“The Total Client Experience”

1. “The Total Client Experience” Service Meeting and exceeding the expectations of everyone in the service equation Prepared for: The Securities Transfer Association Prepared by: David Driskill David Driskill Associates National Quality Review © 2006 David Driskill

2. Presentation Map • Working definition of a “client” • The Core Conditions: What all Clients Want • Minimum Expectations (x Client Type) and Selected Benchmark Data For Each Condition • A Prescription • What’s Up Ahead?

3. Key Caveat/Limit: This is all about service, not cost of service or investment performance • Service cost is driven by market forces and will only drive satisfaction when outside normal range or in relation to other service attributes • Value of stock can eclipse all other forces, but seldom does so over the strategic long-term Normative Range

4. What defines a client? A client is anyone in a position to feel satisfied or dissatisfied about what you do. And they are able to act on the basis of their satisfaction or dissatisfaction A completely inclusive definition of a client is both real and vital in an environment in which so many interdependencies exist.

5. The Core Conditions:What All Clients Want Dissatisfiers Satisfiers A “Dissatisfier” is a function in which perfect service is required but won’t improve satisfaction and any problem can engender dissatisfaction. A “Satisfier” is a function in which continuous improvement has a high probability of increased and sustainable clientsatisfaction. • Accuracy • Timeliness • Risk Management • Access • Utility • Problem Recovery • Responsiveness • New Means of Access • New Use of service Must at least compare favorably to market norms.

6. What Clients Want All Clients want their service provider to deliver accuracy and timeliness 1 + 1 = 2 Accuracy and timeliness are Dissatisfiers Perfect accuracy & timeliness will not increase satisfaction, but errors or being late will produce dissatisfaction.

7. Accuracy/Timeliness - Client Expectations External Internal

8. Accuracy/Timeliness Selected Benchmark Data • 1993 – 2003 overall manual transaction processing accuracy rates have dropped from high 90s to low 90s1 Best in Class stable in the high 90s • 1993 – 2003 overall manual financial processing timeliness rates have dropped from mid 90s to low 90s. Best in Class has risen - mid to high 90s • Approximately 40% of errors in manual financial transaction processing are the result of typos/keystroke errors. 2 • For many clients and many events timeliness is a subjective perception of duration between expected delivery versus actual delivery. The more accurate the expectation set, the closer client perception conforms with actual “clock time.” (In process follow-up or failure has a profound effect.) 1 One Reason: As more transactions are handled via automation, what we are left with are increasingly complex. 2N = 500,000 (+) transactions reviewed 1993 through 2003.

9. What Clients Want All Clients want their service provider to Manage Risk Risk Management is typically a Dissatisfier Perfect risk management will not increase satisfaction – unless many clients have risk problems that yours do not –but negative consequences and especially negative surprises will drive extreme dissatisfaction

10. Risk Management – Client Expectations External Internal

11. Risk Management Selected Benchmark Data • Ethical conduct – and the reports of the lack of ethical conduct – is a new fixture in the service landscape • When risk is explained – well and repeatedly - downside results can be experienced as less severe • Clients see transparency/process predictability (easy access to supporting data, full disclosure of underlying process, etc) as a lynchpin to risk management1 • In the global market, local knowledge and trading expertise is viewed as a critical component to risk management/reduction 1 The spirit, if not the reality, of the Sarbanes-Oxley Act is congruent with the principles of transparency and thus risk management

12. What Clients Want All Clients want their service provider to aggressivelyrecover from errors or other problems Problem Recovery is a Satisfier & Dissatisfier Ongoing improvement in this function has a high probability of positively impacting client satisfaction, but some clients (wealthy individuals, Issuers) enter relationship with higher expectations and problem repetition is dissatisfier.

13. Problem Recovery – Client Expectations External Internal

14. Problem Recovery Selected Benchmark Data • Since 1994 survey research1 has shown Problem Recovery to be a “predictor” of overall satisfaction among Brokers. • Among shareholders (large and small) overall satisfaction can go up after a problem - based on how the problem is handled • During problem recovery shareholders, Brokers and issuers prefer dealing with a person that; first, demonstrates and understanding of their situation and, second, can act affirmatively, quickly and with commitment on their behalf (versus web/VRU access) • Time becomes “elastic” during problem recovery. The more critical/risk related the problem the more time needs to be managed during recovery • Post problem, the next concern of the client will often be, “What will you do to prevent this error/risk from occurring again?” 1N = 12000 +

15. What Clients Want All Clients want the service provider to be responsive. Responsiveness is a Satisfier Ongoing improvement in responsiveness has a high probability of positively impacting clientsatisfaction.

16. Responsiveness – Client Expectations External Internal

17. Responsiveness Selected Benchmark Data • Different client segments define responsiveness differently. Wealthy individuals expect their provider to “walk their dog.” Brokers may define it as speed and competence. Issuers might define responsiveness as flexibility, being “proactive” and customized/ customizable reporting. • Issuers and Brokers have several “defining moments” (e.g. per year) in which there is a problem or special need. Wealthy individuals and shareholders have “traumatic events” like a death, a move or the like. How the provider responds creates a lasting relationship definition. • For shareholders, Brokers and issuers “Responsiveness” of client service staff and their managers is a statistical predictor of overall client satisfaction – particularly during problem recovery. • Even though responsiveness is often characterized (wrongly) as a “soft skill” it can have all of the consequences for a client of product, process and technology attributes. There is ample anecdotal and empirical evidence that responsiveness can be taught, learned and applied

18. What Clients Want All Clients want Access & Utility Access and Utility can be either Satisfiers or Dissatisfiers New ways to access the provider and new/more useful output can produce increases in satisfaction, but, over time, they become dissatisfiers as the market place normalizes

19. Access/Utility – Client Expectations External Internal

20. Access/Utility Selected Benchmark Data • Issuers have sharply rising expectations with regard to web access and utility of information and data. They want to be able to extract information the way they want, when they want and how they want. They also want interoperability – all of the service applications have to interact • When problems or complex questions arise (from the perspective of the shareholder, broker or issuer) there is still a very strong preference for access to a “live” service provider/expert** **Marshal Mcluhan’s predictive axiom about “high tech – high touch” appears to be true. The value and importance of personalized service (high touch) in a high tech environment is significant.

21. A Prescription • ‘Manufacture’ non–value added tasks/ transactions via automation and low process variation • Outsource (onshore, near-shore & offshore) BUT master the process first • Ensure that jobs locally and outsourced are ‘satisfying’ to prevent loss of knowledge capital • Ensure that your client contact and relationship management personnel have ‘world-class’ listening skills, an obsession with timeliness, and deep process knowledge

22. What’s up ahead? • Ethical conduct become a routine aspect of risk management • Increased demand for access customization • Increased pressures on service providers to “commoditize/ manufacture” and deliver more personalized service • Increased pressure on cost, lower fees with no loss in service • Increased demand for service providers to do special projects • Increased demand for global providers to deliver local expertise • Frequency of error may go down while severity may go up

23. The “High-Tech/High-Touch” service culture is fully realized As the global market place becomes “the” market place and our work process and technology become more capable of handling the routine, interpersonal communication, decision making, planning and execution becomes more important, complex and demanding.