Customer Value Managers have a lot of on their plate:
- Manage CVM transformational projects (e.g. introduction of Next Best Offer Program).
- Run CVM operations (e.g. Lifecycle Management, Loyalty Program Management, etc.).
- Execute ad-hoc activities (e.g. running one-off campaigns to migrate customers from product A to product B).
The essence of the CVM value creation in all these activities is to drive business impact, ideally increase Customer Lifetime Value. But where to start? CVM needs a useful framework that would allow practitioners to focus their energy and scarce resources where they can make the biggest impact. Fortunately, such a framework already exists.
Customer Lifetime Value is realised through a series of customer purchase decisions that happen though customer lifetime. Examples of such purchase decisions:
- Customer receives the third bad invoice in a row and decides to stop using service and switch to competition.
- The contract is about to expire and the customer decides to renew the contract after the Telemarketing Call.
- The customer runs out of data balance and decides to upgrade the data price plan for his/her mobile phone.
The point of time when customer makes those decisions is the time when the company looses business, keeps the same business, or gains business with the customer. These moments are called the “Moments of Truth (MoT)” and they form a key part of modern CVM methodology, allowing precise focus and deployment of scarce resources where they can make the most impact.
Managing Customer’s “Moments of truth (MoT)” #
The Moment of Truth is defined as a critical point in the customer’s journey where the customer’s perception and behavior towards the company can change significantly.
Moments of Truth (MoT) approach recognizes that not everything in CVM is important – a few interactions drive majority of results. By focusing on MoT companies can concentrate their resources on the 20% of situations that produces 80% of the impact.
At the deepest core the Customer Value Management is the management of customer’s MoT, which means making sure that company keeps and gains the business in as many MoTs as possible.
Moments of Truth are not the same as Touchpoints or Channels – they are a salient interaction between the company and the customer, and as such do indeed inevitably occur in some kind of channel or touchpoint. However the key difference between a Moment of Truth and a Channel or Touchpoint is that the Moment of Truth is analyzed and defined from an individual customer’s perspective.
Moments of Truth are also not the same as Customer Journeys – the customer journey is a series of interactions potentially across multiple touchpoints, and is in a way similar to Moment of Truth because it captures the customers’ perspective. However Customer Journey lacks the salience aspect of the Moment of Truth concept.
Therefore we prefer the Moment of Truth as the foundational concept to guide CVM. Moment of Truth is the critical point in the Customer Journey that happens across one or more Touchpoints or Channels.
Different businesses have different Moments of Truths. Here is a sample of Mobile Telecommunications – Postpaid major moments:
- Receiving of (First) Invoice
- Allowance exceeded / far below
- Device change
- Visit to store
- Conversation with tele-sales
- Conversation with call center
- Visit/message in digital channel
- End of contract / offer / discount
- Complaint / grievance submission
- Cancellation request
These 10 moments of interacting with the customer clearly will produce disproportionate share of impact for the business, therefore the business should aim to be as excellent as practically possible there and then. Not all moments are of equal value – some drive upside, while others drive loss. How to establish the relative values of these different moments for further prioritization?
Identifying the business impact of a moment #
Moment of Truth business impact can be measured through two perspectives of Incremental Value and Incremental Risk.
MoT Incremental Value – the extra value that your company gains if a customer makes a positive decision (e.g. purchases something) during that moment of truth.
MoT Incremental Value = # of MoTs * The value of positive decision * The probability of positive decision
MoT Incremental Risk – the value that your company looses if a customer makes a negative decision (e.g. churn) during that moment of truth.
MoT Risk = # of MoTs * The value of negative decision * The probability of negative decision
# of MoTs is a simple count of how many times this moment of truth occurs over your entire customer base over a period of time, say, a month; The Value and Probability are the averages for that particular Moment of truth.
Using this method, you can assess which of the moments are more important, and begin the long project of focusing the organization on achieving excellence in the biggest moments.
It may be useful to see specific examples of moments of truth in different business lines. Below you will find three fairly comprehensive lists for Telecommunications industry and specifically Mobile Prepaid, Mobile Postpaid and Home Services products within telco.
MoTs in Mobile Prepaid #
Here is a sample list of the most impactful moments for Mobile Prepaid customers:
- Customer fills in the online lead form
- Customer purchase a new sim card (activates new sim, sets it on the phone, makes the first call, use the data and evaluate the service quality)
- Customer makes the first top-up / purchases packages.
- Customer runs out of account balance
- Data / Voice / SMS package expires
- Customer runs out of resources before data / voice / sms package expiration
- Mobile device change
- Visit to store
- Conversation with tele-sales
- Conversation with call center
- Visit/message in digital channel
- Customer service is interrupted significantly
- Complaint / grievance submission
- Port-out request
MoTs in Mobile Postpaid #
Here is a sample list of the most impactful moments for Mobile Postpaid customers:
- Customer fills in the online lead form
- Customer signs a new contract (activates new sim, sets it on the phone, makes the first call, use the data and evaluate the service quality)
- Receiving of (First) Invoice
- Allowance (Data/Voice/SMS) exceeded
- End of contract / offer / discount
- Add-on activation (e.g. e-sim for wearables)
- Device leasing expiration
- Mobile device loss
- Mobile device malfunction (bought, insured, leased from Telco)
- Mobile device change
- Visit to store
- Conversation with tele-sales
- Conversation with call center
- Visit/message in digital channel
- Customer service is interrupted significantly
- Customer receives a bill shock
- Customer is late to pay the bill
- Complaint / grievance submission
- Cancellation / port-out request
MoTs in Home services #
Here is the list of the most impactful moments for Home Services (home broadband, fixed telephony, cable TV) customers:
- Customer fills in the online lead form
- Customer signs a new contract
- Service installation at customer’s home
- Receiving of (First) Invoice
- End of contract / offer / discount
- Home device (router, TV set, etc.) malfunction or miss-configuration
- Home service quality degradation
- Home device change
- Visit to store
- Conversation with tele-sales
- Conversation with call center
- Visit/message in digital channel
- Customer service (broadband, or TV) is interrupted significantly
- Customer receives a bill shock
- Customer is late to pay the bill
- Complaint / grievance submission
- Technical issues resolution on-site
- Cancellation request
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