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Customer Experience

RECALL No 2 Customer Experience

Welcome ...
... to the second issue of Recall, a new publication for executives and board members that provides insights into marketing and sales in the telecommunications industry. In this issue, we focus on customer experience. McKinsey & Company defines customer experience as a brands perceived, explicit, and implicit promises in terms of the care received, the value delivered for the price, the product, the network, and the intangible benefits that tie them all together. Our research shows that providing best-in-class customer experience is one of the few remaining ways that carriers can differentiate themselves and drive customer retention. Three core beliefs guide the thinking on customer experience performance: excellence requires a balance of both brand promise and frontline execution based upon what people really value; there is no one score that solves it all customer experience management is a detailed and analytically rigorous science; and only return-driven customer experience creates real value for both the customer and the company. Based upon these three core beliefs, this issue of Recall provides insights into managing the customer experience. The first article is on The Science of ROI-Focused Customer Experience Management. Research shows that it becomes increasingly more difficult each year to satisfy customers and that telcos can run very fast in the wrong direction attempting to do so. Instead, telcos need to strongly link customer experience to business priorities and to focus on costefficiently boosting quality in ways that mean a lot to customers. The second article explains CE:O Customer Experience Optimum. Together with two leading research and telecommunications institutions, McKinsey has developed and tested a new method for understanding what really drives customer satisfaction and what levers to pull making the customer experience really actionable. Read how McKinseys Customer Experience Optimum can help managers achieve the highest returns possible from their customer satisfaction investments. Next, we illustrate insights on how operators can manage the customer experience at their most important touchpoint the network, Net-to-Customer: Resolving the Quality Myth. McKinsey believes that instead of further investing millions into network access, many mobile operators face a largely perceptiondriven problem they can resolve much more cost efficiently. Learn why McKinseys Net-to-Customer approach provides managers with a fact-based way to balance capex needs against customer demands. We close this issue with an interview with Rainer J. Brkle of The RitzCarlton, who works at the heart of customer experience in the most demanding service industry. Two important subjects emerged during the interview. First, employees have to identify very closely with what is defined in the companys core principles, which need to become a way of life for each staff member. Second, its increasingly important to continually measure and quantify the customer experience in order to understand how trends are developing and how to incorporate them. We hope that you find this issue of Recall interesting and that it provides you with unique insights and ideas that are useful in your daily work. We look forward to your feedback and thoughts on relevant topics you would like to see covered in this publication.

Jrgen Meffert European Leader of McKinseys Telecommunications Practice

Pedro Mendona Leader of McKinseys Marketing in Telecommunications Practice

Boris Maurer Leader of McKinseys Telecommunications Extranet

Thomas Barta Leader of European Telecoms Branding/ROI, Editor Recall

RECALL No 2 Customer Experience

01 02 03 04 The Science of ROI-Focused Customer Experience Management CE:O Customer Experience Optimum Net-to-Customer: Resolving the Quality Myth Points of View 7 13 21 29 35


RECALL No 2 Customer Experience The Science of ROI-Focused Customer Experience Management

01 The Science of ROI-Focused Customer

Experience Management

Managers require hard data and real business acumen to provide a relevant customer experience today. Research shows that its becoming more difficult each year to satisfy customers. Taking the United States as an example, McKinsey & Companys analysis across multiple industries reveals that, except for very recent improvements in certain subsectors (e.g., the wireless market), average customer satisfaction (CSAT) levels have dropped significantly since the 1990s. In the fixedline telecoms sector, for instance, average satisfaction levels dropped 11 percentage points from 1995 to 2005. Thus, as telecoms struggle with the evolving nature of managing customer experience (CE), they confront a moving target it seems that the more effort they expend on pleasing customers, the less pleased customers become. This dynamic results from the typical approaches companies take when addressing customer experience issues, often featuring a lot of guesswork supported by relatively few facts. McKinseys research shows that customer experience in a given market, as well as the industrys attitude towards fixing it, typically go through three distinct phases (Exhibit 1), which will be examined in greater detail: Phase 1: Strive to make the customer experience as positive as possible. Phase 2: Look for one simple metric that will solve everything. Phase 3: Drive ROI-focused customer satisfaction.

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

When signs of market saturation appear, companies often focus more intently on finding ways to differentiate their offerings. As product features and functionality become commodities, companies often view improving customer satisfaction as a new differentiator, based upon the intuitive belief that profits will automatically result. This phase is typically characterized by many (sometimes disjointed) initiatives rather than holistic approaches. For example, one telco, in devising a scheme for addressing customer experience, analyzed complaints across its marketing, product management, operations, call center, and other relevant departments. The company ultimately ended up concentrating 85 percent of its initiatives on call center issues, which accounted for only 24 percent of total complaints. Furthermore, managers had limited ability to measure satisfaction, relying instead upon anecdotes such as letters to the CEO, war stories, and other subjective data. The company placed a strong focus on customer care, but its initiatives featured few links to real business issues and therefore, generated little business impact.

Phase 2: Look for one simple metric that will solve everything.
By the early 2000s, several off-the-shelf customer satisfaction measurements appeared in the telecommunications industry and elsewhere, which attempted to condense company performance into one overall score or to apply


Typical phases in the customer experience journey

basic transactional touchpoint measures (e.g., How happy were you with your last call to customer care, on a scale of 1 to 10?). Many companies in the most mature markets sought refuge in magical thinking, trying to find the one perfect top-line metric that would resolve all customer experience issues. Large incumbents, in particular, sought out metrics-based solutions as they began to feel besieged by savvy attackers (which often employed new segmentation approaches and werent burdened by legacy systems or inertia problems). Unfortunately, most of these top-line metrics yielded the same results, i.e., they tended to stack up companies in the same order regardless of whether the focus was customer satisfaction, willingness to recommend, or their derivations. Whats more, academics began to realize that achieving CSAT at any cost didnt automatically lead to improved total return to shareholders (TRS) performance. The earliest academic studies had demonstrated links between customer satisfaction and a number of attributes linked to positive customer behavior, including higher usage levels, lower price elasticity, and lower defection rates. Furthermore, financial benefits also emerged, as shown by a positive correlation between CSAT and TRS, and net cash flow. Analysts at the time

also noted that a 1 percent increase in CSAT correlated positively with market share gains of up to 4.6 percent. More recent studies, however, find little or no relationship between CSAT and financial performance. McKinseys primary research confirms that CSAT over-performance (as measured by the most common metrics) bears no strong links to financial overperformance. Many large companies today in industries ranging from airlines to retail to financial services achieve high customer satisfaction levels but, nonetheless, earn below-average financial returns (Exhibit 2). So how can this be? Naturally, in any six-month period, there will be outliers: companies whose share prices move for reasons (such as mergers) that have little to do with CSAT. There are also companies in the lowerright quadrant that are perennial CE all stars, whose excellent customer experience has long been priced into shares, leaving room for random variation in share price caused by unrelated factors. More commonly, however, found in this quadrant are companies that appear to have overinvested into CSAT or more specifically, invested into the wrong levers and past the point of positive returns. A company stuck in the mode of Phase 2 magical thinking will sometimes take drastic measures (such as steep price cuts) to

RECALL No 2 Customer Experience The Science of ROI-Focused Customer Experience Management


There are many companies with high CSAT and low financial returns

engender customer loyalty without making a business case to justify it. Some companies overinvest into experience improvements for captive customers who have little choice but to stay with the service or indiscriminately improve service for low- and high-value customers alike.

Phase 3: Drive ROI-focused customer satisfaction.

Today, more and more companies have begun to look more closely at the relationship between CSAT and TRS within their customer bases, using their own objective data and survey information. Several high-performing companies have adopted a new top-down CSAT focus that incorporates business variables such as churn, cross-selling opportunities, and the need to boost market share with a more precise understanding of how each touchpoint with a customer influences these variables something that a single score cant provide. They view customer experience investments as a source of true competitiveness because such investments can be tied directly to profitability. Increasingly more companies embed CE within the organizational DNA in the sense that it has become part of internal/external communication and evaluation activities led by the CEO.

The most sophisticated companies today fully understand and integrate the customer-back perspective. This needs-based approach seeks to identify the customers own list of priorities, which can range from companies providing a friendly and informative sales experience to effectively resolving problems. Based upon this data, telecoms can begin to segment existing customers based upon their most pronounced needs (e.g., product, price, network, or customer service) in order to design the best policies and processes for maximizing customer value. These same companies continue to use other segmentation plans for other purposes, such as new customer acquisition. Companies use this customer-back data to build solid analytical linkages between CE and overall satisfaction, and business performance. For example, one cable company noted that customer service drove customer satisfaction with its pay-TV products, while other attributes, such as brand strength, value, and reliability played only secondary roles. The company used this information to measure the impact of this more detailed CSAT on churn and customer-initiated service downgrades and upgrades, and found meaningful correlations in each case: customers with the lowest satisfaction levels across the key dimensions exhibited the highest rates of churn and engaged in the most service



Done correctly, CSAT drives customer lifetime value in several ways

downgrades and fewest upgrades. Conversely, the most satisfied customers revealed results that were the exact opposite. With such data in hand, managers can take the most appropriate actions from a return-on-investment (ROI) perspective. One hotel chain arrayed its options for improving CE against the costs associated with each. It quickly identified three high-impact moments of truth providing superior concierge services, recognizing customers by name, and offering superior bed comfort that all provided positive ROI. It discarded other options, such as offering larger rooms, an extra night free, and tailored in-room facilities because they generated negative ROI. Customers didnt value these improvements enough to pay extra for them, so their cost exceeded the positive impact they would have had on CE. The highest-performing Phase 3 companies quickly discover that many CE improvements are self-funding. Avoidable call center queries, for example, can be resolved with an appropriately configured IVR (interactive voice response) system that doesnt create dissatisfaction and in many cases, better planning can eliminate a significant portion of service truck rolls. Savvy companies also quickly make relatively inexpensive

adjustments to their marketing communications efforts when it becomes necessary to realign customer perception with reality, such as when hard data show a telcos objective network quality to be significantly higher than customers think it is. Business-informed CE thinking requires companies to take a cross-functional view that includes CE measurement on key touchpoints. Many service providers from telcos to cable companies face multiple customer moments of truth that, if mishandled, generate poor customer experience. Examples for a cable company might include on-phone, in-home, and plant-related touchpoints, which can expose multiple opportunities to make a difference for customers (and the risks inherent in not doing so). High performers focus on evolving a CE ethos throughout the entire organization, right up to the frontline workers, where the right mindsets and behaviors can supercharge a companys drive towards CE excellence. In a truly actualized organization, frontline employees during this stage often demand to see weekly CE scores and actively support one another in order to earn outstanding scores. Done right, CSAT drives customer lifetime value in several ways and at favorable ROI levels (Exhibit 3).

RECALL No 2 Customer Experience The Science of ROI-Focused Customer Experience Management


Several interesting things happen once companies break through the mediocre customer satisfaction barrier and achieve outstanding, business-focused CSAT performance. Positive word-of-mouth recommendations skyrocket and customers actively upgrade their service plans, while cancellation rates, churn levels, and service downgrades plummet. McKinseys research shows that achieving high customer satisfaction, especially for large incumbents with legacy systems and diverse customer bases, is not simple and

that telcos can run very fast in the wrong direction by pursuing a satisfy at any cost or one score mandate. Instead, telcos need to strongly link customer experience with business priorities and to focus on cost-efficiently boosting quality in ways that mean a lot to customers. This approach forces managers to banish the magical thinking that hovers over many CSAT initiatives, allowing companies to pursue initiatives that create value for both customers and shareholders. By Fabian Barros, Adam Braff, and Markus Frerker

RECALL No 2 Customer Experience CE:O Customer Experience Optimum


02 CE:O Customer Experience Optimum

McKinseys new approach to measuring and increasing customer satisfaction helps managers pinpoint the highest returns possible. The relationship between customer loyalty and customer satisfaction is a close-knit one if measured correctly. However, many of todays customer satisfaction measurements fail to provide actionable guidance on this point or others. Thats because customer views are either expressed in one simple score for the entire organization, thus offering little in terms of specifics, or in abstract terms such as 6.8 out of 10 for a given customer touchpoint. And, for some magical reason, most companies hover in the 6.9 to 8.9 range regarding this latter metric with even the greatest companies rarely scoring a 10. Worse yet, such metrics say little about the areas upon which managers should initially focus as improvement priorities. For example, if both the call center and the network generate low customer satisfaction levels, which one should managers improve first? Some customers might accept lower call center satisfaction levels, as long as the company offers broad product variety. McKinsey & Companys research shows that in order to create truly profitable customer satisfaction, by balancing various trade-off decisions to reach the customer optimum, managers need to answer a few key questions (Exhibit 1): How important is each of the touchpoints to customer satisfaction? That is, how important is each interaction through which customers come into contact with the company, including advertising, brick-andmortar stores, and direct services, such as product quality?

To what extent does the company fulfill todays customer expectations and how high is overall customer satisfaction? How good is the actual service being provided relative to customer perception? With which improvement actions can customer satisfaction be increased precisely? What effect will these actions have on loyalty and ultimately, on revenue? Which actions aimed at improving loyalty are the most profitable? Numerous off-the-shelf instruments exist for measuring customer satisfaction, and McKinsey agrees that one simple score can provide an important vehicle for external communication. But real profitability from customer experience (CE) management requires managers to dive deeper into the touchpoints, to look for the real experience levers that drive profitable loyalty and to understand the optimum for customer experience and for the respective budget allocation to reach this state.

CE:O: Customer Experience Optimum a new method for measuring and increasing returns from customer satisfaction
Together with a highly regarded market research institute and a leading global service organization, McKinsey has developed and tested a new method for analyzing these critical management questions concerning customer satisfaction. The approach is called Customer Experience Optimum (CE:O). The foundation of CE:O is the knowledge that customer



The profit stars from customer experience lie well below the surface

satisfaction is the sum of all positive and negative customer experiences, spanning a long time frame and including all instances in which the customer has come into contact with the company. As a rule, satisfied customers do three things: they are loyal, they purchase more frequently and in higher quantities, and they recommend the company to others. The task, therefore, is to determine exactly what drives customer satisfaction and to examine how to increase it. The CE:O approach aims to measure customer satisfaction on a much broader basis than previous methods did, focusing on four main steps: 1. Capture the importance of the individual touchpoints in overall customer satisfaction (differentiated according to competitors and segments). 2. Understand the relative performance of all relevant touchpoints in the customers mind (using verbalized scales such as I had to wait for five minutes). 3. Deduce exactly which actions improve customer satisfaction per touchpoint and per individual experience driver. 4. Quantify the effect of the specific improvement actions on customer revenue.

Step 1: Capturing the importance of individual touchpoints

A companys customer satisfaction strategy must center on one key question: How important is a particular touchpoint in terms of overall customer satisfaction? Ultimately, this question determines the level of resources allocated to maintaining or increasing the quality of that particular touchpoint. One could ask customers directly about the importance of a specific touchpoint, but experience shows that responses to questions posed in this manner often reflect what sounds plausible rather than the reality. In the case of mobile phone service providers, the monthly bill doesnt rank among the top three touchpoints but in reality, the monthly bill can be a source of great annoyance if it contains errors. Therefore, for many people, this aspect is actually an extremely important determinant of satisfaction. Here too, it pays to look for alternative methods. Reliable results are often the product of methods based upon trade-off decisions: respondents must first rate their experiences and then weigh the touchpoints. By asking customers to consider touchpoints relative to each other, researchers can make a relative assessment of what the customer perceives as important. In market research conducted in the German mobile phone market,

RECALL No 2 Customer Experience CE:O Customer Experience Optimum



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

customers ranked various touchpoints using the above methodology. One example result showed that billing was considered the most important touchpoint for customers, followed by the network, the pricing system, and end-user devices.

For example, customer satisfaction at the billing touchpoint may already be very high and in comparison with competitors the highest. But it may be that customer satisfaction is low and significantly lagging behind competitors at the touchpoint prices/tariffs. The classic method for measuring these factors relies upon numerical scales, e.g., 1 to 6, in which 1 means bad and 6 means very good. However, its much more powerful to use so-called verbalized scales. For instance, respondents could answer the question about waiting times in stores by choosing between statements implying different service levels. The best service level could be I had to wait less than two minutes, and the worst service level I had to wait more than five minutes. The unbeatable advantage of verbalized scales is that a company can derive from them exactly what it should do to raise service levels (Exhibit 2). Customer expectations offer a sensible perspective, as they highlight where demand for higher service levels is strongest. From the pool of the most important experience drivers, a company can select a certain number upon which to focus in order to keep complexity at reasonable levels (e.g., a company may choose to concentrate on the product range in stores and waiting times at checkout).

Step 2: Determining present performance

The second step involves determining how customers rate service at individual touchpoints via specific experience drivers. For example, when considering retail stores as a touchpoint, customer experience drivers might include the distance to the nearest store, store appearance, waiting times, and friendliness of shop staff. Service levels should be defined in such a way that makes them comparable with operational key performance indicators (KPIs). For instance, companies should find internal ways to measure customer waiting times in order to verify how plausible customer perceptions are, by making a direct comparison between customer survey responses and the KPIs. This will highlight cases in which, for example, a customer rates call center service worse than the corresponding KPI shows it to really be. Better communication could bridge this gap relatively easily. This will indicate to a company the state of service levels at the different touchpoints and experience drivers.



CE:O clearly helps to prioritize touchpoint measures

Thus, Step 2 provides a complete picture, including ranked touchpoints, and highlights those service levels that make for satisfied customers. For example, respondents may indicate that they are only satisfied in terms of experience drivers such as waiting times at the point of sale (POS) touchpoint when the service level there has reached the highest level, e.g., when waiting times are less than two minutes. Conversely, customers may be satisfied in terms of a different experience driver when service has reached the middle level. The more and quicker the customers want to change a particular service level, the more important the experience driver is to them.

rate current service levels poorly. Provider strengths are shown in the area exploit in this case, network and billing. Both touchpoints are important for customer satisfaction and have been rated positively. The matrix is useful for general orientation on a high level, but a deeper look behind the reasons for the performance is required. For example, customers may be basically satisfied with service levels in the stores, but a closer examination reveals that waiting times in stores and the distance to the nearest store make customers dissatisfied, while they are very satisfied with the experience driver quality of advice. The key now lies in determining the right thresholds for performance. Customer satisfaction is not a linear element. It can easily happen that a five-minute waiting time in a store is as good as seven minutes but that after eight minutes, satisfaction drops significantly. So, not only is it key to understand the general relationship between performance and loyalty but also the thresholds at which satisfaction starts to drop or stops increasing (Exhibit 4). Both the prioritization matrix and the thresholds provide a general orientation regarding on what to focus. But the advantage of the CE:O approach becomes apparent

Step 3: Defining thresholds and targets

Urgent need for improvement arises when a touchpoint proves highly influential, but the service in question achieves only a poor rating. In these cases, an improvement in service levels must be considered if profitable. An importance versus performance matrix has proven to be an excellent tool for showing this relationship (Exhibit 3). In the matrix illustrated in Exhibit 3, the touchpoints prices/tariffs and end-user devices are both in the area improve urgently, i.e., they are extremely important for customer satisfaction, but customers

RECALL No 2 Customer Experience CE:O Customer Experience Optimum



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

when discussing real actions to take, since it delivers a detailed description of the service levels customers expect, based upon verbalized scales which can be linked to operational KPIs. By doing so, the exact level of service, i.e. the optimum, expected by customers can be determined.

the lowest to the middle level at the touchpoint prices/ tariffs for the experience driver price value perception leads to an increase in overall customer satisfaction of 0.47 percentage points, from 67.1 to 67.48 points. If ratings for every prioritized experience driver could be improved by one service level, the resulting potential increase in customer satisfaction would be 2.2 percentage points, pushing it to 69.3 percent. Increases in customer satisfaction have a positive effect on loyalty, which the approach measures using regression methods. For example, a customer satisfaction-to-loyalty ratio of 1 to 1.65 means that an increase of 1 percentage point in customer satisfaction stimulates a more than proportional increase in loyalty of 1.65 percentage points. Just as one can apply exact quantitative measurements regarding both the effect of improving service levels on customer satisfaction and the impact of improving customer satisfaction on loyalty, the market research and company data can also be used to calculate the revenue effect of greater customer loyalty based upon three levers: 1) churn reduction, 2) upsell/cross-sell, and 3) new business through recommendations. Assume, for example, a company plans to improve in-store waiting times from five minutes to about two

Step 4: Finding the most profitable improvements

Only a small number of companies can afford the luxury of putting all service ideas into practice. Therefore, its key to select the few most profitable actions from the abundant pool of many. Primarily, the decisive factor is the extent to which each action will raise satisfaction levels and strengthen loyalty. McKinseys research shows that customer satisfaction clearly depends upon service levels at important touchpoints. If a company successfully raises satisfaction levels so that customers previously rating service as poor now rate it mediocre, the customer satisfaction with a touchpoint will improve. And so will depending upon the touchpoint the customers overall satisfaction. This effect can be calculated for each experience driver. Exhibit 5 illustrates such a calculation. In the example, an improvement in service level from



Example: Tapping the full potential increases total satisfaction from 67.1 to 69.3

to five minutes for each customer. Research shows in one case that currently 51 percent of customers experience a waiting time of five minutes or longer. If all of these customers could be moved into the two- to five-minutes bucket, the overall satisfaction would go up by 0.06 percentage points. Translating this into loyalty (e.g., churn, upselling/cross-selling, and recommendation as measured by internal standards and average revenues) would create an additional revenue potential of about EUR 30 million for the company. In comparison, improving the distance to the nearest store (which would ultimately mean building new shops) only yields about EUR 6 million annually. Following return on investment (ROI) logic, all possible investments can now be calculated and approved or rejected. The result of the process is an action plan incorporating the investments with the highest returns. This step highlights another benefit of CE:O. Its now possible to use objective data to quantify the contribution made to revenue potential by these types of focused improvement actions and thereby finding the optimum split of allocating internal budgets. Of course, estimating value in this way can never be precise but rather indicative. First of all, theres the fact that research while attempting to be accurate will always have to rely upon the sample being absolutely

representative and the conditions under which it was carried out being perfect. Second, the correlation between satisfaction and the different types of loyalty is never perfect. However, CE:O does represent a significant advancement in customer satisfaction research. It indicates areas in which there is a need to improve service levels and for the first time, makes these effects transparent and quantifiable. Using a method based upon facts, Customer Experience Profiling produces important results for quality decision making in management, which is ultimately responsible for the ROI of all activities (Exhibit 6).

What gets measured gets done

Successful customer experience management requires regular assessments in order to highlight successes and reveal weaknesses. An initial CE:O can be followed by quarterly or monthly market research waves to determine whether the actions were successful and to what extent. These tracking waves are significantly smaller in scope and focus only on customer satisfaction with the improved service levels. The CE:O profile lends itself well to cockpit monitoring, a method that provides management an overview of changes in service performance. As a rule, one page is

RECALL No 2 Customer Experience CE:O Customer Experience Optimum



CE:O shows how much revenue improvements could generate

sufficient for summarizing the current perception, operational performance, and target perception. Further data offer additional details that the reader can review when necessary. Ideally, the cockpit runs on standard software such as Microsoft Excel, so that it can be easily adapted and developed. A company can also decide to integrate an incentive system into the cockpit to help emphasize alignment with customer satisfaction and loyalty throughout the organization. Methods such as CE:O help managers recognize where and how they can raise customer satisfaction and

loyalty levels, and then identify the associated revenue potential. The CE:O method also offers valuable indications as to which touchpoints will bring positive ROI performance and thus drive action plans and budget decisions. Doing this right is crucial to success. At a higher level, the method enables managers to align their companies even more closely with customer requirements. For many companies, it becomes the nucleus for a much wider task the transformation into a customer-driven organization. By Thomas Barta, Wiebke Khler, and Sascha Lehmann

RECALL No 2 Customer Experience Net-to-Customer: Resolving the Quality Myth


03 Net-to-Customer: Resolving the

Quality Myth

Marketing meets operations as the clever matching of network performance, and customer satisfaction provides an effective way to raise customer experience and hence, is a best-practice example for ROI-driven customer experience management. In terms of customer experience, marketing and operations enjoy strong links, since the quality of a net-work is in part driven by the perception of customers and the understanding of performance drivers. But do operators get what they pay for in terms of mobile network quality performance? McKinseys Customer Experience Scoring approach can help find the answer. Some telecoms executives seem to think paying more to boost quality makes sense, judging from the amounts budgeted for capital expenditures to address the problem. We believe that instead of investing billions more into network access, many mobile operators face a largely perception-driven problem they can resolve much more cost efficiently. To this end, McKinsey proposes a four-step, Net-to-Customer process to define and manage real network priorities (Exhibit 1). 1. Identify network performance and perception drivers. Here, companies learn how well they perform in terms of network quality by comparing actual network performance and customer perceptions of network quality the key is to prioritize according to customer perception. 2. Set target and threshold values. During this step, mobile players determine which network-related benefits drive customer consideration in terms of subscribing to

the service and how much investment would be needed to capture those benefits. 3. Manage priorities. Operators separate real network issues from perceived shortcomings, identify local market peculiarities, and rank top priorities and determine what to fix in those areas. 4. Implement the approach. The final step involves finding the best way to embed the approach within the organization, while managing across both functions and footprint (i.e., geographic regions served). Each of these steps will be discussed in greater detail, providing additional insights into the Net-to-Customer approach to solving the network quality dilemma.

1. Identify network performance and perception drivers

When attempting to assess network quality perception and performance, managers can quickly lose sight of the forest because of all the trees. Taking an overly global view, at the country-wide network level, for example, can cause managers to overgeneralize and miss important perspectives. On the other hand, proceeding on a toogranular level (e.g., a cell or zip code level) will likely provide too much detail. Instead, McKinsey recommends proceeding at a midpoint between the two extremes specifically, at the base station subsystem (BSS) or base transceiver station (BTS) levels, which tend to cover cities and municipalities. They typically encompass distinct local markets with clear-cut BSS/BTS user-facing network elements linked directly to the local market.



Methodology for defining and managing real network priorities 4 steps

Capturing perceptions. To understand customer perceptions regarding quality, operators can employ McKinsey & Companys BrandMatics approach leveraging the purchasing funnel. The purchasing funnel models the way in which customers usually shop for and buy mobile services. For a postpaid customer, for example, the first step involves being aware of the various mobile brands on the market. Once aware of a brand, the consumer considers whether to use it or not, then either selects it as his or her main brand or not and later, remains loyal to it or switches to another mobile carrier once the contract has expired. As customers move through the funnel, they narrow the number of brands on their list (hence, the name). Key analysis points in the purchasing progression tend to be between funnel stages: the point between awareness and consideration, for example, or between consideration and purchase. Understanding why customers choose one brand and drop another during these transitions can provide significant insights into a brands strengths and weaknesses. In this discussion, the points of interest in terms of perceptions lie between awareness and consideration (i.e., acquisition), and between main brand and loyalty (i.e., customer retention). These brand elements influence purchasing behavior, and the BrandMatics

approach allows managers to systematically address their brands funnel deficiencies by repositioning their offers and/or adjusting communications. In one case, the key direct network consideration drivers among customers turned out to be the ability to call, the perceived (voice) quality of the call, and network reliability. Companies dont operate in vacuums, so managers should also assess their network perception compared to those of competitors. Furthermore, McKinsey research shows that competitive strengths and weaknesses among operators can vary significantly across cities and regions due to internal issues (e.g., differences in network design or performance) and external differences (e.g., local competitors or customer structures), which makes it important to conduct research at the regional level. Assessing performance. Managers usually require two types of data in order to gain a full picture of network performance: an operators own network statistics and competitor network performance. Operator-specific measures might consist of dropped calls, failed calls, and load levels. A source for this information is typically standard network statistics. These data can help managers surface internal company deficiencies and improvement areas. Competitor network performance

RECALL No 2 Customer Experience Net-to-Customer: Resolving the Quality Myth



Manage network quality around the satisfaction cliff

should be measured from the users perspective in areas such as call setup time, coverage, and signal strength. Managers can obtain competitive information by measuring across networks using drive tests. An effective approach involves designing a drive test route that extends through a municipality in a way that aligns with mobile user routines in a targeted segment. For example, a sample route focused on the business segment might assume that customers live in the suburbs, commute to the city center to work, and spend weekends in the country. Using these techniques, operators can measure the perception-relevant aspects of network performance not covered by internal statistics. Managers will probably find that performance differs across micro-markets due to a number of factors, including topological peculiarities, the quality of local network functions, and locally-focused competitors, which is why they need local data to confirm and address these differences. Once managers collect data concerning both network performance and customer perceptions, they can begin to identify the real issues facing them. They will likely discover that their overall technical network performance aligns with perceived network quality in some regions. In others, they will face competitive shortfalls

in perception although the network performance is superior while in yet other regions they could be market leaders in perception even though the network is actually insufficient. Taking a prioritization approach based upon this type of information can allow managers to address mismatches more cost efficiently. For example: Do technical mismatches in strong regions really require network investments? How can operators leverage better performance (e.g., the ability to call fast) to improve customer perceptions in medium regions and what improvements or target levels are needed for build-out in weak regions?

2. Set target and threshold values

The key challenge that managers face during this step is to match the market-research-based customer perception information with the collected technical performance data in order to identify and set targets that matter, and avoid over-/underspending. A good first step uses correlation analytics to match perception/ performance pairs by city or region. Managers should see solid correlations between technical performance and matching customer network perceptions.However, the challenge involves matching the right pairs of data. For example, a customer statement such as I get a connection when I want to call could match a number


of technical performance parameters, such as average call drop rate or average blocking rate during peak hours. The pair that exhibits the strongest correlation should thus be chosen (some data crunching is needed to filter out the right pair). When setting targets, finding satisfaction cliffs can help managers to understand where customer satisfaction thresholds or breakpoints occur. A satisfaction cliff represents the point at which customer satisfaction jumps due to improved technical performance. For example, one company found that once its call setup success rate hit 96 percent, it realized a significant surge in customer ability to call satisfaction. Thus, reaching the satisfaction cliff threshold became a key focus, but almost as important, the company found that improvement beyond this level didnt materially improve customer perceptions further. In other words, spending money to improve performance beyond the satisfaction cliff made little sense. The satisfaction cliff concept leverages the non-linear relationship between performance and perception: weak performance creates poor customer perception and making improvements below the threshold lifts perception but improvement beyond the threshold doesnt further improve perception. Managers should fully exploit this non-linear effect by identifying the threshold, rigidly targeting the threshold value (i.e., avoid overshooting), and then focusing on fixing poorly performing regions to improve overall customer perceptions (Exhibit 2). McKinseys experience shows that companies often do poorly when setting performance targets, overshooting some satisfaction cliff thresholds by wide margins (and thus, wasting money), while settling for belowthreshold performance on others (and hurting customer satisfaction levels). One operator, for example, set its blocked-call rate in peak hours target one-third lower than the satisfaction cliff threshold, while another set a target that overshot its voice quality threshold by a significant amount. In the first case, the operator under-delivered in terms of customer needs, while in the second, the company overspent to deliver a level of performance not demanded by customers (and, in fact, not even detectable by the human ear!). In the course of its work in this area, McKinsey has gained several insights that can help companies set targets and threshold values:

Real priorities often differ by country and can be counterintuitive. The key drivers of network perception usually differ across markets, and customer tolerance of performance deficiencies often diminishes as markets mature. Findings may also be counterintuitive: call setup times may be more relevant than dropped calls, for example. Not all customer perceptions are measured. Certain network performance parameters may not be measured (e.g., voice quality or call setup time), and managers usually need to establish company-specific standards (e.g., what to measure for call setup time). Manage the variance, not the mean. While many companies are used to managing average performance parameters (e.g., having one target number for call-drop rate for the entire network), McKinsey found that managing the variance is much more important. Thus, tackling the low performers first will make a huge difference. Double-check and manually adjust data. Todays consumer perceptions are influenced by past experience (e.g., past regional billing system outages). In addition, companies often conduct drive tests ineffectively, leaving equipment in use during traffic jams or breaks. Furthermore, cross-checking and the manual elimination of outliers are usually required. Data sets may reveal full correlations only at the subset level. Teams often find that they must dig deeply into their data in correlation analysis because subsets often prove to be the core drivers of performance and issues. Companies should also consider running variations on correlations (e.g., peak/off-peak, indoor/outdoor; average, top, and bottom performers).

3. Manage priorities
Once an operator establishes its network goals and targets, reaching the level of customer satisfaction that translates into lasting value creation will require active management. Developing a Network Priority Cockpit can help in this endeavor, since it integrates the approach both vertically and horizontally across the operators organization (Exhibit 3). Built upon a standardized tool (e.g., an Excel spreadsheet), the cockpit provides both a vertical managerial alignment from top management to the local level and a horizontal operational alignment. The first ensures the systematic

RECALL No 2 Customer Experience Net-to-Customer: Resolving the Quality Myth


Network Priority Cockpit integrates the approach vertically and horizontally across the client organization

application of the approach by setting consistent priorities and common targets that align with company strategy. The second ensures that managers use common language, tools, and timing across local operations and assists them in interpreting results and setting priorities. It also helps operational managers determine strategy and measure the impact of actions. The cockpit provides details regarding technical performance indicators (e.g., blocked-call rates or territory coverage gaps) and their associated threshold values. These values can be ranked in terms of proximity to targets, providing managers with a prioritized list of issues to attack. The cockpit provides a systematic way to assess performance across different regions and make network and marketing recommendations. A region still struggling to meet local competitors, for example, might act to improve the blocked-call rate of its poorlyperforming BTS, while coordinating its marketing activities to build customer awareness of the new focused investments. Conversely, a region with good overall purchasing funnel performance might simply need to invest in order to support growth targets, while stressing its high network quality perception in marketing communications.

4. Implement the approach

The implementation of the Network Priority Cockpit requires senior managements ongoing involvement. For example, oversight of Step 1 (Exhibit 1) measuring performance and perception might be shared by the chief technical officer and the chief marketing officer (CMO), since it dwells on both network and customer issues. These two, plus the chief financial officer, oversee Step 2 the establishment of threshold values while the CMO leads Step 3 the creation of the Network Priority Cockpit. Finally, the companys CEO should take charge of Step 4, implementation. McKinseys experience shows that, effectively applied, this approach allows operators to substantially reduce capex outlays, while securing or improving customer perceptions. Focusing on optimizing those (controllable) elements that influence perceptions and rigorously managing key threshold values allow managers to balance capex needs against marketing measures and thus achieve the greatest returns on overall investments. Using this approach, one operator found that it could calibrate its network to allow 1 percent higher congestion rates, which would allow it to reduce cumulative radio capex by 6 percent. It also


discovered that by increasing customer satisfaction by 1 percent, it reduced its annual churn by up to 4 percent. The Net-to-Customer approach provides managers an effective way to balance capex needs against customer demands. Experience with the methodology shows several lessons learned: Use good data. Having high-quality data makes or breaks the effort dont underestimate the need to manually review and adjust drive test and market research data. Closely involve regional teams. Execution happens at the local level and on-ground staff can provide invaluable input. Involve them in the projects setup and keep them in the loop regarding emerging findings doing so can pay significant dividends. Tightly manage third parties. The involvement of agencies (for market research) and technical service providers

(for drive tests) is common practice. These participants should be tightly managed for quality and timing of delivery setbacks can likely defer and even endanger the project. Link to the budgeting cycle and process. Emerging findings may suggest that core assumptions regarding network planning will have to be adjusted. Close linkage to a (potentially concurrent) capex budgeting process allows for rapid reflection and the capture of quick wins. Drive as a cross-functional effort. Ramp-up and implementation of the Network Priority Cockpit require support from marketing, technology, and finance from chief officers down to the operational level. A cross-functional team will help avoid any handover delays or pitfalls. By Thomas Barta, Fabian Blank, and Katrin Suder

RECALL No 2 Customer Experience Points of View


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

Rainer J. Brkle is the General Manager of The Ritz-Carlton, Berlin, and has overall responsibility for all activities of The Ritz-Carlton Hotels in Wolfsburg, Moscow, and Istanbul. In 1992, when he first encountered the exceptional quality management and high service standards of The Ritz-Carlton Hotel Company, he went on to take up positions in The RitzCarlton hotels in Boston, Cleveland, Palm Beach, and Naples until he was assigned to Istanbul and later, Berlin, as General Manager. The Ritz-Carlton Hotel Company, headquartered in Maryland, USA, is the only service company worldwide to have received the Malcolm Baldrige National Quality Award twice in succession. McKinsey & Companys Telecommunications Practice recently had the opportunity to speak with Rainer J. Brkle about customer experience, as this topic is top of the agenda for many telecommunications companies. It is hard to imagine anyone more competent to speak on this crucial subject than Mr. Brkle, and the Recall team at McKinsey was honored to have the chance to do so. Two important subjects emerged during the interview. First, employees have to identify very closely with what is defined in the companys core principles. Second, it is important to continually measure and quantify the customer experience in order to understand how trends are developing and how to incorporate them. McKINSEY: What is the most difficult request that a hotel guest has ever made to you? RAINER J. BRKLE: Im faced with the most difficult request day after day in order to fulfill our Gold

Standards, as we call them, implementing the principles and philosophy of our corporate color gold. To do this, we have a Credo Card that each of us commits to fulfilling every day, every moment. The hardest task is to really live up to this credo, The Ritz-Carltons mission, whatever the situation. A five-star deluxe hotel has a certain mystique. When our guests leave, we dont just want them to say that was great, but also I definitely want to go back there. McKINSEY: It is known that most employees in the hotel industry are not particularly well paid. How do you manage to get your people to take core principles like that seriously to integrate that credo into their being and actually put into practice what it stands for? RAINER J. BRKLE: Youre absolutely correct in suggesting our staff is central to this. They are the only facilitators of customer centricity or what we call guest delight. Thats why we spend a great deal of time on the staff we hire. We select people who have a specific talent the talent to intuitively and immediately react the way we need them to. This means that our people tend to do things a certain way. If their colleagues behave like that too, they feel at home. The secret is to recruit people with the right attitude, the right talent. Thats the only way I can be sure of having interns who arent just working for the money, but from conviction. Recognition is their reward, but it goes beyond that. Its not simply the recognition of the boss saying You did that really well, we want them to have an all-around satisfaction with their lives, with what theyre doing.


RECALL No 2 Customer Experience Points of View


The Ritz-Carlton Credo Card


McKINSEY: So, your staff really lives and breathes your Credo Card, its not just a cool-looking piece of paper? RAINER J. BRKLE: Our Gold Standards cover five points, for example, our service values, which are Im proud to work for The Ritz-Carlton. In other words, I am The Ritz-Carlton. Whats important here is a sense of pride and thats the key point that our employees identify with us and that they feel at one with The RitzCarlton. Thats the only way to live our values. McKINSEY: Do you find your guests gradually becoming spoiled? Do their expectations continually increase the more you meet them? RAINER J. BRKLE: Youre touching on something interesting. In worldwide surveys conducted last year, we found that our guests expectations are much higher than those of guests who stay with competitors. Thats wonderful, but it means our staff has to do much more both to fulfill and exceed these expectations. The Ritz-Carlton as a brand has an enormous advantage in that regard. We are the only hotel group in Germany that analyzes the satisfaction and expectations of our guests systematically and neutrally, using an external research company. Of course, we also have our own internal criteria, such as our comment card (always on our guests bedside table), information from our staff, and we apply metrics to the letters we receive. But the third-party survey quantifying the responses independently has revealed very clearly that repeat guests are much more critical than first-time guests. And we can also measure emotions. McKINSEY: How do you do that? RAINER J. BRKLE: Using an external research company that asks questions that are not just about whether all guests wishes were fulfilled, so to say, our functionality, but whether they were also engaged emotionally. One of the questions is very radical: Can you imagine a world without The Ritz-Carlton? You might say: well, other hotels are out there too. Ill give you a very extreme example to clarify what I mean. A while ago, we had a situation in which a bellboy was going from corridor to corridor returning shoes after theyd been cleaned. A mother came running towards him with a baby in her arms that was turning blue. The baby couldnt breathe and she

had no idea what to do. The bellboy took the child, laid it down gently and gave it mouth-to-mouth resuscitation. It began breathing again and survived. If you ask that woman whether she can imagine a world without The Ritz-Carlton, shell say no, she cant. What I mean is that you have to ask questions that go beyond the normal parameters to find out how far you have to go to inspire people so theyll say Youre right, I cant imagine a world without The Ritz-Carlton. Of course, there are many other questions that are not so radical, such as Does The Ritz-Carlton measure up to its promise? Thats also an emotional question. McKINSEY: How often do you conduct these surveys? RAINER J. BRKLE: A certain number of guests are called monthly and asked whether they mind giving us feedback on their stay. Interestingly, most people think its a good idea and are very willing to take part. McKINSEY: Who at The Ritz-Carlton group receives this information? RAINER J. BRKLE: It is collected and sent to the hotels each month. Its very neutral, without a directional bias of any kind. Our Quality Leader has the task of discussing the feedback with the departments. Obtaining the information is just one side of the coin the other and much more important one is to evaluate the results and draw actionable conclusions that we then implement. McKINSEY: Does it have consequences if performance suddenly starts going downhill? RAINER J. BRKLE: Yes, it definitely does. Its no longer the case that all that counts is revenue: the figures from our guest and staff surveys are important, too. All the incentives for senior management are based on those results. We have a traffic light system: green, amber, and red. If an indicator is on red for a certain length of time, you get a call from the head office the same way as if the profit is not in line. McKINSEY: Where is your hotel on the scale right now? RAINER J. BRKLE: All our indicators are on green. But I have to mention that the values are adjusted every year. The company naturally has an interest in growing through the exercise, so a little more is expected each year.

RECALL No 2 Customer Experience Points of View


McKINSEY: Again on the topic of surveys, how do you find out what is really important for a guest versus whats less relevant and simply incurring costs? RAINER J. BRKLE: Thats a very good question. Some 10 or 15 years ago, hotel managers used to simply wander through the floors of their hotels issuing instructions on what should be done differently. Today, we have quality leaders, statistics, surveys, and specific problems that are analyzed in greater detail in smaller groups. That means not that I am no longer around but the statistic gives you a better understanding of guest-relevant issues. One example: from the various questions (which are always the same for all the different types of guests), we can identify what is important or not for a particular group. The statistics also help us to see how trends are developing over several years, for instance, where cleanliness of the rooms is concerned, the equipment we provide, or the check-in process. McKINSEY: Do you have an example of something that many people once considered important that is not anymore? RAINER J. BRKLE: Two examples occur to me. One is dress code. We now allow gentlemen to dine in our gourmet restaurant on Saturday evenings without a dinner jacket. That was unheard of five or ten years ago. The second example is the global debate on smoking. This has resulted in a non-smoking policy in all The Ritz-Carlton hotels in the United States. What we are also picking up on is that customers want much more individualized service today than 10 or 15 years ago. This is naturally leading to a greater demand for measurement and for our system of gathering every bit of information rather than the philosophy of just rewarding customer loyalty with a bonus program. In this industry, its vital that customers receive the service theyve always wanted. I suffer from an allergy, for example. If I sleep in a bed with a feather comforter, my eyes will be red and swollen in the morning. So I expect the hotel to remember my needs and this throughout the world. McKINSEY: Do you believe that telecommunications companies can inspire their customers with the quality of their service? Do you think this is important to customers and that telcos could do more in this respect?

RAINER J. BRKLE: Earlier, we discussed, how staff has to identify with the company 100% you need total alignment between staff and leadership. Lets take the example of The Ritz-Carlton. When The Ritz-Carlton was established in 1983, the founders had a vision. They wanted to be the best. But in those days, the staff didnt yet know what the leadership wanted. After two or three years of this conflict, the leadership realized it was crucial to sit down with the staff and talk. The Credo Card arose from that dialog. This wasnt just a rehash of something that already existed, the staff members generated the entire concept themselves. In the meantime, weve revised this Credo Card six or seven times with our ladies and gentlemen. Its our mission statement in the sense of this is how wed like to run our business or this is how wed like to do this or that. Every employee has to believe in it for it to work. The best marketing for a company is living up to the promise that corporations make in their advertising, especially in the moment of truth when the employee meets the customer and the promise has to be fulfilled. My team is all I have they have to walk the talk. Particularly in telecommunications and also in other sectors, there are various fundamental problems that affect the staff. Its very important to win over their trust. I have to lay a foundation of confidence and faith in the firm. Then, you can sit down and discuss what you want to achieve together. McKINSEY: Thats a tremendous summary. What youre saying is that there are two main themes. One is that the staff members have to identify very closely with what is defined in the companys core principles the credo has to come alive and can only do that if your employees absorb it heart and soul. Second, you reiterated how important it is to actually quantify these things and develop very detailed ongoing measurement in order to continually understand how trends are developing and how to incorporate them. RAINER J. BRKLE: Yes. This morning in our staff meeting we discussed the fact that quality of execution is a continuous process in the service industry and is becoming ever more crucial. We dont just want our customers to be satisfied, we want them to be inspired and enthused. A tennis match is a good example. I have to concentrate on the ball, not the scoreboard. From time to time, I have to look at the score because I need to play strategically, but the ball is what counts. Naturally, the three lynchpins of a company always need to be


brought into balance: staff, customers, and the corporation itself or rather, the investors. All three have to be satisfied. Its not a question of which is more important they all are. There are moments when I will shift towards one more than another, but only to ultimately restore equilibrium.

RECALL No 2 Customer Experience Appendix


McKinseys Telecommunications Extranet

McKinseys Telecommunications Extranet is the gateway to some of the best information and most influential people in the telecommunications industry. The Extranet offers selected McKinsey-generated information that is not available in the general Internet. Extranet users have access to selected McKinsey articles on subjects ranging from Industry & Regulation, Growth & Innovation, Sales & Marketing, Services & Operations, IT & Technology, Corporate Finance, Organization & HR, Corporate & Enterprise, and Equipment & Devices. Direct communication channels ensure that your questions and requests will be addressed swiftly. The site is updated weekly with new articles on current issues in the industry. Through McKinseys Telecoms Extranet you can: Obtain exclusive information free of charge and take advantage of an Internet portal specifically designed for the industry. Access cutting-edge business know-how, interact with other experts to gain new perspectives, and contact leading industry professionals. Stay well-informed with daily industry news from factiva that you can tailor to your needs and interests. General information about the site is available at: http://telecoms.mckinsey.com Contact: telecoms@mckinsey.com

RECALL No 2 Customer Experience Appendix


The Telecommunications Practice

McKinseys Telecommunications Practice serves clients around the world in virtually all areas of the telecommunications industry. Our staff consists of individuals who combine professional experience in telecommunications and related disciplines with broad training in business management. Industry areas served include network operators and service providers, equipment and device manufacturers, infrastructure and content providers, integrated wireline/wireless players, and other telecommunications-related businesses. As in its work in every industry, the goal is to help McKinseys industry clients make positive, lasting, and substantial improvements in their performance. The practice has achieved deep functional expertise in nearly every aspect of the value chain, e.g., in capability building and transformation, product development, operations, network technology, and IT (both in strong collaboration with our Business Technology Office BTO), purchasing and supply chain, as well as in customer lifetime management, pricing, branding, distribution, and sales. Furthermore, we have developed perspectives on how new business models and disruptive technologies may influence these industries.

RECALL No 2 Customer Experience Appendix

About the authors

Fabian Barros is an Associate Principal in McKinseys Sao Paulo office. He is a core member of the Telecommunications Practice in Latin America. He has served telecommunications clients, both integrated players and wireless-only players, in North America, Europe, and several Latin American countries, with relevant work in customer experience, marketing, go-to-market and call center operations, and organization. fabian_barros@mckinsey.com Thomas Barta is an Associate Principal in McKinseys Cologne office and a core member of McKinseys European Marketing Practice, where he focuses on marketing in the telecommunications industry, especially branding and pricing. Since joining McKinsey in 2001, he has primarily served clients in the areas of telecommunications and consumer goods/services across Europe. Prior to joining McKinsey, he worked for seven years in a global consumer goods company, most recently as European Marketing Manager. thomas_barta@mckinsey.com Fabian Blank is an Associate Principal in McKinseys Berlin office. He is a core member of McKinseys Telecommunications Practice and the global Customer Lifecycle Management (CLM) core group. He works with telecommunications industry clients, mainly in emerging markets, focusing on marketing-, sales-, and network-related topics. fabian_blank@mckinsey.com Adam Braff is a Principal in McKinseys Washington, DC office and the leader of the North American Customer Experience Practice. He previously launched and co-led McKinseys Telecommunications Customer Lifecycle Management Practice. He primarily serves clients in telecommunications and high tech on marketing and operations issues and leads the firms primary customer research efforts on customer experience across eight sectors. adam_braff@mckinsey.com Markus Frerker is a Principal in McKinseys Munich office. He is a core member of the Global Media & Entertainment and Telecommunications Practices and leads the German media sector. Since joining McKinsey in 2000, he has advised clients primarily in the media and mobile industries, especially broadcasters, packaged media companies, and mobile operators across the entire value chain. His functional focus has been dedicated to strategy, marketing (including customer lifecycle management and multi-brand strategies), and M&A/postmerger management. markus_frerker@mckinsey.com Wiebke Khler is an Associate Principal in McKinseys Hamburg office and a member of the European Marketing Practice, where she co-leads the European CLM Initiative. She serves clients on marketing and sales topics on international projects in industries, such as transportation/ logistics, telecommunications, retail, pharma, and insurance. Prior to joining McKinsey, she worked as Vice President of CRM at a major European airline. wiebke_koehler@mckinsey.com Sascha Lehmann is a Customer Insights Specialist in McKinseys Hamburg office. He serves clients in different industries on market research topics with a special focus on customer satisfaction research and qualitative market research techniques. sascha_lehmann@mckinsey.com Katrin Suder is a Principal in McKinseys Berlin office. She is a member of the Telecommunications and High Tech Practices, focusing on mobile as well as software and services. She has worked intensively with her clients on a large variety of issues, ranging from strategy to operations and from product management to technology topics. She holds a PhD in Physics and a BA in German and theater. katrin_suder@mckinsey.com

Telecommunications Practice 2007 Copyright McKinsey & Company, Inc.