customer journey touchpoints mckinsey

The four pillars of distinctive customer journeys

In recent years, customer experience (CX) has emerged as a major differentiator for large companies, including financial-services providers. In a McKinsey survey of senior executives, 90 percent of respondents confirmed that CX is one of the CEO’s top three priorities.

It’s a priority because the stakes are so high. For financial institutions, for example, rising customer expectations are pressing organizations to come up with more functional improvements even as alternatives to traditional financial services are emerging. In this dynamic environment, financial institutions face a stiff challenge to differentiate their offerings while reducing cost and complexity for customers—and to do it at a profit.

Overcoming these challenges is critical not just to meet rising customer expectations and to compete with new digital attackers but also to generate significant business impact. Our research indicates that for every 10-percentage-point uptick in customer satisfaction, a company can increase revenues 2 percent to 3 percent.

At a time when the customer-satisfaction scores of top-quartile institutions can exceed those of bottom-quartile players by as much as 30 to 40 percentage points, the financial payoff from best-in-class CX can be significant indeed. These gains come from a variety of sources, including additional product purchases generated by cross-selling and upselling, such as when a borrower increases the value of a loan.

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To understand what constitutes distinctive CX in financial services, we performed benchmarking research on five key customer journeys—the series of interactions a customer has with a brand to complete a task—in banking and insurance. 1 1. We performed the research in five countries (France, Germany, Italy, the UK, and the US), conducting outside-in studies of five key customer journeys in banking and insurance. The journeys include retail customer onboarding, mortgage applications, car insurance claims, life insurance acquisition, and the onboarding of small and medium-sized enterprises (SMEs). In partnership with external research agencies we deployed an online questionnaire about these journeys, surveying customers of both top traditional players and purely digital players. We asked questions related to what led them to the company, metrics of the journey’s steps, the companies’ capabilities in place and customers’ satisfaction with them, and customers’ use of online channels. The survey findings in this article relate specifically to retail customer onboarding but apply generally to the other journeys we studied.

Reaching the top quartile of CX performers is no easy task. Cost, design, and value are emerging as key differentiators for customers, yet companies often lack guiding principles to shape those efforts. By analyzing and ranking correlations between customer satisfaction and operational factors (such as the reasons a customer chooses one company over others, cycle times, features offered, and the use of digital channels) in our survey, four pillars of great customer-experience performance stood out:

1. Focus on the few factors that move the needle for customers

We asked customers to assess different characteristics of the end-to-end experience, including the first interaction with the institution, the ease of identifying the right products, and the knowledge and professionalism of staff. We found that only a small number of characteristics (typically three to five out of 15) had a material impact and accounted for the bulk of overall satisfaction (Exhibit 1).

For example, when analyzing the characteristics of the customer onboarding journey, we found that transparency of price and fees, ease of communication with the bank, and the ability to track the status of the onboarding process accounted for 42 percent of overall satisfaction. The next three highest-ranking characteristics—assessment of broader customer needs; products and services received immediately after account opening, such as debit cards and mobile and online banking access; and ease of identifying the needed product—account for an additional 34 percent. Conversely, characteristics such as the courtesy of staff, the timeliness of callbacks, and the clarity of documentation had limited impact on satisfaction. This finding strongly suggests that banks should concentrate mainly on those things that make the most difference to customer satisfaction.

2. Ease and simplicity: The payoff trade-off

Today’s harried customer values convenience. Cutting down the time it takes to complete an individual journey, such as applying for an account, by making it easier and simpler has a deep effect on customer satisfaction.

For example, in France, customer satisfaction drops by up to 30 percentage points when the time to open an account exceeds 45 minutes. That 45-minute point marks the “satisfaction cliff.” But what’s really important to note is that there is a diminishing payoff in reducing the time it takes a customer to complete a journey. In France, again, the impact on customer satisfaction when taking between 15 and 45 minutes to open an account is relatively minor (the “satisfaction plateau”). Cut that process to below 15 minutes and satisfaction increases by up to ten percentage points. Companies need to work out the trade-off, then, between the investment in improving the ease and simplicity of a process and the resulting improvement in customer satisfaction and new value created.

As more processes are digitized, journey times will be cut back. But low cycle times alone don’t equate to superior CX. Rather, our research indicates that customers respond most positively to the ease of a transaction or process.

3. Master the digital-first journey, but don’t stop there

We analyzed different types of customer journeys: those that are completely online, those that start online and finish in a branch, those that start in a branch and finish online, and those that take place fully in a branch. We found that digital-first journeys led to higher customer-satisfaction scores (Exhibit 2) and generated 10 to 20 percentage points more satisfaction than traditional journeys.

For all the advantages of digital-first journeys, those journeys that are the most digitized across all the interactions lead to the greatest customer satisfaction. Nevertheless, many financial services do not provide fully digital services even when they exist, such as digital identification and verification. This finding indicates that financial-services providers can still significantly improve CX by digitizing complete journeys.

4. Brands and perceptions matter

It may not be surprising that companies whose advertising inspires their customers with the power and appeal of their brand or generates word of mouth deliver 30 to 40 percentage points more satisfaction than their peers. But how advertising or word of mouth affects perceptions is crucial. Two banks in the US, for example, performed nearly identically across a set of customer journeys. However, customers viewed one bank as delivering a much better overall experience than its rival, because the higher-ranked institution’s advertising promoted its user-friendliness.

That perception had an important effect on identifying promotions that were effective for attracting new customers but, on average, had a nearly neutral impact on satisfaction. The average, however, is misleading. Promotions are slightly negative for traditional banks but positive for purely online players. In the same vein, physical proximity to a financial-services provider tends to have, on average, little discernible influence on customer satisfaction. Again, though, the value to customers of physical proximity can vary widely from institution to institution and from country to country, pointing to a need for financial institutions to understand their customers at a more granular level.

Why the customer experience matters

Despite the impact of word of mouth in shaping perceptions, our survey revealed that few customers recommend a financial-services provider on the strength of their existing relationship with it. An existing relationship alone does not turn a customer into an advocate. Institutions that do more to please their existing customers and help them tell their story to their peers might be able to mobilize a new group of influential advocates for their products and services.

It pays to customize

While the four hallmarks for outstanding customer experiences tend to be universal, experience designers should focus on a range of customer preferences based on country, product, and age group. For example, we observed that the ease of navigating through the account-opening process had a larger impact on satisfaction in Italy than in France. Conversely, the assessment of broader customer needs is more important in France than Italy.

When looking across products, we also found detailed differences, such as the satisfaction factors for current accounts and mortgages. When working with current accounts, customers derive the greatest satisfaction from transparency on prices and fees; when they’re applying for a mortgage, by contrast, they most value the ease of filling in the application form.

Finally, there are also differences among customer groups. The ease of communicating with the bank is more important to customers 55 years and older than to 18-to-24-year-olds. Conversely, the ability to identify the right products is more important to 18-to-24-year-olds than to those 55 and older. This suggests that processes and value offerings need to be modular with their emphasis varying with what matters most to each customer segment.

Knowing what to do is the right place to start. But a company’s success in building out great customer journeys requires agile capabilities that excel at rapid iteration and testing and learning. 2 2. See Xavier Lhuer, Tunde Olanrewaju, and Hyo Yeon, “ What it takes to deliver breakthrough customer experiences ,” November 2015. Reacting to live feedback from real customers is often the difference between a good and a great customer experience.

Joao Dias is a partner in the Cologne office, Oana Ionuțiu is a specialist in the Bucharest office, Xavier Lhuer is an associate partner in the London office, and Jasper van Ouwerkerk is a senior partner in the Amsterdam office.

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The Truth About Customer Experience

• Alex Rawson,
• Ewan Duncan,
• Conor Jones

Touchpoints matter, but it’s the full journey that really counts.

Reprint: R1309G

Companies have long emphasized touchpoints—the many critical moments when customers interact with the organization on their way to purchase and after. But this focus can create a distorted picture, suggesting that customers are happier with the company than they actually are. And it distracts from the more important picture: the customer’s end-to-end experience.

In their research, the authors—partners at McKinsey—have found that organizations able to skillfully manage the entire customer journey reap enormous benefits: enhanced customer satisfaction, reduced churn, increased revenue, and greater employee satisfaction.

To realize these benefits, companies need to embed customer journeys into their operating models in four ways. They must identify key journeys, understand how they are performing in each, redesign and support those journeys, and change mind-sets to sustain the initiatives at scale.

Journey-based transformations may take years to perfect. But they create a culture that engages the organization across functions and from top to bottom. It’s a culture that’s hard to build otherwise, and a true competitive advantage goes to companies that get it right.

Idea in Brief

The problem.

Many companies excel in individual interactions with customers, but they fail to pay adequate attention to the customer’s complete experience on the way to purchase and after.

The Argument

Companies that perfect customer journeys reap enormous rewards, including enhanced customer and employee satisfaction, reduced churn, increased revenues, lowered costs, and improved collaboration across the organization.

The Solution

Companies need to combine top-down, judgment-driven evaluations and bottom-up, data-driven analysis to identify key journeys, and then engage the entire organization in redesigning the customer experience. This requires shifting from siloed to cross-functional approaches and changing from a touchpoint to a journey orientation.

Companies have long emphasized touchpoints—the many critical moments when customers interact with the organization and its offerings on their way to purchase and after. But the narrow focus on maximizing satisfaction at those moments can create a distorted picture, suggesting that customers are happier with the company than they actually are. It also diverts attention from the bigger—and more important—picture: the customer’s end-to-end journey.

• Alex Rawson and Ewan Duncan are partners in McKinsey’s Seattle office, and Conor Jones is a partner in its Dublin office.
• Conor Jones is a partner in its Dublin office.

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Why You Need To Measure Journeys—Not Just Touchpoints

Oct. 2, 2017 by Kerry Bodine

The concept of customer journeys isn’t new to the customer experience world. Yet it’s taken some time for organizations to evolve from simply creating journey maps to actively using the journey as a framework for how they do business. One of the most exciting developments of the past few years is the recognition, in the words of McKinsey , that “end-to-end customer journeys, not individual touchpoints, are the unit to measure when setting priorities for your customer-experience investments.”

Enter journey analytics : the measurement and analysis of key customer journeys—not just individual touchpoints.

It may seem like common sense to measure how well your organization supports customers as they try to achieve their goals. But the data to support this notion took a long time to surface, as many prime examples stayed hidden and well-guarded behind corporate walls. Fortunately, McKinsey’s anonymized (but published!) data will help you make the case for pivoting your organization’s measurement strategy.

Here are the crib notes (with my major takeaways as the headings):

The journey doesn’t equal the sum of its parts.

A media company looked at the new customer onboarding experience, “a journey that spanned about three months and involved an average of nine phone calls, a home visit from a technician, and numerous web and mail interactions.” Customer satisfaction scores for individual channels each consistently scored over 90%. But satisfaction for the entire end-to-end journey was nearly 40% lower. Ouch.

Journeys are better predictors of likelihood to recommend.

Ok, I’m gonna have to get a bit data wonky on you here, so hang with me. In statistics land, R-squared values, like those you see in the image above, always fall between 0 and 100%. An R-squared value of 0% means that the model in question—for us, the hypothesis that touchpoints or journeys account for satisfaction or willingness to recommend—explains NONE of the variability in the data. (Think of a bunch of random dots on a graph that you can’t draw a single line through.) A value of 100% means that the model in question explains ALL of the variability in the data. (Here, you’d have all the data points aligned perfectly through your line. When does that ever happen?)

McKinsey’s models of customer satisfaction and willingness to recommend both have R-squared values for journeys that hover around 50% for the electric utility, health insurance, cable/satellite TV, and hotel industries. I’d love it if these were higher, but it’s reasonable to assume that there are other factors that account for about half of customers’ satisfaction scores and referral behavior.

Journeys present more opportunity for differentiation .

In one (unnamed) industry, McKinsey compared satisfaction with both touchpoints and journeys across companies. The gap between the companies with the best and worst journey performance was 50% wider than between those with the best and worst touchpoint performance. And a wider gap equals more potential for you to differentiate from your competitors.

Journeys drive cold hard cash.

When McKinsey looked at the pay TV and auto insurance industries, it found that average satisfaction with each company’s three key journeys correlated with faster revenue growth. To be specific: “a one-point improvement on a ten-point [satisfaction] scale corresponds to at least a three-percentage-point increase in the revenue-growth rate.” Wow!

This post is part of the Customer Experience Professionals Association’s Blog Carnival “Celebrating Customer Experience.” It is part of a broader celebration of Customer Experience Day.  Check out posts from other CX Day bloggers  & learn more at  CXDay.org .

Now more than ever, you need to understand your customers’ changing needs and expectations.

Our Journey Mapping Master Toolkit is the industry’s only solution to combine the expert instruction and ready-to-use tools you need to create effective journey maps.

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Kerry Bodine

I founded the consulting firm Kerry Bodine & Co. in 2014 to create great customer experiences with business leaders who want the financial benefits of human-centered thinking. My book, Outside In: The Power of Putting Customers at the Center of Your Business — and my writing in Harvard Business Review , The Wall Street Journal , Fast Company , Forbes , and USA Today — draws on two decades in technology and design, showing how observant companies win again and again.

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New touchpoints – digitalizing the automotive customer journey

by Philip Junge, Global Director, Customer Engagement

The changes in consumer behavior and technology breakthroughs are creating a fundamental shift in the automotive customer journey. New insight from McKinsey & Co revealed that these changes are giving rise to disruptive technology-driven trends including alternative forms of mobility, autonomous driving, electrification and connectivity.

Digitalization, paired with an increasing end-customer affinity with e-commerce, has led to the emergence of new touchpoints throughout the customer lifecycle. By digitalizing their traditional business processes, OEMs and their dealer networks can engage and interact with their customers in many new ways.

As they do with most other retail experiences, consumers demand online platforms that enable product searches and comparisons, and ultimately enable them to finalize the buying decision online. Interestingly, so far the automotive industry has not adopted e-commerce to the level that other industries have achieved.

“Consumers don’t differentiate between OEM and dealer web presence. More than 50% of people expect sales and service offers to be available on both dealers’ and OEMs’ websites.”

– Philip Junge, Global Director, Customer Engagement

Where other industries have already fully digitalized their customer journeys, automotive is lagging behind. This situation creates unique opportunities for brands to differentiate and to position themselves as digital innovators. To identify these opportunities, OEMs must look at the entire customer journey and evaluate the level of digitalization at a brand, market and dealership level.

As more and more consumers begin their buying journeys using online retail channels, manufactures and their dealer networks must integrate their online strategies to remain competitive.

Online vehicle configuration supports the initial stage of the buying process without the customer having to set foot in the dealership. However, these processes are more commonly available on brand websites than on dealers’ own online channels. Similarly, customers can often only book a test drive on the dealer site but not on the OEM webpage. Brands and their dealer networks need to combine their processes to create a more unified customer experience.

MSX Customer Engagement solutions include a Digital Readiness Assessment (DRA), comprising multiple questionnaires designed to identify the status-quo of a digitalization efforts. It enables industry experts to work closely with manufacturers and their retail networks to implement digital solutions that integrate processes and data sources to significantly improve performance and satisfy customer needs.

These applications are modular, meaning they can evolve into larger, more complex solutions over time. Using scalable technology, MSX applications act as building blocks, linking data and processes to create valuable new efficiencies and opportunities.

MSX has recently started to perform a wider DRA approach across 13 markets and 10 brands. The figures shown in this article represent a subset of the initial results from the German market. More detailed and holistic statistics will be published later this year.

If you require additional information regarding DRA, please don’t hesitate to contact Philip Junge.

By combining online and offline journeys and creating a digital customer profile, OEMs can further streamline the customer journey. Using innovative technologies such as facial recognition, dealers can continue the customer journey when the customer enters the dealership.

It is crucial to combine online and offline journeys by creating digital avatars and personas for website visitors and connecting device IPs to physical persons. Detecting these customers and connecting their online journeys can then be achieved through facial recognition in the dealerships.

The expectations of a digital consumer

As part of MSX’s DRA solution, we are collecting consumer expectations on digital processes throughout the customer journey. The information below is based on a subset of German consumers:

Source: MSX Research , MSX Customer Expectations Online Survey

*80 Respondents, Margin of Error of ± 10.9% for a 95% confidence level.

From the initial stage of configuration and financing options, through owning, servicing and repurchasing a vehicle, the processes involved must be evaluated and improved.

Manufacturers looking for to a neutral source for identifying opportunities to introduce technology and digitalize parts of the customer journey can benefit from MSX Digital Readiness Assessment. This performance analysis can help find actionable insights that support business decisions in this digital transformation.

By evaluating the current customer journey, manufacturers can gather impressive intelligence enabling them to compare their performance in one market against consumer expectations and competitors. This helps them understand which areas of the process are affecting the performance of a particular market. As elements of online performance depend on variables such as customer expectations, data protection regulations and other legal requirements, it’s not possible to make direct comparisons between regions and countries. The calculation of global results can only be achieved by adding, not averaging, individual market scores.

It’s also important for OEMs to explore whether their technical capabilities support their digitalization efforts. Being able to identify whether an OEM can connect to – or even access – the dealer management system data, can influence the requirements for an effective resolution. Real improvements can only be made if the two parties work together.

“88% of respondents expect to be able to choose available appointments based on workshop availability when making a service appointment online.”

Technological advances mean drivers can now enjoy the benefits of a connected vehicle, making driving safer and less stressful. While increased connectivity has improved the overall driving experience, the vehicle now gathers, processes and generates vast amounts of data. This data is extremely valuable and can provide OEMs with insights into driver behavior and vehicle health.

Some of this data presents live opportunities for the service network of OEMs. It’s crucial to benefit from these hot leads and to streamline and automate end-customer communication.

Exposing the gap between consumer expectations and reality

However, this connected car data is not as readily available as one might think. In many cases, cars are connected to the wrong dealership, customer information is missing, or contact data is not available. Case studies show that OEMs can achieve an uplift of up to 75% in lead conversion by integrating dealer data into the connected car process, and by applying automated communicaton processes.

Source: MSX Research and Qualitative Interviews with subject matter experts

By digitalizing the customer journey, manufacturers can use this data to achieve higher retail intelligence for better decision making, increased revenue and long-term customer loyalty. Manufacturers can identify additional customer touchpoints, better understand what motivates customers to defect to other brands before it happens, and find resolutions for these issues.

About the Author:

Philip Junge

Global Director, Customer Engagement

Philip Junge is responsible for creating and managing the global MSX product portfolio for customer engagement activities. He joined MSX with 15 years of customer engagement experience in the automobile industry at both OEM and dealership levels. Previously he was a lecturer of marketing at the Munich University of Applied Sciences. He was formerly Managing Director of VEACT, which he co-founded, and has published several papers on his areas of expertise.

He can be reached at [email protected]

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