Expert case by

Cristian

GlowMobile Goes Digital (McKinsey first-round)

Case information

Difficulty: Intermediate

Interviewer-led

< 100 Ratings

Times solved: 5.8k

Competitive response Growth strategy Market analysis Operations strategy Organizational behavior Restructuring

Case Prompt:

GlowMobile is a leading telecom operator with a strong presence in Southeast Asia. They sell regular products and services that any telecom operator would offer in their retail stores: cell phones, SIM cards, subscriptions, etc.

Even though the number of digital customers in the region has grown exponentially, currently GlowMobile does not have an online presence and customers must go in person to retail stores for every interaction with the operator. In the past years, they have been losing a lot of customers due to bad customer experience.

GlowMobile has asked our team to improve customer satisfaction through digitization. Specifically, they want us to help improve and digitize their operations and prepare a proof of concept for a digital customer journey for customers.

The CEO believes that opening their digital channel would minimize the loss of customers due to bad customer experience and solidify their position as market leader. Right now, a digital journey does not exist.

Overview of All Exhibits

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Question 1: What are the most important factors to consider as the client is about to embark on a digital transformation?

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A sample answer would go along the following line:

1. Market assessment:

Market trends. What are the core market trends regarding specifically digitalization? What % of customers have internet access? What % of customers have digital devices?
Customers. Who is our target customer / demographic? What are the customer preferences of our target customer group? What is their openness to try new things? What are the features on the customer journey that are most important to them (e.g., account opening fully online, checking balance)
Competitors. What is the competition doing (competitive assessment)? What is the digital offering of our competitors? How long have they been offering digital products? Which are the flagship digital products in the market, and what makes them successful?

2. Client capabilities assessment:

Team / Digital talent a. Does the client have sufficient digital talent to digitize the company or would they need to hire it (e.g., developers, designers, coaches, product owners) b. What are the trainings that are currently offered by the operator around digitalization, and what would be required in order to expand the offering?
Working culture a. What is the current working culture – traditional or rather Agile based? b. What would be required to migrate to a more Agile based working culture that is product-centric?
Project governance a. Who in the client organization will be tasked with leading and delivering the project? b. How will success be measured (e.g., KPIs, dashboards)?

3. Financial assessment

Budget. What is the budget planned and secured for this project and the timeline?
Profitability analysis a. What are all the costs associated with the project? b. What are the projected benefits? c. When will the digital journey become net profitable for the company?

4. Risk assessment

With opening a new digital channel, is there a significant risk of cannibalizing the retail channel?
What is the probability of failure for the program, what are the main factors and how could they be prevented?

Note for Interviewer

The interviewer should look for the following features in the candidate's answer:

The answer is deep, broad and insightful. It covers all areas of the problem, they are explained well and in detail, and they show a good understanding of the client situation
The candidate takes time to think about the problem, then gets back with a structured approach. Ideally, the candidate presents the structure top-down using the pyramid principle, counting first through the buckets and then going into detail into each of them
The candidate speaks at a pace that is easy to understand, is keeping the interviewer engaged, and is approaching the interview as a conversation (instead of a presentation).

Question 2: What are the features that you expect to be critical to users and thus have a positive influence on customer experience?

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An intuitive structure to use here is to look directly at the main types of customer journeys. The two core ones in telecom are ‘Customer buys a product’ and ‘Customer requests support’. The idea would be to assess along the main steps in the customer journey what would be the critical pain points. Since there are many potential improvements that could be brought in the digitalization process, a distinctive candidate would prioritize these features based on customer/user feedback.

Journey A: Customer buys a product.

How does the customer arrive at the platform of the operator? – Digital marketing (e.g., SEO optimization), traditional marketing.
How does the customer create an account? – How many steps / long does it take? Can they purchase a product without an account? Can it all be done end-to-end online?
How does the customer choose the product? – Is there a feature to compare products? Is the information available online sufficient to clarify what product is best for the client? Can we offer online advisory support?
How does the customer pay for the product? – How easy is it to make the payment online? What are the means of payment offered online? How can we minimize fees or any elements that could discourage clients?
How does the customer start using the product? – When does the product become available to the customer? How many days does delivery take? Can the product be activated remotely (instead of in store)?
How is value maximized after the customer has purchased the product? Are there any add-ons that the customer can buy? How do we encourage the customer to buy these add-ons? How can we provide additional value that we can monetize to customers who have already purchased a product (to maximize customer lifetime value)?

Journey B: Customer requests support

What channel does the customer ask for support on? – Can we offer online support over browser and phone, as well as phone and in-person support? How we direct the customers between these channels based on cost estimates and type of issue? Do we have live support over online? Do we use actual humans or chatbots?
What is the type of support? – How do we deal differently between functionality issues, complaints, inquiries, in order to maximize customer satisfaction and minimize cost associated with customer support? What are the best-in-class examples?
Issue resolution – How long does it take to resolve an issue? How do we make sure we improve the customer’s perception of the operator while waiting for the issue to be solved?
Feedback collection – How do we record and analyze feedback? How do we prioritize improvements to be brought to customer service? How do we prioritize improvements that are meant to minimize issues in the first place?

Note for Interviewer

This is only an example structure, and it is to be expected that candidates with little knowledge of digital engagements might not be able to replicate a customer journey-based structure. Similarly, the interview should not expect the candidate to provide as many ideas as those presented in the sample answer - 3-4 for each bucket is sufficient. It is more important that the candidate shows the ability to develop these ideas and explain them in a clear and convincing way.

Interviewers should be flexible to assess whether the alternative structure provided is relevant for the answer, is MECE and shows a deep understanding of both the customer mindset and the feasibility of the potential features to be implemented by the client.

Q3. What are the insights that you can draw from the current consumer experience analysis?

The candidate ran an internal analysis to survey customer satisfaction across the main touchpoints when a customer acquires a product.

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There are three significant issues that the candidate could focus on, ordered from the most damaging to customer experience.

Resolution – This step seems to have the most negative impact on customer satisfaction, and it can create delays that amount to as long as the entire customer journey. We should understand the magnitude of these mix-ups (how many) and what is the root cause of them? Then, how can we minimize the mix-up of orders? How we solve the mix-up situations faster? The client should dig deep into understanding whether the mix-up of orders is a technical issue that happens in the database during the ordering process, or it’s an actual physical issue during the preparation and dispatching of orders. They should then understand how to best fix it sustainably. Next, assuming there might still be exceptional mix-ups, they should figure out a faster way of re-sending the correct order - for instance, re-sending the correct order before the customer even returned the initial wrong order.
Verification – There seem to be two issues here. One around the manual verification. The client should investigate a digital solution that allows for the automatic scanning and verification of addresses. They should assess the costs of this digital solution against the current cost of having an actual human doing the verification. The second issue is around customers not being home to receive the order. The client should investigate the possibility of delivering with couriers or carriers that contact the receiver of the package in order to align on the delivery time (or leave the parcel with somebody else). This could minimize returns and the total delay.
Activation – The core issue here seems to be around having to do the activation in person. The client should investigate what would be required to do the activation online and how to minimize the amount of time it should take. There are current operators where the activation can be done remotely and instantly, which proves that the technology exists, and our client could adopt it as well.

Note for Interviewer

The candidate should start by briefly reading (not interpreting) the exhibit with the interviewer. Then they should ask for some time.

The candidate should get back to the interviewer with a structured approach that synthesizes the main insights.

For each area, the candidate should dive deep into some of the potential root causes of these issues and what they mean, but also suggest some potential solutions for solving it.

Question 4: How much would the profits of GlowMobile increase if they introduce a digital customer journey?

The CEO of GlowMobile believes that creating a digital customer journey will reduce the drop-off rate by 10%.

He is interested in learning the effect on profitability in the first year as a consequence of this decision.

We know that the company is quarterly losing 100,000 customers and that the average customer value per year is $150.

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After taking some time, the candidate should get back to the interviewer with a proposed structure for solving the questions. For instance:

Step 1. Calculate the total drop-off customers per year

Step 2. Calculate the customers who will be retained per year

Step 3. Calculate the average value brought by the customers retained

Step 4 Calculate the average profit brought by the customers retained in the first year

Once the interviewer validates the approach, the candidate could take a few seconds to do the calculations or choose to do them live.

Step 1. Calculate the total drop-off customers per year

100,000 * 4 quarters = 400,000 customers dropping-off annually

Step 2. Calculate the customers who will be retained per year

400,000 * 10% = 40,000 customers ‘saved’ from churning as a consequence of the improvement in customer experience

Step 3. Calculate the average value brought by the customers retained

Step 3. 40,000 * $150 = $6,000,000 saved in the first year by retaining 10% of the churned customers

Step 4 Calculate the average profit brought by the customers retained in the first year

Step 4. $6,000,000 * 15% = $900,000 saved in profit in the first year by retaining 10% of the churned customers

The candidate should next proactively interpret the result. For instance, they could say that as a next step, they would check this increase in profit and make sure it includes all the costs associated with the customer journey (both developing it and maintaining it). The candidate should also acknowledge that besides the decrease in the drop-off rate, there should also be an increase in enrolment and thus revenues as a consequence of the increase in customer satisfaction.

Note for Interviewer

The candidate should clarify the question with the interviewer and play back the critical data points to ensure they understood it correctly. The candidate should then take time to structure their answer and come back to the interviewer with a step-by-step approach (For a free guide on how to best approach calculation questions, reach out to Coach Cristian).

The candidate should realize that they need the profit margin in order to calculate the profit from the total client value. If they do not proactively ask for it, the interviewer should help them along and say it is 15%.

If the candidate struggles, the interviewer should nudge them along the way to reach the correct calculation.

It is imperative that the candidate interprets the correct result at the end and explains it within the context of the case.

Q5. What would be your final recommendation for our client?

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The candidate should take a few seconds to prepare the recommendation. They should then get back to the interviewer with something along the following lines:

We were asked to investigate and start laying out the steps for developing a customer journey for customers at GlowMobile. We are confirming the potential of this digital transformation for the following reasons:

1. The digitization process will bring us in line with market expectations and could present a competitive advantage for our company

2. The expected 10% improvement in churn would lead to almost $0.9M in profit in the first year

3. The main areas we should focus on are around resolution, verification and activation, and we have clear next steps for improvement in each of these areas.

Some of the risks associated with this process are around the digital talent needed as well as a potential cannibalization effect between channels, since not all sales on the digital channel will be incremental (some customers may just switch between channels). Additionally, we would need to ensure through detailed customer surveys and focus groups that we are focusing and investing in developing the features that are most important to customer experience.

As a next step, we believe we should dig deeper to detail out this strategy and then start the implementation process. In line with the risks presented above, recruiting the necessary digital talent to ensure we can successfully kick off this transformation is a priority.

Note for Interviewer

To assess the performance of the candidate, the interviewer should not only look at the content of their answers, but also at the presence of the candidate during the interview. Is the candidate easy to relate to, and are they effective at building a quick rapport? Do they react well to feedback and being nudged through the cases? Do they seem genuinely interested and excited about the case?

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Questions on This Case

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Question about

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on Apr 07, 2023

Global

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GlowMobile Goes Digital (McKinsey first-round) i

Case Prompt:

Question 1: What are the most important factors to consider as the client is about to embark on a digital transformation?

Question 2: What are the features that you expect to be critical to users and thus have a positive influence on customer experience?

Q3. What are the insights that you can draw from the current consumer experience analysis?

Question 4: How much would the profits of GlowMobile increase if they introduce a digital customer journey?

Q5. What would be your final recommendation for our client?

GlowMobile Goes Digital (McKinsey first-round)