Scorecard Solution Helps Online Travel Company Measure the ...



Overview

Country or Region: United States

Industry: Travel

Customer Profile

The largest online travel company in the world, Expedia serves travelers on three continents.

Business Situation

To better serve its online customers, Expedia needed real-time insight into its Web site performance.

Solution

Implementing a Balanced Scorecard solution using Microsoft® Office Business Scorecard Manager 2005 allowed Expedia to put complex Web performance metrics and Key Performance Indicators at its analysts’ fingertips.

Benefits

Faster insight into Web operations allows for very high responsiveness to Expedia’s customer experience. Automated data collection saved time and effort, allowing analysts to spend their time developing answers rather than crunching numbers.

| | |“Customer satisfaction is essential to helping make Expedia a great company. With scorecarding, we have the means to evaluate how well we are doing to make the company even greater. And if scorecarding is adopted throughout the company, I believe we are that much closer to becoming the largest and most profitable seller of travel in the world.”

Laura Gibbons, Manager, Customer Satisfaction & Six Sigma, Expedia | |

| | | |In the world of e-business, going from zero to millions in a short period of time was common in the |

| | | |mid to late nineties. And so was going bust just about as fast, when the bubble burst. There were a |

| | | |few savvy companies that survived the bust—no doubt because they offered real products and services |

| | | |that showed real returns. One of those companies is U.S.-based Expedia, which has become the largest |

| | | |online travel agency and the fourth largest travel company in the world since going public in 1999. |

| | | |With customer satisfaction critical to the success of online business, Expedia needed real-time |

| | | |insight into its Web site performance. To do this, the company implemented a scorecard solution using|

| | | |Microsoft® Office Business Scorecard Manager 2005. The solution gave Expedia access to complex Web |

| | | |performance metrics and the ability to respond quickly to customer satisfaction issues. |

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| | | |[pic] |

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Situation

Expedia has become a major force in the travel industry global playing field. The company provides direct access to a broad selection of leisure and corporate travel products and services through its North American Web sites, localized versions throughout Europe, and extensive partnerships in the Asia-Pacific region.

Becoming a global concern in such a short period of time is not without its challenges. The massive growth Expedia has already achieved could hinder the company as it aims to become the largest and most profitable seller of travel in the world.

Are We Getting and Keeping Customers?

The competitive nature of today’s marketplace leaves many companies at a disadvantage if they merely keep an eye on the bottom line to ensure that business is on track. By the time quarterly results are available, the ship may already be sinking.

In an online business, such as Expedia, the competitive marketplace is even tougher, with competitors just a mouse click away. Saying competitive means ensuring you’re making the right moves every day, not just on a quarterly or even monthly basis.

That task might not be difficult for a sales team, but for a non-financial business unit, such as customer satisfaction, it seems like an impossible challenge.

“The customer’s shopping experience is key to Expedia revenues, but there isn’t a clear way to measure its impact on profitability or the company’s overall business objectives,” says Laura Gibbons, Manager, Customer Satisfaction & Six Sigma at Expedia. “We need a timely and sophisticated way to gauge the customer experience and its impact on the company’s goals and bottom line.”

Are We Frustrating Our Customers?

The online shopping experience can make or break an online business. A site must be well designed, not just from a visual standpoint, but also—and more importantly—from a usability standpoint.

“You can have the best selection of products and services compared to all your competitors, but if it’s difficult for customers to find what they want, they will go elsewhere,” says Gibbons. “The entire selection and purchasing process needs to go quickly and smoothly.”

The Expedia Customer Satisfaction group also wants to ensure that a good online shopping experience is mirrored by a good trip experience.

“We want to be able to measure the whole trip experience, right down to ensuring our vendors make good on the travel arrangements our customers make,” says Gibbons.

Are We Losing Customers?

Because the customer experience is so critical to Expedia, all customer issues need to be tracked, monitored, and resolved as quickly as possible. Unfortunately, Gibbons and her team lacked visibility into the “voice of the customer.”

Without a total picture of customer satisfaction and the actionable data to back it up, the group was not only a potential source of revenue loss at Expedia, but it found it difficult to demonstrate whether or not they were taking actions that aligned with corporate objectives.

“It wasn’t as though we didn’t have any customer satisfaction data to draw on—we, in fact, had lots of great data. Our problem was that we didn’t have a way to analyze it or act on it until, in many cases, it could have a negative impact on the business,” says Gibbons.

Defining the Problem

The idea of measuring the impact of non-financial performance areas on profitability isn’t new. Management and investors alike long ago realized that intangibles such as Research and Development or Customer Satisfaction are reflected in a company’s overall performance, even if accounting rules don’t recognize their results as assets.

But just how do you measure something like customer satisfaction? And once you’ve decided on the criteria, how do you show its impact on profitability and that it’s aligned with the bigger, corporate picture?

“After some research and brainstorming, our team developed a vision of what we needed: a tangible way to define and monitor the key drivers of customer satisfaction, such as breadth and depth of product selection, ease of the purchase process, value for price and the level of service provided by our vendors,” says Gibbons. “Ultimately, these are the drivers that will help build Expedia’s long-term growth.”

Back at Square One

Gibbons and her team met their first hurdle almost immediately. Not management buy-in, but rather the overwhelming amount of data related to customer satisfaction—everything from site analytics, such as click-through conversion, to various customer relationship management (CRM) systems and customer survey feedback. In all, there were 20 disparate databases with 20 different owners.

To start, they charged an Expedia business analyst to pull and aggregate data for a number of key measures of customer satisfaction.

“We called it a ‘scorecarding solution’ even though it was completely manual and there was no real way for end-users to build or manage their own scorecards,” says Gibbons. “While it was a start in the right direction, we quickly found that we still didn’t have a way to analyze the data or act in it in a timely manner.”

Instead of taming customer satisfaction data and using it to develop strategies for helping Expedia make good on its corporate mandate, the Customer Satisfaction group added a new level of pain to their challenges through wasted resources.

“Our business analysts spent two or three weeks every month pulling and aggregating data, leaving them no time to do the job they were hired to do—analyze data,” says Gibbons. “We ended up where we started: lots of great data that was not actionable. By the time data was presented to the team at the end of the month, it had lost some of its value since it was stale and had no context. We still didn’t know if our results were aligning with the company’s overall objectives.”

Solution

Time to Regroup

The value of scorecarding wasn’t lost on Gibbons and her team. They saw what could be possible with scorecarding, even though their in-house solution provided less than optimal results.

“Through our own trial and error, we realized we needed something that would give us a more holistic view of any particular Customer Satisfaction issue on demand. It wasn’t enough to aggregate data; it needs to be viewed in context of strategic goals, and individuals have to take ownership of the results,” says Gibbons.

The Customer Satisfaction team went back to the drawing board and came up with a refined vision of what they needed. Number one on the list was being able to respond to any business issue quickly.

“Under our old solution, customer satisfaction issues were aggregated on a monthly basis. By the time they were brought to the attention of the Customer Satisfaction group, the information was stale,” says Gibbons. “It was easy to see that this could have a significant impact on our customers and, ultimately, on the company as a whole.”

To gain the kind of agile insight needed to respond quickly to business issues, the company chose Microsoft® Office Business Scorecard Manager 2005.

Refining the Vision

To start, the Customer Satisfaction group created a more detailed vision to link the data they collected with Expedia’s mandate. They started with a detailed analysis of the fundamental drivers of the department’s performance.

“It’s not enough to say that our KPI drivers affect customer satisfaction levels,” says Gibbons. “We need to track all events that may occur in the booking process, the result of the event—such as abandonment versus a call to Customer Care—and the long-term effect it has on loyalty and retention. This knowledge helps us continually serve our customers better.”

Gibbons and her team spent a month defining the scorecards that would ultimately measure the Customer Satisfaction group’s ability to deliver on Expedia’s corporate objectives. This process included:

n Deciding how to measure customer satisfaction. “We have 20 databases that each measure some aspect of a customer’s relationship with Expedia. Using business logic, we determined which data in each database would be useful in demonstrating a customer’s level of satisfaction. That information, in turn, became the basis of our scorecards and their corresponding key performance indicators (KPIs),” says Gibbons.

n Setting the right performance targets. That meant deciding whether KPI targets had short-term or long-term pay-offs. In the short-term, for example, a customer might be happy that the purchase process is easy to use, but in the long-term, be turned off by Expedia because the vendor at the customer’s destination didn’t honor the reservation as booked with Expedia.

n Putting data into context. For Gibbons’s group, that meant being able to tie their data to ongoing customer satisfaction improvement projects. “We also wanted to be able to drill down into data to view it from different angles,” says Gibbons. “For any particular customer issue related to a KPI, we wanted to be able to see exactly what the customer sees.”

Benefits

Putting Vision in Action

The Customer Satisfaction group ultimately came up with about ten to twelve objectives that linked directly to Expedia’s corporate initiatives. These objectives, in turn, are linked to more than 200 KPIs within the Customer Satisfaction group. KPI owners can build, manage, and consume their own scorecard, while managers and executives have a transparent view of how well actions are aligning with strategy on demand.

The KPIs draw data from several sources, including several types of customer surveys, CRM systems, Interactive Voice Response (IVR), and other customer self-service systems, as well as collections of industry data. KPIs measure everything from the customer shopping and buying experience, the customer’s pre-trip experience to, ultimately, the customer’s trip experience.

The ability to drill down into data is proving invaluable to the team. For example, there is a KPI for customer booking reconfirmations online versus utilizing the IVR system or the more expensive Contact Center channel. With the new scorecarding solution, the team is also able to drill down to find out how many of those costly calls are abandoned and where in the system the call is abandoned. Insight into this type of customer behavior can then quickly translate into action.

“A year ago, it might have taken weeks or months to sort out this type of problem,” says Gibbons. “Scorecarding makes it exponentially easier and faster to get at the data we need, making it possible to resolve issues in a matter of minutes or hours.”

Another key component of Expedia’s scorecarding solution is a dashboarding feature for at-a-glance graphical representations of data. It takes just moments to pull together a trended view of data over time or overlay graphs of two KPIs, such as the wide selection of travel products and buyer usage.

“We have such a wealth of useful and accurate data at our fingertips now,” says Gibbons. “With scorecarding, we can see whether or not we’re measuring up on individual KPIs, which in turn is reflected in our group objectives, and, finally, in the company’s objectives.”

Easy Integration and Collaboration

From a technology perspective, Microsoft Office Business Scorecard Manager 2005 met all of Expedia’s requirements. It was easy to integrate with Expedia’s existing systems, such as Microsoft SQL Server™ 2000. And, because it’s a Microsoft Office product, it didn’t require a lot of end-user training. End-users can build, manage, and consume their own scorecards without the intervention of the IT department.

Business Scorecard Manager also met Expedia’s collaboration requirements.

“We needed a way for the Customer Satisfaction group to collaborate with respect to our team objectives,” says Gibbons, Manager, “Business Scorecard Manager integrates with SharePoint®, a Web-based portal that allows our team members to share insights and analyze data as a group.”

“By leveraging its employees’ skills, as well as its existing technology investments, Expedia is getting greater value for less cost, time, and risk than had they chosen to build their own scorecarding solution from the ground up,” adds Gibbons.

Return on Investment

It’s still early to reflect on Expedia’s return on investment for its scorecarding solution. There is buy-in at the company’s corporate level, all of whom are excited about the opportunities scorecarding creates for employees to align their day-to-day activities with the company’s strategic objectives. There are plans in the works to implement scorecarding company-wide.

“Customer satisfaction is essential to helping make Expedia a great company,” says Gibbons. “With scorecarding, we have the means to evaluate how well we are doing to make the company even greater. And if scorecarding is adopted throughout the company, I believe we are that much closer to becoming the largest and most profitable seller of travel in the world.”

Company Profile

Expedia, Inc. [Nasdaq:EXPE]

Corporate mandate: Expedia, Inc. is on a mission to become the largest and most profitable seller of travel in the world, by helping everyone everywhere plan and purchase everything in travel.

Size: Expedia, Inc. employs 4,300 full-time employees worldwide (as of December 31, 2004).

Industry position: The largest online travel agency in the world; the largest online leisure travel provider and third largest travel company in the U.S.; the fourth largest travel company in the world.

Management/ownership: In 2001, USA Networks—now IAC/InterActiveCorp (IAC)—led by Barry Diller, bought a controlling stake in Expedia. Diller’s company bought the remaining stake in the company in 2002. In July 2005, IAC separated into two publicly traded companies: Expedia, Inc., and IAC. Barry Diller remains Chairman and Senior Executive of IAC, as well as Chairman of Expedia, Inc. Expedia, Inc. is led by CEO Dara Khosrowshahi, formerly the Chief Financial Officer of IAC.

Businesses

Expedia Inc. owns and operates a diversified portfolio of U.S.-based and international businesses, including:

• Leisure Travel Group: Focused on the leisure travel market and includes , Expedia.ca, , TripAdvisor, , and Classic Custom Vacations (CCV).

• Corporate Travel Group: Comprehensive online travel products and services for corporate customers worldwide.

• Partner Services Group: Consolidates all of the company’s supply expertise into one strategic group to heighten the ability to serve supply partners and simplify the way they interact with Expedia, Inc.

• Expedia Europe, Middle East, and Africa: Operates Expedia-branded Web sites in France, Germany, Italy, the Netherlands, and the United Kingdom, as well as , a leading seller of discount air travel in France, and Voyages-SNCF.fr in partnership with France’s railway company, SNCF.

• Expedia Asia Pacific: Manages the company’s activities in Asia’s fast-growing travel markets.

• eLong: One of China's leading Web-enhanced travel service companies and the second largest travel provider in China.

Microsoft Office System

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For more information about the Microsoft Office System, go to:

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For more information about Microsoft Office Business Scorecard Manager 2005, go to: office/bi/bpm/default.mspx

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For More Information

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© 2005 Microsoft Corporation. All rights reserved. This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Microsoft, Example: Active Directory, Windows, the Windows logo, Windows Server, and Windows Server System are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Document published March 2005 | | |

© 2005 Microsoft Corporation. All rights reserved. This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Microsoft, the Office logo, and SharePoint are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. All other trademarks are property of their respective owners.

Document published November 2005 | | |

| |Software and Services

n Products

− Microsoft Office Business Scorecard Manager 2005 |

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“A year ago, it might have taken weeks or months to sort out this type of problem. Scorecarding makes it exponentially easier and faster to get at the data we need, making it possible to resolve issues in a matter of minutes or hours.”

Laura Gibbons, Manager, Customer Satisfaction & Six Sigma, Expedia

| |

For More Information

For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:

“Our business analysts spent two or three weeks every month pulling and aggregating data, leaving them no time to do the job they were hired to do—analyze data.”

Laura Gibbons, Manager, Customer Satisfaction & Six Sigma, Expedia

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Laura Gibbons, Manager, Customer Satisfaction & Six Sigma, Expedia | |

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