1. Customer Value Management November, 2002 From anywhere… to anyone Janet LeBlanc Director, Canada Post

2. From anywhere… to anyone Introduction to Customer Value Management Presentation Objectives Define customer value management (CVM), Understand the difference between customer value and customer satisfaction, describe key CVM concepts and tools, and communicate the importance of measuring quality in the eyes of your clients.

3. From anywhere… to anyone Introduction to Customer Value Management WHY invest in CVM? Canada Post will be a world leader in providing innovative physical and electronic delivery solutions, creating value for our customers, employees and all Canadians

4. From anywhere… to anyone Introduction to Customer Value Management What is Customer Value? QualityPrice VALUE Source: Adapted from Customer Satisfaction in Practice by the American Productivity & Quality Center, 1998

5. From anywhere… to anyone Introduction to Customer Value Management Customer Value Defined

6. From anywhere… to anyone Introduction to Customer Value Management Quality Attributes Performance Rating Importance Weight ABCXYZ Product Information 5068 Advertising and Promotion 2067 Customer & Consultation 2096 Customized Solutions 1087 100

7. From anywhere… to anyone Introduction to Customer Value Management Stage One Stage TwoStage ThreeStage Four Minimum Requirements Customer Focus Customer Attitudes Competitive Focus on Targeted Markets Conformance Quality Delivering what we promise Meeting standards Customer Satisfaction Providing what customers want Responding to customer complaints Customer Loyalty Retaining our customers Getting them to recommend us Customer Value Meeting critical needs of targeted customers Outperforming competitors Creating new, unique benefits 21st Century Growth Company Source: Adapted from Managing Customer Value by Bradley T. Gale, (New York, The Free Press, 1994)

8. From anywhere… to anyone Introduction to Customer Value Management I can’t get no (customer) satisfaction… Satisfaction in itself does not lead to customer loyalty Positive empirical relationship between value focus and link to market share Where are leading-edge companies headed? Satisfaction = Satisfy Existing Customers Better Value = Improve Your Competitive Position Attract and Retain Targeted Customers

9. From anywhere… to anyone Introduction to Customer Value Management Satisfaction Current Service The Entire Customer Relationship Lag Indicator Lead Indicator Company Performance Company Vs. Competition Tenuous Link to Business Performance Proven Relationship to Business Performance Value

10. From anywhere… to anyone Introduction to Customer Value Management INPUTS Customer Value Management Council External/Internal Data Sources OUTPUTS Customer Value Tools and Data Competitive Value Proposition Customer Loyalty and Market Share Analysis GOAL To establish CVM as a core competence for the Canada Post Group of Companies. KEY MEASUREMENTS Customer Loyalty Market Share ProfitabilityCustomer Retention DEFINITION Customer Value Management is a process designed to develop and execute value-based strategies which impact marketing, strategic planning, competitive positioning, branding, pricing, and selling.

11. From anywhere… to anyone Introduction to Customer Value Management Ideal Customer Value Process Capabilities Process Capabilities Performance Improvement Performance Improvement CUSTOMER-CENTRIC

12. From anywhere… to anyone Introduction to Customer Value Management 1.Assess Market Opportunity 2. Conduct Analysis 3. Commit to a Value Proposition 4. Measure and Reward Performance Customer Value Management

13. From anywhere… to anyone Introduction to Customer Value Management Value Analysis Tools Value Scorecard Price Performance Profile Value Map Head-to-Head Comparisons

14. From anywhere… to anyone Introduction to Customer Value Management Price Performance Profile

15. From anywhere… to anyone Introduction to Customer Value Management Value Map

16. From anywhere… to anyone Introduction to Customer Value Management Value Scorecard

17. From anywhere… to anyone Introduction to Customer Value Management Head-to-Head Comparisons (Average)

18. From anywhere… to anyone Introduction to Customer Value Management Identify Value Drivers Measure Value Creation After Transaction Business Process Improvement Conduct Baseline Study On-going Transactional Surveys Develop Action Plans Measure Market Perception On-going Market Surveys feedback

19. From anywhere… to anyone Introduction to Customer Value Management The Value Proposition Deployment Process Define/ Refine Value Proposition Define/ Refine Value Proposition Build Commitment To Value Proposition Build Commitment To Value Proposition Process & Organization Gap Analysis Process & Organization Gap Analysis Changes To Deliver Value Proposition Changes To Deliver Value Proposition Internal Tracking & Measurement Internal Tracking & Measurement Tracking Market Impact Tracking Market Impact Plan/Do/Check/Act Internal Management/ Staff Internal Management/ Staff Group of Companies Group of Companies

20. From anywhere… to anyone Introduction to Customer Value Management Customer Value Yields Big Dividends Doubled profits in a single year Moved from being a market “nicher” to the market leader Wireless Telecom Company Heavy Equipment Dealership Underground Mining Equipment Manufacturer / Distributor International Health and Leisure Firm 50% reduction in customer churn Improved equipment delivery time from 10 days to 2 days Total estimated bottom line contribution = $4.5M Doubled sales revenue – from $250M to $500M+ Tripled market share in a strategically important market: 4% - 12% Increased employees from 600 to 1000+ Achieved record profitability last year Reclaimed more than $8mm in lost sales 30% improvement in on-time deliveries Improved margins on equipment repairs from 11% to 28% Source: Adapted from Customer Satisfaction in Practice by the American Productivity & Quality Center, 1998

21. From anywhere… to anyone Introduction to Customer Value Management MODELING EMPLOYEE VALUE The Right Workforce ” Positive Turnover AcquisitionRetention Employee Value Relative Compensation Relative Job Quality Base Salary Work Life Balance Brand Equity Manager Quality BenefitsBonus Pay Equity

22. From anywhere… to anyone Introduction to Customer Value Management The “Value” of Customer Value Strengthen value propositions – value is the basis for customer decisions Identify responses with the greatest impact on customers’ future purchase behaviour Hone in on winning client strategies Discipline and focus—across all functions Dramatic impacts and performance gains The key to attracting, satisfying, and retaining customers.

23. Customer Value Management November, 2002 From anywhere… to anyone November, 2003