Improving a portfolio company’s CX post-acquisition
To improve CX, it is critical to first understand if and how it has adapted to today’s digital landscape. A thoughtful CX road map can help to:
- Map end-to-end touchpoints between a company and its key customer segments
- Listen to and assess customer sentiment
- Design a digitally enhanced, end-to-end “future state” for the customer journey
- Develop, prioritize and plan the initiatives required to improve the CX
These steps will help to drive revenue by optimizing the CX for conversion, improving customer satisfaction and brand loyalty — as well as increasing efficiency and agility by simplifying, standardizing and automating back-end processes.
For example, a PE-backed European telecommunications company needed to improve its operating model to keep pace with the rapidly changing telecom market in Western Europe. To accomplish this, they wanted to better understand exactly what their customers needed from them. EY performed a rigorous data collection and modeling exercise using data from all customer touchpoints that enabled the company to:
- Increase customer retention rates
- Identify areas of the business requiring more resources and technical upgrades to better fit customer needs
- Set discount rates for customers with high churn propensity
- Discover almost US$2m in revenue losses and improve efficiency and timeliness in the company’s call center
- Develop and implement a marketing strategy to drive ROI, competitive differentiation and customer loyalty
This example demonstrates how the combination of a customer-centric philosophy, data-driven approach and digital aspiration can transform how a company thinks about, interacts with and serves its customers.
COVID-19-era CX: key considerations for PE firms and Portco CEOs
Many portfolio companies are grappling with the work and costs involved in improving CX. CEOs can begin by preparing a road map as described above; however, the most important aspect of any strategy in today’s environment is flexibility.
Over the next 6-18 months, much of what was considered normal economic activity — dining in restaurants, going to the salon, traveling — is now dependent on the threat (and resulting restrictions) posed by the pandemic. Companies must remain alert to customer pain points and adapt their services accordingly. If people must stay home, the product must go to them. If they can visit a business, they must feel safe doing so.
Cost management will remain critical as CEOs reposition their organization to serve customers and differentiate themselves in this new environment. While the pandemic does serve as a forcing mechanism for experience-led transformation, this necessary pivot may be detrimental to profit margins, at least in the short term. Now, investors will need to scrutinize the impact of this shift across the portfolio and determine whether their new cost-to-serve model is sustainable over the long term.