Direct Marketing Services CUSTOMER CENTRIC TRANSFORMATION

1. Direct Marketing ServicesCUSTOMER CENTRIC TRANSFORMATION As-Is Campaign Management Process Analysis July 26, 2000

2. TABLE OF CONTENTS • I. Purpose of this Document • II. Process Enhancement Overview • Process Enhancement Approach • Tasks Completed in Analysis Workstep • Interview List • III. Process Mapping Conventions • Process Level Definition • Standard Process Mapping Symbols • Standard JCPDMS Abbreviations • Additional Analysis Format • SIPCO (Suppliers, Inputs, Process, Customers, Outputs) Diagram • Process Change Diagram • Process Map Example • Level I • Level II • Level III • Level IV • Additional Analysis – SIPCO • IV. JCPDMS As-Is Campaign Management Process Analysis • As-Is Campaign Management Process Overview • Sub-Process Maps (Level III, IV & SIPCO) • Plan Campaign • Select & Process Leads • Develop Campaign • Execute Campaign • Track Campaign • Analyze Campaign

3. PURPOSE OF THIS DOCUMENT • Review process enhancement approach • Explain & illustrate process mapping conventions • Review & confirm JCPDMS as-is campaign management process analysis

4. PROCESS ENHANCEMENT OVERVIEW

5. Phase 1 of the Campaign Management project is divided into four distinct work steps. In each workstep, Process Enhancement is run concurrently with other workstreams. PROCESS ENHANCEMENT APPROACH Project Start-up Future Phases Analysis Design Construction Implementation • Activities: • Understand current marketing organization, processes, tools used, information flows & performance measures • Document as-is Campaign Management process using well-defined mapping conventions • Analyze processes and identify enhancement opportunities • Activities: • Review functionality of chosen tool(s) • Review best practices • Identify process gaps & propose changes • Develop & conduct process enhancement workshops with end-users • Design to-be marketing processes • Document & confirm process enhancements • Activities: • Finalize process enhancement design • Communicate to-be process maps • Develop process-related tools & templates • Activities: • Implement to-be processes • Conduct user training sessions

6. The Analysis workstep was conducted May 1 through June 20. Below are the tasks completed. • TASKS COMPLETED IN ANALYSIS WORKSTEP • Reviewed available as-is campaign management process maps • Identified information gaps in campaign management sub-processes • Obtained information through interviews • Synthesized all process information • Re-defined process levels • Mapped as-is level I, II, III, & IV processes • Conducted additional analysis of suppliers, inputs, customers, and outputs for each level III sub-process • Understood current business rules through interviews • Categorized and documented current business rules

7. This is a list of JCPDMS employees who were interviewed and answered inquiries about as-is campaign management processes and related topics. • INTERVIEW LIST

8. PROCESS MAPPING CONVENTIONS

9. Campaign Management (CM) processes have been mapped from a level I process to a level IV sub-task map. The benefit of process maps is to visualize and document CM processes across the Marketing organization in a uniform and consistent way. Below is an overview of the details that will be provided at each level in the process maps. • PROCESS LEVEL DEFINITION • Each process, activity and task is assigned a number. This number indicates the level and sequence of each process, activity, or task. Level 0 Operations Marketing HR Finance Level I Processes to support the functions 1.0 Campaign Management Major activities to support the process Level II 1.1 1.2 1.3 Series of tasks needed to complete an activity Level III 1.2.1 1.2.2 1.2.3 Series of sub-tasks required to complete a task 1.2.2.1 1.2.2.2 1.2.2.3 Level IV

10. JCPDMS standard mapping symbols have been used to ensure that processes are documented in a manner comprehensible to the Marketing organization. • STANDARD PROCESS MAPPING SYMBOLS

11. The following abbreviations have been used throughout the process maps to describe the departments, titles and tools involved in each process step. • STANDARD JCPDMS ABBREVIATIONS

12. The following SIPCO format have been used to document additional analysis on Suppliers, Inputs, Customers, Outputs of a process. • ADDITIONAL ANALYSIS FORMAT – SIPCO (Suppliers, Inputs, Process, Customers & Outputs) Diagram Title of process Who receives the outputs of the process Suppliers that provide inputs to the process Title Supplier(s): Process Map: Customer(s): Inputs provided to this business process Results of this process Level III or IV graphical depiction of the process Duration of time taken to complete process Cycle time: actual time to complete process Input(s): Output(s): Elapsed time: total time elapsed from start to finish Cycle Time: Tool Used: Commentary: Elapsed Time: Headcount: Issues and opportunities associated with the process Performance Measures: How performance of this process is measured Tool used during the business process Total headcount involved in the business process

13. When the Design workstep of Process Enhancement begins, it will be necessary to identify and document improvement opportunities in the JCPDMS processes. To facilitate this effort, the following table will be used. It will link the as-is steps to proposed to-be steps, and provide justification for changing current steps, or adding additional steps. • ADDITIONAL ANALYSIS FORMAT – Process Change Diagram Justifications for change in processes As-is activity step number To-be activity step number Description of process change Description of relevant Best Practices related to particular activity step Description of as-is process step Description of to-be process step

14. PROCESS MAP EXAMPLE

15. This diagram illustrates how level I processes will be mapped, using a simple example. • LEVEL I PROCESS Level 0 Description The necessary processes that must take place in order to accomplish construction of a house. 2.0 Build a House Level I

16. This diagram illustrates how level II processes will be mapped, using a simple example. • LEVEL II PROCESS 2.0 Build a House Level II Description __________________ __________________ __________________ __________________ Description __________________ __________________ __________________ __________________ Description __________________ __________________ __________________ __________________ Description __________________ __________________ __________________ __________________

17. This diagram illustrates how level III processes will be mapped, using a simple example. • LEVEL III PROCESS Level III

18. This diagram illustrates how level IV processes will be mapped, using a simple example. • LEVEL IV PROCESS Level IV

19. This SIPCO diagram illustrates additional analysis that will be conducted for processes. Using a simple example, it shows how to identify suppliers, inputs, customers and outputs, as well as other pertinent details about the process. • ADDITIONAL ANALYSIS – SIPCO (Suppliers, Inputs, Process, Customers & Outputs) 2.2 Design House • Suppliers: • contractors • neighbors • architects Process Map • Customers: • home owner • contractor • Inputs: • research • referrals • proposals • Outputs: • architect contract • architect blueprints • design for house Cycle Time: 15 to 60 business days Tool Used: computer, design tool Commentary: Hiring the most qualified architect is a critical task when designing a house. Headcount: 3-4 Elapsed Time: 15 to 60 business days Performance Measures: quality of design

20. JCPDMS AS-IS CAMPAIGN MANAGEMENT PROCESS ANALYSIS

21. Campaign Management Process To date we have reviewed a total of six highly inter-related sub-processes under the “Campaign Management umbrella.” During the Analysis workstep, we mapped the 6 as-is sub-processes: Plan Campaign, Select & Process Leads, Develop Campaign, Execute Campaign, Track Campaign and Analyze Campaign. The maps mainly reflect JCPenney Market sub-processes. • AS-IS CAMPAIGN MANAGEMENT PROCESS OVERVIEW

22. AS-IS CAMPAIGN MANAGEMENT PROCESS OVERVIEW • As-Is Level II Process Description • Create TM scripts • Develop messages & creative for DM • Gain approval for execution • Train TM agencies • Personalize mail • Produce mail • Monitor TM agency results • Resolve script & training issues • Track campaign goal achievement • Determine actions necessary • Leverage learning from previous campaigns • Develop campaign plan • Review campaign plan • Justify new campaigns • Revise & finalize campaign plan • Distribute campaign plan • TM agencies execute solicitation calls • Sign off DM kits • Prepare postage • Drop mail • Distribute samples to related departments • Fulfill mail • Load input files • Provide compliance info. • Select lead files • Process leads • Process keycodes • Extract keycoded files • Transfer lead information to DM vendors & TM agencies • Report campaign costs • Analyze campaign economics • Generate Best Estimate reports to analyze campaign results Outcome: Executed campaigns (sales & profits)

23. Sub-Process 1.1Plan Campaign

24. AS-IS LEVEL III PROCESS MAP • 1.1 Plan Campaign

25. AS-IS LEVEL IV PROCESS MAP • 1.1.1 Develop Preliminary Campaign Plan

26. LEVEL III ANALYSIS OF SUPPLIERS, INPUTS, CUSTOMERS & OUTPUTS • 1.1 Plan Campaign 1.1 Plan Campaign Sub-Process Process Map: Suppliers: Actuarial Target Marketing Product & Channel Mgt. Marketing Finance – Budgeting Telemarketing: Outside list brokers Customers: Marketing Finance Campaign Managers Marketing Operations Marketing Management - MCCM Inputs: Profitability Profitability by depth of file (i.e. score for customer cluster) Product information Best Estimates Flagging purchases Circulation by product by file, state counts Annual Budget • Outputs: • Campaign plans Cycle Time: 2 weeks Commentary: Changes in campaign plan affects all downstream activities. Tools Used: NICAS, Marketing Database, Best Estimates Elapsed time: 2 weeks Headcount: 7 Performance Measures: sales/hour, sale/contact, depth of file, profit, RIP (Response, Issue & Paid rates)

27. Sub-Process 1.2Select & Process Leads

28. AS-IS LEVEL III PROCESS MAP • 1.2 Select & Process Leads

29. AS-IS LEVEL IV PROCESS MAP • 1.2.1 Load Input Data

30. AS-IS LEVEL IV PROCESS MAP • 1.2.2 Select Files

31. AS-IS LEVEL IV PROCESS MAP • 1.2.3 Assign & Apply Keycodes & Campaign Codes

32. AS-IS LEVEL IV PROCESS MAP • 1.2.4 Create Post-Keycode Files

33. AS-IS LEVEL IV PROCESS MAP • 1.2.5 Transfer Information to DM Vendor/TM Agency

34. LEVEL III ANALYSIS OF SUPPLIERS, INPUTS, CUSTOMERS & OUTPUTS • 1.2 Select & Process Leads 1.2 Select & Process Leads Sub-Process Process Map: Suppliers: Planning Telemarketing Production & Compliance Target Marketing Customers: Telemarketing agencies Direct mail personalization vendors Inputs: Campaign plan Telemarketing ratio sheet Campaign coding information Compliance information Scoring • Outputs: • Lead files Cycle Time: 4-6 weeks Tools Used: approx. 90 different tools, e.g. Marketing database, TMLM Commentary: Campaign plan and availability of input files are critical for lead selection process. Elapsed time: 6-8 weeks Headcount: 33 Performance Measures: CAM Schedules – timeliness

35. Sub-Process 1.3Develop Campaign

36. AS-IS LEVEL III PROCESS MAP • 1.3 Develop Campaign

37. AS-IS LEVEL IV PROCESS MAP • 1.3.1 Develop Telemarketing Script

38. AS-IS LEVEL IV PROCESS MAP • 1.3.2 Gain Approval for Telemarketing Script

39. AS-IS LEVEL IV PROCESS MAP • 1.3.3 Train Telemarketing Agency

40. AS-IS LEVEL IV PROCESS MAP • 1.3.4 Develop Direct Mail Creative

41. AS-IS LEVEL IV PROCESS MAP • 1.3.5 Gain Approval for Direct Mail Creative

42. AS-IS LEVEL IV PROCESS MAP • 1.3.6 Produce Direct Mail Kit

43. AS-IS LEVEL IV PROCESS MAP • 1.3.7 Personalize Direct Mail Kit

44. LEVEL III ANALYSIS OF SUPPLIERS, INPUTS, CUSTOMERS & OUTPUTS • 1.3 Develop Campaign 1.3 Develop Telemarketing Campaign Sub-Process Process Map: Suppliers: Mktg. Mgt. – Planning Mktg. Mgt. – MCCM Telemarketing Law Department Customers: TM agencies Inputs: Campaign plans Previous scripts Training Approvals • Outputs: • Scripts Cycle Time: 2 weeks Tools Used: previous scripts, script templates in Word Commentary: Campaign plans are critical for campaign development process. Elapsed time: 8-10 weeks Headcount: 20 Performance Measures: None

45. LEVEL III ANALYSIS OF SUPPLIERS, INPUTS, CUSTOMERS & OUTPUTS • 1.3 Develop Campaign 1.3 Develop Direct Mail Campaign Sub-Process Process Map: Suppliers: New Business Purchasing Mktg. Mgt. – Planning Product Development Mktg. Mgt. – MCCM Law Department Marketing Operations Outside suppliers Customers: New Business Outside suppliers Inputs: New fulfillment materials/kits Pricing & supplier information Campaign plans Previous creative Compliance info. New product specifications Approvals Lead counts • Outputs: • Mailing schedules • Solicitation material specs. • Direct mail kits Cycle Time: 4-8 weeks Tool Used: MARS Commentary: Cycle time various by campaign complexity & size. It is also dependent on whether new kits have to be developed. Elapsed time: 10-16 weeks Headcount: 24 Performance Measures: delivery timeliness & accuracy

46. Sub-Process 1.4Execute Campaign

47. AS-IS LEVEL III PROCESS MAP • 1.4 Execute Campaign

48. AS-IS LEVEL IV PROCESS MAP • 1.4.3 Sign Off Direct Mail Kit Production

49. AS-IS LEVEL IV PROCESS MAP • 1.4.4 Prepare Direct Mail Postage

50. AS-IS LEVEL IV PROCESS MAP • 1.4.5 Drop Mail