Focus on The C

Harnessing the Power of the Many Learning from the USA’s Customer Experience Leaders Customer Experience Excellence Centre 2016 US Analysis Customer Experience Excellence Centre 2 ‘Best Use of Thought Leadership’ Customer Experience Excellence Centre © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

© 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Understanding international best practice 7 years of ongoing research Personalisation IntegrityExpectations Vision and Strategy Journey Prioritisation Journey Diagnostics Resolution Time and Effort Empathy Journey Transformation and Roadmapping CX Management and Control c. 1,000 cross-sector brands Across 3 continents 1.25 million consumer evaluations Through The Six Pillars TM of customer experience excellence Applied to key customer experience challenges Customer Experience Excellence Centre © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 4 Foreword There is a uniquely defining characteristic of the top 10 companies in the 2016 US Customer Experience Excellence analysis – they have mastered the art of making a thousand moving parts think as one.

Their secret? They have connected their people with customer purpose.

To achieve this they have had to become advanced practitioners in the field of alignment. They have the ability to keep all of the vital elements of the organisation aligned and headed in the same direction. They can orchestrate a complex organisation to consistently deliver an intentional experience across multiple touch points, channels and technologies and, in so doing, gain exponentially from the power of the many.

The power of the many day-to-day micro experiences that accumulate to a compelling reason to stay with a company and buy more of its products.

The power of the many thoughts, ideas and talents of its people to deliver great experiences every day.

The power of the many customers that advocate their products and services and act as energised ambassadors on their behalf.

The power of the many attributes that comprise the KPMG Nunwood Six Pillars and drive world- class experiences.

The power of the many nuggets of customer feedback that drive customer journey improvement and customer experience-defining insight.

The power of the many best practice learnings from across the globe. They have understood that customer experience cannot be left to the default outcome of multiple different departments, all with their own agendas, all with their own perspectives and all with uniquely different objectives.

These companies are aligned organisations. They have hierarchies, silos and functions but don’t act as if they are controlled by them; they have ageing technologies but have learnt not to be defined by them, and they have short-termist shareholders but don’t act as if they are governed by them. They are motivated and driven by a deep desire to deliver on their customer purpose. They respond to their ultra-competitive markets with integrated precision, rapidly organising and reorganising as the circumstances demand, but always moving for ward in the same positive direction.

They have learnt to manage the complexity of escalating expectations by understanding the customer so deeply, so profoundly, that they are leaders in setting those expectations.

Their employees are organised, excited and committed to an energising customer purpose.

Everyone in the organisation is clear on what a great experience from their organisation looks like and they are committed to its consistent delivery.

Most organisations will achieve great customer experiences at one time or another. What sets the US top 10 organisations apart is their ability to do this consistently. To ensure that the sum of the many small things that they have to do each day, every day, add up to an outstanding customer experience where the whole is always greater than the sum of its parts.

David Conway May 2016 © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 5 Contents USA 2016 Summary06 The Six Pillars of Customer Experience Excellence 08 The Economics of Excellence 09 The 2016 US Customer Champions 10 The State of the Nation 13 Innovation and the Omnichannel Experience 17 The Connecting Power of Customer Purpose 21 Organising for Customer Journeys 26 The Human Equity Continuum 30 The Sum of Many Small Things 32 Lessons from America: The Alignment Checklist 35 Further Resources 38 The US CEE 2016 Top 100 39 © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 6 US firms are much clearer on their customer purpose and what they intend to achieve for customers, and are better at enacting corporate rules to ensure consistency of delivery. Whilst UK firms are capable of delivering a great experience, they are less able to do this on a consistent basis.

US leaders are much more tightly focused on key segments – they realise that you cannot be all things to all customers so they define their target customers tightly, specify the target experience and then follow the rules for delivery.

Doing the right thing for the customer because it is the right thing to do is much more of a way of life. Customers believe that, when it matters, these organisations will act in their interests ahead of those of shareholders.

The customer is understood more deeply. The voice of the customer carries more weight than the voice of finance.

The customer agenda is set from the very top. CEOs own the customer agenda. One CEO, addressing a series of questions with his executive team, was asked whether they had a customer experience team. His response was “yes, you are looking at it!” Contrast this to the UK where the customer agenda bubbles up from within the organisation and is signed off by the board, having first been ‘socialised’ and people’s ‘buy-in’ sought.

Experience is much more multidimensional and sensorial. No detail is missed – there is an increasing sense of theatre about experience delivery. The focus on inspiring and exciting customers is considerably greater than in the UK. Nowhere is this more obvious than in the grocery trade – supermarkets have become destinations in their own right – the quality of the experience is more important than the price.

Digital is integrated, not kept as something separate with its own rules and philosophy, a digital island in a multichannel world. In the US, it has always been omnichannel.

Customer journeys are seen to be more than just a means of improving the experience – they are a unit of organisational design. Used to drive down cost, as well as to deliver a great end-to-end experience. The US remains a haven for global customer experience best practice. Des\ pite a slightly diminished lead against the UK in 2016, a customer in the US is still six times more likely to have a great experience than a customer in the UK. The majority of US industries exceed their UK counterparts, some by a significant amount. Our research shows the reasons for this:

USA 2016 Summary © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 7 Whilst there is much to learn from the US leaders, UK firms are learning from best practice very quickly. Companies such as Lush, First Direct and John Lewis are getting closer to their outstanding US counterparts. What is interesting is that the average experience is better in the US than the average experience in the UK, and that is because US organisations are further along the customer experience maturity curve. Research conducted in March 2016 7,504 US consumers evaluated 243 brands Spanning 10 sectors Financial Services Travel and Transport Entertainment and Leisure Public Sector Non-Grocery Retail Utilities Grocery Retail Logistics Restaurants and Fast Food Telecoms Employees are at the epicentre of the experience – the great companies are very particular about who they recruit. They focus on finding people who have a passion for customers, a passion for the category and an inbuilt desire to deliver great service. Companies such as Wegmans restrict their growth because such people are not easy to find. Rather than compromise on the experience and undermine the brand, they grow more slowly. Zappos moved their business from San Francisco to Las Vegas, in order to tap into the large pool of people trained in the hospitality industry who had the right personal qualities to deliver the legendary Zappos service.

The great companies are not just great for customers, they are also great places to work. Several of the US top 10 feature highly on the ‘Great Place to Work’ list and many pay higher than the average – recognising the value of quality people.

The leaders invest in their people, recognising that knowledge and the ability to impart that knowledge to the advantage of the customer is vital. Wegmans sends its people to France to learn about wine and to Italy to learn about cheese and pasta. The added value of the human contribution to the experience is where their focus lies. They want staff who can deliver real engagement and emotional connection – not automatons.

The alignment between the employee experience and the customer experience is significantly greater in the US. Culture is the root of experience. A culture where the customer genuinely comes first is a prerequisite of experience excellence.

US leaders realise that every experience is the sum of several smaller experiences and it is the attention to detail within each micro experience that makes a competitive difference. Chick-fil-A describes this as ‘second mile service’, the tiny things that add up to a great experience when you put them all together.

Through an ongoing research programme across three continents over seven years, over 1.25 million consumer evaluations have been gathered.

Organisations that deliver across The Six Pillars demonstrate the enhanced commercial outcomes that are achievable, as The Six Pillars have a clear link to loyalty and advocacy: The Centre’s research demonstrates that a universal set of emotional qualities defines an outstanding customer experience – these are The Six Pillars. Personalisation, Integrity, Expectations, Resolution, Time and Effort and Empathy are all essential goals to master for a leading customer experience. Personalisation Using individualised attention to drive an emotional connection. Integrity Being trustworthy and engendering trust. Expectations Managing, meeting and exceeding customer expectations. Resolution Turning a poor experience into a great one. Time and Effort Minimising customer effort and creating frictionless processes. Empathy Achieving an understanding of the custome s circumstances to drive deep rapport. Pillar impact on advocacy Pillar impact on loyalty The Six Pillars 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Personalisation Expectations Integrity Empathy Time and Effort Resolution Shareholder Value Customer Experience The Six Pillars Repurchaseloyalty Cross sales Lower price sensitivity Positive word of mouth First Order Results Lower costs to serve Lower acquisition costs Stable customer base Higher prices Higher sales Positive reputation Second Order Results Acceleration of cash flows Increased cash flows Lower volatility/ vulnerability Higher residual values Drivers of Shareholder Value 9 The Economics of Excellence Organisations that excel at The Six Pillars ultimately create greater shareholder value by delivering multiple-tiered commercial outcomes. These rest on creating an emotional connection – as defined through The Six Pillars – which, in turn, create relationships and behaviours consistent with growth.

The following conceptual model draws on the Customer Experience Excellence Centre’s research to illustrate the economics of customer excellence. Guiding economic model 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 10 USAA is a true lesson in customer centricity. The business is structured around the customer, every employee is trained to focus on its customers’ needs and at the core is the value of putting members’ interests first. Internally, USAA refer to this as ‘customer surround sound’ and it is central to USAA’s company culture. Holding the number 1 ranking for another successive year, USAA are evidence of the benefit of putting the customer first.Through technological innovation and an intense focus on process, Disney Parks consistently delivers a magical experience for each and every guest. It creates magic through the delivery of many and varied micro experiences, supported by technological innovations such as the MagicBand (a bracelet using RFID technology) and a continually updated app that allows the guest to manage their entire experience.

Disney Parks captures the essence of customer best practice.

The largest employee-owned grocery chain in the US, Publix’s experience centres around making the food it sells the star. Turning the weekly shop into an experience in itself, through in-store food showcasing and regular cookery demonstrations, there is a sense of theatre in a visit to Publix.

A leader of the customer experience revolution, Amazon continues to feature in the top 10 through its devotion to pushing the boundaries of service. From a one-hour delivery service rapidly extending geographically, to innovations such as Dash to make ordering easier than ever before, Amazon continually exceeds customer expectations.

The fast food restaurant maintains its top 10 ranking for another year, through a continued focus on meticulous care and attention – it gets the small things right. For Chick-fil-A, this manifests itself in every aspect of the customer journey, even down to small touches such as the correct folding of toilet paper in the bathrooms. Getting such attention to detail consistently right only comes from having highly engaged and motivated employees, who are at the heart of Chick-fil-A’s success. Publix Amazon 3 rd 4th USAA Disney Parks 1 st 2nd 3 1 1 1 8.69 8.47 8.41 8.40 8.35 places from 2 015 place from 2 015 place from 2 015 place from 2 015CEE score CEE score CEE score CEE score CEE score Chick- fil-A 5 th The 2016 US Customer Champions 0places from 2 015 © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 11 Membership only warehouse club, Costco Wholesale, is another customer experience leader that recognises the importance of the detail – focus on the small things and excellence will come. Costco recruits employees that recognise the value of this in enhancing the customer experience, and so has a set of highly engaged employees who take a personalised approach to interactions with customers.Grocery retailer H-E-B cleverly enhances the weekly grocery shop with in-store theatre and technology. H-E-B stores have their own in- house chefs who frequently whip up signature dishes for customers to sample, alongside offering general cooking advice. And to aid the shop, customers can use the H-E-B app to create shopping lists from scanned receipts and even find out in which aisles items can be located.

Southwest Airlines has redefined service in air travel. With a business model that places as much importance on their employees as they do their customers, the Southwest brand is delivered through every individual staff member expressing their personality and engaging with passengers in a way that makes every flight memorable. Southwest ensures its staff are recruited with an attitude to serve its customers, whatever it takes.

Online shoe retailer Zappos is famed for the lengths it will go to for its customers. Encouraged to make emotional connections, Zappos employees are set customer service metrics rather than being targeted on call volumes. This is acknowledged in endless tales of Zappos’ ‘insane’ levels of customer service – from the lengths they will go to to resolve customers’ problems, to small gestures such as thank you cards and flowers. Wegmans Southwest Airlines 8th 9th Costco Wholesale H-E-B 6 th 7th Zappos 10 th Wegmans is known as a theme park of food and bases its business on anticipatory service – knowing what the customer needs before they know themselves. Highly knowledgeable staff, eager to share their knowledge with customers, provide an outstanding experience. This is demonstrated through an almost telepathic level of customer service, alongside a continual innovation pipeline focusing on how best to improve the customer journey. 3 39 8.29 8.20 places from 2 015 places from 2 015CEE score CEE score 4 1 8.24 8.23 8.22 places from 2 015 place from 2 015CEE score CEE score CEE score 0places from 2 015 © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. +14 % +22 % + 19 % +17 % + 19 % +15 % 1st The leading brand for another successive year, USAA is a paragon of customer experience excellence. The financial services organisation recognises the importance of putting the customer at the heart of the business, in both word and deed.

Such customer centricity has resulted in world-leading scores across The Six Pillars.

“Customer experience is our main priority; the service we provide to our members is the foundation USAA was built on. We are focused on knowing our members and fully understanding their individual needs, so we can effectively provide appropriate and customised solutions to protect and enhance their financial security.

What we do begins and ends with our mission: to serve the financial needs of our members through a lifelong relationship. Our employees are personally committed to delivering excellent service and great guidance. That exceptional service builds loyalty and trust over the long term.

We truly understand the demands of the military community. Many of our employees have either served, been a spouse of someone who served, or grew up in military families and, as a result, our employees can relate and provide customised advice for our members at all stages of their lives.

With the pace of today’s marketplace we have made, and continue to make, adjustments to our structure and operations, to remain agile and put ourselves in the best position to continue to know, understand and meet our members’ needs with exceptional experiences. This includes ensuring we can serve them through their channel of choice, expanding across our contact centres to service through phone, usaa.com, mobile and other digital channels.

Our mission guides us every day and it’s not only what we do, but how we do it. The quality of our service and the passion and advocacy we have for the 11 million-plus members we serve is what matters most. Our member service representatives are some of our most mission-driven employees. They are the face and voice of USAA and live USAA’s core values: service, loyalty, honesty and integrity.” Thomas Grothues, SVP Banking and Insurance Solutions Alignment within an organisation is crucial – with strategy, employees, customers and process working together towards a shared purpose to deliver business success. We will continue investing in the foundation that makes USAA great today – world- class member service. Ty Richardson, VP Strategy and Analytics USAA 0 © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 12 More about USAA on the Excellence Centre The Six Pillars:

Scores vs US Average “ “ Implication rank in 2016 of 243 brands places from 2 015 Spotlight on Customer Champions 13 The State of the Nation US customer experience continues to outperform the UK Despite a slightly diminished lead from 2015, US organisations remain better than the UK at delivering customer experience excellence.

The US continues to provide outstanding examples of best practice for UK organisations to learn from, with five times more outstanding brands (achieving a CEE score of 8+) in the US analysis than in the UK. The US top 5 brands are the best in the western world, ahead of any other organisations analysed by the Customer Experience Excellence Centre. US surpasses the UK across The Six Pillars By winning across The Six Pillars, US brands outperform their UK peers.

The US particularly outshines the UK for the pillar of Resolution (+5 %), driven by a combination of factors:

• US organisations are at the forefront of technological innovation to solve issues • Leading organisations are structured in such a way to encourage responsibility for Resolution • Colleagues are empowered to resolve issues in whatever way is appropriate for each customer • All driving the ‘service recovery paradox’ – a problem being resolved in such a way that it leaves the customer feeling better about the organisation than they did before the issue occurred.

In the last year, despite some declines in US performance, there has been a particular improvement in US organisations meeting and exceeding customer Expectations. This pillar is a driving factor for brands who have progressed in the US in 2016. Overall performance US vs UK © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 14 Most US industries outperform their UK counterparts The US outperforms the UK across the vast majority of industry sectors analysed by the Customer Experience Excellence Centre. Only telecoms and the public sector (new to the US analysis in 2016) buck this trend – with no organisations within these sectors featuring inside the US top 100.

% difference in US sector Customer Experience Excellence score vs. UK 2015 US 2016 sector ranking US sector % difference in US sector CEE score vs UK 2015 -7% The State of the Nation © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 15 US grocery retailers continue to stand out for customer experience, with three grocers featuring in the top 10 alone. Each one takes a slightly different stance to deliver on customer experience; from the use of technology to enhance the experience, to in-store theatre to entertain and inform. Yet they all understand, seemingly more so than their UK counterparts, what their customers want in an outstanding shopping experience, and place its importance ahead of price. As a result, US grocery retail outperforms its UK equivalent across all Six Pillars, most notably, Resolution and Empathy.

Superior performance in Time and Effort is a driving factor of non-grocery retailer success in the US. Another sector to feature three organisations in the top 10 alone, the leading non-grocery retailers are acknowledged for their ability to ensure a swift and frictionless process. Through a clever use of technology to ensure digital/omnichannel ease, alongside the recruitment of employees who have a truly customer-centric attitude, the US non-grocery retail leaders are defined by a stronger service culture than that of the UK.

With a financial services organisation in the number 1 position for another successive year, it’s proof that even complex sectors with less excitement around everyday interactions can deliver an outstanding customer experience. The US’ leading financial organisations do this through an intense focus on Empathy, with a deep understanding of the customer and their circumstances at the heart. This, in turn, creates trust in the organisation – something that many UK financial organisations are still working on – to be seen to do the right thing for the customer. Outperforming UK counterparts across all Six Pillars, the service culture of the US travel industry is characterised by its recognition of the link between employee and customer experience. The leaders invest in their people and recruit for attitude and, perhaps more so than the UK, find employees who have a genuine desire to deliver great service and do ‘whatever it takes’ for their customers. They pay attention to the detail of every micro experience. “ I truly love Wegmans, they are open all hours, they have childcare, a pharmacy and even cooking classes for customers, catering to every taste from vegetarian to gluten- free diets. ” “ Wonderful experiences – always. They do such a great job of finding clothes that fit and look good on me. Love shopping here. ” “ Fair, honest business for insurance and banking. Recently involved in a hit and run accident.

They took care of 90 % of actions with little response from me. They were quick and fair.

” “ When traveling with my parents, they were both in wheelchairs and they allowed us to go in with them first. By letting me go in with them it helped to have a great experience. ” Grocery Retail Non-Grocery Retail Financial Services Travel and Transport US CEE 2016 respondent, Wegmans US CEE 2016 respondent, Nordstrom US CEE 2016 respondent, USAA US CEE 2016 respondent, Southwest Airlines © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Disney Parks Disney Parks is renowned for delivering a magical experience for its guests. What is perhaps surprising though, is it’s an intense focus on process that makes the Disney magic work. From badges offered for a first visit or birthday so every cast member knows to treat the guest with even greater attention, to an extra fast pass handed out to a child looking disappointed to end a ride, Disney employees are trained to recognise when someone needs a little ‘Disney magic’ added to their day. It’s no surprise then that the pillar Disney Parks stands out for is Empathy – recognising the needs of each guest, perhaps even before they realise themselves.

These micro experiences seem like a little Disney magic to the observer, but behind this is a process that has allowed this to happen in the first place. Walt Disney was known for his fixation with procedure and this continues to live and breathe through Disney University – the global training programme for all cast members – that teaches about the important roles that process and people play together, to inject something a little different to make a personalised Disney experience. Technology also plays an important role in the Disney experience.

The My Disney Experience app makes planning a personalised itinerary a doddle. With everything at your fingertips to be able to book a restaurant to coincide with the evening fireworks, but to fit around the fast passes you’ve pre- booked for your favourite rides so you don’t have to spend two hours in the queue, the app will also tell you live wait times and where to find your favourite characters whilst in the parks.

Arguably one of Disney Parks’ most important technological developments in recent years though is the introduction of the MagicBand – a rubber bracelet with RFID sensors that ensures a quick yet personalised experience. This innovation connects the guest to every choice they’ve made on the My Disney experience app, allowing payment, ride fast pass entry, restaurant reservations and more, all simply by the scan of a band.

It’s this combination of technological innovation and personalisation of process that ensures a magical Disney experience for each and every guest.

It’s possible to create magic from the mundane – the sum of many micro experiences through a typical customer process can combine to build an outstanding customer experience. 2nd +14 % It’s not the magic that makes it work; it’s the way we work that makes it magic.

+16 % + 11 % +14 % +14 % +18 % 3 Lee Cockerell Former EVP of Operations © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 16 More about Disney Parks on the Excellence Centre The Six Pillars:

Scores vs US Average “ “ Implication rank in 2016 of 243 brands places from 2 015 Spotlight on Customer Champions 17 With customers across the globe expecting a seamless experience across all touch points, the leading US companies recognise that digital is just one of the modes of engagement that a customer might use. Consequently, the US customer experience is more integrated and delivers a more omnichannel experience than in the UK. Consumers find it easier to move across and within channels in a way that suits their needs at a particular time.

Nevertheless, the focus on using digital to solve customer problems in the US has led to significant innovation, and there is much the UK can learn from the US’ sophistication.

For example, USAA has developed a suite of apps that have revolutionised how customers interact with them. Such app-based interfaces have removed paper from the process of insurance claims, from car purchasing and from cheque depositing – improving things for the customer and reducing cost for USAA. As referenced previously, Disney Parks offers its guests a bracelet that uses RFID technology.The MagicBand enables a speedy yet personalised experience for everything from ride entry to restaurant reservations.

Grocery retailer H-E-B has introduced an app to make shopping easier for its customers – allowing them to create shopping lists from scanned past receipts and even find out which aisles products are located in.

US 2016 omnichannel leaders: The power of digital in an omnichannel customer experience CEE rank 2 016 Omnichannel rank Brand US sector Omnichannel Score Innovation and the Omnichannel Experience © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 18 Six Pillar Innovation What is apparent in the US is that digital is more about finding creative ways to solve customer problems than digitally enabling existing processes.

Fintech providers are leading the way in the financial services industry. Retailers are harnessing video and expert systems to curate and manage individualised collections and utilities are maximising the communication advantages of smart meters.

Zappos invests considerable effort in developing new tools that will surprise and delight customers. Within its internal innovation lab - ‘Zappos Labs’ - the online retailer has a dedicated team of employees who focus on solving customers’ pain points and creating compelling and customised experiences across all channels. For example, Ask Zappos allows customers to snap photos of items they see on the street and text, email or Instagram them to team members. A representative will then find the item and send a link to the customer to buy online. New capabilities implemented in the Zappos mobile app allow consumers to shop and favourite items across different devices, as well as store their payment information in a secure environment. Zappos 10 th Providing a custom-fitted experience; referred to as ‘hyper personalisation’:

• Zappos offers individualised curated collections to their customers.

• Advertisers send discounts that are customised both on browsing history and geographical location.

• Netflix continues its pursuit of the ultimate ‘you catalogue’ for each viewer, identifying the one film or programme that is exactly right for the viewer’s taste. Delivering human empathy through technology:

• The increasing adoption of companion robotics to customer service (for example, Pepper, the personal robot).

• MasterCard has transformed a favourite fashion accessory (for example, rings, wristbands or keyfobs) into a payment device. Personalisation Empathy The organisations that are close to their customers find innovation easy. They simply identify problems their customers have and fix them. Their innovation is grounded in their business model and is a tangible manifestation of their brand. It is not technology for its own sake.

The leading US companies are carrying this philosophy in their developments across each of The Six Pillars:

• With the USAA car insurance app, if a customer has an accident, they simply dictate what happened into their phone and take a photograph of the scene. The app adds the GPRS coordinates of the accident and the weather conditions at the time.

Press a button and the claim is initiated, no forms or paper work needed. A replacement car is delivered to the scene within an hour.

• Some services leverage predictive analytics to identify potential delays on public transport before they even happen and send an SMS with alternative routes.

• Retail robots automatically audit shelves and warn of the need to re-order or replenish, to save customers the disappointment of not finding their favourite item.

Going beyond the delivery of returns for shareholders, putting customers ahead of shareholders:

• Ally Bank’s advertising campaign is about setting new standards of behaviour in banking.

• Some furniture retailers are investing and innovating to ensure the furniture that customers purchase will fit within their home – putting satisfaction ahead of sales.

Increasing the time and resources that organisations spend to ensure customers don’t need to do so:

• Nimbl, the mobile ATM operating in New York, eliminates the need to go to the ATM.

Simply use the app to specify the amount of cash needed and it is hand delivered to a customer’s office or home.

• The Nordstrom trunk club delivers clothing items monthly and learns better what is right for the individual through what is returned.

• Adobe’s Smart Bag keeps an in-store real- time inventory of what is in the shopping bag, allowing for automatic payment without going to a check-out.

Using big data to exceed expectations:

• Technology companies are developing apps that sense when a customer is bored and send personalised content.

• USAA are using their huge transactional data resources to equip the customer at point of purchase with all of the relevant information needed to make the smartest purchase possible. Their app identifies what type of discounts are usually available or what others have paid at individual outlets. Integrity Resolution Time and Effort Expectations © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 14 th Kroger, the second largest general retailer in the US, is known for its forward-thinking strategy and early adoption of innovations. This is driven by listening closely to the customer’s voice and a strong investment in its customer science practice.

Year on year, Kroger proves to be consumer-centric and to have a clear focus on addressing issues faced by shoppers through digital development.

The chain has rapidly embraced mobile apps (reportedly used millions of times weekly) and was among the first brands to release an update for the Apple Watch, constantly working towards keeping up with trends its customers adopt. But the true differential of Kroger is how it leads the way in digital innovation and in-store implementation.

Kroger has used predictive analytics and infrared sensors to address the issue of queuing in-store and, more recently, the chain began monitoring the temperature of its freezers, thanks to the Internet of Things.

In the last year, Kroger has also introduced the digital shelf, with video-streaming capabilities to display advertisements, alongside the ability to send alerts to customers when they pass by an item on their shopping list (via the Kroger app).

This innovation provides a number of micro experiences through the typical shop, from pointing shoppers to their favourite items, to signposting to those with particular dietary needs the products that fit their requirements. Such micro experiences reshape how customers shop at Kroger, simply by putting convenience at the centre of the experience, and result in above average scores for Time and Effort and Personalisation.

Kroger invests heavily in understanding its customers, their needs and the road bumps they experience as they shop. It then employs technology and data to ensure these road bumps are removed from their shopping aisles.

Investing in technology and keeping up to date with the latest digital trends is crucial to continue meeting customers’ changing demands and continually find ways to make life easier for the customer. One of the ways we continuously improve the shopping experience is by bringing new technology and digital capabilities to our business. Kroger Q1 2015 Results 0 +8 % + 11 % + 10 % +8 % +9 % +8 % Kroger “ “ © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 20 More about Kroger on the Excellence Centre The Six Pillars:

Scores vs US Average “ “ Implication rank in 2016 of 243 brands places from 2 015 Spotlight on Customer Champions 21 As human beings we have long learnt the power of aligning behind a sense of common purpose. It is something that we are naturally programmed to do. It is through understanding this facet of human nature that the great organisations have created the alignment necessary to harness the power of the many.

It is no accident that each of the US top 10 have, in their own way, set out a clear purpose that their organisation can align behind so that each individual component moves for ward in the same direction. It is the clarifying nature of this purpose that anchors a unique brand experience.

At the heart of this purpose lies a controlling idea, an idea that resonates deeply with employees and customers alike. It shapes the experience both internally for employees and externally for customers, The Connecting Power of Customer Purpose and the US top 10 are world class exponents of connecting people and purpose.

However, a compelling purpose alone is not enough.

It needs guidelines or principles that amplify how it should be implemented. It is these simple rules, or design principles, that ensure a consistent experience across all touch points.

Think of birds flocking: cohesive, integrated – they have a single purpose to fly to warmer climes.

However, the way they exercise control is based on a few simple rules: keep to an optimum distance from the next flight partner; match their speed and velocity; anticipate changes in direction arising from elsewhere.

The power of a few simple rules to drive cohesion has long been known – but our US leaders use it to their distinct advantage: Customer Purpose:

To contribute positively to members’ lives.

The Simple Rules:

• To understand the customer at a deep and profound level • Treat the customer as you would want to be treated yourself Experience:

Extraordinary levels of Empathy and emotional connection. Customer Purpose:

To create happiness for others.

The Simple Rules:

Make every experience magical:

• I project a positive image and energy • I am courteous and respectful to all guests • I stay in character and play the part • I go above and beyond • Treat the customer as you would want to be treated yourself Experience:

A magical, captivating ‘wow’ experience that delivers a 70 % return rate (Source: Be Our Guest, The Disney Institute). USAA Disney Parks 1st 2nd © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 22 Customer Purpose:

Making shopping a pleasure.

The Simple Rules:

• Never let making a profit stand in the way of doing the right thing • Make the food the star • Deliver outstanding customer service and competitive pricing Experience:

Customers love the experience of shopping at Publix. Customer Purpose:

Customer first.

The Simple Rules:

• Put the customer in control at all times • Become the world’s most customer- centric company • Excite and inspire the customer Experience:

Amazon has defined the online shopping experience for its customers. Publix Amazon 3rd 4th When Walt Disney began to define the experience in his theme parks, the simple rules reflected the characters from Snow White. They are as relevant today for any business as they were in the 1950s:

Be Happy…make eye contact and smile!

Be like Sneezy…greet and welcome each and every guest. Spread the spirit of hospitality…it’s contagious!

Don’t be Bashful…seek out guest contact.

Be like Doc…provide immediate service recovery.

Don’t be Grumpy…always display appropriate body language at all times.

Be like Sleepy…create dreams and preserve the magical guest experience.

Don’t be Dopey…thank each and every guest! Disney Parks 2nd © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 23 Customer Purpose:

Sell stuff they don’t!

The Simple Rules:

• Put the food front and centre • Ensure a Texan sense of place • Invest in our customers so we can have the lowest prices possible • Invest in our partners’ pay and benefits • Invest in our communities Experience:

Convenience, low prices, friendly people.

Continually working to find new and exciting products. Customer Purpose:

To have a positive influence on all who come into contact with Chick-fil-A.

The Simple Rules:

• Focus on ‘Second Mile’ service • The first mile is the foundation: good customer service, hot food hot, cold food cold. The second mile is what is remarkable, for example, carrying customers’ trays to their tables.

Experience:

It’s the little things that Chick-fil-A does really well that create a memorable experience.

These little things exceed expectations and create repeat customers who turn into ambassadors. In fact, 10-15 % of Chick-fil-A’s customers are ‘raving fans’ (Source: CNN iReport). These are the people who do over- the-top things to show their love for the brand. Customer Purpose:

To continually provide members with quality goods and services at the lowest possible prices.

The Simple Rules:

• Obey the law • Take care of members • Take care of employees • Respect vendors Experience:

Shoppers describe the experience as fun. They pay their employees more on average than most retailers, keeping turnover lower than others.

They keep a determined focus on their original strategy – low margins, low overheads, sensible profits.

Customer Purpose:

Ensure customers are truly put first.

The Simple Rules:

• Happy, knowledgeable and superbly trained employees • Treat customers like guests • Enable customers to take time, relax and enjoy the experience • Care about the wellbeing of every person • High standards are a way of life Experience:

Empowered, passionate staff working in a theme park of food, creating an almost unbreakable bond with its customers.

A destination in its own right.

Listed as one of the best employers in the US in Fortune’s ‘100 Best Companies to Work for’. H-E-B Chick-fil-A Costco Wholesale Wegmans 7th 5th 6th 8th © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 24 Southwest has a clear and succinct customer purpose. “We exist to connect people to what’s important in their lives through friendly, reliable and low-cost air travel.” This is coupled with a vision that states: “Our vision is to become the world’s most loved, most flown, and most profitable airline.” The combination of the two ensures that not only are employees encouraged to go the extra mile, but they also know how they should go about it and why it is important. It isn’t just about moving people from A to B safely – it is about connecting people to what is important to them.

As CEO Gary Kelly describes, “Southwest is a great place to work and brings the greatest joy because we have such a meaningful purpose.” Southwest Airlines 9th Customer Purpose:

A dedication to the highest quality of customer service, delivered with a sense of warmth, friendliness, individual pride and company spirit.

The Simple Rules:

• The personality of our people make the difference Experience:

Passengers love interacting with Southwest Airlines’ staff. Customer Purpose:

Uncommon service.

The Simple Rules:

Create a customer culture based on:

• Deliver wow through service • Embrace and drive change • Create fun and a little weirdness • Be adventurous, creative and open-minded • Pursue growth and learning • Build open and honest relationships • Build a positive team and family spirit • Do more with less • Be passionate and determined Experience:

Continually having your expectations exceeded. Southwest Airlines Zappos 9th 10 th © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Long heralded as an exemplar of customer experience, Zappos, one of the world’s largest online shoe retailers, has moved into the US top 10 in 2016 and features among the world’s leading brands for customer experience excellence.

From the outset, Zappos recognised the challenge of online shoe buying for customers unable to try them on. So it offered free shipping, free no quibble returns and invested in a call centre that was centred around customers being able to ask questions to find the right product for them. As a result, Zappos developed customer service metrics that emphasised creating a personal connection with the customer, rather than call volumes. Perhaps an increased cost of service, but its evident such service-focused KPIs can enhance performance – with company sales today well over $2 billion.

Such a customer-focused strategy has resulted in Zappos performing strongly across all Six Pillars of customer experience, most notably, Empathy and Resolution.

Zappos employees are encouraged to go above and beyond traditional customer service and are famed for the lengths they will go to for their customers. Endless stories fill the internet about their ‘insane’ customer service; for example, one mother emailed Zappos to ask for a replacement pair of sandals for her son as the strap had broken.

A prompt reply said they would send a replacement overnight, and not to worry about returning the old pair. However, when they arrived, it was the wrong sandals – on contacting Zappos again, they apologised profusely, told her to keep the new shoes or donate to charity, and the correct pair would be with her the next day. A story in great customer service, but also a note in the importance of trusting the customer – by not asking her to return the shoes, they’d gained a customer for life. Stories such as this make it no surprise that over 75 % of Zappos purchases are from repeat buyers (Source: Forbes article, Languatics).

Next on the path to success for Zappos is reportedly the transition to a Holacratic structure. At Zappos, this means that when a problem arises more than once, a different team of people will address it each time. The goal for this is to find the best, innovative solution to each new challenge – developing opportunities to build on Zappos’ success. Setting targets based on call volumes is unlikely to benefit the customer experience.

Instead, focus on customer service metrics that are based around building an emotional connection. +7 % + 11 % + 11 % +9 % +14 % +14 % Zappos places from 2 015 39 “ “ rank in 2016 of 243 brands 10 th I love that Zappos will send a replacement before even receiving a return. US CEE 2016 respondent © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 25 More about Zappos on the Excellence Centre The Six Pillars:

Scores vs US Average Implication Spotlight on Customer Champions 26 Organising for Customer Journeys Einstein once remarked “Everything should be made as simple as possible but not simpler”.

Organisations have a natural tendency to create their own complexity. This is a fact of life that organisations seem to permanently rediscover:• A proliferation of products and services • Inconsistent and overlapping processes • Misaligned incentives • Misaligned KPIs and measurement systems • A poorly articulated strategy In a world of escalating complexity, organisations that concentrate on simplification are better equipped to respond competitively.

The leading US organisations are permanently engaged in systematically rooting out unnecessary, self-inflicted complexity. They focus on using technology to transform the experience itself, not just make its delivery more efficient. Amazon has used techniques borrowed from the 1980s quality movement to micro measure and improve every aspect of their customer journeys.

Designing out interactions that add no value for them or the customer (the best service is no service – when things just work). They are focused entirely on the minutiae of customer journeys.

The role of customer journeys is changing. No longer just the preserve of experience designers, they have become the entire proposition. A means of aggregating and integrating service, product and support, these are sequential experiences combined into a definable unit of management and measurement.

Increasingly, customer journeys are becoming the currency of organisation improvement. This is posing some UK businesses with organisational design challenges. How do we manage and improve a customer journey that runs across many of our functional silos, and do so in a way where the whole is greater than the sum of its parts?

Leading organisations are discovering that within a customer journey, each micro experience can be defined and seen as a reusable design component.

For example, the application stage of a financial services customer journey can be defined, optimised and then reused for mortgages, credit cards and current accounts.

The problem many organisations now face is how to structure an enterprise capable of dealing effectively with this new world. USAA maintains a relentless focus on the quality of member experiences. Integrated planning that includes all service channels is essential and ensures our members have a seamless experience. Chris Cox, VP Digital Strategy and Operations, USAA “ “ © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 27 In the leading US companies, the barriers caused by traditional silos and functions are not just being eroded, but purposefully dismantled.

Companies such as USAA and American Express are building new types of organisations based on the concept of reusability. Entirely new modes of organisation design are emerging as businesses grapple with managing customer journeys in a post-silo world.

Two of the organisations in the US top 10, USAA and Zappos, have made significant progress in moving from the rigidity of a structured organisation, to a structuring process where resources are deployed in the best way to meet customer needs.

USAA describes their enterprise architecture as being designed for innovation and superior customer service. They have moved from the silo-based pyramid structure to a radial organisation where key capabilities are aligned to the customer’s needs.

Customer-centric organisation design – the integrated enterprise Zappos have embraced a philosophy of Holacracy, scrapping management positions and leaving employees to decide amongst themselves how to get the work done.

Holacracy is described as a new operating system for the organisation, a means of distributing power where decisions are made locally by those closest to the front line. Guided by a Holacracy constitution, a set of organising principles and transparent rules, Zappos’ local teams are empowered to decide for themselves how to tackle customer and organisational resource issues. Zappos 10 th USAA also applies human- centered design principles in developing digital experiences – designing based on stated and observed member needs and conducting rigorous usability testing. The voice of the member is collected through multiple feedback sources and drives prioritization decisions. Chris Cox, VP Digital Strategy and Operations, USAA “ “ © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 28 In this new world, duplication is the enemy. Organisations are redolent with overlaps, duplication and interdepartmental inefficiencies. Every large business has multiple ways of doing the same thing. By structuring around customer needs, USAA was able to not only improve the quality of customer service, but also to improve cost ratios by designing out duplication and becoming hugely adept at design reuse. By institutionalising the reuse of journey designs USAA has:• Accelerated time to market • Reduced costs • Accelerated organisational change • Increased customer recruitment • Increased revenues • Achieved world-leading innovation The organisation design is built around individual customer needs groups and encompasses their end-to-end customer journeys, while the contact centres are structured around customer life events, ensuring a real empathetic connection with the customer.

What was important to USAA was that they surfaced in customers’ lives problems they could solve in new ways. They implemented an ideation tool, open to the entire organisation, to identify potential improvements for their customers. In the first three months employees submitted some 6,000 new ideas, with employees encouraged to work up their suggestions, build the business case and pitch their concepts to the leadership. USAA 1st The journey is the result of individual departmental efforts – which don’t necessarily all align to work together and create a good experience for the customer. Silo organisation Matrix organisation Radial organisation Some organisations are managing the matrix of departments and journeys by appointing end-to-end journey owners, either an individual or a forum. The most advanced companies, such as the US leader, USAA, have organised the business around the customer, managing journeys, not functions – an integrated enterprise.

Customer journeys require a new business architecture Capabilities Products Member Experience Customer © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. MasterCard MasterCard is one of the transformation brands of the last year in the US, moving up 51 places into the top 100. Its 2016 rank of 76th is testament to the brand’s efforts to be seen as a driving force in the payments industry.

With a company mission defined as “Every day, everywhere, we use our technology and expertise to make payments safe, simple and smart”, MasterCard acknowledges the importance of innovation in the payment experience; indeed, one of the brand’s core values is agility:

“we act with a sense of urgency and deliver value through our innovation and execution”.

In recognition of the increasing demand from consumers for smarter ways to pay, MasterCard set up its own ‘MasterCard Labs’, an incubator for new ideas. One of the ideas that came to fruition is its Masterpass proposition – a ‘digital wallet’ that enables secure online and in-app payments, also letting users store their card details and delivery information in one place, making the checkout process quick, seamless and secure.

And the Labs continue to test new ideas – from piloting commercial tests for facial and voice recognition apps, to conducting trials of a wristband which authenticates a cardholder through their unique cardiac rhythm. MasterCard approaches innovation in a very customer- centric way – find a problem with the customer experience and build a solution for it – a reason why the organisation performs so well for Resolution in particular.

It’s not just about technology though. Alongside great service and benefits, MasterCard looks to exceed Expectations, and has long been surprising its cardholders with its Priceless campaign, most recently, through ‘Priceless Surprises’ – all based around the idea of making memories for its customers that money can’t buy.

Add to this its high scores for acting with Integrity – which relates to MasterCard’s efforts to make the financial system more accessible – and it’s no surprise that not only is MasterCard in the US CEE Top 100, but also has a top 20 ranking in Fortune’s ‘Change the World’ list, sitting alongside other leading innovative companies who are seen to ‘do good’ as part of their strategy.

Consumers are expecting continually smarter ways to interact with a company and its products. This provides organisations with an opportunity to create better, smarter and more memorable experiences, often driven by technological innovation. 76 th +4 % +4 % +3 % +4 % +5 % +3 % I use MasterCard almost every day. They make it easy to contact them and are very responsive. 51 US CEE 2016 respondent © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 29 More on the Excellence Centre The Six Pillars:

Scores vs US Average “ “ Implication rank in 2016 of 243 brands places from 2 015 Spotlight on Customer Champions 30 It’s evident from the Customer Experience Excellence Centre analysis that the leading US organisations understand the need for alignment. Alignment is the optimal organisational state where customer strategy, employees, key processes and customers work in concert to propel growth and profits.

In the 1990s, organisations began to focus on the Service Profit Chain: the link between employees, customers and commercial outcomes. Many organisations simplified this to ‘happy employees create happy customers which equals happy shareholders’.

A simplification too far. Purely focusing on employee or customer satisfaction as end states misses the alignment of inputs needed to create the required commercial outcomes.In many organisations, each of these capability areas has its own engine. There is a culture initiative, an employee engagement initiative and a customer experience initiative – invariably they are not joined up and each engine pulls in a slightly different direction, reflecting the agenda of the originating department.

What we see in the excellent organisations is alignment. Each engine is pulling in the same direction – this overcomes inertia and these businesses achieve real momentum.

The Human Equity Continuum Southwest Airlines starts with culture and shared values.

Highly sophisticated recruitment techniques ensure employees who join the company share their values, are inspired by the customer purpose and bring their personalities to work every day. They are very clear on the employee experience, offering an environment that encourages the right type of customer-oriented behaviours.

They are also clear on what these behaviours need to look like.

Communication is vitally important and, like many organisations, they have learnt the power of storytelling to reinforce the company’s purpose in day-to-day interactions with customers. Every week, CEO Gary Kelly gives public praise to employees who have gone above and beyond to show great customer service. Each month the Southwest Spirit magazine features the story of an outstanding employee and the company highlights positive behaviours through a variety of recognition programmes and awards. Southwest Airlines 9th Business Outcomes Colleague Behaviour Customer Behaviour Colleague Experiences Customer Experiences Company Culture © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Charles Schwab Charles Schwab, one of the leading providers of US investment services, ranks 16th in this year’s analysis, a move up 29 places from 2015.

“Customer experience is our top priority and all things derive from that. It is reflected in the way we describe our corporate strategy, which we call “Through Clients’ Eyes.” This strategy is the bedrock for our decision making. Through clients’ eyes means when we make decisions, we are focused on the clients’ interests, their goals, their future.

Since launching the company roughly 40 years ago, we’ve set out to challenge the status quo in our industry, looking for ways to offer our clients more value and a better experience. We believe it can’t just be an idea, so we embed it in business processes, in how we compensate and reward employees, and how we measure success.

To try to ensure a consistently great experience across all channels for our customers, we make the client experience our primary objective, embed it across the enterprise, operationalize it, measure for it, incorporate learnings quickly, hire for it.” Schwab’s culture of service is at the heart of how we activate our strategy, and we see an absolute link between the employee experience and the customer experience. In 2015, Schwab received, with distinction, a fourth consecutive win of the Gallup Great Workplace, placing Schwab among the top 40 companies recognized for having the most engaged workforces in the world. Looking to the future, our approach will continue to be guided by our strategic focus on clients and will be based on engagement – encouraging clients to demand accountability and play an active role in the relationship; value – ensuring products and services deliver maximum value; service – serving clients based on an understanding of their needs; transparency, providing the information clients need to be confident in their relationship with Schwab; and empowerment – arming our clients with the products, tools and expertise that make it simpler and easier to pursue their goals.” Greg Gable, Schwab Senior Vice President Charles Schwab’s success reinforces the importance of organisational alignment, focusing all employees on key goals that everyone across the business can articulate, driven by a clear sense of customer purpose. “ “ 16 th There are few things we enjoy more than doing for clients exactly what we would want if we were the client.

+8 % +9 % +6 % + 10 % + 11 % +7 % Walt Bettinger, CEO 29 © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 31 More about Charles Schwab on the Excellence Centre The Six Pillars:

Scores vs US Average Implication rank in 2016 of 243 brands places from 2 015 Spotlight on Customer Champions 32 The Sum of Many Small Things “Success is doing a million small things well over and over again” Jim Sinegal, Founder, Costco Chick-fil-A creates raving fans not just through delivering good food, but also through delivering a good experience. They do a lot of little things that continue to exceed expectations and are talked about between friends and shared on social media, helping to drive revenue.1. Staff say “my pleasure” instead of “you’re welcome” – it is more personal.

2. They greet customers with an umbrella if it is raining.

3. There are fresh flowers at every table.

4. Table touches take place to check in with customers and make sure everything is OK.

5. Staff carry customers’ trays to their tables.

6. Staff call customers by their first name not a random number.

All micro experiences that sum to a great experience overall. Chick- fil-A 5th Excellence is in the details. Focus on the details and excellence will come.

There is much focus at the moment on the “Law of Incremental Gains”. The success of the GB cycling team is driven by it. David Brailsford, who led this team, pioneered what he called the “aggregation of marginal gains”. Improving every aspect of what you do by 1 % has a compound effect that vastly exceeds the number of individual gains.

In the customer experience world, we have seen the power of micro experiences – remarkable small experiences that get talked about and help drive recommendation. Not everyone feels able to recommend a company so, to drive advocacy, they need to be given something to recommend – some part of the experience they are going to want to tell others about. Something that is so clever or insightful that it strikes a deep cord.

Each of these ‘signature experiences’ sits alongside multiple other sequential micro experiences that, when knitted together, sum to a great experience overall.

These signature experiences do not have to be large or costly, simply symbolic of the brand and easily replicable.

The excellent organisations create great customer experiences by doing lots of small things really well.

© 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 33 Examples of signature experiences from the US leaders USAA apps for photographing cheques, car buying and car insurance claims Publix’s in-store food showcasing and demonstrations Costco’s changing marketplace and short-term offers Nordstrom’s trunk club – a personal styling service without having to step into a store American Express’ video servicing app to connect the customer to the right Customer Care Professional In-N-Out Burger’s secret menu The attention to detail at Disney, such as the micro experience of queuing for a ride being like a ride in itself DoubleTree by Hilton’s cookies offered on arrival.

We’re known for our delicious, warm chocolate chip cookies, baked fresh daily, and we’re proud to greet our guests with something sweet at check-in. But to us, the cookie means so much more. It represents our constant dedication to our guests and thoughtful touches that ensure you feel special and cared for throughout your stay (Source: DoubleTree by Hilton website) American Airlines’ partnership with Uber to offer an end-to-end travel service Zappos’ thank you cards Walt Disney viewed his theme parks almost as ‘factories’ that produced delight and entertainment. His belief was that the backbone of quality service was built on designing perfect processes and then repeating them at scale. Walt Disney knew that the magic was powered by these processes.

Disney Parks has seemingly held true to these beliefs with the close attention to detail in constantly improving processes. It’s safe to say that they always sweat the small stuff.

Walt Disney perfected these processes by observing each and every detail. He didn’t just want Disneyland to be better – he wanted it to be one hundred times better than anything else available. Disney Parks 2nd © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. In- N-Out Burger In-N-Out Burger, a Californian burger chain which has recently expanded its presence into a number of other states, owes much of its popularity to its so- called ‘secret menu’.

On first appearance, In-N-Out Burger has an aptitude for simplicity and offers a very straightfor ward menu, comprising only of the Double Double, the cheeseburger, the hamburger, French fries, milkshakes and beverages. Or at least, that’s what the menu displayed in-store would have its customers believe.

However, for those in the know, In-N-Out Burger actually offers a very extensive, but secret, menu to choose from. The company shares some of the secret items on its website, branding the list as the ‘not-so-secret’ menu. The options, however, are much more extensive than advertised. A quick search on the internet tells of the Flying Dutchman, light fries and even a Neapolitan shake. The true In-N-Out burger experience is based on one critical micro experience: the option to order items that are not even on the menu. In-N-Out Burger’s ‘secret menu’ enables diners to customise their meal in any way they wish. Some speculate that the secrecy is a clever marketing strategy – an approach that had many people visiting with an urge to experience the chain and be an ‘insider’.

Others believe that this is simply the fruit of exceptional customer service to provide the customer with anything they request – and call these items the ‘not-so- secret’ menu. The fact that ‘secret menu’ items show on till receipts demonstrates that the company is involved in making this happen in a centralised fashion.

This (not so) secret menu is the base of In-N-Out Burger’s strong performance in both Personalisation and Time and Effort in particular, propelling the brand to 12 th position for its first appearance in the US CEE analysis.

In keeping with many of the other leading US organisations, In-N-Out Burger also pays close attention to its employee experience, offering a substantial wage and rigorous training for team members.

It’s this combination of commitment to excellent service by investing in its employees, alongside fulfilment of orders to exact customer specifications, that leaves In-N-Out Burger customers in the know feeling delighted. Signature micro experiences can become symbolic of a brand. When combined, they drive advocacy and loyalty among customers, through a greater overall experience. +9 % +9 % +9 % + 10 % +9 % +9 % to 2016 analysis rank in 2016 of 243 brands 12 th “ “ In reality, we don’t have any secrets at all. It’s just the way some of our customers like their burgers prepared, and we’re all about making our customers happy. In-N-Out Burger website NEW © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 34 More about In-N-Out Burger on the Excellence Centre The Six Pillars:

Scores vs US Average Implication Spotlight on Customer Champions 35 Lessons from America: The Alignment Checklist Our Customer Experience Excellence Centre analysis has shown that significant organisational benefit is derived from alignment, which leads to competitive advantage.

Alignment is that optimal state in which strategy, employees, customers and key processes work in concert to propel growth and profits. Aligned businesses have a seamless culture of shared purpose, enjoying greater customer and employee satisfaction and superior returns for shareholders.

Aligned companies focus employees and their work on key goals. Everyone can articulate what the needs of customers are and what his or her unit must do to satisfy them. We have a clear sense of customer purpose This customer purpose is embodied in our brand We have a comprehensive customer experience strategy that defines how we will deliver The Six Pillars We have clear organisational priorities based on removing the causes of detraction and building capabilities for delivering the drivers of promotion Everyone in our organisation understands the customer purpose and their role in delivering it We are clear on the few simple rules (design principles) that guide our experience design We understand our target customers We have an experiential segmentation modelWe have a well-articulated target customer experience – nuanced for the segments we serve We are organised in a way that allows us to optimise the delivery of customer journeys We consistently work together We are able to align the employee experience with the customer experience Our KPIs and key metrics are integrated into a measurement framework, based on our customer purpose, that drives actionable insight across each of our customer journeys We have a business model linking experience design to commercial outcomes We have distributed decision-making power to the front line To assess whether your organisation has the key drivers of alignment in place, consider the following checklist:

The most successful organisations are aligning the employee experience to the customer experience by encouraging the following role model leadership behaviours. When the employee experience and the leadership behaviours satisfy the following conditions, then high quality Six Pillar outcomes naturally emerge. Employee Experience:

• Help me develop as an individual – to be the best I can be • Enable me to improve my sense of self- worth – make me feel my contribution is valued and that my work is meaningful • A job role that enables me to utilise my unique talents • An environment that promotes continuous learning and improvement Customer-oriented leadership behaviours:

• Focus on the customer as an individual • Aim to make the customer feel special and important • The target experience for customers is articulated and understood Employee Experience:

• There is support when I need it • Personal concerns are dealt with, with urgency • I am able to participate in decisions that affect my team and I • Leaders look after my interests • I am supported to learn from mistakes without blame Customer-oriented leadership behaviours:

• Focus on the customer as an individual • Aim to make the customer feel special and important • The target experience for customers is articulated and understood Personalisation Resolution Leadership behaviours © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 37 Employee Experience:

• Business has a higher purpose than just making money • Fairness is key • Interpersonal relationships are based on trust • The environment is safe to be myself • There is consistency between word and deed • Communications are open and explanatory • Rules are applied consistently • There is trust between and across teams Customer-oriented leadership behaviours:

• Convey what we stand for to the customer • Leaders inspire trust • Leaders role model the organisation’s values • Teams are enabled to see how they impact the customer • Doing the right thing for customers is the top priority Employee Experience:

• My time and extra effort are recognised and appropriately rewarded • Leaders and managers show respect for my time Customer-oriented leadership behaviours:

• Look to minimise the effort a customer has to make to deal with us Employee Experience:

• The organisation has stretching objectives • Leaders are clear on their expectations • Leaders provide helpful and constructive feedback Customer-oriented leadership behaviours:

• Ensure we accurately set the customer’s expectations Employee Experience:

• The organisation and its leaders care about me • I am able to bond and affiliate with my colleagues • Issues are dealt with sensitively and with emotional intelligence • Leaders react positively and in line with our values when under pressure • Leaders show sensitivity and concern over needs and feelings Customer-oriented leadership behaviours:

• Demonstrate the organisation cares about its customers and employees • Leaders start by considering the customer when making decisions • Foster a sense of passion for the customer Integrity Time and Effort Expectations Empathy © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Further Resources Contact us:

Acknowledgements Author: David Conway Design: Lee Jolley-Brown Contributors: Tamsin Jenkins, Gustavo Imhof, Lynsey McGregor, Hannah Mac Mahon Lucy Taylor, Oliver Nightingale, Michael Hoole, Amit Varsani, Chris Platt, Dean Tindall David Conway Director KPMG Nunwood T + 44 (0) 845 372 0101 E [email protected] Tim Knight Managing Director KPMG Nunwood T + 44 (0) 845 372 0101 E [email protected] Tamsin Jenkins Executive Advisor, Customer Experience Excellence Centre KPMG Nunwood T + 44 (0) 845 372 0101 E [email protected] nunwood.com [email protected] Customer Experience Excellence Centre The Customer Experience Excellence Centre is dedicated to rapidly improving customer experiences by defining what ‘best-in-class’ looks like for customers around the world.

Access customer experience best practice resources Download previous reports, watch best practice sector webinars and download CX white papers. Access the Excellence Centre online Learn from the international best practices of innovative and fast-moving brands.

http://www.nunwood.com/customer- experience-excellence-centre/ Apply for membership A community for customer experience professionals, providing access to best practice tools alongside a platform to connect and influence.

Learn more about The Six Pillars A universal set of qualities within every customer relationship. The Six Pillars have proven to deliver enhanced commercial outcomes and deliver greater shareholder value. © 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 38 2016 KPMG Nunwood Consulting Limited is a subsidiary of KPMG Holdings Limited, a subsidiary of KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 02 Disney Parks 03 Publix 04 Amazon 16 Nordstrom 06 Costco Wholesale 05 Chick-fil-A 23 Red Lobster 50 Five Guys 62 Subway 63 Starbucks 89 Arby ’s 95 Chili’s 97 IHOP 97 Pizza Hut 76 Olive Garden 83 Dunkin Donuts 76 Papa Johns 33 Krispy Kreme 39 Panera Bread 26 Caribou Coffee 07 H-E-B 21 Aldi 45 Meijer 75 Food Lion 85 Save-A-Lot 20 TraderJ o e’s 41 ShopRite 08 Wegmans 14 Kroger 10 Zappos 28 Avo n 25 Vistaprint 28 Lowe’s 43 Hallmark 53 Barnes & Noble 67 The Home Depot 47 Sam’s Club 56 Kohl’s 59 Sephora 86 Macy’s 92 JCPenney 56 Target 71 Walgreens 87 TJ Maxx 76 CVS 97 eBay 71 Victoria’sSecret 83 American Greetings 38 Apple Store 60 Bed Bath & Beyond 60 BJ’s Wholesale Club 39 Polo RalphLauren 42 The Container Store 2016 US Customer Experience Excellence Centre Winner 01 11 EdwardJones 46 American Express 14 AAA 43 PayPal 53 Ally Bank 65 Prudential 87 Chase 95 GEICO 67 State Farm 56 Discover 16 Charles Schwab 65 Kaiser Permanente 80 Merrill Lynch 53 TD Ameritrade 21 Fidelity 76 MasterCard 82 Visa 13 The Vanguard Group 09 SouthwestAirlines 33 Hilton Hotels 47 Hampton Inn Suites 63 JetBlue 16 Marriott Hotels & Resorts 23 DoubleTree by Hilton 36 Courtyard by Marriott 28 Hyatt 33 Westin 67 Holiday Inn 89 Sheraton 67 IHG 12 In-N-Out Burger 26 Aflac 47 Ace Hardware 81 Williams- Sonoma 50 Petsmart 32 Alaska Airlines 28 Hyvee 36 Hannaford’s 16 Netflix 71 AMC Loews 71 Six Flags 50 Apple TV 89 FPL 92 UPS 97 FedEx 94 Whole Foods Access the Customer Experience Excellence Centre Here Customer Experience Excellence Centre 2016 US Top 100 Results Change vs 2015: Up Down No change New to study Sector Key Financial Services Non-Grocery Retail Utilities Logistics Entertainment and Leisure Restaurants and Fast FoodTravel and Transport Grocery Retail The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accu- rate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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