapid-digitization workshop. Participants, many

of whom had little experience in rapid digitization, were

taught the basic elements of customer-centric

design. The CMO also brought in guest speakers from

a prominent start-up and a successful player in an

adjacent sector to build interest and shed light on what

leaders in other fields were doing.

Team members then listened to several painful call-

center exchanges that pressed home the issues some

customers were experiencing. It took only a day

to brainstorm creative ways of addressing those cus-

tomers’ complaints and draft a new design. Con-

structing a minimum viable new product to test,

however, proved more challenging. Early customer

polling revealed some plans were too ambitious and

others were too basic, so the business and tech team

partnered in interpreting and cycling feedback in

successive releases. Close performance monitoring,

integrated into the product-release cycle, revealed

when they finally landed on a model that met most

customer requirements.

To keep the project scope from spiraling, the tech-

nology team dug around the bank’s IT environment

to find existing interfaces to which it could attach a

new set of processes. Although team members at first

felt uncomfortable with repeated testing and refining,

they gradually warmed to the new dynamic. Now,

with the new process established, the team is focused

on cleaning up old redundant methods to open

accounts in order to make the new customer-approved

method the primary means of opening an account.

The initial customer reaction has been very positive.

Large established players are under increased

pressure to transform the quality of the customer

experience to meet rising customer expectations

and counter nimble digital competitors. Rapid

process digitization allows incumbents to execute

on their most critical customer priorities, deliver-

ing highly refined initiatives to market in far less time

than traditional design-and-build approaches.

The authors wish to thank Robert Park and Mahin

Samadani for their contributions to this article.

Line Hartvig Müller is an associate principal in

McKinsey’s Copenhagen ofﬁce, Andrea Peyracchia

is a digital VP in the Milan ofﬁce, and Vik Sohoni is a

director in the Chicago ofﬁce.

Using rapid process digitization to transform the customer experience

Exhibit 2

Rapid digitization can be completed in under 20 weeks.

Customer Experience 2015

Rapid process digitization

Exhibit 2 of 2

Source: McKinsey analysis

Team setup Scale

Diagnostic

and zero-

based design

Detailed design

and initial tech

build

Agile sprints

and customer

testing

Create

exceptional

customer

experience

Transform

business

process

Build

technology

quickly

2 weeks 2–4 weeks 6–10 weeks

Roll volume

into new

processes

Design

architecture of

target solution

Develop basic

technology

building blocks

Integrate

back-end and

system changes

Continue

to evolve

Detail and

approve

design of new

business

process

Build prototype

that delivers

customer

experience

Test with

customers

and reﬁne

Operationalize

and scale

business process

Set up

end-to-end

“SWAT team”

Start zero-

based design

of digital

process and

scope minimum

viable product

Harald Fanderl, Kevin Neher, and Alfonso Pulido

Are you really listening

to what your customers

are saying?

Too many companies squander the treasure that is

customer feedback. The solution is systematically

measuring the customer’s voice and integrating it into

a culture of continuous feedback.

Are you really listening to what your customers are saying?

Customer-experience metrics have proliferated over

the past decade, and chances are that your busi-

ness relies heavily on one or more of them. But many

companies struggle with metrics. For some, the

problem is a disconnect between the metric and

business performance; for others, it’s a loss of

confidence among frontline workers when the metrics

don’t seem to explain big swings in customer satis-

faction. Further, in some companies, there is confusion

about whether transactional or relational measures

matter more, and, in others, a simple lack of results

from too much focus on one top-line metric.

Complicating the problem, many companies

struggle with collecting, analyzing, and acting

on feedback. Many B2B companies, for instance,

gather customer feedback only through sales

channels, missing important insights from users and

influencers. Finally, many companies don’t have the

culture to loop customer feedback through the front

line to improve behavior or connect it to innovation.

Taken together, these complications leave many

companies tone-deaf to the voice of the customer

and represent a formidable barrier to building

the foundation of a successful customer-centric

strategy. Happily, our experience shows that it

matters less which top-line metric a business relies

on; almost any one will do. Rather, what matters is

how the business inserts the metric into a systematic

capability to collect, analyze, and act on feedback

in an effective and complete measurement system of

the customer journey. Building that system can

take time, but gains to a customer-centric culture

and the bottom line can accrue quickly.

Journey-centric customer-experience

measurement

Consider the experience of one international utility

that aimed to break up its metrics logjam and build a

truly customer-oriented culture. While its approach

started with a top-line metric, it shifted past practice

by putting a central focus on key customer journeys

as the bedrock of its system. First, the company

moved beyond measuring touchpoints and homed

in on customer-journey feedback. A journey such

as “I join” for new customers incorporates several

touchpoints (for example, making initial contact,

signing a contract, and receiving a first bill). The

shift in focus gave the utility for the first time an end-

to-end view, in real time, of how customers joined.

This helped the company act on client feedback such

as “my gas meter is not registered properly” or “I do

not understand my direct-debit reassessment”

within a few hours by calling the customer, fixing the

problem, and in this way turning negative customer

feedback into promotion.

Second, a new platform for operational feedback

automated surveys, analysis, and role-based

reporting that created a hardwired backbone

for a customer-centric culture. For the first time,

not only did the marketing department have

customer insights, but so did a large number of

employees—for example, those in all call centers.

Moreover, the same system was applied across

countries, enabling best-practice exchanges on

multiple levels of the organization. Finally, the utility

put the new insights to work with a continuous-

improvement mind-set that directly encouraged

frontline workers to close the loop with customers.

This also forced actions onto meeting agendas and

performance-management systems across the

company. Although the system was only recently

implemented, the utility has seen real payoffs in

better customer experiences, more loyalty, and lower

costs. Following full implementation, company

executives expect about $50 million in improvement

in earnings before interest, taxes, depreciation,

and amortization from revenue gains and other

cost reductions.

In our experience, three core elements are critical

for transforming a middling approach to customer-

experience measurement into a value-creating system.

Customer experience: Creating value through transforming customer journeys Winter 2016

Journey-centric feedback. The heart of journey-

centric measurement is the organizing principle

of measuring customer experience at the journey

level, as opposed to looking only at transactional

touchpoints or overall satisfaction (exhibit).

Our research finds that customer journeys are

significantly better correlated with business

outcomes, such as churn, than are touchpoints (see

“From touchpoints to journeys: The competitive edge

in seeing the world through the customer’s eyes,”

on page 14). Obtaining feedback about customer

journeys—say, for the overall purchase journey, not

just a point of sale, or for the issue-resolution journey,

rather than just a customer-care interaction—

becomes foundational (though it is possible to retain

a top-line metric that combines the journey scores

for ease of reporting and overall progress).

One important advantage of measuring journeys

over touchpoints is the ease of tying operational key

performance indicators (KPIs) to the system. For

example, from a customer perspective, one of the

most important KPIs that data show matter in an

issue-resolution journey is the time from issue to

resolution. This KPI links closely with the journey

that might start from the first moment the customer

or company identifies a problem and then moves

all the way through resolution, so it can be linked

Exhibit

The ideal customer-experience-measurement system puts journeys at the center

and connects them to other critical elements.

Customer Experience 2015

Measurement System

Exhibit 1 of 1

Customer-experience-measurement pyramid Principles

Customer experience.

Source: McKinsey analysis

metric

Employee feedback

Top-line CE metric linked to business outcomes

Journeys, not touchpoints, at the core; aim is to

understand performance on each journey

Regular, objective metrics serve as leading indicators

building to each journey

Employees leveraged to assess customers’ experience

and identify operational improvements

Supported by change-management capabilities

and customer-centric culture

Journey-

experience

assessment

Journey analytics

and operational key

performance indicators

Organizational and cultural foundation

to a customer’s satisfaction with that journey. If

the company is looking only at a touchpoint—say, a

call interaction—then the total elapsed time until

resolution never will appear as an element that

drives customer satisfaction, nor will it become a

focus for improvement.

In addition to tying operational KPIs to journey

feedback, another essential effort is building

organizational and cultural elements into the

foundation of a measurement system. These

elements include clear and broad transparency

of customer-experience measures and feedback,

as well as employee feedback. Best practice is

to think of employees’ journeys in the same way as

customer journeys and to create a parallel path

for collecting, analyzing, and acting on their feed-

back. In our experience, better employee experi-

ence and engagement translate to better customer-

experience performance, and employees are crucial

actors in helping to convey what the customer is

really experiencing.

Hardwired backbone. Just as companies invest in

enterprise-resource-planning systems to collect,

measure, and report finances, so investment in tech-

nology is necessary to support a superior customer-

experience-measurement system. Numerous vendors

provide a variety of functionalities and price

points for these platforms to integrate the customer-

experience-measurement strategy into day-to-

day work routines. Hotel companies generally led the

way more than a decade ago on seeing the value

of hardwiring ways to capture customer experiences,

but today businesses as varied as Apple stores

and Mercedes-Benz dealerships see these platforms

as more than mere survey infrastructure. Rather,

these companies regard them as a true method to

translate data into operations and as essential

to achieving impact.

These systems make important contributions to

creating value. First, they make it possible to tap

many more customer voices beyond the individuals

with whom the business interacts the most.

Moreover, they provide an analysis engine that can

incorporate all kinds of data: survey results, social-

media posts, and linking operational data. Finally,

they enable action-based reporting. In other words,

not only does the user gain transparency into results,

but also the system offers recommendations for

specific responses when certain issues are flagged.

Companies hardwiring a backbone for customer

feedback typically see their net promoter score jump

10 to 25 points in the first year.

Continuous-improvement mind-set. Change is

difficult. Organizational inertia is hard to overcome,

even for companies with a strong customer

orientation. In our experience, there are two areas

where establishing a continuous-improvement

regimen matters most in achieving a superior

customer-centric mind-set. The first is at the front

line, with employees closing the loop with customers

on direct feedback, then using that insight to change

the way the process is designed or executed. When

this does not occur, the cause is sometimes a failure

of performance management around customer-

experience improvement, but often it involves a

“muscle” that hasn’t been trained and role modeled.

Implementing this change is largely about

influencing human behavior. Our research has

consistently shown that effecting this type of change

requires real behavioral role modeling. This must

come from leaders and supervisors, new rewards

and consequences, improved training in how to act,

and a strong conviction and understanding among

employees about why the change is important for the

customer, for themselves, and for the company.

Are you really listening to what your customers are saying?

Customer experience: Creating value through transforming customer journeys Winter 2016

The second important area of impact is making

feedback part of an approach to continuous

improvement in service design. Product companies

long have known that rapid iteration using customer

insights is the way to get to a winning product, but

service companies have rarely invested the same

way in service design. For designers and engineers

in marketing or research and development, it is

necessary to create a pipeline of feedback and

actions, rather than merely reporting metrics, so

the customer’s voice is always present.

Getting started and lessons learned

This kind of transformation can take time—often

18 to 24 months to fully realize the bottom-line gains—

but the benefits to a company’s culture can begin

accruing quickly as the system is put in place. One

particular value of journey-centric measurement is

that it does not require going all in at the beginning

across the customer life cycle. Businesses can build

the complete system, end to end, in one journey

at a time and then roll out more broadly as they build

momentum or free up resources.

Whatever starting point management chooses, there

are common pitfalls. Lessons learned from these

can help ensure that establishing a journey-centric

customer-experience-measurement system gets off

to a strong start:



Think systematically. Metrics are simply data

points. Think of each as a medical test, such as

an X-ray or CAT scan, that serves as one input in

making an informed diagnosis. In business, as

in health, the goal isn’t to focus on the test but to

figure out how to heal whatever has gone wrong

throughout the entire system. It may seem

intuitive, but it bears repeating that securing a

number is not enough. Businesses must be

Custready to take that feedback and use it for

change.



Don’t fret about the metric. Businesses often

agonize over whether they have the right metric.

But our research shows that whether a company

is using a net promoter score, customer-

satisfaction score, customer-effort score, or

another popular metric of the day, it matters

less which score customer-experience managers

choose than what they do with it. No one metric

is the best for all businesses or customer journeys,

and best-in-class operators generally choose the

metric that is most predictive of their desired

business outcome, which can vary by industry.



Show me the money. Getting the most out of

any metric requires linking that measurement

to financial value. That linkage helps business

leaders set priorities on the changes that

will deliver the greatest bottom-line impact

and stimulate conviction at all levels of the

organization. It’s of little use to choose a typical

net-promoter-score scale (say, 0–6, 7–8, 9–10)

if moving customers from 7 to 9 doesn’t actually

deliver any improvement in financial metrics

such as likelihood to churn. In tying action to

metrics, businesses must establish clear and

well-understood break points (see “Linking the

customer experience to value,” on page 82).



Close the loop. Metrics reflect the state of

business at a particular point in time. Actually

improving customer experience requires

closing the loop with customers to fix individual

concerns and to celebrate frontline successes. It

also requires closing the loop on core issues by

applying the feedback to the journey level,

analyzing the KPIs, and rewiring the organization

to fix the root causes of any problems.



Listen to the front line. Leading customer-

experience companies systematically improve

operations by incorporating employee feedback

on perceived customer experience and problem

areas. This requires a shift in thinking that goes

beyond conducting focus groups or meetings

between senior management and frontline

workers. It requires applying to employees the

same operational-feedback platforms used for

listening to customers. Although employees and

customers point out similar problems, employees

uncover root causes, while customers only report

on symptoms.



Focus on alignment. Successfully establishing

a new measurement system in the context of a

broader customer-experience transformation

depends on cross-functional alignment

(see “Designing and starting up a customer-

experience transformation,” on page 72).

Marketing, operations, IT, and even human

resources in some cases are essential to have at

the table, jointly committed to the company’s

customer-experience vision.

Customer-experience metrics are everywhere, but

relying on them isn’t the same as truly hearing

the voice of the customer. Rather, investing in

an effective and complete system to measure the

experience of the customer journey is the way to reap

the rewards of customer feedback.

Are you really listening to what your customers are saying?

The authors wish to thank Ralph Breuer and Whitney

Gretz for their contributions to this article.

Harald Fanderl is a principal in McKinsey’s Munich

ofﬁce, Kevin Neher is a principal in the Denver ofﬁce, and

Alfonso Pulido is a principal in the San Francisco ofﬁce.

Dilip Bhattacharjee, Line Hartvig Müller, and

Stefan Roggenhofer

Leading and governing the

customer-centric organization

The uniquely cross-functional nature of effective

customer-experience efforts puts a premium on smart

governance. Clearly defined leadership, behaviors,

and metrics are the places to start.

Leading and governing the customer-centric organization

What’s wrong with this picture? C-suite leaders,

intent on restoring their company’s slipping com-

petitiveness in today’s fluid, multichannel markets,

conclude a high-level strategy meeting with an

announcement from the chief executive: since cus-

tomer satisfaction has become a top priority for

the company, a high-performing executive will take

charge of a new customer-experience unit, with

the goal of making the organization more customer-

centric. The unit will report to the chief operating

officer (COO), since the operations function is closest

to where most customer interaction takes place.

What’s amiss is that, while the company’s impulse

is right, this often-seen response overlooks criti-

cal elements in leading and governing a customer-

experience effort that distinguishes leading

customer-centric companies from laggards. For

starters, the best customer-experience efforts begin

with a “customer back” perspective driven by

the customer’s wants, not the company’s traditional

organizational structure. That makes the task of

governing customer-experience efforts unique even

among organizational designs that rely on a heavy

dose of cross-functional collaboration. Then, leading

players incorporate that complexity into choosing

which customer journeys matter, which metrics to

target, and which incentives to apply in energiz-

ing and motivating frontline workers to build and

sustain a superior customer experience.

In our experience, adequately addressing the

challenge requires a dedicated effort on three levels.

First, a customer-centric leadership structure

must ultimately report to the chief executive and

should be designed to stimulate cross-silo activity

and collaboration. Second, leaders must commit to

demonstrating behaviors and serving as role

models to deliver customer-experience goals to front-

line workers and refine and reinforce those goals

over the long term. Finally, it is necessary to put in

place the correct metrics and incentives that are

critical for aligning typically siloed units into effec-

tive cross-functional teams.

Perspective matters

Consider the customer’s view of the experience of

shopping for a pair of sports shoes. As noted in

“From touchpoints to journeys: The competitive edge

in seeing the world through the customer’s eyes,” on

page 14, customers form their impression of a product

or service through multiple interactions with an

organization. The customer’s ultimate satisfaction or

irritation stems from his or her overall impression

over the course of an end-to-end journey, rather than

with individual touchpoints along the way.

In this way, the experience of shopping for a pair of

sports shoes reflects more than the customer’s satis-

faction with the appearance or performance of the

shoes themselves. It might begin with the experience

of browsing the Internet to get an idea of choices;

finding a store to buy the shoes; making a selection

and interacting with the sales staff; considering the

price, look, and quality of the shoes; undergoing the

packaging and return journey; and even sharing the

experience with friends on social-media sites. If one

of these interactions or elements feels bad, the entire

experience might be rated as bad by the customer.

This example demonstrates how many different parts

of the organization are responsible for delivering

the ultimate customer experience. Providing a seam-

less customer experience thus begins with the

customer’s perspective at the center of the organiza-

tional structure and requires all parts of the orga-

nization to work together in lockstep. The same holds

true for customer journeys that take place across

geographic regions or even across brands as part of

the same organization.

Now consider the perspective of a manager who

spends most of his or her day in a large organization

selling products or services to customers. Unlike

the customer’s journey, which touches all areas of

the business, the manager’s time and energy is

largely devoted to improving a single part of the orga-

nization. In many cases this is a typical functional

area, for example, a call center.

Customer experience: Creating value through transforming customer journeys Winter 2016

The COO will have a strong focus on improving the

productivity of back-office employees. He or she

might have teams measured on average handling

time for a call center, or a backlog of customer

requests for the back office. This focus drives effi-

ciency but not necessarily customer satisfaction.

Tensions might arise with the sales department if

the number of product options increases complexity

for the COO’s agents. Should a slightly longer call

allow for resolving more problems the first time

around, the COO may nonetheless resist because one

measure of his unit’s productivity might slump.

What message does this send to employees? By

constantly focusing on reducing handling times

at the call center rather than on raising customer-

satisfaction scores, a manager will signal to

employees that productivity, and thus cost, is a

priority over delivering a superior customer

experience. Similarly, the emphasis on department

performance will motivate employees to focus

locally, not across the entire end-to-end customer

journey. Under such circumstances, even the

best customer-experience vision and strategy will

stumble under the weight of limited information

transfer and poor cross-functional collaboration.

Organizing to lead end-to-end

customer journeys

Leaders in customer experience pursue a range of

approaches to overcome such complexity. In our

experience, several elements form the core of their

successful efforts. They include the following.

Setting up a dedicated customer-experience

organization.

Forming a dedicated team allows a

company to maintain a continuous focus on

customer experience across segments, brands,

geographies, and functional areas. In our

experience, a permanent customer-experience

team of 2 to 20 members is usually sufficient,

regardless of company size. The team’s size and

profile can be determined by the maturity of the

company’s customer-experience profile. In

cases where customer-experience norms, values,

and metrics are lacking, more formal roles and

responsibilities will be required. A larger team may

be necessary when its focus is on stimulating

cross-functional activity and on execution versus

promoting innovation.

The role and responsibility of the team should also

be clearly defined within the organization. Effec-

tive customer-experience teams provide outside-in

perspectives, such as industry best practices and

customer insights from other sectors. They identify

customer-experience-improvement opportunities

and potential solutions, as well as support customer-

journey performance analyses and traction.

They enable change management and continuous

improvement in frontline operations.

Some typical roles include a senior staff role to lead

the team of managers and analysts and ensure

cross-functional collaboration and oversight to imple-

ment customer initiatives at the front line; a line

leader who drives frontline initiatives, supports

implementation, and coaches employees; a manager

who prioritizes staff and resources on customer-

experience initiatives and oversees analytics and

drivers of customer metrics; and analysts who work

with data from internal surveys and external sources

to focus on metrics and operational-performance

indicators, with an eye on identifying opportunities

and solutions to problems.

Establishing C-suite engagement. In our experi-

ence, the CEO must make customer experience an

active priority, given the cross-functional col-

laboration required. For one US insurance provider,

customer experience had been a key priority of

the CEO for two years. Customer ratings were high.

Assuming that such success could be sustained,

the CEO decided to have the customer-experience

organization report directly to the COO, given his

existing oversight of the company’s customer call center.

Six months later, however, customer-experience

ratings were spiraling downward, driven by a lack

of priority and responsibility from other parts of

the organization.

There are several different ways to structure

a direct role for the CEO in customer-experience

programs and to provide a customer-experience

leader who is not the CEO with sufficient access to

the boss to prioritize customer experience within an

organization and across its operational silos.

Leading and governing the customer-centric organization

Exhibit

Direct C-suite access is recommended as the most straightforward way to set up a

customer-experience organization for success.

Customer Experience 2015

Governance

Exhibit 1 of 1

Vertical

alignment

Function speciﬁc Cross-functional Direct C-suite access

Recommended

Whom the

head of

customer

experience

(CE) reports

Factors for

success

Single functional leader

/VP Multiple functional leaders/VPs CEO/C-suite

Functional leader

Functional

leader

Functional

leader

Chief

customer

ofﬁcer (CCO)

CEOCEO CEO

CE leaderCE leader

•

Lower vertical alignment will

not affect ability to inﬂuence

and prioritize CE within company

•

CE and assigned functional

leader work closely to include

CE goals/priorities

•

Relationships with other

functions are possible without

any formal structure

•

Creating additional links

enhances cross-functional

relations and capacity to

develop and integrate a

holistic customer approach

•

Functional leaders are aligned

on importance of CE within

organization

•

Functional leaders cooperate

to develop and support CE

leader in capabilities and

strategic approach

•

CEO has necessary interest

and time to devote to CE

strategy and develop CCO

•

CCO role in executive

team is clear and CE vision

is easy to articulate

•

High CE alignment will

allow CCO to inﬂuence and

incorporate other functions

throughout company

Other positions and structures may exist below or beside head of customer experience.

Examples of functional leaders include chief marketing, operating, and strategy officers.

Source: McKinsey analysis

Customer experience: Creating value through transforming customer journeys Winter 2016

Ideally, the naming of a chief customer officer

(CCO) with direct access to the CEO is the most

effective way to establish the importance of

customer-experience efforts and to influence change

across an organization’s functions (exhibit).

The virtues of establishing the CCO role include

signaling the importance of customer experience

to the organization, ensuring a persistent focus

on customer experience in the actions the company

takes, and implementing a customer-experience

framework that highlights the voice of the customer

in the organization. The challenge is that the CCO

takes on responsibility for the customer experience

and thus must align with and secure the strong

support of the executive team and levels below, to

manage the cross-functional nature of the

customer journey.

In any case, the CCO also requires the CEO’s strong

support to succeed. The CCO’s tasks begin with

aligning leadership to embed a customer-experience

solution across individual segment, brand, geo-

graphy, and functional areas. It’s critical to engage

leaders of other functional areas, particularly

marketing and operations, given their close ties to

customers. Among other challenges in building a

sustainable program: bringing together customer-

insights research and reporting, with a focus on

operational excellence and frontline changes.

Within IT, the CCO must ensure that analytics are

streamlined into tools and systems and that the

customer experience is digitized.

Fitting the customer-experience team into the

organizational fabric.

Once the team is constituted

and leadership assigned, it’s critical that the

customer-experience team fit seamlessly within

the company fabric and mirror the company’s

principal organizational construct. If not, customer-

experience transformation efforts may drown

in a sea of organizational confusion. For example,

the customer-experience group within one global

travel and hospitality company mirrors the parent

company’s brand structure and delivers an end-

to-end customer-journey experience for each indivi-

dual brand across all functional areas. By contrast,

a customer-experience focus rooted in a particular

function would have emphasized the touchpoint

experience, not the company’s different brand value

propositions, to the confusion of both customers

and the organization.

Walking the walk

Setting up an organization with primary responsi-

bility for driving customer experience is just

Setting up an organization with primary responsibility for

driving customer experience is just the beginning.

the beginning. How senior leaders embrace

an organization’s customer orientation is at least

as much a critical factor in the success of such

efforts. The approach used by Disney, one of

the most successful customer-centric organizations,

illustrates the principle that business leaders

promote the value that customer-centricity creates.

Disney makes use of a simple leadership frame-

work that links the delivery of business results to

customer satisfaction and measures that satisfaction

via two key indicators: “propensity to return” to

a Disney experience and “propensity to recommend.”

Disney’s framing also stipulates that the way to

satisfy customers is through engaged employees. For

Disney’s business leaders, the logic is clear: their

task is to develop excellent employees, who in

turn help to create satisfied customers, leading to

business results.

How can organizations apply these principles?

From our work, we find four primary ways business

leaders can act.

Modeling specific behaviors. Examples abound of

senior executives who walk the walk when it

comes to advancing customer experience. At one

European telecommunications company, the CEO

regularly listens to customer calls, goes on customer

visits with technicians, and tries out both old and

new product and service solutions to live the customer

experience. The CEO of one retailer regularly

works the cash register to interact with customers

face to face. Other executives ask for customer-

satisfaction results before they look at any financial

or productivity measures, to signal the importance

of customer satisfaction. Others make sure that

their employees feel valued by understanding their

specific needs. At one international airport, for

example, security personnel did not have their own

break room. They had to sit in the restaurants of

the airport, leading to many passengers accosting

them with questions about the airport. This was

not a good way to relax. The CEO decided to

build specific rest facilities for the employees where

they could retreat from hectic airport activities.

Fostering understanding and commitment among

employees and managers.

While many managers

talk up the importance of customers, how many

actually know the financial impact of an additional

percentage point in a customer-satisfaction score?

One major financial institution wanted to embark

on a customer-experience transformation. Although

managers identified many improvement themes,

the entire transformation did not really go beyond a

few initiatives, because no one in the organization

knew how much the customer-satisfaction improve-

ments were worth. After some initial excitement,

managers lapsed into focusing on other priorities.

Making an explicit link between improvement in

customer satisfaction and actual bottom-line impact

is a prerequisite for a CEO to keep customer-

experience strategy at the top of his or her agenda

(see “Linking the customer experience to value,”

on page 82). Giving employees an opportunity to

diagnose customer-experience performance, conduct

interviews, and participate in feedback sessions

also builds commitment.

Reinforcing new behaviors through formal

mechanisms.

Financial incentives can help, but

nonfinancial recognition schemes are more powerful.

Consider the recognition cards that senior leaders

sign and hand out to employees. In the case of the

international airport, it turned out the employees

carried the cards in their wallets and proudly showed

them to colleagues and family. The airport man-

agement even went as far as handing out those cards

for special efforts across functional and organi-

zational boundaries. For example, the manager of an

airport would hand out a card to cleaning staff

when he or she saw them going out of their way to

Leading and governing the customer-centric organization

Customer experience: Creating value through transforming customer journeys Winter 2016

help a stressed passenger find passport control.

Showing teams how their actions directly affect

customer-satisfaction scores can also help

employees see how their contributions influence the

customer experience; this in turn helps support

new behaviors.

Developing capabilities and skills. Training man-

agers and employees in customer-centric behaviors

is an important first step. This starts with the

recruiting staff and training. Part of this training

should be an understanding of the customer-

experience rules and associated behaviors. It may

be necessary to create an overarching frame-

work that explains the key principles for a good

customer experience. This can include ensuring

safety protocols are in place (a priority), followed

by courtesy, friendliness, and efficiency. These

principles may need to be nuanced for the different

parts of an organization. For the customer-facing

part of a bank, for example, making eye contact

might be an appropriate behavior to ensure courtesy,

while people in the back office need to make

sure that customer requests are given priority over

internal requests.

Why metrics matter

With the dedicated customer-experience organi-

zation in place, and senior leadership modeling and

reinforcing key customer-centric behaviors, the

next step is setting up metrics and targets that steer

cross-functional collaboration at all levels of the

organization. Given the cross-functional nature of

the customer-experience process, it’s important

to avoid the stumbling block posed by organizational

silos. Metrics and targets can enable collaboration

that supports the continuous delivery of superior

customer experience (see “Are you really listening to

what your customers are saying?,” on page 58).

The natural tendency of siloed business units

is to first and foremost deliver on key performance

indicators and financial targets. To change that,

one telecommunications company’s CEO started a

customer-experience transformation by updating

the group incentive structure for his top 30 execu-

tives. The new approach made company recommen-

dation scores and unacceptable customer-incident

scores count for 35 percent of bonuses, while local

business-unit scorecards were changed to focus

intently on customer experience. This prompted a

shift in attention from short-term local profit

and loss to long-term company growth via cross-

functional customer experience.

In addition, it is necessary to encourage trans-

parency on customer-experience performance at all

levels of the company. At the executive level, the

focus may be on the overall recommendation score,

and at the next level down, it may be on the

customer-journey experience across functions.

Within a department, managers might look at

specific customer touchpoints. Customer-experience

performance indicators—such as recommenda-

tion scores, unacceptable customer incidents, and

journey-satisfaction scores—mirror the voice of

the customer and should be paired with operational-

performance indicators, which employees can

directly influence. These include waiting time,

throughput time, or number of errors made.

For key performance indicators to be valuable, they

must explicitly link to financial impact and

illuminate which journeys matter most to customers.

To deliver bottom-line impact and change employee

behavior, all key indicators need specific target values

that in turn are linked to the incentive structure.

This makes all employees responsible and account-

able for the customer experience and is useful

for individual performance discussions, from execu-

tives to frontline agents.

Executive teams can ensure cooperation across

functions through regular meetings to evaluate

overall customer-experience performance.

Typically, cross-functional customer-champion

teams are held accountable for performance

indicators and progress on improving customer-

experience journeys. The cross-functional

customer-champion teams must meet regularly

to review performance against targets, based

on indicators to measure customer journeys.

These teams must then generate and implement

improvements. Here the divergence between

driving functional results and cross-functional, end-

to-end journey experiences is critical. If man-

agers cannot agree on a joint course of action, senior

managers or the CEO may have to intervene.

Structuring a complex organization to deliver

a superior customer experience can be challenging.

Leading customer-experience organizations

tackle this problem by making customer experience

a top priority for the CEO, by having senior leaders

model the customer-centric behaviors that will

engage and motivate employees on the front line,

and by designing a customer-experience team that

promotes cross-functional collaboration via

targets and metrics.

Leading and governing the customer-centric organization

Dilip Bhattacharjee is a principal in McKinsey’s

Chicago ofﬁce, Line Hartvig Müller is an associate

principal in the Copenhagen ofﬁce, and Stefan

Roggenhofer is a principal in the Munich ofﬁce.

Ewan Duncan, Harald Fanderl, and Katy Maffei

Designing and starting

up a customer-experience

transformation

To successfully initiate a broad improvement

program, decide on a structure, select the sequence

that’s right for your type of company, and don’t

forget to recruit change agents.

Designing and starting up a customer-experience transformation

As improving customer experience becomes a bigger

component of corporate strategy, more and more

executives will face the decision to commit their organi-

zations to a broad customer-experience trans-

formation. But it’s not sufficient to understand that

the benefits of change are great. The immediate

challenge will be choosing how to structure the organi-

zation and rollout, and deciding where and how to

get started.

These are critical issues because, like many far-

reaching and complex business programs, customer-

experience transformations frequently fail to live

up to expectations. The foundations of such transfor-

mations require organizations to make cultural

changes and to rewire themselves operationally and

financially. Customer journeys, which are cross-

functional by nature, cut across traditional organi-

zational boundaries, and changing this dynamic

is tricky.

It is important to think about program design before

you start: decide on a structure, examine the best

sequence for your type of company, and make sure

you are engaging change agents and minimizing

the inevitable resistance. You’ll also want to think

about where to start, so you can be sure to deliver

near-term impact. This is crucial for gaining momen-

tum and organizational buy-in and for identi-

fying the funding and capacity to reinvest in your

transformation.

Choosing an overall architecture

The first step in setting up any customer-experience

transformation is establishing the right overall

architecture. A typical program involves five elements.

Senior executives will want to set a clear, inspiring

vision for the ideal customer experience, including a

change story to underline the importance of deliv-

ering on goals. Drawing up a governance blueprint is

also important, both to set up a mechanism to make

decisions on cross-cutting initiatives and to align new

and ongoing initiatives in each function with over-

all customer-experience objectives. Drafting an

initiative road map will serve as a portfolio of actions

to deliver on the vision. Metrics and initiative objec-

tives should be set to gauge progress. It’s important

to monitor both “hard” metrics on performance

and “soft” metrics that relate to organizational health.

Finally, establishing purpose-driven change-

management principles will define a new way of

working, embed it in the organization, and guide

frontline employees across functions (Exhibit 1).

Drafting a road map

Other articles in this compendium have explored

how to create a vision and shape an effective gover-

nance structure for a customer-experience change

program (see “Developing a customer-experience

vision,” on page 8, and “Leading and governing

the customer-centric organization,” on page 64). To

draw an initiative road map for a broad transfor-

mation, there are three primary decisions to make:

the organizational approach, sequencing, and

impact timing.

Organizational approach

Is it better to push change functionally or cross-

functionally, with a journey-by-journey focus? The

critical factor in answering this question is where

you think you can best build and sustain momentum.

Most companies are organized functionally,

so proceeding by function often is an easy way to

get going (Exhibit 2). Organizations can use the

voice of the customer to identify opportunities

to improve within functions. Tapping into the voice

of the customer involves a range of systems that

capture feedback, including satisfaction scores and

verbatim opinions; it’s increasingly common to use

information from sources like social media, too.

Typically, a central group is tasked with aggregation,

analytics, and gathering internal and external

insights on what truly matters to your target customer,

within your industry, and for your organization.

Customer experience: Creating value through transforming customer journeys Winter 2016

Over time, the voice of the customer can be used

to identify upstream and cross-functional issues and

address the root causes of problems. This is likely

to be your approach if you’re in the 80 percent of com-

panies performing in the middle of your peer set—

not broken and dysfunctional, but not a top performer,

either. This approach should allow you to get started

and show early results within the existing organi-

zational structure.

An alternative is to structure the transformation cross-

functionally from the outset, focusing on a set of

specific customer journeys (Exhibit 3). The benefit

of this approach is that it emphasizes the end-to-

Exhibit 1

Five elements are typical of a customer-experience transformation.

Customer Experience 2015

Transformation

Exhibit 1 of 4

A clear, inspiring vision for the ideal customer

experience and the capability for employees to

deliver it consistently

Voice of the customer: what matters

and to whom

Compelling change story

Brand value proposition

Source: McKinsey analysis

Vision

A decision structure to align on priorities and actions

Functional alignment

Cross-functional decision

committees and working groups

Governance

A portfolio of initiatives that will deliver on the vision;

clear performance accountability

Journey design eliminating pain points

and injecting wow moments

Process and policy changes

Rapid test and learn

Initiative road map

The ways we will work differently in order to accomplish

things that today’s ways of working cannot

Change agents, including willing

leaders as well as skeptics

Frontline empowerment

Communications

Change-management principles

The ways we know we are making progress

“Hard” and “soft” measures

to manage performance and health

Metrics and initiative objectives

end experience for customers, given that they’re

exposed to organizations across channels and functions.

The idea is to design “future back”—first deter-

mining the ideal future experience and then tackling

a set of initiatives to overhaul an entire journey

from start to finish. The initiatives can then be mapped

onto the existing organization using different goals

and metrics; in more extreme cases, you can shift the

organization to mirror the customer-back, cross-

functional view. Typically, the approach will evolve,

as redesigning and embedding journeys at scale

takes time to implement. Cross-functional working

teams should be convened to tackle these journeys.

KPN, a high-performing Dutch telecommunications

company, reoriented its business around cross-

functional working teams. Similarly, Canadian telco

Telus organized its 8,000-employee frontline

team into cross-functional working pods of about

200 people each. In retail customer care and field

service–oriented companies, doing so is a powerful

way to bring everyone close to the customer. And

Exhibit 2

Build and sustain momentum

A functional program road map can yield results.

Customer Experience 2015

Transformation

Exhibit 2 of 4

Source: McKinsey analysis

2014 2015

Q3 Q4 Q1 Q2 Q3 Q4

Understand what matters to whom

Voice of the

customer

Change

management

Customer

care

Sales

Billing and

payments

Field service

Customer

care

Set up learning lab

Quick wins Transformation initiatives

Design initiative 1

Test and learn

Scale

Design initiative 1

Test and learn

Scale

Design initiative 1

Test and learn

Scale

Design initiative 1

Test and learn

Scale

Designing and starting up a customer-experience transformation

Customer experience: Creating value through transforming customer journeys Winter 2016

Middle Eastern bank Emirates NBD reorganized

itself to concentrate on customer journeys,

irrespective of channel, to create an organization-

wide singular customer-journey focus.

Sequencing

Is it better to start in one functional area, in one

journey, and show what’s possible before rolling out

changes, or to launch in all areas at the outset?

Most companies prefer to tackle one area at first.

Doing so can help build momentum by proving the

benefit of the change before it’s scaled up for the rest

of the organization. And starting small tends to

be more practical for the majority of organizations,

which need to identify additional resources and

change agents who can push for performance gains

that are bigger and faster than the organization

is used to. These change agents then become the

coaches for subsequent waves in other parts of

the organization.

Some companies like to launch everywhere,

across functions, and take a big-bang approach.

Exhibit 3

Build and sustain momentum

A cross-functional road map can also guide transformations.

Customer Experience 2015

Transformation

Exhibit 3 of 4

Source: McKinsey analysis

2014 2015

Q3 Q4 Q1 Q2 Q3 Q4

Understand what matters to whom

Voice of the

customer

Change

management

Set up

learning lab

Quick wins

Journeys

Design journey 1

Test and learn

Scale improve-

ment capabilities

Design journey 2

Test and learn

Scale improve-

ment capabilities

Design journey 3

Test and learn

Scale improve-

ment capabilities

Organizations that do this well establish a baseline

with voice-of-the-customer data and feed results

back to the functions. Individual operational leaders

are allowed to make the decisions that make the

most sense for the customer, given the capability and

constraints of the function. Some companies try

to use the voice of the customer to coordinate efforts

and organize implementation centrally. In those

cases, a central group manages analytics and priori-

tizes efforts. Usually, we see greater impact when

this happens because investment decisions are made

at a broader level.

In carrying out a big-bang approach, it’s important to

set goals for the entire organization. Tweak them

for different groups, depending on the competitive

situation (customer-experience performance is

based as much on product and geographic specifics

as it is on internal performance), then let the organi-

zation figure out how to achieve the goal. Estab-

lishing a central “SWAT team” can help steer improve-

ment and provide teams with resources. When

one large European shipping company with 30,000

employees worldwide and a presence in more

than 100 countries adopted a big-bang approach, it

linked 40 percent of every department’s and

employee’s yearly evaluation to customer-experience

improvement for two years. Then it let individual

departments figure out how to implement specific

initiatives, supported by SWAT teams.

Another option that is becoming more common is

using digital capabilities to design an entire journey

or subjourney from scratch. Such “clean sheeting”

can cut through functional bureaucracies. For example,

a European bank designed and delivered a com-

pletely digital onboarding experience for opening a

new account by bringing together a working team

with representatives from all functions that affected

the process so it could be reimagined. The project’s

kickoff materials were a blank wall and lots of sticky

notes. This method works because it quickly results

in a “perfect” journey that a subset of customers expe-

riences digitally; the longer, more incremental work

is conducted in parallel to create a nondigital version

of the journey across functions.

Impact timing

Should you pick low-hanging fruit first, though it

may have less impact, or move aggressively on big-

ticket items?

When choosing actions, it’s important to set priorities

for initiatives that have near-term impact. To start,

pick an area where you can affect revenue growth and

reduce costs immediately. This creates momentum

for the program, which will get everyone excited and

can accelerate progress; it also frees up funds or

capacity that can be invested in the rest of the program.

As you look at different customer-experience initia-

tives, measure them for both short- and long-term

Designing and starting up a customer-experience transformation

Customer experience: Creating value through transforming customer journeys Winter 2016

impact. Make sure there are wins early in the program.

For example, a quick policy scrub might eliminate

approaches that cost money and don’t really benefit

customers, tackle credits, or reduce call volume.

Some pricing actions can have quick impact, though

these kinds of initiatives generally will reduce—

not generate—revenue in a customer-experience pro-

gram. Impact is often measured operationally,

through a drop in calls, fewer calls that must be ele-

vated to managers and supervisors, and other cost

measures that come from simplifying the business.

Benefits from improved customer experience and

heightened loyalty are lagging indicators and will

come over time.

In addition to efforts that drive near-term impact,

early symbolic actions can send an important signal

to the organization. Companies might, for instance,

reverse or eliminate policies that were put in place long

ago. Or they could change the way the senior team

behaves by bringing customer-experience and voice-

of-the-customer principles into senior operational

meetings and by getting the senior team out on the

front line to interact with customers directly.

Most organizations start customer-experience trans-

formations with a focus on reducing abrasive

experiences, which can include rooting out elements

that irritate customers or addressing detractors

within the organization. Only then do customer-

experience advocates go on to create more promoters.

Targeting abrasive experiences is usually the right

place to begin, particularly when there are many of

them. Often, fixing a journey’s broken elements

affects many customers and can move customer-

experience numbers in a positive direction. Once a

stable base case is achieved, organizations should turn

their attention to making sure each journey includes

wow moments that exceed customer expectations.

Moving to action

Regardless of the structural approach chosen for

the customer-experience transformation, securing

buy-in from the organization and building momen-

tum depend on balancing two organizational dynam-

ics: blending top-down and bottom-up activities,

and addressing hard performance and softer

health measures.

Customer-experience transformations depend on balancing

two organizational dynamics: blending top-down and

bottom-up activities, and addressing hard performance and

softer health measures.

Top-down and bottom-up activities

Any program to improve customer experience is

ultimately shaped by millions of individual interactions

across journeys and functions as customers research,

buy, use, and renew products and services. Building

a customer-experience culture is about ensuring the

employees who interact with customers directly

and indirectly make the right choices in those inter-

actions to meet—and, ideally, exceed—customer

expectations. Programs thus need a good dose of

bottom-up activity, as those behaviors have to be

embraced by thousands of employees over time. For

example, a global freight forwarder in China asked

all employees to start delivering just 1 percent extra

a month as they gradually rolled out other top-

down initiatives.

Programs that are only nurtured from the bottom up,

however, usually produce results that are less than

ideal. Executives need to set a top-down aspiration and

overarching mission to ensure everyone has the

same level of ambition and the same guiding principles.

But it’s also important for leaders to set the structure,

approach, and underlying methodology to ensure

performance is consistent across the organization. Too

often, we’ve seen organizations create conditions

for change but fail to meet their aspiration or reach

the overall goals for the program, though they see

some improvement.

A customer-experience transformation at a large

international airport demonstrated these principles.

Leadership defined cross-functional working teams

for each initiative that pulled expertise from the front

line and midlevel managers. The teams were given

latitude to test new ideas in a leadership-defined “sand-

box.” Formal monthly meetings, in which a rotation

of teams participated, provided updates on status and

impact. Finally, technology-driven crowdsourcing

of ideas allowed all stakeholders who interacted

with customers to shape the transformation effort

more broadly.

Performance and health measures

All customer-experience programs require hard

metrics. What matters to customers? What are the

underlying elements of customer experience?

What goals should be set across and within functions?

What priorities should be applied to initiatives to

meet those goals? And so on. Where we see many pro-

grams fail, however, is in addressing the soft side

of change. How do we create the case for change, espe-

cially in high-performing organizations? How do

we motivate leaders to take the first steps? How do

we inspire the rest of the organization to follow?

McKinsey research can be helpful in sorting through

these choices in the context of a broad customer-

experience transformation.

In the five frames of per-

formance and health, we make the case for managing

with equal rigor both hard and soft measures.

For example, in setting the customer-experience

aspiration, a healthy organization will engage leaders

and employees so they own goals and results. To

do this successfully, there must be a compelling story

about the imperative to change. The organization

needs to gather input from leaders and employees,

while ensuring there’s a critical mass of leaders

with a sense of personal ownership of the organization’s

aspirations.

Additionally, organizations need to understand and

embed strategically important capabilities, as

well as to unearth and address the underlying mind-

sets that can keep them from realizing their goals.

Designing and starting up a customer-experience transformation

Customer experience: Creating value through transforming customer journeys Winter 2016

Identify areas of health that you want to strengthen

or shift, and then design appropriate interventions,

such as leadership role modeling, improved incentives,

and new training and career-development programs.

To check on progress as the transformation continues,

make sure everyone understands how individual

contributions fit into the big picture. Continue to

build ownership through formal accountability

and informal marketing. And constantly evaluate

progress on your health-related interventions.

Exhibit 4

One company aligned its customer-experience road map with functional owners.

Customer Experience 2015

Transformation

Exhibit 4 of 4

Journey Primary initiatives Metrics Owner

Net promoter score.

Source: McKinsey analysis

Sign-up

Simple offer and sales

journey

Sales conversion

90-day contact rate

V P, s a l e s

Payment

Simpliﬁed bill and

bill-resolution journey

Reduction in billing calls VP, ﬁnance

Use

Product-reliability

improvement

Field-service reduction

Equipment replacement

% digital care

Reduction in calls

Enhanced self-care

VP, product

VP, online

Renewal

Streamlined upgrade

program

Upgrade volume VP, loyalty

Repair

Customer-care service

experience

First-call resolution

Service NPS

Employee NPS

% on-time arrival

Field-service NPS

Employee NPS

Field-service experience

VP, care

V P, ﬁ e l d

Hitting your performance and health targets is not

the end, however. Rather, you must ensure a smooth

transition to an era of continuous improvement.

This requires infrastructure to maintain gains in

performance and leadership to nurture advances

in organizational health. Rewire your existing organi-

zation to support ongoing gains, with systems and

leaders to emphasize sharing knowledge, capturing

ideas for improvement, and promoting ongoing

learning and dedicated expertise. For example,

one service provider aligned its functional and

cross-functional initiatives with metrics that had

functional owners in order to establish customer-

experience gains and generate momentum (Exhibit 4).

Starting up

The most important criteria for getting a trans-

formation effort off to a fast start is to find the parts

of the organization where the leader and at least

some employees want to change. These prospective

change agents can be high performers who want

to get better or laggards who need to improve quickly.

Either way, picking those who are most willing can

ensure you get off the blocks quickly.

Designing and starting up a customer-experience transformation

Ewan Duncan is a director in McKinsey’s Seattle

ofﬁce, Harald Fanderl is a principal in the Munich

ofﬁce, and Katy Maffei is a consultant in the San

Francisco ofﬁce.

See Scott Keller and Colin Price, “Organizational health:

The ultimate competitive advantage,” McKinsey Quarterly,

June 2011, mckinsey.com.

Joel Maynes and Alex Rawson

Linking the customer

experience to value

Many customer-experience transformations stall

because leaders can’t show how these efforts

create value. Patiently building a business case can

fund them, secure buy-in, and build momentum.

Linking the customer experience to value

The road to failed customer-experience programs

is paved with good intentions. Executives are quick

to see the end-game benefits of a customer-centric

strategy: more satisfied customers, increased loyalty,

a lower cost to serve, and more engaged employees.

But they often fail to understand clearly what a superior

customer experience is worth and exactly how it

will generate value. At a recent roundtable, fewer than

half of the customer-experience leaders present

could say what ten points of net promoter score would

be worth to their businesses.

Many companies begin their efforts to change the

customer experience with a broad aspiration to trans-

form it. Executives launch disruptive initiatives to

delight customers with bold moves and innovations.

But they often fail to quantify the economic outcomes

of differences in customer experiences, so their

efforts end up having clear costs and unclear near-term

results. Customer-experience transformations

invariably raise questions about business policies,

cross-functional priorities, and how to invest in

innovation. Without a quantified link to value and a

sound business case, such efforts often can’t show

early gains, build momentum among functional exec-

utives, and earn a seat at the strategy table. They

stall before they ever really get going.

There is a better way, anchored in science, fresh

research, and a structured methodology. We also

find that the most successful programs are self-

funding—early wins remove costs from the system

and simplify the business. Those savings can

then fund medium-term initiatives to innovate, to

change the trajectory of the customer experience,

and to support some of the boldest actions. With

a self-funding business case, a customer-experience

program can maintain momentum and build buy-

in throughout an organization.

Make no mistake, however: building an unambig-

uous link between the customer experience and

value requires patience and discipline to invest early

in an analytic approach. It is easy to skip this step

for the sake of speed, but that is a mistake every time.

When establishing a link to value is done well, it

provides a clear view of what matters to customers,

where to focus, and how to keep the customer

experience high on the list of strategic priorities.

In essence, getting the logic and the math right for a

successful program requires a structured approach

and real science to achieve three objectives: building

an explicit link to value, directing investments to

where they will do the most good, and designing a

detailed road map populated with early successes

to self-fund the transformation.

Building an explicit link to value

Companies investing to improve the customer

experience must be clearer about what it is actually

worth and exactly how the improvements will

generate value. To construct this link, start by defining

the customer behavior that creates value for your

business and then follow customer satisfaction over

time to quantify the economic outcomes of different

experiences. Several steps can help.

Develop a hypothesis about customer outcomes that

mat ter.

Start by identifying the specific customer

behavior and outcomes that underpin value in your

industry. For example, in the telecom sector, more

satisfied customers should be less likely to churn, have

fewer issues that escalate into calls, and sign up

for more products. Airlines will focus on capturing

a greater share of trips and trip revenues and on

lowering the cost to serve. Business outcomes will

vary by industry, but the principle is the same—

postulate three to five hypotheses about the outcome

measures that deliver value.

Link what customers say to what they do. The next

step is to link what customers say in satisfaction

surveys with their behavior over time. Begin by

building a customer-level data set of the results of

past surveys that asked respondents about their

overall satisfaction or willingness to recommend

your products or services. Using an email or

Customer experience: Creating value through transforming customer journeys Winter 2016

customer identifier (with due regard to customer

privacy concerns and in compliance with applicable

regulations, of course), most companies can link

survey results back to their databases. Query your

customer database to pull down two to three years of

monthly data for each priority outcome measure.

For example, a pay-TV company matched its historical

willingness-to-recommend survey responses at a

customer level, on the one hand, with two years of

monthly data on customer retention, cost to serve,

revenues, product upgrades, and referrals, on the

other. This type of link will form the backbone of

your customer-experience data analysis.

Analyze the historical performance of real customer

cohorts.

Using customer data linked to survey respon-

dents, analyze customers you designate as satisfied,

neutral, or dissatisfied over a period of one to two years.

How much less subject to churn are satisfied custom-

ers than dissatisfied ones? What about generating

expensive calls, adding additional lines of business, or

defaulting on loans? For each group of customers and

segments, summarize the one- to two-year outcomes.

Those with larger differences among dissatisfied,

neutral, and satisfied customers tend to link more

solidly to value. Leading customer-experience com-

panies use these data to estimate the value, at an enter-

prise level, of moving 5 percent of their dissatisfied

customers to a neutral status.

Look at the trend to take a forward-looking view.

Successful customer-experience programs look

forward, not backward, in assessing the link to value.

Building a business case solely on backward loyalty

data may overinflate the economics in ways that bias

investment decisions. For example, since 2009 the

stated loyalty of customers has dropped by 20 percent

for pay-TV companies that provide an average

customer experience. By looking at year-over-year

changes in outcome measures for dissatisfied,

neutral, and satisfied customers, companies can build

a view of where the link to value is heading.

Track outcomes. In our experience, the best approach

to quantify the value of the customer experience

is to track outcomes over time for each customer seg-

ment that matters. To set priorities and quantify

payouts for improving the customer experience, every

company with a program to improve it should be

able to link satisfaction directly to business outcomes.

Directing investments to where they will do

the most good

To be confident that your customer-experience pro-

gram will generate a positive return on investment,

building a link to value is necessary but not sufficient.

The next step—where most companies fall short—is

to base priorities for initiatives and opportunities on

their importance to customers.

What matters to customers

To do this well, a company must create a model of

what matters to customers, a graded short list of cus-

tomer pain points to eliminate or fix, and a view of

opportunities to innovate as seen from the customer’s

perspective. A number of actions can be taken.

Focus on customer-satisfaction issues with the

highest payouts.

Customer-experience break points

are not standard across industries. For example,

in health insurance, improving the experience of cus-

tomers who are dissatisfied with the service so

that they become merely passive about it has more

economic impact than migrating such “passives” to

the category of people willing to promote the service.

However, in retail banking, every promoter does

matter—moving someone from the 80th to the 90th

percentile of satisfaction has a significant economic

payout. Using the link-to-value analysis outlined

earlier, determine if it would be more valuable to

reduce the number of detractors or to create more

promoters, and then focus your portfolio of customer

initiatives on achieving that goal to maximize the

return on your investment from the start.

Build a model around what matters to customers.

End-to-end customer journeys, not individual touch-

points, are the unit to measure when setting prior-

ities for your customer-experience investments. Why?

Our research has found that journey performance

is significantly more strongly linked to economic out-

comes than are touchpoints alone. Modeling cus-

tomer satisfaction around journeys rather than touch-

points enables you to estimate the most important

end-to-end journeys across customer segments. Start

by rethinking the scope of existing surveys. Test

whether they cover the most important customer

journeys and lesser elements of customer satis-

faction. Next, expand your customer data set so that

it links up with operational data, as well as input

from employees and customers. Finally, you can use

advanced “derived importance” analytics, such

as Johnson relative weights,

to build a model of cus-

tomer satisfaction that links perceived and oper-

ational performance on each journey with long-term

costs and revenues.

In addition to identifying the most important

journeys, supplement the model by exploring how

consistently you perform. In our experience,

improving your consistency in delivering a flawless

customer journey is often one of the best ways

to create value. A flawless onboarding journey, for

example, might entail a single sales phone call,

zero callbacks, service activation within 48 hours,

active usage in the first ten days, and no issues

on the first bill. A company may be 80 to 90 percent

successful at each stage of that sequence, but only

30 to 40 percent of customers will have a flawless

experience end to end. Done well, the satisfaction

model will also help you measure the value of

consistent performance.

Within journeys that matter, size and set priorities

for key areas to improve.

Once you know the

journeys to focus on, assemble a cross-functional

team to dig into possible initiatives to improve your

performance. What pain points or opportunities

will help you differentiate your company? Where do

you want to focus first?

To create a set of pain points, analyze the voice of the

customer, starting with the driver model above.

But extend it into specific operational surveys, focus

groups with customers who recently undertook the

journey in question, and deep structured interviews

to highlight pain points, missed expectations, and

opportunities to differentiate. In parallel, the voice

of the employee will help you gather the experience

of those who know customers best—the front line.

Use site visits, employee focus groups, and supervisor

interviews to construct a map of the current journey

and a short list of pain points, complexities, and

opportunities to streamline.

Once you have listed the pain points, size the potential

impact of each, using three measures: reducing

the cost to serve, capturing longer-term revenues and

loyalty, and improving overall satisfaction. In the

customer-experience area, the most concrete business

cases are often built on a near-term reduction in the

cost to serve: fewer calls, escalations, technician

visits, and so on. These moves remove both customer

pain points and costs from the system. Then measure

longer-term outcomes. For example, mobile cus-

tomers who dispute their first bill are less likely to

remain active 12 months later—a lagging effect

common across many industries. Finally, for each

journey, size the potential impact of improvements

at every pain point on overall customer-satisfaction

scores. Moreover, what does the model you have

created suggest about the value of customer-satisfaction

improvements over time? Taken together, the

near-term cost, medium-term loyalty, and overall-

satisfaction analysis will help you set priorities

for addressing specific pain points in the journeys

that matter.

Linking the customer experience to value

Customer experience: Creating value through transforming customer journeys Winter 2016

Identify opportunities to innovate and disrupt in

competitive white spaces.

While eliminating pain

points for customers is important, it is equally critical

to identify areas where you can differentiate your

company from competitors as customer expectations

change. For example, retail-banking customers

increasingly want a digital, branchless, and paperless

experience. Getting ahead of that trend is far

more important than incrementally improving the

branch experience.

Where else can you innovate?

Voice-of-customer analysis can provide a starting

list of disruptive ideas. How else can you decide where

to innovate? First, focus innovation resources

either on important customer-experience journeys

where you have a large gap against competitors

or on reasonably important journeys where the gap

is narrow or unclear. The model described above

will help you estimate the potential for disruption in

those areas.

Second, look at your operational data for digital-

innovation opportunities. Which customer journeys

drive the largest number of calls? For example,

a typical banking customer of the diversified

financial-services group United Services Automobile

Association would make multiple calls to obtain

a new car loan. USAA turned this process into an

online digital-loan-origination solution. Journeys

that generate more than six calls per customer are

leading opportunities for digital innovation; you can

build an economic case around reducing the cost

to serve customers and promoting loyalty by engaging

them more intensely.

Third, conduct ethnographic research to follow

customers in their daily lives and identify unmet

needs and innovation ideas. Then assess these

ideas against the customer-satisfaction model to

estimate the potential impact.

Designing a road map with early successes to

self-fund improvements

So far, you have analyzed what matters to customers,

set your priorities for customer journeys, and

weighed the importance of initiatives. Now you can

construct a transformation road map backed by

a clear business case. Many customer-experience

efforts lose momentum because the path to impact

is too slow or too vague. Efforts to improve near-term

quarterly performance can therefore sweep aside

initiatives to improve customer-satisfaction scores.

To overcome that risk, successful efforts construct

road maps that ring the cash register in the near

term, fund themselves in the medium term, and make

a long-term impact anchored in a model of the things

that matter most to customers. To create that road

map, it can help to follow these steps.

Calculate each initiative’s expected value, time to

capture, and cost to implement

The exploration of what matters most to customers

should unearth the value of initiatives under consider-

ation and help to crystallize a short list of priority

efforts. With that in hand, convert an initiative’s over-

all potential impact into an expected value by

combining the severity of an incident or opportunity

(for instance, its magnitude of impact, whether it

is positive or negative, or when it occurs) with its

frequency (say, how often all or part of the customer

base is affected). For example, a telecom company

would consider a phone’s technical failure a severe

but infrequent event. By contrast, surprise billing

changes are less severe as individual events but

happen all the time. Addressing the customer shock

from billing changes almost always represents

greater overall value.

For each of these examples (and others), a cross-

functional team must then estimate the time needed

to capture the value at stake. If the expected benefit

is reducing customer churn or boosting future

revenues, a payoff may not be visible for more than

12 months. Finally, estimate implementation costs.

In a smart sequencing, you want to order and balance

multiple initiatives: those that will affect the largest

number of customers, that will pay off quickly, and

that address the most severe problems or the most

important areas to exploit.

Separate initiatives to help balance the portfolio

To achieve the right balance and sequence, two

dimensions are critical. First, some initiatives, such

as simplifying billing or revising rules on issuing

customer credits, will be policy driven. Others, such

as enhancing the skills and training of field tech-

nicians or boosting customer-service skills at a retail

bank, will require a frontline field rollout. In general,

policy initiatives can be directed centrally and are

therefore faster to implement than field-driven initia-

tives requiring disciplined rollouts in waves. A well-

sequenced road map balances both types of initiatives

throughout.

Second, some initiatives will affect nearly all cus-

tomers, and some will be severe opportunities that

affect only a few. A good sequencing balances both

because companies must ensure that a majority

of their customers experience the change in some

way. An overemphasis on severe incidents and

opportunities is a common blind spot.

Design a balanced road map that will signal

success and fund itself

With the expected value, cost, and impact timetable

for each initiative in hand, and with a clear sense

of which initiatives can be undertaken centrally and

which require a rollout in the field, operators will

have enough information to build a well-sequenced

road map. Keep in mind a few design principles:

 Ensure some quick wins early. For example,

make a policy change that is easy to implement,

even if its impact is relatively small.

 Tackle at least one sacred cow in the early going

to signal that you are serious. Every company

has them—often, some pricing or policy element

that the organization knows to be customer

unfriendly but generates such high earnings that

most executives shy away from unwinding it.

Armed with a robust fact base, leaders can

demonstrate the value of piloting such initiatives.

 Balance severe incidents and opportunities with

frequent ones—make sure the road map will

touch all customers and all employees in some

way within the first year.

 Finally, use the early wins to finance investments

in longer-term solutions—for example, upgrading

systems or easing logjams in IT. Armed with your

analysis of what matters to customers, you will

typically find constructing the business case to be

straightforward.

Many companies begin customer-experience efforts

with lofty ambitions but a poor grounding in linking

programs to value. There is a better way. Take the

time to construct a self-funding business case and you

will reap company-wide buy-in as your reward. That

will anchor your customer-experience program and

pay dividends long after the up-front months needed

to do it right have passed into history.

The authors wish to thank Brooke Boyarsky and

Will Enger for their contributions to this article.

Joel Maynes is an associate principal in McKinsey‘s

Southern California ofﬁce, and Alex Rawson is a

principal in the Seattle ofﬁce.

Linking the customer experience to value

Johnson relative weights and related analyses refer to the

contribution a variable makes to the prediction of a criterion variable,

by itself and in combination with other predictor variables.

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