How Loyal are Your Customers…Really? Ken Dawson

How Loyal are Your Customers…Really?

• Ken Dawson

• Director, Product Support

• McKesson – Extended Care Solutions Group

Agenda

• Who is McKesson?

• SCP certification statistics

• Customer loyalty analysis – the fundamentals

• How was life before the new way?

Agenda (cont’d.)

• The problem

• The realization

• The approach

• Loyalty collection mechanism

Agenda (cont’d.)

• Loyalty scale and definitions

• Here’s how we do it

• Courtesy call customer segments

• Courtesy call preparation

Agenda (cont’d.)

• Courtesy call possible actions

• So that’s the process…what were the results?

• Applicability to the SCP program

• Recommendations

Agenda (cont’d.)

• Comments & Questions

• Who is McKesson?

• SCP certification statistics

• Customer loyalty analysis – the fundamentals

• How was life before the new way?

• Founded in 1833

• Headquarters in San Francisco, CA

• Leading provider of pharmaceutical, medical supplies, care management, and health information technology products/services in the health care industry

• World’s largest health care services company

• 24,500 employees
• Revenues of nearly $70 billion for last fiscal year
• Ranked # 15 on Fortune 500 list
• Touching the lives of more than 100 million patients each day in the health care setting

• McKesson’s customer demographics

• 50,000 healthcare facilities & physician practices
• 5,000 hospitals
• 25,000 retail pharmacies
• 200,000 physicians
• 10,000 long-term care sites
• 600 healthcare payor organizations

• McKesson business divisions

• McKesson Pharmaceutical Solutions
• San Francisco, CA
• McKesson Provider Technologies
• Alpharetta, GA
• McKesson Medical-Surgical Solutions
• Richmond, VA
• McKesson Customer and Financial Operations
• Carrollton, TX

• Extended Care Solutions Group profile

• Located in Springfield, MO
• Industry: Healthcare Information Technology – Home Healthcare
• Revenues: $55 million
• 240 employees – 71 support employees
• Product suite:

• Extended Care Solutions Group profile

• 380 customers
• 233 hospital-based
• 147 stand alone
• 210 hospice customers

• Who is McKesson?

• SCP certification statistics

• Customer loyalty analysis – the fundamentals

• How was life before the new way?

• 18 McKesson Provider Technologies (MPT) support centers have achieved SCP certification

• 60 SCP certifications have successfully been achieved since January 2001

• Extended Care Solutions Group (ECSG) was the first MPT support center to achieve certification (certified in 2001, 2002, 2003, 2004 & 2005)

• ECSG was also the first MPT center to be audited under the “surveillance” methodology (January 2005)

• Who is McKesson?

• SCP certification statistics

• Customer loyalty analysis – the fundamentals

• How was life before the new way?

• Get past the idea that customer “satisfaction” is the same as customer “loyalty”

• A customer loyalty collection mechanism must be in place

• Based on analysis of collected loyalty data, develop a set of goals

• Develop various measurement tools to gauge progress toward goals

• Establish a mechanism to proactively communicate with your customer base

• Who is McKesson?

• SCP certification statistics

• Customer loyalty analysis – the fundamentals

• How was life before the new way?

• Based on customer quarterly case volumes

• Proactive courtesy calls were placed to customers who called the most and least each quarter

• Results were recorded and appropriate action taken

• The problem

• The realization

• The approach

• Loyalty collection mechanism

• Proactive courtesy calls were placed quarterly…

• One-dimensional methodology…

• No common approach…

• The problem

• The realization

• The approach

• Loyalty collection mechanism

• The methodology needed to be expanded to include more business relationship considerations and allow the team to make more courtesy calls…

• The problem

• The realization

• The approach

• Loyalty collection mechanism

• Proactive courtesy calls are based on the combination of:

• Monthly customer loyalty results and;
• Monthly customer accounts receivable amounts

• Two customer “segments” were developed based on loyalty and A/R data

• Courtesy call “templates” were developed to establish consistency

• The problem

• The realization

• The approach

• Loyalty collection mechanism

• Administered by Satmetrix

• Collected monthly via case event survey

• Survey generated approx. every 30 days
• Sent to the customer contact associated with the closed support case (unless surveyed within the last 30 days)
• First seven questions are specific to the support case itself and last three are specific to loyalty to McKesson

• Thinking about the company in general, please rate your overall experience with McKesson.

• 1. Satisfaction with McKesson as a company.

• 2. If you had the opportunity, indicate the likelihood of recommending McKesson to a colleague or associate during the next 12 months.

• 3. If you were making a buying decision, indicate the likelihood to continue purchasing McKesson products.

• Loyalty scale and definitions

• Here’s how we do it

• Courtesy call customer segments

• Courtesy call preparation

• Respondents rate the loyalty questions using a

• 7-point scale:

• 7: Extremely satisfied or extremely likely

• 6: Satisfied or likely

• 5: Somewhat satisfied or somewhat likely

• 4: Neutral

• 3: Somewhat dissatisfied or somewhat unlikely

• 2: Dissatisfied or unlikely

• 1: Extremely dissatisfied or extremely unlikely

• Loyalty scale and definitions

• Here’s how we do it

• Courtesy call customer segments

• Courtesy call preparation

• Monthly Satmetrix loyalty results are imported into a local database and a “customer loyalty score” is derived

• For ECSG customers, their loyalty data is combined with their A/R balances that are 61 – 90 or > 90 days past due for the same month

• Based on combined data, two priority lists (customer segments) are defined and courtesy calls begin

• Loyalty scale and definitions

• Here’s how we do it

• Courtesy call customer segments

• Courtesy call preparation

• Courtesy Call A-List

• Top priority for the monthly courtesy calls
• Customers that have any amount of A/R past 61 days
• Two sort levels:
• 1st level: Customer loyalty category, low to high (Lost, Disappointed, Content, Promoter)
• 2nd level: Total amount of A/R past 61 days, greatest to least amount

• Courtesy Call B-List

• Second priority for the monthly courtesy calls
• Customers that DO NOT have any amount of A/R past 61 days
• Two sort levels:
• 1st level: Customer loyalty category, low to high (Lost, Disappointed, Content, Promoter)
• 2nd level: Customer loyalty score, low to high

• Loyalty scale and definitions

• Here’s how we do it

• Courtesy call customer segments

• Courtesy call preparation

• Courtesy call A & B lists are printed and distributed

• Courtesy call A & B list “templates” are printed and distributed

A & B list template common fields

• Courtesy call possible actions

• So that’s the process…what were the results?

• Applicability to the SCP program

• Recommendations

• Courtesy call possible actions

• So that’s the process…what were the results?

• Applicability to the SCP program

• Recommendations

Impact on least loyal customers

• Least loyal customers were identified

• Six-month trial was implemented

• The results?

Impact on least loyal customers (cont’d.)

Impact on broader customer base

• 3 immediate escalations to Customer Care

• 47 customers added to the team “radar screen” for further analysis

• 9 of the 47 customers were escalated to the Customer Care team

• Increase in aggregate customer loyalty results month-to-month

• Average monthly loyalty improvement of 4.55%

Impact on broader customer base (cont’d.)

Impact on team efficiency

Impact on the company

• Courtesy call data utilized to influence future releases of our products

• Increased the quality of dialogue with the Sales organization

• Demonstrated applicability and repeatability in other McKesson offices

• The process named as a company best practice

• Courtesy call possible actions

• So that’s the process…what were the results?

• Applicability to the SCP program

• Recommendations

• 1.01: Customer Satisfaction Process

• 1.09: Direct Customer Feedback

• 1.11: Customer Loyalty and Retention Programs

• 2.07: Technical Account Management Program

• 11.03: Customer status updates for the Sales and Services Teams

• Courtesy call possible actions

• So that’s the process…what were the results?

• Applicability to the SCP program

• Recommendations

• Assess where you are with customer loyalty

• Where do you want to be?

• Formulate a game plan

• Have your team take the field!

• Track
• Measure
• Revise game plan as needed

Comments & Questions