1. CREATING A CULTURE OF CUSTOMER ADVOCACY SESSION: AP068

2. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent Microsoft APC 2011 ® Net Promoter and NPS are registered trademarks of Bain & Company, Inc., Fred Reichheld, and Satmetrix Systems, Inc. Creating a Culture of Customer Advocacy

3. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 3 Microsoft APC 2011_Customer Loyalty_FINALMEL Objectives for today Introduce/recap Net Promoter Score Link customer advocacy and company economics Introduce the Net Promoter System Discuss what the Net Promoter System could mean for you and your business

4. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 4 Microsoft APC 2011_Customer Loyalty_FINALMEL We measure our success by our clients' results Australian client share price performance Bain & Company Clients (14.9% CAGR) All Ordinaries (5.4% CAGR) Note: Dates are at end of month Source: Datastream; Bloomberg What makes Bain different? Practical answers Collaborative way of delivering results People passionate about your success

5. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 5 Microsoft APC 2011_Customer Loyalty_FINALMEL Advocacy has been an important, and evolving, aspect of Bain’s customer strategy practice Customer Strategy and Marketing Performance Improvement Mergers and Acquisitions Information Technology Results Delivery—Change Management Strategy Organisation 200420062011

6. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 6 Microsoft APC 2011_Customer Loyalty_FINALMEL Loyalty Leaders: Faster revenue growth Loyalty Leaders: Faster revenue growth and lower costs

7. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 7 Microsoft APC 2011_Customer Loyalty_FINALMEL Loyalty transforms economics

8. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 8 Microsoft APC 2011_Customer Loyalty_FINALMEL Companies whose customers agree 8% ‘Delivery gap’ Everyone believes 20 40 60 80 100% Percent of companies Companies that believe they provide a superior proposition 80% Source: Bain Customer Led Growth Diagnostic Questionnaire 0 Everyone believes, but few achieve

9. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 9 Microsoft APC 2011_Customer Loyalty_FINALMEL Tools to manage profits are stronger and far better understood than for loyalty Effective and well established Tools to measure and manage Profit Source: Bain & Company Ineffective and underdeveloped 100+ years track record with strict standards Widespread understanding throughout organisation Six sigma processes for quality Limited track record with no standards Qualitative understanding throughout organisation Ad hoc, complex survey processes Tools to measure and manage Loyalty

10. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 10 Microsoft APC 2011_Customer Loyalty_FINALMEL % Promoters 0-6 7-8 9-10 Net Promoter ® Score (NPS) minus % Detractors Extremely likely Extremely unlikely "On a scale 0-10, how likely is it that you would recommend our company to a friend or colleague?" Net Promoter® Score (NPS) evolved from Bain's loyalty work as the best simple metric

11. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 11 Microsoft APC 2011_Customer Loyalty_FINALMEL NPS ties directly to customer behavior and economics at the individual customer level… Promoters stay longer... 1 …buy more... 2 …and refer others more 3 Above the line = Recommendations Below the line = Criticisms DetractorPassivePromoter Source: Bain NA Financial Services NPS Survey 2008 (N=3,427)

12. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 12 Microsoft APC 2011_Customer Loyalty_FINALMEL Net Promoter score Credit card companies Net Promoter score SupermarketsRetail …and correlates with growth across many industries Source: Fred Reichheld, The One Number You Need to Grow; Analysis from Bain & Company Boston Sept 2003; Satmetrix Net Promoter Data 2001-Q12004, Nilson Report 2000-2004

13. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 13 Microsoft APC 2011_Customer Loyalty_FINALMEL NPS scores are relatively dispersed within most sectors of the Australian economy Note: TPG and iiNet tied for #2 position in Home Broadband Source: Bain Australian NPS Survey (2010)

14. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 14 Microsoft APC 2011_Customer Loyalty_FINALMEL The basics: “Eliminating nuisance factors” Satisfaction Ordinary services delivered exceptionally Exceptional services/features delivered well Loyalty/Advocacy Differentiators: “Creating the wow-factor” Loyalty leaders go beyond delivering “the basics” to design and deliver the “wow-factor”

15. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 15 Microsoft APC 2011_Customer Loyalty_FINALMEL Serving loyal customers is a lot more fun Net Promoter Score 24%Net Promoter Score 71%

16. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 16 Microsoft APC 2011_Customer Loyalty_FINALMEL Will employees who are not advocates create an army of Promoters? ? Net Promoter Score 24%Net Promoter Score 71%

17. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 17 Microsoft APC 2011_Customer Loyalty_FINALMEL The Promoter Flywheel Enthusiasm, creativity Excellence, trust, value Growth, opportunity Employee NPS Customer NPS Buy from here! Come work here! Profitable, sustainable organic growth

18. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 18 Microsoft APC 2011_Customer Loyalty_FINALMEL Positive team member behavior and attitude leads to customer promoters Most important levers DISGUISED CLIENT DATA Friendliness Clear explanations Honest/manages expectations Empathy Thinking with the customer Right resources and systems Subject knowledge Clear number Waiting time (service level) Transferring to other desks

19. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 19 Microsoft APC 2011_Customer Loyalty_FINALMEL Approach: Create real change via burning platform and frontline pull for customer focus Burning platform via -NPS competitive rankings -NPS economics analysis Universal customer loyalty language: NPS Prioritisation of product, process and system improvements Front-line employees, supervisors Functional managers and process leaders Snr. leaders Process improvement Closed feedback loops at critical touchpoints -Measurement -Individual customer dialog Frontline employee empowerment and NPS mindset

20. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 20 Microsoft APC 2011_Customer Loyalty_FINALMEL Approach: Listen, learn and act Listen Learn Who How What UnderstandPrioritise Design Track Act Deliver Drive to action with improvements to customer experience Capture feedback – what’s great, what’s not Prioritise actions

21. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 21 Microsoft APC 2011_Customer Loyalty_FINALMEL Listen Learn Who How What UnderstandPrioritise Design Track Act Deliver Identify most important interactions, e.g. -Plan preparation -Annual review Call customers and capture feedback (by third party) Ask for permission to call back At the front line: Build feedback into daily routines -Account planning -Relationship management -Coaching At the centre: Improve end-to-end customer experiences -Fix processes and systems -Improve support and tools for the frontline Approach: Build customer focus into the way you do business Pass feedback to frontline Follow-up with customers (by frontline) -Capture in-depth feedback -Understand key issues -Resolve problems -Ask for referrals Develop personal and team action plans

22. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 22 Microsoft APC 2011_Customer Loyalty_FINALMEL Companies that have benefited from NPS focus include a host of familiar names Lego tied employee bonus to NPS improvement and achieved 20% increase in NPS over a 2-year period By focusing on customers, additional 10% of its business has attained leadership/co-leadership positions in NPS in 2-year time frame. Accounts where NPS improved grew revenue by 69% within a year After launching NPS programs in 2007, achieved 16% increase in relative NPS, 23% increase in operational NPS and record low churn of 1.2% (20% reduction) in one- year time span Focus on closed-loop feedback system with its policyholders, potential customers, claimants, and agents has led to 8.5% increase in loyalty NPS and 15% in claims NPS over a 2- year period

23. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 23 Microsoft APC 2011_Customer Loyalty_FINALMEL “It [NPS] is the first thing I look at when I get to my office every morning.” Walt Bettinger President and CEO NPS has become central to management metrics and activities at Charles Schwab

24. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 24 Microsoft APC 2011_Customer Loyalty_FINALMEL Schwab was experiencing a serious decline in customer acquisition and revenue Source: OneSource; Bain Experience Experiencing a serious decline in revenue and new customer acquisition, and increased attrition NPS well behind its key competitors Primary objective was to drive revenue growth by dramatically improving the customer experience

25. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 25 Microsoft APC 2011_Customer Loyalty_FINALMEL Schwab discovered promoters were six times more valuable than detractors

26. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 26 Microsoft APC 2011_Customer Loyalty_FINALMEL Schwab built NPS into the way they do business Weekly coaching ‘huddles’ NPS as key branch metric Executive Leadership Cross- functional teams to drive priorities Proven value of loyalty Closed-loop feedback HR: Hiring, training, job descriptions etc. Client feedback communities Touchpoint priorities Case for change Feedback loops Business processes

27. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 27 Microsoft APC 2011_Customer Loyalty_FINALMEL “It’s really helpful for the branch manager to come back to the team and say, “Let’s brainstorm as a group on how to improve our score.”” Financial Consultant “We’ve identified technological improvements to the website… the whole front-line feedback process has been really helpful.” VP, Client Loyalty “You really need to be committed. It’s not something you can just look at part-time or occasionally.” VP, Branch Manager “Those are probably the best conversations I have at Schwab. To call a client in the first 24 hours after they’ve filled out a survey, has a tremendous impact, even if they are unhappy.” VP, Branch Manager Closed loop feedback in action

28. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 28 Microsoft APC 2011_Customer Loyalty_FINALMEL Focusing on the customer experience at Schwab has driven significant value Retail NPSRevenue

29. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 29 Microsoft APC 2011_Customer Loyalty_FINALMEL Don’t ask for feedback unless you’re prepared to listen, learn and act “I’m sorry, dear. I wasn’t listening. Could you repeat what you’ve said since we’ve been married?”

30. This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 30 Microsoft APC 2011_Customer Loyalty_FINALMEL What it means for you Know your clients: Segment by value and advocacy – know advocacy economics Learn directly from customers and close the loop with them – listen and act Build feedback disciplines into your weekly routine – the system, not just the metric Share best practices and ideas with others – inside and outside Leverage the power of referrals – build active promoters