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Chapter 2
 The importance of
Customer Satisfaction
Objectives
• Why is Customer service essential

• Understanding customer service in the
  market

• Measuring customer satisfaction
Introduction
• The key to customer retention in India is
  good customer service

• It is vital to ensure that the customer loyalty
  programs are an integral part of the
  organization
Statistics for customer
retention
• Repeat customers spend 33% more than new
  customers.

• Referrals among repeat customers are 107%
  greater than new customers

• It costs 6% more to sell something to a
  prospect than to sell that same thing to a
  customer
Why customer service
matters
• India loses Rs. 11,640 Crores (Rs. 116.4
  Billion) in revenue because of poor customer
  service

• Businesses in India, Australia and New
  Zealand suffer significant losses because of
  poor customer service over the web
Why customer service
matters
• Out of the 1,500 people surveyed most of the
  people could not reach the call center

• In India, 56% people discontinued because of
  poor customer relationship
Why customer service
matters
• The higher the income levels the service
  expectations are higher

• Customer service is as much part of building
  the brand as is advertising
Understanding customer
satisfaction in the market
• At the heart of the LVMH’s business model
  is a well thought of process for creating and
  growing star brands

• A star brand has to be built for eternity
Understanding customer
satisfaction in the market
• Timelessness takes years even decades to
  develop. Such a brand must have come to
  stand for something in the eyes of the world

• Profitability depends on the price and the
  cost incurred
Understanding customer
satisfaction in the market
• LVMH realizes that in the case of the luxury
  brands, the innovation supporting the
  creative process and the advertising are very
  expensive

• The manufacturing process is carefully
  planned and executed with the help of
  modern technology
Understanding customer
satisfaction in the market
• The Boulogne multicolor which sells for
  $1500, illustrates how LVMH coordinates its
  operations

• The prototype went directly from the
  marketing department to the top executives
Understanding customer
satisfaction in the market
• When LVMH opened in Delhi, It found
  strong demand for premium and aspirational
  products

• Super rich in the world have similar
  lifestyles – LVMH’s experience
Understanding customer
satisfaction in the market
• LVMH planned it’s entry carefully in the
  Indian market

• The company closely monitored Indians
  who were buying abroad
Customer service initiatives
of MHFC
• MHFC combines the advantage of a bank
  and MFI in one equity

• It has tied up with several low cost
  developers for projects in Maharashtra
Customer service initiatives
of MHFC
• Critics of the MFI model highlight it’s
  inherent fallacies

• People in dire straits are well-informed and
  rational economic actors
Measuring Customer
Satisfaction
• Measurement of customer satisfaction is a
  new significant addition to the new
  ISO9000: 2000 Standard
Measuring Customer
Satisfaction
• There is a strong link between customer
  satisfaction and retention

• There is a lot of debate and confusion about
  what exactly is required and how to go about
  it
What do Customers want
• It is important to develop a clear
  understanding of what exactly a customer
  wants

• Customer expectations are of 2 types –
  Expressed and Implied
What do Customers want
• Expresses customer expectations – written
  down and agreed upon by both the parties

• Implied customer expectations – not written
  or spoken but expected
What do Customers want
• There are many reasons why the customer
  expectations are likely to change over time

• The customer is always right. The suppliers
  job is to provide the customer what he
  wants, when he wants it
What constitutes Satisfaction
•   Major attributes of customer satisfaction
  can be summarized as:
• Product quality
• Product packaging
• Price
What constitutes Satisfaction
•  What are the tools?
•   Customer expectations can be identified
  using various methods such as:
• Periodic review contracts
• Market research
• Personal visits
What constitutes Satisfaction
•   What are the tools?

• Depending upon the customer base and the
  available resources, we can choose the most
  effective measures in customer perceptions
  measurement
Customer Satisfaction
Surveys
• Formal surveys have emerged as the best
  method to periodically assess the customer
  satisfaction

• The surveys are not marketing tools but an
  information gaining tool
Customer Satisfaction
Surveys
• There is no point in asking irrelevant
  questions on a customer satisfaction
  questionnaire

• Priorities for improvement should be one of
  the objectives of the satisfaction
  measurement
Customer Satisfaction
Surveys
• The survey forms should be easy to fill out
  with the minimum amount of time and
  efforts

• The data should be sufficiently reliable for
  management decision-making
Customer Satisfaction
Surveys
• Space should always be provided for the
  customer’s own opinion

• The respondents must be provided a way to
  express the importance they attach to
  various survey parameters
Customer Satisfaction
Surveys
•   Typical questions for product performance
  can be grouped together like:
• Quality of the product
• Consistency of the product
• Price of the product
Customer Satisfaction
Surveys
•   Typical questions for competitor
  performance can be grouped together like:
• Adherence to the delivery schedule
• Quality of the product
• Cost of the product
Customer Satisfaction
Surveys
• It is often found that there are dismal
  responses from the customer

• Electronic mailing of the surveys are a good
  option as the customers can fill and send the
  questionnaire quickly
Analysis
• The customer’s requirements must be
  translated and quantifies into measureable
  targets

• This provides an easy way to monitor
  improvements and to in turn improve the
  customer satisfaction
Performance Matrix
• The average of the weightings and the scores
  given by the customer on each of the
  parameters are plotted on a scatter graph

• The customer satisfaction index represents
  the overall satisfaction level of the customer
Performance Matrix
• The bias due to individual perception needs
  to be accounted for, since the surveys are
  taken from one organization

• We need to calculate average of all the
  weightings
Performance Matrix:
Parameters
•   P Weighting
•   A Score
•   B Weighting (avg. of 1)
•   C Weighting (avg. of 1) * Score
•   D = B*C
Performance Matrix
• Customer satisfaction can be expresses as a
  single number that tells the customer where
  he stands today

• It is far less costly to keep existing
  customers than to win new ones
Performance Matrix
• A supplier should keep improving so as to
  achieve a greater profitability

• A simple tool is to take the customer
  satisfaction surveys and analyze the
  customer’s feedback
Responsibilities of the
Organization
•     The Organization is responsible for
    providing superior support in all aspects of
    purchasing products:

• All pre-order entry qualifications
• Responsible for providing direction
• Coaching and development of regional order
  management teams
Key responsibilities
• Ensure that all orders are entered into the
  order management systems in accordance to
  the set processes

• Ensure that issues are escalated to the
  appropriate authorities and seek closure in a
  timely order

• Builds and maintains customer relationships
  specific to regions
Key responsibilities
• Execute all month and quarter end activities
  flawless

• Documents, policies and procedures based on
  expertise in specific job areas

• Provide other services or perform activities
  specific to the assigned region(s)
Key responsibilities
• Schedule and perform quarterly business
  reviews onsite with channel partners to
  review and to drive operations improvement

• Draw on to others support resources to drive
  performance improvement for the assigned
  regions(s)
Key responsibilities
• Perform all people management duties
  including recruiting, staff, development,
  team-building and performance reviews

• Participate in all other projects and
  initiatives as determined by the organization
HCL – Case Study
• HCL announced the launch of ‘HCL
  TOUCH’, its 24*7 round the clock, service
  and support for its leaptop customers

• ‘HCL Touch’ sets a new benchmark for
  laptop service in the country
HCL – Case Study
• HCL offers round the clock service to
  leaptop customers across India

• The support is offered in 11 different regional
  languages
HCL – Case Study
• The HCL service is backed up by several
  other initiatives such as the SMS request
  service

• The landmark laptop service will be
  delivered through India’s largest IT Service
  and support network
HCL – Case Study
• “Customer has always been at the core of the
  HCL’s business with the customer care
  services as a top priority” – Ajai Choudhary
  – Chairman and CEO, HCL.
Eureka Forbes – Case Study
• In a bid to enhance its customer services –
  Eureka Forbes will be launching the
  ‘Automatic dust tracker’ initiative

• The ‘Automatic dust tracker’ measures the
  exact amount of dust in the nook and corners
  of our houses
Eureka Forbes – Case Study
• The main objective behind this move is to
  build an everlasting relationship with the
  customers

• This initiative would make the customers
  friends for life by meeting all their health
  requirements
Eureka Forbes – Case Study
• Further Mr. Palekar informs that these
  results are based on research conducted at
  the company’s laboratories

• On a daily basis the institute monitors the
  air pollution data
Eureka Forbes – Case Study
• Eurosmile is the 24*7 virtual call center for
  customer response

• The total sales force of the company is over
  4000 people – Mr. Palekar
Eureka Forbes – Case Study
• Eurosmile is the 24*7 virtual call center for
  customer response

• The total sales force of the company is over
  4000 people – Mr. Palekar
Titan – Case Study
• Titan – a name which changed forever the
  way watches made in this country were seen
  by Indians and the world

• Launched in 1987, Titan is credited to
  transforming the Indian watch industry
Titan – Case Study
• Understanding the Indian consumer’s
  psyche has been vital to Titan reaching it’s
  current position of strength

• The company today has a model for every
  price segment and every market
Titan – Case Study
• Research reveals some interesting facts and
  figures:
• The Indian market is estimated at 25 million
  watches a year
• Titan is the runaway market leader
• More men than women own watches in
  India
Titan – Case Study
• It is the rural segment with this diverse
  market that Titan is now looking to tap

• The company plans to change that with
  enhanced marketing and a different
  marketing strategy
Titan – Case Study
• The Titan retail operations are a mix of
  company-owned and franchisee outlets

• The company brings the brand to the
  customer in an appropriate setting through
  its showrooms
Titan – Case Study
• The franchisee is a critical cog in the Titan
  retail mix

• “The market is opening up, and the
  franchisee, after all, looking for what is more
  profitable” – Ajay Chawla
Titan – Case Study
• The franchisee is a critical cog in the Titan
  retail mix

• “The market is opening up, and the
  franchisee, after all, looking for what is more
  profitable” – Ajay Chawla
Titan – Case Study
• Besides its franchisee and its own
  showrooms, Titan sells it products through
  other outlets as well

• The service centers have been deliberately
  kept apart from the showrooms
Titan – Case Study
• Titan’s blueprint for the future includes
  watches for the international heavy weights
  such as YSL, Christian Dior and Gucci

• Titan is also planning to expand into
  categories like sunglasses and leather
  products
Indian Oil Corporation –
Case Study
• Indian Oil Corporation launched the IVSR
  in 33 Indane area offices for better services

• The Indian oil – Citibank co-branded credit
  cards have reached a 1.48 Lakh membership
  in 2002
Indian Oil Corporation –
Case Study
• IOCL launched “Power plus fleet card” for
  transport fleet operators in association with
  Sundaram finance

• The customer service initiative of IOCL is
  considered as one of the best from the public
  sector undertaking
End of Chapter 2
 The importance of
Customer Satisfaction

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Importance of Customer Satisfaction

  • 1. Chapter 2 The importance of Customer Satisfaction
  • 2. Objectives • Why is Customer service essential • Understanding customer service in the market • Measuring customer satisfaction
  • 3. Introduction • The key to customer retention in India is good customer service • It is vital to ensure that the customer loyalty programs are an integral part of the organization
  • 4. Statistics for customer retention • Repeat customers spend 33% more than new customers. • Referrals among repeat customers are 107% greater than new customers • It costs 6% more to sell something to a prospect than to sell that same thing to a customer
  • 5. Why customer service matters • India loses Rs. 11,640 Crores (Rs. 116.4 Billion) in revenue because of poor customer service • Businesses in India, Australia and New Zealand suffer significant losses because of poor customer service over the web
  • 6. Why customer service matters • Out of the 1,500 people surveyed most of the people could not reach the call center • In India, 56% people discontinued because of poor customer relationship
  • 7. Why customer service matters • The higher the income levels the service expectations are higher • Customer service is as much part of building the brand as is advertising
  • 8. Understanding customer satisfaction in the market • At the heart of the LVMH’s business model is a well thought of process for creating and growing star brands • A star brand has to be built for eternity
  • 9. Understanding customer satisfaction in the market • Timelessness takes years even decades to develop. Such a brand must have come to stand for something in the eyes of the world • Profitability depends on the price and the cost incurred
  • 10. Understanding customer satisfaction in the market • LVMH realizes that in the case of the luxury brands, the innovation supporting the creative process and the advertising are very expensive • The manufacturing process is carefully planned and executed with the help of modern technology
  • 11. Understanding customer satisfaction in the market • The Boulogne multicolor which sells for $1500, illustrates how LVMH coordinates its operations • The prototype went directly from the marketing department to the top executives
  • 12. Understanding customer satisfaction in the market • When LVMH opened in Delhi, It found strong demand for premium and aspirational products • Super rich in the world have similar lifestyles – LVMH’s experience
  • 13. Understanding customer satisfaction in the market • LVMH planned it’s entry carefully in the Indian market • The company closely monitored Indians who were buying abroad
  • 14. Customer service initiatives of MHFC • MHFC combines the advantage of a bank and MFI in one equity • It has tied up with several low cost developers for projects in Maharashtra
  • 15. Customer service initiatives of MHFC • Critics of the MFI model highlight it’s inherent fallacies • People in dire straits are well-informed and rational economic actors
  • 16. Measuring Customer Satisfaction • Measurement of customer satisfaction is a new significant addition to the new ISO9000: 2000 Standard
  • 17. Measuring Customer Satisfaction • There is a strong link between customer satisfaction and retention • There is a lot of debate and confusion about what exactly is required and how to go about it
  • 18. What do Customers want • It is important to develop a clear understanding of what exactly a customer wants • Customer expectations are of 2 types – Expressed and Implied
  • 19. What do Customers want • Expresses customer expectations – written down and agreed upon by both the parties • Implied customer expectations – not written or spoken but expected
  • 20. What do Customers want • There are many reasons why the customer expectations are likely to change over time • The customer is always right. The suppliers job is to provide the customer what he wants, when he wants it
  • 21. What constitutes Satisfaction • Major attributes of customer satisfaction can be summarized as: • Product quality • Product packaging • Price
  • 22. What constitutes Satisfaction • What are the tools? • Customer expectations can be identified using various methods such as: • Periodic review contracts • Market research • Personal visits
  • 23. What constitutes Satisfaction • What are the tools? • Depending upon the customer base and the available resources, we can choose the most effective measures in customer perceptions measurement
  • 24. Customer Satisfaction Surveys • Formal surveys have emerged as the best method to periodically assess the customer satisfaction • The surveys are not marketing tools but an information gaining tool
  • 25. Customer Satisfaction Surveys • There is no point in asking irrelevant questions on a customer satisfaction questionnaire • Priorities for improvement should be one of the objectives of the satisfaction measurement
  • 26. Customer Satisfaction Surveys • The survey forms should be easy to fill out with the minimum amount of time and efforts • The data should be sufficiently reliable for management decision-making
  • 27. Customer Satisfaction Surveys • Space should always be provided for the customer’s own opinion • The respondents must be provided a way to express the importance they attach to various survey parameters
  • 28. Customer Satisfaction Surveys • Typical questions for product performance can be grouped together like: • Quality of the product • Consistency of the product • Price of the product
  • 29. Customer Satisfaction Surveys • Typical questions for competitor performance can be grouped together like: • Adherence to the delivery schedule • Quality of the product • Cost of the product
  • 30. Customer Satisfaction Surveys • It is often found that there are dismal responses from the customer • Electronic mailing of the surveys are a good option as the customers can fill and send the questionnaire quickly
  • 31. Analysis • The customer’s requirements must be translated and quantifies into measureable targets • This provides an easy way to monitor improvements and to in turn improve the customer satisfaction
  • 32. Performance Matrix • The average of the weightings and the scores given by the customer on each of the parameters are plotted on a scatter graph • The customer satisfaction index represents the overall satisfaction level of the customer
  • 33. Performance Matrix • The bias due to individual perception needs to be accounted for, since the surveys are taken from one organization • We need to calculate average of all the weightings
  • 34. Performance Matrix: Parameters • P Weighting • A Score • B Weighting (avg. of 1) • C Weighting (avg. of 1) * Score • D = B*C
  • 35. Performance Matrix • Customer satisfaction can be expresses as a single number that tells the customer where he stands today • It is far less costly to keep existing customers than to win new ones
  • 36. Performance Matrix • A supplier should keep improving so as to achieve a greater profitability • A simple tool is to take the customer satisfaction surveys and analyze the customer’s feedback
  • 37. Responsibilities of the Organization • The Organization is responsible for providing superior support in all aspects of purchasing products: • All pre-order entry qualifications • Responsible for providing direction • Coaching and development of regional order management teams
  • 38. Key responsibilities • Ensure that all orders are entered into the order management systems in accordance to the set processes • Ensure that issues are escalated to the appropriate authorities and seek closure in a timely order • Builds and maintains customer relationships specific to regions
  • 39. Key responsibilities • Execute all month and quarter end activities flawless • Documents, policies and procedures based on expertise in specific job areas • Provide other services or perform activities specific to the assigned region(s)
  • 40. Key responsibilities • Schedule and perform quarterly business reviews onsite with channel partners to review and to drive operations improvement • Draw on to others support resources to drive performance improvement for the assigned regions(s)
  • 41. Key responsibilities • Perform all people management duties including recruiting, staff, development, team-building and performance reviews • Participate in all other projects and initiatives as determined by the organization
  • 42. HCL – Case Study • HCL announced the launch of ‘HCL TOUCH’, its 24*7 round the clock, service and support for its leaptop customers • ‘HCL Touch’ sets a new benchmark for laptop service in the country
  • 43. HCL – Case Study • HCL offers round the clock service to leaptop customers across India • The support is offered in 11 different regional languages
  • 44. HCL – Case Study • The HCL service is backed up by several other initiatives such as the SMS request service • The landmark laptop service will be delivered through India’s largest IT Service and support network
  • 45. HCL – Case Study • “Customer has always been at the core of the HCL’s business with the customer care services as a top priority” – Ajai Choudhary – Chairman and CEO, HCL.
  • 46. Eureka Forbes – Case Study • In a bid to enhance its customer services – Eureka Forbes will be launching the ‘Automatic dust tracker’ initiative • The ‘Automatic dust tracker’ measures the exact amount of dust in the nook and corners of our houses
  • 47. Eureka Forbes – Case Study • The main objective behind this move is to build an everlasting relationship with the customers • This initiative would make the customers friends for life by meeting all their health requirements
  • 48. Eureka Forbes – Case Study • Further Mr. Palekar informs that these results are based on research conducted at the company’s laboratories • On a daily basis the institute monitors the air pollution data
  • 49. Eureka Forbes – Case Study • Eurosmile is the 24*7 virtual call center for customer response • The total sales force of the company is over 4000 people – Mr. Palekar
  • 50. Eureka Forbes – Case Study • Eurosmile is the 24*7 virtual call center for customer response • The total sales force of the company is over 4000 people – Mr. Palekar
  • 51. Titan – Case Study • Titan – a name which changed forever the way watches made in this country were seen by Indians and the world • Launched in 1987, Titan is credited to transforming the Indian watch industry
  • 52. Titan – Case Study • Understanding the Indian consumer’s psyche has been vital to Titan reaching it’s current position of strength • The company today has a model for every price segment and every market
  • 53. Titan – Case Study • Research reveals some interesting facts and figures: • The Indian market is estimated at 25 million watches a year • Titan is the runaway market leader • More men than women own watches in India
  • 54. Titan – Case Study • It is the rural segment with this diverse market that Titan is now looking to tap • The company plans to change that with enhanced marketing and a different marketing strategy
  • 55. Titan – Case Study • The Titan retail operations are a mix of company-owned and franchisee outlets • The company brings the brand to the customer in an appropriate setting through its showrooms
  • 56. Titan – Case Study • The franchisee is a critical cog in the Titan retail mix • “The market is opening up, and the franchisee, after all, looking for what is more profitable” – Ajay Chawla
  • 57. Titan – Case Study • The franchisee is a critical cog in the Titan retail mix • “The market is opening up, and the franchisee, after all, looking for what is more profitable” – Ajay Chawla
  • 58. Titan – Case Study • Besides its franchisee and its own showrooms, Titan sells it products through other outlets as well • The service centers have been deliberately kept apart from the showrooms
  • 59. Titan – Case Study • Titan’s blueprint for the future includes watches for the international heavy weights such as YSL, Christian Dior and Gucci • Titan is also planning to expand into categories like sunglasses and leather products
  • 60. Indian Oil Corporation – Case Study • Indian Oil Corporation launched the IVSR in 33 Indane area offices for better services • The Indian oil – Citibank co-branded credit cards have reached a 1.48 Lakh membership in 2002
  • 61. Indian Oil Corporation – Case Study • IOCL launched “Power plus fleet card” for transport fleet operators in association with Sundaram finance • The customer service initiative of IOCL is considered as one of the best from the public sector undertaking
  • 62. End of Chapter 2 The importance of Customer Satisfaction