Faculty of Economics and Business MSc. BA – Business Development

T o u c h y o u r c u s t o m e r s

I n t e g r a t i n g C u s t o m e r T o u c h p o i n t d e s i g n i n N P D

A C a s e S t u d y B y : S a s j a C . R o s k a m

Faculty of Economics and Business MSc. BA – Business Development

September, 2010

Korte Vleerstraat 184 2513 VP The Hague The Netherlands

T: +31 (0) 6 38364395

E: S.C.Roskam@student.rug.nl / Sasja_Roskam@hotmail.com

Student number: 1387243

Theme

Customer Excellence

Company

Royal KPN (Business segment)

Department

Marketing Strategy & Innovation

Supervisor

R.U.G. - Wim Biemans (w.g.biemans@rug.nl)

KPN - Gertjan Kleinhout (gertjan.kleinhout@kpn.com)

Keywords

Customer Excellence, Service Innovation, Customer experience, Customer touch points, New Product Development, Service Integration, Customer Orientation

Abstract

Service plays an increasingly important role when it comes to customers’ buying decisions. Simply having a good product does not suffice anymore. However, there are still companies that neglect the importance of their service offerings and fail to properly integrate service design in the New Product Development process. In this article the importance of properly managing the customer experience in the Customer Touchpoints is highlighted. Moreover, several helpful methods are introduced to help your company design an excellent experience to deliver through the Customer Touchpoints.

Acknowledgements

I would like to take the time to thank Royal Dutch KPN and its employees for the opportunity and time dedicated to this research. During this graduation research dr.

Wim Biemans from the University of Groningen (R.U.G.) has been of great assistance and I would like to thank him for his nonstop support, devotion and enjoyable

conversations. I am grateful for my family’s and friends’ continuous support and

belief in me throughout my studies. Special thanks to Geert Nijenhuis for being there

every step of the way and for simply listening and encouraging me.

I n t e g r a t i n g C u s t o m e r T o u c h p o i n t d e s i g n i n N P D

A C a s e s t u d y B y : S a s j a C . R o s k a m

Service plays an increasingly important role when it comes to customers’ buying decisions.

Simply having a good product does not suffice anymore. However, there are still companies that neglect the importance of their service offerings and fail to properly integrate service design in NPD.

S.C. Roskam, student of MSc. Business Administration – Business Development at the University of Groningen (R.U.G.), the Netherlands. This research was conducted under the supervision of dr. W.G. Biemans (R.U.G.) at Royal Dutch KPN in the Hague.

There does not seem to be a consensus on what is a company’s most important asset. Some argue that a company’s most important assets are its employees (; Bontis et al., 2000; Fitz-Enz, 2000;

Gabarro et al. 1990), while others say it is their products. But isn’t it true that without your customers there wouldn’t be anyone to sell to?

And then there would not be any business at all?

So, let’s focus on this important asset of the company.

With the increasingly competitive environment in

which many companies operate it is important to

impress your customers. It is even more

important to impress your customers even more

than your competitors are doing. To do this your

company needs to deliver superior customer value

(Woodruff, 1997) which, obviously, demands both

The Genie and the Ice cream shop

A genie paid a visit to the town square of Businessland, where he met three

entrepreneurs, each of whom wanted to open an ice cream stand.

The genie said, “I will grant each of you one wish—give you anything you ask of me—if, and only if, granting your wish will truly ensure the success of your venture.”

The first entrepreneur thought for a moment and then said: “My wish is the best possible ice cream to sell here in Businessland.” The genie frowned and said, “I shall not grant it. The best ice cream on Earth would not guarantee your success.”

The second entrepreneur was quick to speak up. “My wish is that you should grant me the very best location in Businessland, a place where my ice cream shop will be noticed by all who pass through the city.” Again, the genie frowned. “I shall not grant it. The best location on Earth would not guarantee your success.”

The genie cast a doubtful eye on the third entrepreneur, saying: “Yours is the last wish.”

The third entrepreneur smiled confidently as she said, “I have ice cream, though it may not be the best on earth, and I have a storefront in mind, although it may not be the best location.

My wish,” she continued in a firm voice, “is that I should have a never-ending supply of loyal customers lined up outside the door of my ice cream shop every day.” The genie grinned broadly. “Yes! You will have success!

Your wish is my command.”

You see, without customers, it doesn’t matter how good the ice cream is. Without customers, it doesn’t matter where you put the ice cream shop. Without customers, you don’t have a business!

From: ‘The Cult of the customer’, Hyken (2009).

high quality products and high quality services.

Additionally, it is important that products are designed from a customer perspective and that the products fit your customers’ expectations and needs ( Üςler, 2006) . Besides merely offering good or even excellent products, the service that accompanies your products should be up to

standards as well. Customers do not settle for just a good product anymore. They demand high service offerings before, during, and after purchase. This also means that even as your company fails to properly deliver an offering your service delivery could make up for it. This poses an even greater importance on services and a customer orientated way of doing business.

Thus, to sell your products and stimulate growth a customer focus is important. Furthermore, to reach your customers your business needs to focus on how to do so. Customers experience your company in many different ways. For example, by simply seeing the company’s name or logo customers are exposed to your company.

But there are also moments that are often more managed and controlled (Woodruff, 1997). By well designing these moments of contact, or Customer Touchpoints, your company could exploit the opportunities to satisfy the customers.

As service is often closely related to the core offering of your company it would make sense that when developing your core offering (whether this is a good or a service) the design of the complementary customer service takes place as well. In the existing literature on New Product Development (NPD) a strong focus exists on a customer oriented way of working and integrating customers in the NPD process (Alam and Perry, 2002; Kaulio, 1997; Veryzer and de Mozota, 2005). However, none of this literature seems to be discussing the importance of integrating Customer Touchpoint design and NPD. More specifically, how can your business benefit from integrating Customer Touchpoint design in your new product development process?

In this article the importance of Customer Touchpoint design will be highlighted.

Furthermore, a case study illustrates how the

design of Customer Touchpoints could be

integrated in the NPD Process.

Box 1: Customer touchpoints

Touchpoint Experience (2010):

“Every point in time the customer ‘touches’ or connects with your company throughout the entire product/service delivery; pre-, during and post-purchase.”

Intervox Group (2005):

“Customer Touchpoints are all physical, communication, and human interactions that your customers experience during their relationship cycle with your company.

Examples of customer Touchpoints include an advertisement, Web site, receptionist, offices or store, sales staff, point-of-purchase display, even a receipt or invoice – everything and everybody that a customer comes in contact with while dealing with your business is a Touchpoint. Increasingly, customer

touchpoints are ‘owned’ and managed by the contact center. These include telephone, internet, email and other channels for delivering service and support”

Touchpoint Metrics (2003):

“Touchpoints are all of the physical,

communication and human interactions your customers experience over their relationship lifecycle with your organization.”

KPN

During the second and third quarter of the year 2010 an in-depth investigation was conducted on the current situation of Customer Touchpoint design within the NPD process used by Royal Dutch KPN. This study was prompted by KPN’s concerns about KPN’s customer orientation and Net Promoter Scores (NPS). NPS is used within KPN to measure customer loyalty and, related to that, customer satisfaction. Over the past years KPN has not been able to keep up service levels compared to competitors. NPS ratings are increasingly important within the KPN business market segment and solutions to positively affect the customer perception and satisfaction are required. Closely related to customer satisfaction at KPN are their Customer Touchpoints in which the customers experience the KPN brand, the products and the service. It are the consequences (e.g. service failures) resulting from the lack of Customer Touchpoint design throughout the NPD process that triggered this investigation at KPN.

Literature background

To get a proper understanding of the two main subjects under investigation some explanations of the terms will be provided. Moreover, a brief literature review was conducted and provided.

Customer Touchpoints

Merely searching for the meaning of the word

‘Touchpoint’ in the Oxford Dictionary provides us with the following description: “point of contact between a buyer and a seller”. Stone et al. (2002) describe touchpoints as “the points at which products and services are purchased or serviced”.

Since these are rather plain and incomplete descriptions of the term some more practical explanations are investigated. Various companies

have dedicated their business to helping others to cope with the increasingly importance of the activities performed in Customer Touchpoints.

Although their descriptions of Customers Touchpoints may slightly differ, the underlying message is equivalent. Not only does the term Customer Touchpoints refer to a moment of purchase, but it also includes all the moments of contact before-, during- and after purchase (Box 1). Additionally, Meyer & Schwager (2007) refer to touchpoints as “instances of direct contact either with the product or service itself or with representations of it by the company or some third party”. For the remainder of this article the following description will explain the term Customer Touchpoint:

A touchpoint is a moment before-, during- and/or

after purchase in which a customer comes in

contact with your company, its brand, its product

or service.

Box 2: Shifting touchpoint needs

A young family with not much time and resources at hand may be more easily satisfied with a quick visit to a financial planner. They may also be more eager to pursue buying methods online.

In a similar situation a senior with plenty of spare time and a considerable amount of assets might not be satisfied with merely a

quick visit. Also are seniors less likely to pursue new (online) buying methods.

As a difference exist between touchpoints that include merely exposing your brand and touchpoints that include a real opportunity to design and control your customer’s experience this article refers to this second kind of Customer Touchpoints. Simply because these are the touchpoints you can and should use to manage and create the ultimate experience for your customers.

Meyer & Schwager (2007) explain that not all Customer Touchpoints have the same value. They even state that a service interaction has higher value when the core offering is a service itself.

Furthermore, a touchpoint that motivates customers to take part in a subsequent interaction is even more valuable. Meyer &

Schwager (2007) also argue that the characteristics which determine the importance of a touchpoint change during a customer’s life. That means that the needs of customers regarding touchpoints change and that different target groups have different needs (Box 2).

For both business to business (B2B) markets and business to consumer (B2C) markets it is true that information about a customer’s experience is collected at the Customer Touchpoints. This shows the importance of well organized contact moments. However, in the B2B markets a good

experience in these touchpoints is defined somewhat different from one in the B2C market.

In both markets companies try to fulfil their customers’ needs, but superior customer value in B2C markets mainly lays in the excitement of the customers where customers in B2B markets value, above all, a supportive and reliable experience (Meyer and Schwager, 2007).

In addition to Meyer and Schwagers’ (2007) statement that information about an experience is collected in the touchpoints they also state that a customer’s internal and subjective response to company contact is that customer’s experience.

This contact can be either direct or indirect.

Indirect contact mostly entails an unprompted interaction through a representation of a company’s brands, products and/or service. For example, noticing an advertisement at the side of the road or the logo on the company’s office building. The direct contact moments most often take place during purchase, use and service encounters. They are mostly initiated by the customers and the moments are more directly manageable than indirect encounters. Meyer and Schwager explain that the key to a good experience is not in the amount of features the core offering holds. The success lays in the customer experience your brand creates. This experience, based on the added value to customers, should be embedded in every feature an offering holds including the accompanying services. This shows the importance of properly designing Customer Touchpoints through which services are offered and which can consequently, have a positive effect on a customer’s experience (Garrett, 2006).

The activities performed trough the Customer

Touchpoints (like the actual purchase, but also

filing a complaint, changing delivery address, and

many others) are elements of the service

delivery. The contribution of each of these actions

to customer satisfaction should be considered. For

a long time the literature proposed that performance should be consistent throughout the customer experience. Companies were advised to seek customer satisfaction throughout all the touchpoints without giving importance to the order of events or actions (Zeithaml & Bitner 1996 a.o.). The average performance of a service encounter, therefore, is often calculated as the sum of the events. However, Verhoef et al.

(2004) argue that besides the average performance, peak performances are important.

Customer satisfaction is not merely based on the average quality of the activities in the Customer Touchpoints. Companies can further enhance customer satisfaction by designing for positive peak experiences in their Customer Touchpoints.

These peak experiences will, however, only be effective when they are not predictable. When customers expect a peak in experience to take place its impact will not excite customers anymore.

One often discussed method to design and map the Customer Touchpoints is Service Experience Blueprinting. (Patricio et al., 2008; Bitner et al.

2008) Service Blueprinting entails assigning the events and actions to the best and most appropriate interfaces to obtain desired customer experiences. The article of Patricio et al. (2008) starts with a discussion about the influence of modern technology on service. There was a time that companies had just few physical stores were customer contact took place. Nowadays customers have many contact points to choose from and almost all Customer Touchpoints are supported by technology. It is the growing importance of a customer focus that instigated the idea that customers can co-create the experience in the Customer Touchpoints. Services are predominantly produced and experienced, simultaneously. That means that the service offering can be adapted to specific individual needs. Hence, every service encounter could be

different and is therefore heterogeneous. This idea enhances the importance of a focus on the customer’s service experience in the Customer Touchpoints and thus adding value for the customer (Parasuraman et al., 1985; Pine and Gilmore, 1998; Gwinner et al., 2005).

Rayport and Jaworski (2005) refer to Customer Touchpoints as service interfaces. The combination of the service interfaces results in a customer experience. Therefore, the service interfaces, or touchpoints and channels, become interrelated. A multichannel strategy which integrates a company’s Customer Touchpoints into a cohesive customer experience is preferred (Sousa and Voss 2006). Companies should think about what their Customer Touchpoint should look like. They should decide on which touchpoints and channels to use, how events should occur and how these should be integrated to become cohesive contact moments.

Another important point that Meyer and Schwager (2007) make is that at every Customer Touchpoint the difference between a customer’s expectations and the actual perceived service quality creates an opportunity to either ‘wow’ or disappoint the customers. This point resembles the underlying idea behind the SERVQUAL model (Parasuraman et al.; 1988). Figure 1 shows a representation of the SERVQUAL model.

Consumers evaluate service quality by comparing perceived quality to expected service performance (Parasuraman et al.; 1991). This model once more points out the importance of designing Customer Touchpoints to meet customer expectations.

The actual usage of a core offering by consumers

often generates the greatest exposure and it used

to largely determine a customer’s satisfaction

level. However, also pre-purchase and post-

purchase events are more and more determining

for the customers’ overall experience. Since,

services are closely related to the core offering of

Stage-Gate

Figure 2: Stage-Gate model, based on Cooper (1990).

a company integrating the development of the core offering (NPD) and the design of the touchpoints seems inevitable. In the next section a deeper understanding of NPD will be provided.

New product development

NPD entails the process of developing a new product or service from idea generation until market launch. Probably the most influential and well-know NPD system is Cooper’s Stage-Gate model which evolved from the initial model of Booz Allen Hamilton (BAH, 1982). Cooper’s Stage- Gate system is a conceptual as well as an operational model that facilitates the product development process from idea to market launch

(Cooper, 1990). It is a system that outlines the NPD process to be more effective and efficient.

As shown in figure 2, the Stage-Gate model divides the innovation or development process into a set of stages. All stages entail prescribed, multifunctional, and parallel activities. The entrance to each (next) stage is granted by a gate with Go/NoGo decision (Cooper & Kleinschmidt, 1993). According to Cooper (1990) the Stage- Gate model puts discipline into a process that in too many firms is ad hoc and seriously deficient.

The process is straightforward and understandable. The process provides a road map to facilitate the project, and it better defines the project leader's objectives and tasks. Also, the

The gaps in this figure represent the possible moments of divergence between the company’s internal vision on the service offering and the customer’s view on the offering.

The gaps present opportunities for a company to either disappoint or ‘WOW’

its customers by managing the customer experience.

Consequently, an improved customer experience will contribute to the company’s image and business results.

Figure 1: SERVQUAL model, based on

Parasuraman et al. (1988).

process builds in evaluation stages to better rank projects and focus resources. Parallel processing is a feature of stage-gate models, ensuring timely completion of projects. Moreover, stage gate systems build in key activities and focus attention on often underprovided areas such as the predevelopment and market-oriented tasks. The stage-gate system is merely a discipline that builds the success ingredients into the development process by design rather than by chance. The results are better decision making, more focus, fewer failures, and faster developments (Cooper, 1990). Individual companies may refer to their systems by different names, and on paper they may appear to be unique. In practice, however, there shows to be a surprising correspondence between different development processes (Cooper & Kleinschmidt, 1993).

The NPD process could give a firm a great competitive advantage. Through product development and innovations a company adapts to meet the changing market settings. Therefore, NPD could be considered as an essential process for success and survival of companies operating in competitive markets (Brown & Eisenhardt, 1995).

Since in the light of this paper core offerings are considered to be either goods or services, we should also take a glance at the literature on the development of service. It is interesting to see that even with the growing importance of services as a competitive advantage for many companies the NPD model has not yet been adapted to one commonly used New Service Development (NSD) model. Not only the service industry deals with service development anymore, but customers also expect goods to be complemented by excellent service offerings. These trends place service development at the heart of the firm's competitiveness (Johnson et al., 2000). In general the NSD model is often argued to be similar to NPD models. However, services differ

from products in their intangibility, heterogeneity and simultaneity (Johne & Storey, 1998). It is important to understand that these service characteristics propose a somewhat different approach during the development process. When looking at current NPD models the core focus is on the product. However, considering the customer experience it is increasingly important to design and develop the service offerings that are delivered through the Customer Touchpoints (Zomerdijk and Voss, 2010). Many service failures seem to be the result of a lack of service design.

When designing a service a thorough understanding about the customer process and customer experience is needed. The past two decades the literature on NPD has increasingly focussed on integrating customers in the NPD process (a.o. Alam and Perry, 2002; Veryzer and de Mozota, 2005; Martin & Horne,1995) to better match the offering to customer’s needs. Several ideas, from end-user testing to lead user design, have been proposed to integrate customers’ input in the NPD process. However, there still seems to be a gap in the existing literature when it comes to the design of Customer Touchpoints during the NPD process. When combining the literature on Customer Touchpoints and NPD it seems obvious that properly developing Customer Touchpoints can create a significant competitive advantage for your company. Moreover it is important that your services match your core offering and vice versa.

Therefore, the integration of service design with product design seems inevitable.

As discussed, Service Blueprinting is a widely used method for mapping the Customer Touchpoints. Additionally, several writers propose the use of Service Blueprinting for the development of services (Patricio et al., 2008;

Bitner et al. 2008). It is a helpful method to get

everyone involved during the design process and

it creates “communication, efficiency and

informational precision during the typically ‘fuzzy

NPS

Figure 3: NPS explained, adapted from Satmetrics Systems, Inc.

front end’ of the development process” (Bitner et al.; 2008). Foremost it is important for top management to acknowledge the importance of Customer Touchpoint design. To increase the performance in the Customer Touchpoints management needs to implement processes that reflect the importance of the customers’

experience (Meyer and Schwager, 2007).

Case study

KPN, as well as many other companies, is struggling to keep up service levels to match customers’ expectations. When this case study was initiated it was soon realized that this problem for KPN relating its service levels mainly appears at the Customer Touchpoints. Therefore the Customer Touchpoints are at the heart of this study. It is believed that in the Customer Touchpoints the customer experience is largely shaped. Therefore, it is also believed that in these Customer Touchpoints KPN can make a difference.

KPN

KPN is the leading telecommunications and ICT service provider in the Netherlands offering wireline and wireless telephony, internet and TV to consumers, end-to-end telecommunications and ICT services to business customers. With over 30.000 employees KPN has a substantial business and an extensive organisational structure.

Competition is fierce in the industry and customers increasingly demand high service quality besides high quality products. KPN is separated in a consumer segment and a business segment. This case study has been conducted within the business market segment. Throughout the entire company a strong focus on financial parameters like reducing cost, increasing sales and turnover exists. KPN aims to be the number

one telecom and ICT provider in 2011.

Additionally, KPN aims to be the number one service provider in the Netherlands in 2013. To realize these ambitions KPN not only needs excellent products, but also needs to provide an outstanding service to its customers.

The company’s problem

First of all, it is interesting to see that internally KPN is referring to delivering products while the end-users consider KPN to be a carrier of services. Furthermore, there are additional services, besides the core offerings, that KPN offers to satisfy its customers and add value to the customer experience. It is these services that are increasingly important to customer satisfaction and which are currently not sufficient at KPN. KPN is often being evaluated by its customers as delivering the best quality products in its industry. However, the service offerings are rated poorly. Net promoter score (NPS) is a metric that is increasingly used by companies to determine the loyalty of a firm's customers. This metric, developed by, Fred Reichheld, Bain &

Company (figure 3), and Satmetrix, is also used to determine marketing strategy and innovation within KPN. According to Satmetrix, companies with the highest NPS scores in their segment are also likely to have the highest growth rates. This means that NPS scores indicate how well a company is doing compared to its competitors.

Basically, the core benefit of NPS lies in clarifying

Box 3: NPS at KPN

NPS at KPN is calculated by asking customer the following question: Would you recommend KPN to others?

Respondents can rate the likelihood of recommending KPN to a friend or colleague with a grade between 1 and 10. Respondents are identified as promoters when they respond with 9 or 10. Respondents which graded the likelihood that they would recommend KPN to others with less than 6 are called criticasters.

Promoters – Criticasters = NPS

NPS scores always lie between -100 and +100.

For the KPN Business Segment the NPS scores are:

its main goal to employees throughout the company; creating more promoters and decreasing the amount of criticasters. This suggests that customer satisfaction and loyalty measurements should be at least as important as financial parameters when evaluating employee and project performance. The NPS data for KPN

show that too many criticasters are apparent (box 3). In line with the overall goal of KPN to become the number one service provider in the Netherlands it is important to increase customer satisfaction and increase NPS score accordingly.

When looking at the current NPD process of KPN it can be stated that due to a lack of focus on the entire customer experience and complementary service characteristics early on in the NPD process the eventually offered services do not match the needs of the KPN customers. Moreover, the services often don’t match the products they are accompanying. Basically, the current NPD process of KPN is not sufficient anymore and adaptations have to be made. This case study will draw attention to the importance of Customer Touchpoints and more crucially the right design of these during the NPD process to be able to deliver excellent service in the moments of contact. The aim of this research is to answer the following question; How to increase the customer focus by integrating Customer Touchpoint design in the current NPD Process of KPN? To accommodate this research question several investigative questions are produced. These questions will help to reveal the solutions concerning the integration of touchpoint design in NPD.

1. How are Customer Touchpoints currently designed at KPN and what are the consequences of this design method?

2. How does the design of Customer Touchpoints ideally look like in a customer focussed company?

3. How should KPN integrate Customer Touchpoint design in its current NPD process?

The research method and structure

This case study was conducted internally at Royal

Dutch KPN in The Hague. Already early on during

the research the need for an increased customer

focus became apparent. Moreover, the absence of

Customer Touchpoint design in KPN’s NPD process

and the low overall level of customer satisfaction

accordingly called for a specific focus. The objective of this case study is to improve the current NPD process of KPN by including Customer Touchpoint design. Furthermore, due to a gap in the existing literature on Customer Touchpoints and its integration in the NPD process the need to discuss this matter was further stimulated. This study is strongly based on in- depth interviews and an additional literature research. Five exploratory interviews were conducted with marketing-, and product managers to acknowledge and verify the need for a stronger customer focus in the NPD process.

Consequently, about twenty in-depth interviews were conducted within the concerned departments; Marketing, Customer Service, Product Management, Innovations, Systems, and Processes. The goal of the interviews was to outline the current situation and to reveal the failures in KPN’s current touchpoint design. During these interviews the need for a stronger customer focus became even more apparent. The interviews were conducted among higher as well as lower management to obtain a multifaceted overview of the current development situation. On a weekly basis unplanned and informal conversations with KPN managers took place in which specific service failure and design suggestions were revealed as well. In addition to the interviews, about forty files of documentary evidence were collected throughout the course of the project. These

documents mainly revealed the difficulties KPN is currently facing regarding its service offerings and previous attempts to enhance the service encounters. Solutions to the research problem were investigated based on an interview analysis, scientific literature and internal documentations.

Five additional interviews with Marketing-, and Customer Service managers were conducted to test the appropriateness of the solutions.

Research findings

For this particular case study three situations are outlined; the current situation at KPN, the ideal situation for Customer Touchpoint design in a customer oriented company and the next step for implementation at KPN meant to increase the focus on Customer Touchpoint design during the NPD process. It makes sense to first explain how the new product development process at KPN is intended at the moment, the difficulties that the company faces and the associated consequences.

The current situation

Ideas for innovations at KPN can originate from various starting points. A new technology could be at hand, but of course also observations of and demands from customers generate ideas for new product development. At KPN a development project is conducted according to a standard

The product development process at KPN

Figure 4: KPN’s Product Development process called TeleTURN.

Box 4: Examples of design failure at KPN

One of the latest products developed for the business segment of KPN includes a delivery time of 30 days. Even though technically this time might be difficult to shorten KPN could have simply tested the acceptability of their customers to this long delivery period. KPN could have discovered that customers are not very receptive to the long delivery times that far exceed their preferred and accepted waiting time. (For some products this may not even exceed 5 working days)

The decision that the field engineer (the person who installs the product at the customer’s home) has to be paid for

separately was made already early in the NPD process. Only when marketing’s input was considered KPN found out that those customers ordering the more expensive product packages were not willing to pay for this installation separately. To fix misfits between the offering and customer

expectations project costs and time to market are heavily increased.

This same technology pushed product innovation of KPN is designed without

considering how people would want to sign up for this product. The result of this design failure shows that consumers which want to switch their ‘old’ KPN product face a difficult situation. They first have to cancel their initial product with the matching department. Only then the consumer can contact the

department that can sign them up for the new product. This last example covers the inability to switch easily between KPN products or add KPN products to a customer’s current

portfolio. Too often different products and their underlying processes are not integrated.

As a result, long waiting times are inevitable.

process which consists of six phases (Figure 4).

Every phase is ended with a Go/NoGo gate decision allowing the project to enter the next phase. KPN’s NPD process describes which information should be available for management to make well based Go/NoGo decisions. When taking a deeper look into this process it becomes clear that the focus throughout the process is mainly internal. When looking at the Customer Touchpoint design specifically the phrase ‘too little, too late’ comes to mind. Several important characteristics of the current process can be pointed out which require improvement;

• a dominant focus on the financial parameters costs and return,

• insignificant involvement of Marketing and Service departments,

• ad hoc design of touchpoints during/after market launch in the realisation phase,

• product- and service designs are not integrated,

• an overall insufficient customer focus.

The financial parameters cost and return are important measurements at KPN. Consequently, the focus on the end-users is lacking attention.

Although a business case needs to be prepared in the analysis phase this document often fails to include any customer perspective. In de initiation phase the project managers at KPN need to prepare a document called a DNA concept to present the innovation ideas. This DNA concept describes the target group, customer insights, expected touchpoints and the promise of KPN to its customers. It is used to select the most suitable innovations. This DNA concept does not however describe how customers would like to be taken care of or how they would like the product and services to look like. Even more surprising is that after the initiation phase this document plays a decreasing role and again the internal focus becomes more apparent. The focus on financial parameters is not motivating employees to

execute customer oriented behaviour either. Their work is currently being evaluated mainly on short term financial parameters. Results in NPS scores and customer satisfaction are only noticeable over a somewhat longer period. The current short term focus of KPN neglects to insert these important customer focussed parameters.

Another important hold back for excellent design

of the Customer Touchpoints is the insignificant

involvement of Marketing and Service

departments. Even though channel managers,

which execute the Customer Touchpoints are included in the process often their input is lost in the battle about reducing cost and time to market. The same could be said about the customer focussed input from Marketing and Customer Service departments. Not enough attention is given to the negative effects that a lack of appropriate touchpoint design during the NPD process has on customer satisfaction, as well as on financial parameters. Too often the market launch is already carried out when the contact moments are not even completely designed. This late in the process the marketing and customer service departments have to work together on an ad hoc design basis to reach at least acceptable service levels. In practice this means that the services and moments of contact that KPN offers are rather standardized instead of adapted to the product’s and/or target group’s characteristics and many opportunities to serve customers excellently are thereby lost. It often results in poor operations in the Customer Touchpoints and failures in events like changing delivery address, subscribing, switching products, filing complaints or other contact moments (Box 4).

By developing the Customer Touchpoints this late in the development process integration with the product design is not feasible. As a result, the possibilities for Customer Touchpoint design are limited due to the fact that the product design often puts restraints on service experience. For example, delivery times as well as channel characteristics are often determined by a product’s design; however are also part of customers’ service perception. The product design and product wishes at KPN usually come from the Operational Product Manager and Business Process Management. Both have a large product focus and services are often not yet considered in the product descriptions. As a result, the changes that need to be made to product design, due to increased use of customer insights are difficult,

costly, time consuming and sometimes even impossible.

Ultimately, the NPD process of KPN is overall lacking customer focus. When analysing the gate- decision documents which were provided by KPN it can be concluded that the weight put on a customer focus is vey low. For example, only 7.5% of the score an innovation project receives in the first gate document is assigned to customer satisfaction measures and no other specific customer orientation is evident underlying any other Go/NoGo decision moments. Moreover, evidence exists that in the past technology pushed products were developed without any support of customer insights and customer needs.

KPN did implement several programs to increase its customer’s satisfaction. For example, recently KPN started its OneCRM program in which the Customer Touchpoints are joined to increasingly operate as one cohesive entity and deliver one unified message to the customers. KPN recognizes that too often customers experience inconsistencies when they switch between Customer Touchpoints and that the overall experience lacks cohesiveness. Rather than integrating touchpoint design with NPD and satisfying customers’ needs the different touchpoints (box 5) are merely working together after product development to enhance the underlying way of working and deliver acceptable service levels. Another program involves the processes fundamental to KPN’s offerings.

Lean6Sigma is a process improvement program

that ensures a customer focus during

development processes and ensures efficiency to

coincide with customers’ expectations. Even

though programs like these can be very helpful

their success is limited. Due to the fact that the

various underlying processes and systems used in

KPN’s Customer Touchpoints are not integrated

(with product design or each other) in the first

place. Therefore, these programs will simply be

able to increase customer orientation and satisfaction, but will never be able to completely optimize it.

The consequences of the lack of attention given to the Customer Touchpoints should not be underestimated. Box 4 presents some actual failures in touchpoint design during the NPD process of KPN. Due to the lack of Customer Touchpoint design the various touchpoints, or channels, are not integrated. Consequently, each channel delivers its own experience instead of one cohesive experience and collaboration between the channels is difficult. It is important that the various Customer Touchpoints (box 5) cooperate with each other to add value to the customer‘s

experience of the brand or product. Currently, too often decisions at KPN are made hasty, ad hoc and inconsiderate of the effects they have on the service delivery and customer experience. Much time and money is lost by considering the customers’ needs regarding Customer Touchpoints only at the end of the NPD process during, or even after, market launch. Much of this could be saved when the design of the Customer Touchpoints would be considered already early in the NPD process. In addition, the increased satisfaction and loyalty levels of KPN’s customers would be an even greater reward. Frequently the demands and needs of customers are not fulfilled due to a lack of integration of Customer Touchpoint- and product design. Within KPN it is believed that at least 80 percent of the Customer Touchpoint design should be finished before Market Launch. In fact, on average only 20 percent is. It is clear that KPN needs short-term solutions to increase its customer focus through touchpoint design.

The Ideal Situation

In a truly customer oriented company systems, processes, culture and structure reflect the customer focus. Basically, no additional methods or actions are then needed to integrate Customer Touchpoint design, since it would be integrated in the natural way of working. However, that company does show some important characteristics which KPN should aim for in the future;

• customer involvement (e.g. user observations, lead user design, Beta testing),

• a clearly defined customer experience,

• strong collaboration of Service- and Marketing departments with product developers,

• integration of product- and service design,

• a focus on customer oriented parameters (e.g.

NPS).

Box 5: KPN’s Customer Touchpoints

This short list shows the currently existing Customer Touchpoints relevant for this case study. Any interaction with the KPN brand, products, employees or services can be considered a touchpoint. However for this study only the touchpoints that can be managed directly are included. Touchpoints like social media, commercials, and other Marketing tools or visual representations of the brand are not included.

Business centers

&

Shops

Online:

E-mail & Website Business service desk

&

Call center (Inbound/outbound)

Mechanic/

Field Engineer

Account managers

(Large business clients)

In figure 5 a representation of the integrated NPD process of KPN is shown. As one can see, in this figure the service design is separated from the product design to underline the focus on service design in each phase. The important characteristics of the integration of service- and product design in NPD will now be discussed.

Customer involvement is a good way to outline the specific needs of the customers. There are various methods to include customers in NPD (e.g. user testing, lead user design and customer observations). To support any innovation idea customer insights should be presented to identify the customers’ need. Without the evidence that customers value the product design, including the complementing services, the idea should not continue to proceed through the NPD process. It is important that the added value to a customer’s experience is revealed right at the start. Only then the result of the development process will be fully optimizing the customer experience.

Moreover, it is important to clearly define the target group and design for its specific needs and requirements. Various methods of customer

involvement should be used whenever appropriate to complement the development process during the subsequent phases.

To get an even better understanding of the moments of truth, the moments in which an opportunity exist to ‘wow’ the customer, the total customer experience should be defined. One method for doing this is called Customer Journey Mapping. Mapping the actions and events customers might be undertaking will give a clear overview of all the contact moment (Box 6, figure 6). Furthermore, outlining the employees involved and the actions and resources needed (service blueprinting) will fully prepare the business to deliver excellent experiences.

To develop a product that includes excellent service delivery through the Customer Touchpoints a strong collaboration between Service-, Marketing- and product managers is needed. Only when product designers take into account the complementing service design the final offering will be truly customer oriented.

Marketing managers should communicate the market and customer information to Product Integrated product- and service design in NPD

Figure 5: KPN’s TeleTURN reflecting a customer orientation and integrated product- & service design.

Box 6: KPN’s Customer journey

Purchase and usage of KPN’s core offerings by consumers are important Customer Touchpoints. Nevertheless, the customer experience goes beyond simply buying and/or using. In the customer journey three stages can be identified; pre-purchase, purchase, post-purchase. These stages all consist of various contact moments.

The contact moments which are experienced through the Customer Touchpoints and can be regularly witnessed for KPN are show in the figure below:

An inquiry for information, a person answering the phone at the service

desk, ordering the products, the delivery man, filing a complaint and

many other events ‘touch’

the customers.

It is mainly the direct (employee) contact in the Customer Touchpoints in which an opportunity to

‘wow’ the customers exists.

Figure 6: KPN Contact moments.

managers to incorporate in their product designs.

Service manager as well need to share their information regarding customer service needs to Product managers. Only when the customer information is considered already in the first designs will service and product eventually present a unified offering. Integration of product- and service design will ensure a match between the initial offering and the accompanying services.

It will prevent the (technical) product design to conflict with the service expectations of the specific target group.

Another important characteristic of a customer orientation is a focus on customer oriented parameters. Letting go of the financial parameters, like cost and return, will enable employees to carry out a customer orientation. As previously explained, Net promoter score (NPS) is a metric that is used by many companies to determine the loyalty of a firm's customers. In

addition, this metric reveals how well a company is doing compared to its competitors. Therefore, management should base the gate decisions on these measurements as well. Accordingly, when during development the touchpoint design and consequently, the customer focus is not sufficient the project should be rejected. Only then the customer orientation will not be undermined. As the green dotted arrow in figure 5 represents, a customer orientation should be apparent throughout the NPD process. And, as stated at the beginning of this paragraph, all assets of the company should represent this customer focus.

The effects of the customer focus on service design specifically are further outlined in box 7. It presents the core issues which a truly customer oriented KPN company should be addressing in each phase.

In the long run every company’s aim should be to

completely integrate the (technical) product- and

Box 7: Service design in NPD (Integrated service & product design) Phase Touchpoint design description

Initiation § Is the idea supported by customer insights?

§ What is the target group?

§ Does the idea optimize customer experience?

§ Does the idea fit the customer expectations regarding service?

§ Which touchpoints does the target group prefer?

§ Are user observations or tests conducted?

Analysis § Are Service- & Marketing managers closely cooperating with Product managers?

§ Are the preferred Customer Touchpoints identified?

§ Are the target group’s needs outlined?

§ Are the customer actions and events mapped?

§ Is the complete service experience defined (including the necessary resources)?

§ What are the expected results of the experience on NPS?

§ Does the Business Case reflect both product and Service design

Definition § Is the service feasibility & effectiveness verified with channel managers?

§ Does the product design fit the service needs of the customers?

§ Are the necessary preparations in the Customer Touchpoints executed?

§ Does the Business Case still accurately reflect both product & Service design Development § Are the result on Customer experience and NPS clear?

§ Are user tests executed?

§ Will the offering match the customer’s expectation?

§ Do all involved managers agree that product & Service design optimize customer experience?

(Service-, Marketing-, Product-, and Customer Touchpoint managers) Building &

testing

§ Is Beta testing executed to outline possible service failure?

§ Do all managers agree with the customer experience as revealed in the Beta test?

§ Does the experience in the Beta test meet customer expectations?

§ Does the Beta test verify the expected results on NPS and customer satisfaction?

§ Are all preparations in the Customer Touchpoint executed?

Realisation • Is the business prepared to take over the service delivery?

• Is the business able to make adaptations to customer experience to sustain customer satisfaction and competitiveness in the future?

• Is the touchpoint design executed jointly with the product design?

service design. Consequently, it should be clear that the separation of product and service design, as shown in figure 5, should not actually be existent. Only then the integration of service touchpoint design in NPD becomes the natural course of business for KPN.

Implementation at KPN

Simply put, if KPN offers exactly what the customers want to have customer satisfaction and loyalty should go up, sales would increase and, consequently, profits would grow. Basically, it is all about making the customers an important focus throughout the company. Since the KPN products are considered to be of high quality, the gain for KPN lays in their service offerings. It will

be not be easy, maybe even impossible, for KPN to become a truly customer oriented company within the next few years. A customer oriented company reflects the customer focus throughout the entire company. This means KPN should change, amongst other things, its structure and culture which is a time consuming business. By focussing on the Customer Touchpoints KPN can improve a great deal of its service deliveries already in the short run. The current insufficient service offerings and increasingly important focus on NPS call for the integration of Customer Touchpoint design and product design.

Considering the current lack of focus on

touchpoint design during NPD and lack of

management’s dedication to customer satisfaction

measures recommendations are needed which will increase the controllability of these issues. In collaboration with KPN three methods were investigated to be most appropriate to implement touchpoint design in KPN’s current NPD process;

• implementing checklists regarding Customer Touchpoint design,

• assigning multidisciplinary teams to all innovation projects,

• making NPS scores and the customer oriented checklists an important focus in management decisions.

Figure 7 shows a representation of the three solutions in NPD for KPN. These three methods can, already in the short run, increase customer satisfaction.

The first step for KPN is integrating checklists which are merely focussed on the design and development of the Customer Touchpoints. Since KPN is not yet fully customer oriented it is not yet to expect that all employers carry out a customer oriented perspective. To motivate and require the employees involved in the development process to be customer oriented and consider touchpoint design, checklists should be implemented in the NPD process. These checklists (box 8), especially designed for KPN, outline the important factors

that need to be taken into account during NPD.

Two checklists will demand employees to think about how to deliver the final offering to the target group and whether the (technical) product design fits and executes these service requirements. There will be two checklist moments which are indicated in figure 7 as check 1 and 2. The first checklist will mainly instigate the employees’ perceptiveness regarding touchpoint design, where the second checklist will merely make sure whether the employees have appropriately executed touchpoint design.

Moreover, the first moment will be implemented at the end of the analysis phase to check the suitability of the product design. It is important that KPN identifies the target group and its (service) needs concerning the particular product being developed. This check should ensure that the design of the product is suitable and enabling the service departments to deliver their services excellently. The first check should be conducted at this particular gate (Decision to Fund) since the development of the services and touchpoints will require assets which should be assigned to the project at this point. The second checkpoint is implemented right after the Development phase (in the Decision to Test and Build gate). In the development phase the design is finalized and

Customer Touchpoint design and NPD

Figure 7: Integrating Customer Touchpoint design in the current NPD process of KPN; TeleTURN.

Box 8: KPN Checklist for Customer Touchpoint design

Phase Subject ü ü ü ü Additional

description Check 1

DF I agree that the product en process design fit the customers’ needs regarding customer contact:

We communicate our messages trough target group’s preferred channels Customers are addressed to in their preferred manner

The amount of contact moments fit the target groups preferences

I agree that the product en process design fit the customers’ needs regarding information provision and questions:

The customer can contact us trough their preferred channels/touchpoints Information provisions pre-, during- & after purchase fit customers’ needs

The customer can refer to 1 touchpoint/channel (phone number) for all its questions The customer will have the minimal amount of variety in employee contact

KPN can document customer situations, so the customer will be recognized throughout the channels The customer will have easy and direct access to technical information and advice

I agree that the product en process design fit the customers’ needs regarding customer events: (e.g. complaints, migration, moving customer, etc.)

The customer can easily migrate to other KPN products

The Customers can easily add products and services to its portfolio

Product failures and complaints can be solved within the first customer contact and can be compensated for The customer can arrange its personal information and business online when preferred

The customer can (preferably) move (change delivery address) for its complete portfolio at once The customer can take care of several matters during the same contact moment

The opening hours of the touchpoints/channels fit target groups’ demands KPN can proactively inform customers about deviations and changing situations

I agree that the product en process design fit the customers’ needs regarding the purchase and delivery:

Customers can purchase the product via preferred channels/touchpoints The customer can use the same touchpoints for various products The possible run- and delivery times fit customers’ expectations Customers’ needs to cancel their order are fulfilled

Customers’ needs regarding termination of subscriptions are fulfilled

Customers are well informed about the proceeding activities throughout the delivery process I agree that the overall product en process design

fit the overall customer service needs in the Customer Touchpoints

Signature Proposition Marketeer: Signature Operational Product Manager:

Signature Channel managers:

Check 2

DtB I agree that the Product to Build fits the customers’ needs regarding customer contact:

All customer preferences regarding communication are fulfilled Everything is in place to deliver the communication to the customers

I agree that Product to Build fits the customers’ needs regarding information provision and questions:

The preferred channels/touchpoints are prepared

All information fits customers’ needs and is delivered via preferred touchpoints

I agree that the Product to Build fits the customers’ needs regarding customer events:

Customer events are outlined and are set up to fit target group’s needs

Customers are able to reach us in case of product failure & possible compensations are outlined Customer complaints can be settled without delay and possible compensations are outlined I agree that the Product to Build fits the customers’ needs regarding the purchase and delivery:

Preferred Customer Touchpoints are prepared Waiting times do not exceed acceptable times

Customers’ needs regarding cancellation and termination are fulfilled I agree that the Product to Build (including its

processes) fits overall customer service needs in the Customer Touchpoints & the results of check 1 are sufficiently executed in product and process design

Signature Proposition Marketeer: Signature from Operational Product Manager:

Signature Channel managers:

Figure 8: Relationships defined within a multidisciplinary team.

processes and systems are determined. After development the actual building and testing takes place. Right before this next step it is important to ensure whether the requirements from the first checklist are actually carry out in the product design. The final product design should be optimizing customer experience with services optimally supporting the core offering through the touchpoints. Needed preliminary preparations in the touchpoints should have been executed by now. The presentation of the results of this second check to the management of KPN is carried out at the subsequent gate (Decision to go Public). This is merely due to the fact that often no official project meeting exists right after the development phase. Nevertheless, it is important to carry out this second check before the building phase, so possible failures in design can be overcome.

To place increasing importance on the checklists a multidisciplinary team should be assigned to every innovation project. This team is responsible for the execution of the checklists and the members of this team should together warrant the design of the Customer Touchpoints. The team is led by an Operational Marketing manager.

This multidisciplinary team should be selected right after the initiation phase and it should completely focus on the fit between product and service design. The core team at KPN consists of the Service process (formula) managers; a Proposition Marketing manager and an Operational Product Manager. Each touchpoint is represented by its (formula) manager and marketing is represented by one or two individuals in the core team depending on the size of the innovation project. To put even more weight on the checklists it is essential that all managers in the multidisciplinary teams sign the checklists for compliance. The leader of the multidisciplinary team, the Operational Product Manager, presents the results of both checks to

the management team that is responsible for the evaluation of innovation projects. The Proposition Marketing managers are expected to have a clear understanding of what the commercial offering should look like to fulfil customer expectations and should ensure the fit of KPN’s promise towards the customers with customers’

expectation and the actual experience. Moreover, Proposition Marketing should make sure that the Marketing and Distribution departments are being considered as well. The Service process managers, or as referred to within KPN as Service Formula managers, should be able to describe the optimal customer processes. They should use input from the touchpoints to effectively design the processes from a customer oriented perspective. Figure 8 shows a visual representation of the relations between the members of a multidisciplinary team.

Finally, the third point of improvement for KPN deals with management’s focus on financial parameters. The checklists, which are executed by multidisciplinary teams, should be used by management during the gate decision moments.

Management should reject a project when the

checklists are not being fulfilled. That means that