Sheltering the customer

IDG News Service — Wed, 14 May 2008 11:55:11 -0700

Third-party service centers left LG India's clients exposed to the glare of poor support. HQ urgently needed to supervise service staff in remote locations -- before brand loyalty dried up.

"The single most important thing to remember about any enterprise is that there are no results inside its walls. The result of a business is a satisfied customer," said management guru Peter Drucker.

A satisfied customer who will come back for more, is what he left unsaid. Customer service is the building block of brand loyalty and when LG Electronics India (LGEIL) zeroed in on this, it knew something had to be done.

LGEIL, a wholly-owned subsidiary of LG Electronics, South Korea, set up base 12 years ago. Since then it has grown exponentially, and today, it has two manufacturing plants, 38 branch offices, and 140 area offices. Between 1997-2005, LGEIL's compounded annual growth rate was 62 percent. It quickly became one of the market leaders in consumer durables with over a quarter of the color TV market, over a third of both the washing machine and air-conditioner markets, and a 41 percent market share in microwaves.

However, in 2004, the Rs 9,500-crore company realized that their customers' only point of contact with the company was through 5,000-odd customer service engineers -- the people who fixed their appliances. These brand ambassadors, however, had no loyalty to LGEIL but to their bosses -- 1,100 franchised service centers across the country. The result? In a 2004 Businessworld 'After Sales and Service' survey, LGEIL came in a poor last for the service of its refrigerators.

"The service center's attitude towards the customer was what LG's market depended on," says Daya Prakash, CIO, LGEIL.

LGEIL's management were frightened by the realization that they had no control over the service levels the 5,000 service engineers offered. And customers drew lasting impressions of the manufacturer from them. What was needed was a control mechanism that lay down the guidelines for behavior, service efficiency and communication skills of service engineers. After all, service is among the most important factors in a decision to buy again from LG India.

"It is our duty to ensure that customer satisfaction is maintained. We knew that this was one area in which we absolutely had to be at the top if we wanted to be successful," says Prakash.

It was a thought that had nagged the company's management for sometime. In 2001, the company set up LGSCNET (LG Customer Support Online). The B2B portal was meant to help LGEIL's service franchisees (also called Area Service Centers or ASCs) maintain spare part stock, even if they were located in the backwaters. The lack of spare parts was a major impediment in closing a customer complaint. LGSCNET also helped track the delivery of stock and spares.

From 2004, as connectivity in the country took off, LGSCNET was expanded and today it covers 90 percent of LGEIL's branches. By this time, LGEIL had invested Rs 3 crore initially and about Rs 1.5 crore on maintenance in its attempt to ensure better service.

But despite the real time information available online, LG India's management realized that it still had little control over service engineers -- and consequently its brand.

Life's Not So Good

In 2005, the solution, it seemed, was to somehow get LGCSNET to go at full throttle. But the lack of broadband, the costs involved and fixed mindsets were in the way.

If information is power, then LGCSNET ensured that power was concentrated in the corporate office. Since data on inventory, stock and ordering was available with HQ, there was resistance from some service centers.

"Growing awareness that we needed to do this to improve manpower quality was one of our biggest challenges," recalls Prakash.

In the meanwhile, LGEIL's customers were not being serviced as well as they wanted to be. "We had cases where problems were escalated only because service was not up to the customer's satisfaction," says Prakash.

Even when service engineers attended calls punctually, they couldn't tell customers how soon their problems could be fixed. Mainly because an engineer had no way of knowing if a crucial part could be sourced from the local service center or if it needed to be ordered from a regional depot or higher up the supply chain. When an appliance could be fixed depended heavily on where parts could be sourced. Engineers could not give customers a time-frame and the lack of transparency left customers feeling helpless and cheated.

"One of LG's objectives was to promote the brand. Servicing one product well ensures that customers keep coming back," says Prakash, pointing out how LGEIL could be losing business because of dissatisfied customers.

Another objective of enhancing LGCSNET was to create a call center for customers. The call center was vital if service requests were going to get real time attention. But with the call center being a customer's first point of contact, it was clear that servicing would have to start from there.

So, LGEIL decided to leverage LGCSNET with a campaign called 'Customer Delight'. The program was meant to increase service quality with three initiatives. "We started the campaign basing it on LGCSNET. What we were looking for was a continuous enhancement of the basic service offerings. Each of these initiatives (SMS service, 211 and Voice of Customer) were targeted at bringing about customer delight, service efficiency and employee efficiency," says Prakash

Customer Delight

The SMS service, or the SMS-based call intimation system, ensured that service engineers were intimated of service calls by the call centers via SMS.

The system ensures that whenever the call center receives a call, an SMS is sent to the customer with a job code. Simultaneously, an SMS is sent to a service engineer assigning him that job.

In addition, there are other SMS-driven applications for institution or corporate customers who have been given dedicated numbers. Their calls for service are instantly SMSed to a branch office and an engineer, to ensure stricter follow up of a complaint.

The SMS service initiative worked well, and has several benefits. It provided an auto confirmation of complaint number to customers and ensured that all calls were tracked till closure. It also reduced errors caused by transferring calls manually.

From the SMS service stemmed another initiative that made it possible to have greater control over service engineers -- thereby increasing LGEIL's ability to keep their customers happy. This came in the form of the 211 program.

Under 211, service engineers have to return a customer's call within 2 hours of a complaint being lodged. They have to ensure that they can give their customer 1 hour of their time in the next 1 day.

"211 was implemented not only to better turnaround time. After McKenzie did a customer satisfaction survey for us, we came to the conclusion that we were not interacting enough with our buyers. We were not asking about their feedback -- after a job or before it. This was what prompted the 211 program. When we implemented it, we realized that it also bettered the delivery function. 211 has helped LG with its customer relationships,' says Santosh Das, head of customer service, LGEIL.

The company backed 211 up with 120 tele-callers. Their job was to provide LGEIL with feedback on how the 211 program worked for them. It meant about 1.5 lakhs calls a month and was a substantial investment for the manufacturer. But LGEIL's management ensures that customer feedback is passed on to engineers and going forward, engineers will be evaluated on its basis.

The result? In another Businessworld survey on consumer satisfaction -- this time in 2007 -- LGEIL scored first place for its ability to resolve customer problems on a first call and for the skill of its helpline personnel.

Another initiative is the 'Voice of the Customer (VOC)', which gives LGEIL all the interaction that is needed to keep customer relationships healthy. "For VOC our motivation was getting good customer interaction and in the process, getting a good customer feel," says Das. "It will affect the business in the long term."

VOC helps figure out which regions in LGEIL's empire are facing problems. "We try to track customer calls, note their location and frequency, find out common problems, and how service centers respond," says Prakash. "We wanted customer information, complaint details, resolution details. We even wanted to see how service engineers react and whether customers were satisfied with their behavior."

Making Service Flatter

With these initiatives in place, Prakash's team is looking forward to more applications to add to the LG customer experience. "We want to expand the SMS base further," says Prakash.

Taking the SMS application forward, there are plans for newer applications in which an engineer can interact directly with LGSCNET, via SMS, to check for part availability. Currently engineers have to call a local service center for this data because it is only online.

"Then it will be possible to tell a customer, with greater accuracy, how long a service will take."

LGEIL is also developing tools to forecast part availability. "It means coming up with a business intelligence application. For instance, some models of ACs in NOIDA have problems with gas leaks. So, service staff can be ready with spares and service for these models, because I can forecast problems. The idea is to have a pro-active service structure."

The company's proactiveness is contagious. IT is cutting through the reluctance of service centers to be more transparent. "When the SMS started, it was a little difficult initially, but the LG team helped us through," says R.G. Swaminathan, a service center owner in South Chennai. "Thanks to this, we can service more customers. In 2004, I took about 2,000 calls a month. Today I deal with about 3,500 calls a month. In addition, now there is much more transparency."

In the additional 1,500 calls, LG may perhaps find a way to increase its revenue. "I have asked and talked to my customers. They are much happier, there's less time wasted, and their glad someone is asking if they are satisfied with our service. What we're doing now -- that's making a difference," says Prakash.

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Sheltering the customer