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

2. 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. 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. 4 “Customer Loyalty Process” Key Elements Ongoing process to capture and utilize the Voice of the Customer 1.Listen to key customers 2.Understand the messages 3.Focus on opportunities 4.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. 5 LISTEN ACT FOCUS UNDERSTAND Continuous Improvement by using the Voice of the Customer External Input Loyalty Survey Call Reports Complaints Customer Scorecards Internal Data Accts Receivable Retention Rates External Input Loyalty Survey Call Reports Complaints Customer Scorecards Internal Data Accts Receivable Retention Rates Listen to Customers Understand: Strengths & areas of weakness Identify Key Drivers Communications -Internal/External Input to: Segmentation Sales Process & Business Strategy Other Customer facing processes Understand: Strengths & areas of weakness Identify Key Drivers Communications -Internal/External Input to: Segmentation Sales Process & Business Strategy Other Customer facing processes Understand & Communicate 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 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 Focus on Opportunities Key Elements Leadership Support Resources Meaningful goals & measures Action Teams Deployed Communications Accountability Apply Learnings Sustain Gains Key Elements Leadership Support Resources Meaningful goals & measures Action Teams Deployed Communications Accountability Apply Learnings Sustain Gains Take Action & Sustain Improvement Customer Loyalty Process

6. 6 Global Customer Loyalty Survey Objective: 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. 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. 8 Customer Loyalty Model VULNERABLE CUSTOMERS FAVORABLE CUSTOMERS INDIFFERENT CUSTOMERS AT RISK CUSTOMERS SECURE CUSTOMERS Satisfaction Rebuy Recommend

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

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

11. 11 Loyalty Driver Analysis Business Division H High Low Performance Gap Attribute Impact Sales SupportCustomer ServiceProduct Supply Technical SupportE-Business CapabilitiesOverall Supplier Relationship High Relative Strength Critical Issues Secondary Issues Maintenance Items 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

12. 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. 13 Results made available to the entire enterprise online

14. 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. 15 Customer Loyalty is a Key Input for our Continuous Improvement Process Prepare Focus & Prioritize LearnImplement Plan Cycle tied to annual operating plan Customer Loyalty Voice of the Customer What 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 Start of fiscal year HowDo It

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

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

18. 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. 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. 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. 21 Table 1.1 Problem Solving Research Table 1.1 Problem Solving Research

22. 22 Table 1.1 Problem Solving Research (Cont.)Table 1.1 Problem Solving Research (Cont.)

23. 23 Table 1.1 Problem Solving Research (Cont.)Table 1.1 Problem Solving Research (Cont.)