Implementation of a Global Customer Loyalty Process

1. Implementation of a Global Customer Loyalty Process Year 1: Successes and Lessons Air Products & Chemicals

2. Air Products and Chemicals • $5.5B Sales, 17,000 employees worldwide • Complex, highly matrixed organization • 2 Business Groups and 4 regions worldwide • 6 Divisions with sales to >50 countries • 16 business units with multiple product lines • Varying size, complexity and autonomy • Serve multiple markets with a variety of different business models • Industrial chemicals & gases • Electronics (semiconductor industry) • Petrochemical & energy • Home Healthcare • Performance Materials

3. Air Products And Chemicals Customer Loyalty Process The Challenge (Spring 2001)… • CEO: • Develop a single, global approach to measure how effectively we are satisfying customers • Business Units: • We don’t need a one size fits all corporate solution but… • We need actionable information to support our strategy and the tools to identify opportunities & take action

4. “Customer Loyalty Process”Key Elements • Ongoing process to capture and utilize the Voice of the Customer • Listen to key customers • Understand the messages • Focus on opportunities • Take Action • Using a company-wide model for “Customer Loyalty” • Measures the strength of the customer relationship • Delivers credible, actionable information and is linked to other key business processes • Strategy development/validation • Customer segmentation (needs based) • Continuous Improvement

5. LISTEN UNDERSTAND FOCUS ACT Take Action & Sustain Improvement Listen to Customers Understand & Communicate Focus on Opportunities • External Input • Loyalty Survey • Call Reports • Complaints • Customer Scorecards • Internal Data • Accts Receivable • Retention Rates • Understand: • Strengths & areas of weakness • Identify Key Drivers • Communications -Internal/External • Input to: • Segmentation • Sales Process & Business Strategy • Other Customer facing processes • Continuous Improvement (CI) • Integrate Voice of the Customer with an Improvement Process • Prioritize Customer requirements with business objectives • Identify and foster organizational buyin on Critical Customer Requirements • Key Elements • Leadership Support • Resources • Meaningful goals & measures • Action Teams Deployed • Communications • Accountability • Apply Learnings • Sustain Gains Continuous Improvement by using the Voice of the Customer Customer Loyalty Process

6. Global Customer Loyalty SurveyObjective: Credible, actionable information • “Meaningful” sample of existing customers • Key customers as defined by the business units • 20 minutes long in “major” local languages • Rotated through Air Products on a quarterly basis (12…24 month cycle) • Survey Components • “Core” elements utilized globally • Loyalty, Brand, problem resolution & verbatim • Business specific performance attributes • Importance, performance & competition • Basis for “actionable” information • As developed by the business units

7. Key Survey Deliverables • A “relationship metric” (Loyalty) that distinguishes between business models • Analysis of performance attributes • Competitive Comparisons • Effectiveness at “Problem Resolution” • Access to verbatim improvement suggestions • Account specific issues (“Red Alerts”)

8. Satisfaction Rebuy Recommend SECURE CUSTOMERS Customer Loyalty Model FAVORABLE CUSTOMERS INDIFFERENT CUSTOMERS VULNERABLE CUSTOMERS AT RISK CUSTOMERS

9. Customer Loyalty ResponsesMetricdistinguishes between business models 21% Secure is “geographic” B2B Median Division A Division C Division D Division B High switching costs Low switching costs

10. Loyalty Driver Analysis Business Specific Performance Attributes High Most Important to Customers Relative Strength Critical Issues The correlation between an attribute and Loyalty Attribute Impact Secondary Issues Maintenance Items Low Low High Performance Gap The Customers’ perception of our performance relative to their need

11. Attribute Impact Sales Support Customer Service Product Supply Technical Support E-Business Capabilities Overall Supplier Relationship Loyalty Driver AnalysisBusiness Division H 1 Communicate regarding new products 2 Sales reps visit frequently 3 Sales reps have tech knowledge 4 Sales reps take ownership for problems 7 Sales reps effectively coordinate resources 8 Sales reps take time to understand 10 Easily reach a knowledgeable CS rep 11 CS reps resolve problems quickly 12 Provide delivery confirmation 13 Provide complete/accurate invoices 15 Consolidated invoices minimize burden 16 Provide error-free delivery 17 Provide consistent/reliable product 22 Help you operate your site safely 25 Respond to supply problems 30 Easy to reach a knowledgeable TS rep 32 Product increases productivity/efficiency 33 Provide innovative products/services 34 Provide safety experts 36 Ability to place orders online easily 37 Provide needed information online 38 Understand your e-business needs 39 Easy to do business with 42 Help you lower cost of business 43 Products & services are a good value 44 Manage activities in an integrated manner 45 Understand your business needs Relative Strength Critical Issues High Secondary Issues Maintenance Items Low High Performance Gap

12. Communicating the Results via Online Access • Provided open access* for all results to all employees (17,000) on line • Up front filtering tools to focus on “User Relevant” information • Advantages: • Cost effective • Flexible • Easily updateable • Challenges: • Training & Understanding * Note: We maintain absolute confidentiality of anonymous respondents

13. Results made available to the entire enterprise online

14. Turning Data into Action“Where the rubber meets the road” • Integrating the Voice of the Customer into our Continuous Improvement Process • Critical Success Factors • Business Leadership support • Accepted improvement process tied to the annual business operating cycle • Credible customer input • Meaningful tools to focus on opportunities • Measurement & Accountability • Annual individual performance metrics • Scorecards, etc

15. What How Do It Customer Loyalty Voice of the Customer Customer Loyalty is a Key Input for our Continuous Improvement Process Cycle tied to annual operating plan Prepare Focus & Prioritize Plan Implement Learn Start of fiscal year • Develop understanding of key drivers and gaps from the Customers’ perspective • Align with business strategy and objectives (financial & non-financial) • Establish high level plan & identify resources

16. A Tool to Focus on OpportunitiesQuality Function Deployment Customer Input on their needs & our performance Critical Customer Requirements Business Input on goals and the impact of improvement QFD that is completed with a cross functional team And facilitated by an “expert” Results in a remarkable buy-in for the results

17. QFD/House of Quality • Used for “turning” customer input into product, process and organizational direction setting • Not “new”; around since the 1970’s Reference: “Quality Function Deployment, Linking a Company with its Customers” by Ronald G.Day Organizational Capabilities Customer Attributes • Planning Matrix Inputs • Customer Need • Our Performance • Competitive performance • Business Goals • Business/sales impact Critical Customer Requirement Contribution

18. Examples of Customer Improvement Opportunities • Division A • Responsiveness • Problem Resolution • Division B • Lowering Cost of business • Problem Resolution • Division C • Invoicing & ease of order placement • Problem resolution • Division D • Lowering Cost of business • Flawless execution/Problem Resolution

19. Celebrate the Successes • Initiated a global, one company Customer Loyalty Process (Voice of the Customer) • ~2500 key customers worldwide responded • Key messages are evident • Established a leverage point to drive action • Customer Loyalty & Continuous Improvement • Demonstrated value to many “in the middle”“I wish I knew at the start what I know now”

20. The Future direction… • Evolving the survey content based on feedback from internal & external customers • Provide added value by enabling analysis for customer segments within a business unit • Examine linkages between : • Customer Loyalty & Financial Performance • Employee Engagement & Customer Loyalty • Improve our ability to collect sufficient, valid customer contact data (especially in B2B) • Integrate complaint feedback with survey • “Remind” the organization that Customer Loyalty does not equal a survey !

21. Table 1.1 Problem Solving Research

22. Table 1.1 Problem Solving Research (Cont.)

23. Table 1.1 Problem Solving Research (Cont.)