Slide 1: British Gas Transformation
British Gas Transformation Tuesday, 2 September 2003 www.centrica.com / investors For further information please contact Centrica Investor Relations Published: 2 September 2003 Email: ir @ centrica.co.uk Tel: +44 (0) 1753 494900
Slide 2: British Gas Transformation
British Gas Transformation 2nd September 2003 0
Slide 3: Disclaimer
Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Centrica Shares. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. 1
Slide 4: Phil Bentley
Phil Bentley Group Finance Director - Centrica 2
Slide 5: Mark Clare
Mark Clare Managing Director - British Gas 3
Slide 6: Agenda
Agenda • British Gas strategy • Using data to drive value • Transforming our processes and systems • Delivering through our people • Delivering the benefits • Final overview 4
Slide 7: British Gas' transformation delivers key elements of Centrica's strategic objectives
British Gas’ transformation delivers key elements of Centrica’s strategic objectives De tion ep n o va g er c t in e lli n i n s cu s du ss igh tom Pro cros Common t er an d Managing for synergies Operating value Elements Service standards to win and retain customers • The core strategic themes are
Slide 8: British Gas' strategy leverages key strengths and focuses on growing value
British Gas’ strategy leverages our key strengths and focuses on growing value through deeper customer relationships and improved operational efficiency FOCUS AREAS WHAT ARE WE DOING • Build on our brand leading position in our core markets Leverage our key • Develop Home Services as our key relatio
Slide 9: Successful delivery of our strategy will require a total transformation
Successful delivery of our strategy will require a total transformation which will impact every area of the business • Robust insight into customer needs People Data • Ability to predict customer behaviour • Data-driven prompts to direct sales and service activity • Efficient and automated back offi
Slide 10: Questions so far…
Questions so far...
Slide 11: Nick Smith
Nick Smith Director of Marketing and Strategy - British Gas 9
Slide 12: Agenda
Agenda • British Gas strategy • Using data to drive value • Transforming our processes and systems • Delivering through our people • Delivering the benefits • Final overview 10
Slide 13: Data is a critical asset in delivering a differentiated, branded service experience
Data is a critical asset in the delivery of a differentiated, branded service experience Self Serve Contact Centres CUSTOMER INTERFACE Bill Deliver Deliveraa Personalisation different DATA Analytics Relevant Field Sales of service different propositions delivery customer customer experience experien
Slide 14: Our data forms the basis of customer insight which drives actions
Our data forms the basis of customer insight which we use to drive actions within the business Inputs Segmentation & overlays Actions Outcome Transactional The best predictor of future behaviour is current Product Holdings holdings behaviour Product Specific actions driving Usage Holdings enhanced c
Slide 15: More sophisticated data-based segmentation drives customer planning
We have built more sophisticated data-based segmentation to drive customer planning activity Potential Service strategy Service strategy Focus on cross sell Focus on retention • Leverage energy expertise • Proactive contact High potential - Traditional Gas only • Target with energy related • Dedicat
Slide 16: Data-driven propositions tailored to customer needs are showing results
We are already seeing the results of data-driven propositions tailored to the specific needs of our customers Insight from test and learn Successful targeting Significant result Capped Electricity trial 2002 Campaign conversion rate Churn performance of Capped Electricity Customers retained - Index
Slide 17: Test and learn programme improved effectiveness of selling activities
The results from our continuous programme of test and learn have improved the effectiveness of our selling activities Details of electricity only trial Example of test and learn activities Improved channel performance • The 5 million electricity only CPA reduction 2002-2003 • Cash cheque/Direct Debi
Slide 18: Proven success influencing the way customers transact with us
We have also had proven success in influencing the way our customers transact with us Differentiated proposition Customer insight The results to date Money saving House customer - value profile features • 49,000 new Online customers in 7 15 weeks 6 Profile Element Impact 5 • 38,000 paperless billing
Slide 19: Our data forms the basis of customer insight which drives actions
Our data forms the basis of customer insight which we use to drive actions within the business Inputs Segmentation & overlays Actions Outcome Transactional The best predictor of future behaviour is current Product Holdings holdings behaviour Product Usage Holdings Product •• Reduced Reduced cost cos
Slide 20: Increasing use of data to drive activity will unlock significant value
In summary, our increasing use of data to drive activity will unlock significant value Benefits from using data Retention benefits from increased product holding Value impact by 2006 Impact of product holding on churn 100 Product holding 100 Data-driven propositions Increased by 20% 90 Customer chur
Slide 21: Questions so far…
Questions so far... 19
Slide 22: Paul Bysouth
Paul Bysouth Director of Shared Logistics & Operations – British Gas 20
Slide 23: Agenda
Agenda • British Gas Strategy • Using Data to Drive Value • Transforming our Processes and Systems • Delivering Through our People • Delivering the Benefits • Final Overview 21
Slide 24: Core systems investment projects will fundamentally improve operating capabilities
Our core systems investment projects will result in fundamental improvements in our operating capabilities Where Where we we are are coming coming from… from… Where Where we we are are going going to… to… Benefits Benefits •• Product-centric Product-centric systems systems •• Customer-centric Custom
Slide 25: Assuring success – a modular approach to delivery to minimise risk
Assuring success – a modular approach to delivery to minimise risk Release 1 Release 2 Release 3 Release 4 & 5 (Siebel) (Siebel) (SAP) 2002 2003 2004 2005 Auto Call ID Cross Sell Energy and Cross Serve for Energy Home Services products Flexible Energy Billing Single Customer View Integration of Mark
Slide 26: Assuring success – through a rigorous governance structure
Assuring success – through a rigorous governance structure Comprehensive Programme Management Structure Executive Steering Group Programme Director Programme Management Office Solution Solution System Benefit Deploy- Design Build Delivery ment Programme Assurance Team People, process and systems tra
Slide 27: Further initiatives to support our transformation programme
Further initiatives to support our transformation programme • Process re-engineering - Exploit our new systems’ capabilities - Eliminate issues associated with current processes and systems - Simplify and streamline industry processes and data flows • Engineer deployment - Skills-based job allocatio
Slide 28: In Summary… We are on track and delivering the capabilities needed
In Summary… We are on track and delivering the capabilities needed to achieve our transformation • New state of the art systems • Process simplification and automation • Structured programme delivery - Capabilities/benefits focused - Minimise risk • Siebel Release 1 has 9500 agents fully live • Furt
Slide 29: Questions so far…
Questions so far... 27
Slide 30: Joe Dyer
Joe Dyer Director of Customer Service – British Gas 28
Slide 31: Agenda
Agenda • British Gas strategy • Using data to drive value • Transforming our processes and systems • Delivering through our people • Delivering the benefits • Final overview 29
Slide 32: Employees will be empowered to resolve problems and drive customer value
Our employees will be empowered to fully resolve problems and drive customer value through personalisation of service Shareholder value Customer value Personalised service An enhanced customer focused culture Empowerment accountability ‘Managers as Organisation Ownership & structure leaders’ Reward
Slide 33: Transformation is underway to enable our people to deliver customer value
Transformation is underway to enable our people to deliver outstanding customer value ‘Managers • Leadership training & development for all managers as leaders’ • Focus on ‘coaching’ to deepen relationship with our customers • Defining frameworks for decision making as opposed to rules and Empowerme
Slide 34: In Summary … Customer focused culture will drive customer value
In Summary … Our customer focused culture achieved through great front-line people will drive customer value • Enabled by: - Knowledge about the customer - Simplified processes - Easy to use automated systems • Delivered by: - Great front-line people and leaders - Highly trained & caring people - Em
Slide 35: Questions so far…
Questions so far... 33
Slide 36: Paul Bowtell
Paul Bowtell Finance Director – British Gas 34
Slide 37: Agenda
Agenda • British Gas strategy • Using data to drive value • Transforming our processes and systems • Delivering through our people • Delivering the benefits • Final overview 35
Slide 38: British Gas transformation will enhance the lifetime value of our customer base
British Gas transformation will enhance the lifetime value of our customer base Customer lifetime value Increase Reduce cost to Reduce acquisition Reduce sustaining revenue serve costs costs • Reduce the• cost Reduce churn of maintaining systems • •Cross X-Sellsell additional additionalproducts • Cr
Slide 39: Benefits from our transformation journey
Benefits from our transformation journey … P&L Impact (pre-tax) Project contribution 100% 8% 7% £200m 75% 44% 35% £150m 50% £100m 25% 48% 58% £50m £0m 0% 02 03 04 05 06 07 08 2005 2008 -£50m Engineer deployment Process improvements CRM • Programme benefits incorporate all elements of the entire tran
Slide 40: Benefits delivery by value driver
Benefits delivery by value driver P&L Impact (pre-tax) Value driver contribution 100% 5% 11% £200m 75% 37% 39% £150m 50% £100m 58% 50% 25% £50m £0m 0% 02 03 04 05 06 07 08 2005 2008 -£50m Revenue Acquisition costs Cost to serve • 95% of total benefit coming from cost benefits in 2005. 38
Slide 41: Assuring success - value driver analysis
Assuring success - value driver analysis Front Office Value Drivers Reduce reasons for first time calls Reduce agent- handled call Reduce repeat calls volume Reduce call transfers Reduce agent- handled call time per product Drivers of reduced call duration Net reduction in average call duration Driv
Slide 42: Assuring success – through a rigorous governance structure
Assuring success – through a rigorous governance structure Comprehensive Programme Management Structure Executive Steering Group Programme Director Programme Management Office Solution Solution System Benefit Deploy- Design Build Delivery ment Programme Assurance Team People, process and systems tra
Slide 43: Agenda
Agenda • British Gas strategy • Using data to drive value • Transforming our processes and systems • Delivering through our people • Delivering the benefits • Final overview 41
Slide 44: The British Gas transformation programme delivers our strategy
The British Gas transformation programme delivers our strategy Leverage our key strengths Create a different customer experience Build new capabilities Deliver efficiently Grow value 42
Slide 45: Questions
Questions 43