Summer+2009+Section+09-PJ+Week+3

=Class Discussion for Week 3=

It occurred to me that in our case discussions, not one group*, admittedly not even mine, introduced the prospect of using enterprising social media tools, such as Twitter, LinkedIn, or even Facebook, in the context of customer service solutions. I say “enterprising” not because these tools are brand new, but because they are increasingly relevant to the business climate. Many executives shy away from the formal use of social media in their companies for fear of a rouge employee, or blurry quantitative data on ROI. But I like [|Paula Drum’s reasoning], former VP of Marketing at H&R Block, she says: “One of the most popular questions that I get asked is how to build [social media] support at the C-level. Having a clearly defined objective is critically important to gain support of any initiative. However, everyone is always focused on the ROI or return on investment. I have defined ROI a little differently in this new and emerging space, as **Risk of Ignoring **...”

Furthermore, social vehicles such as Twitter can be used as a tremendously effective customer service mechanism in candid response to dissatisfied customers. It is a way for companies to remain transparent to the public (a good thing in today’s age), and show customers that companies really care and are ready to react quickly to their customer’s needs; without getting bogged down in expensive and time consuming procedural formalities. I came across an interesting blog post by [|Mashable], which outlines six [|“how-to” steps to using Twitter for customer service]. The post starts: “With the connectivity made possible by social media, companies have found a new way to engage their customers, solve their problems, and build goodwill for their brands: Twitter! Understanding how Twitter can transform customer relations for the better can be substantial for reducing costs and improving brand image.” This correlates directly with our discussion of Atida’s “Customer Revenge” case study.

Comcast has taken the above attitude to heart, and put it to work online in the form of [|a customer service blog]. They also "lurk" on the net and look for instances of complaints against them and respond directly to a customer complaint (whether it be on twitter, facebook, etc.) in order to resolve any "unkown" situations. I have a colleague who voiced a complaint on twitter and had his issue discovered and resolved within 3 days through this method.

In a related note, I was recently shown this video which talks about the acceleration of information in social media terms. It is really powerful, and I'd love to hear (read) your reactions and thoughts after viewing it: **[|Did you know?]**


 * Our group, the known unknowns, did suggest the idea of creation a social network on the company's website that would allow for people to post comments or complaints on the site and get responses from other customer and also directly from someone that worked for the company. The reason we went this route instead of facebook is to give us more control over the process. We could remove posts that we didn't like and monitor the conversations between customers.

Much of the reading we covered in the last three weeks has focused on how to create loyal customers. For example Harrah’s went to great lengths to retain loyal customers with their Total Gold program. Why are loyal customers so important and what do you think are the best techniques and methods to retain customers? Under what circumstances would you fire a customer?
 * __ Loyal Customers __**

Harrah's realized that their clientele was not growing which is necessary if a business is to stay alive. They employed the tactic of providing future benefits which can be used when the client returns. This is very smart on a couple of levels. 1.) It is easier to retain customers and more beneficial becuase you can more easily predict a steady income stream. 2.) If the future benefits are worthwhile, they will spread by word of mouth which will bring in more customers. Bringing in new customers hopefully means they will be there at least 2 times. Additionally, loyal customers tend to spend more in future transactions, increasing their overall value.

= One of the slideshows shown by Paul was of the Dell survey below to show how useful the 1-10 grading system can be to gain the needed data to improve a companies customer service: = = =  Paul states "By substituting a single question for the complex black box of a typical customer satisfaction survey, companies can actually put consumer survey results to use and focus employees on the task of stimulating growth"


 * What do you think?**

I'm not sure if this is trailing away from the subject, but Twitter, Linkedln, or even Facebook is more of a social network and is marketed as such so it will be the last thing that a frustrated cutomer will have in mind. The frustrated customer would want to hear a voice at the opposite end of a "customer service" call so that even a voicemail message would even sound irritating, much less having to type out their frustrations online.

Where might they go if they have a negative customer service experience and need someplace to vent, or a way to exact "revenge"? The internet is a powerful tool for sabotaging a company or product. Try searching on Twitter for the phrase, "Comcast Sucks". It returns at least 20 pages of people complaining about bad Comcast service. I would go ahead and say that's something to pay attention to - and gives our Loyalists and Terrorists a place to do some major promotion/damage.

Paul identified a resource that will be helpful with the Rosewood case, which can be found on WISE under Resources > Case Extras > Rosewood.
 * Collective Class Notes:**

Discussed that customer satisfaction feeds into three kinds of customers: 100% Satisfied = Loyalists/Apostles; Less Satsfied = Mercenaries/Hostages; Dissatisfied = Defectors/Terrorists.

We got into some nitty gritty stuff concerning calculating CLV and CRV through an equation. There was an air of confusion surrounding some pieces, so it might be good to start a conversation around any remaining questions here:

One thing to be aware of is that this formula needs to be applied independently to each cost assumption and then combined at the end. It is also an estimate of the future purchasing behavior. This is a guide to determine whether to retain or "fire" the customer.

CLV:

We determined that using "Real Options" assists us in estimating future purchasing behavior, customer's discounted profit contribution, and whether expected future profit contribution might be negative. This process assists us in determining which customers to "fire". This process would include some sort of incentive change or price increase which encourages bad customers to self select out, yet keeps good customers.

CRV: Customer referral value can help determine what sort of strength a customer may have concerning word of mouth. How much damage could they do if dissatisfied? How valuable is their word of mouth? So, they don't buy very much, but they told 100 people that they love your product...are they worth your effort?

CASE STUDY: The Brita Products Company, Harvard Business School 9-500-034 Rev. January 13, 2002

The discussion in class also focused on the Brita case study. Please discuss the elements of perfect competition do you think there is a role for perfect competition in the water filtration industry? How do you think Brita and PUR could benefit from perfect competition or how do you think it could hurt them?

The actual product identified was the water pitcher and replacement filters, over time the overall competitive products in the marketplace grew to include kitchen fixed faucet mounted filtration systems and other water purification systems. The study focused on the cost analysis of how to get the consumer to buy the water system either the fixed system or the pitcher and replacement filter systems. Brita's focus was on taste. The product selection changed based on the evolution of consumer needs and demands. Bottled water was a competitive factor. The consumer wanted a high quality product that provided for their "safety" and met "clean water" health standards. The industry also benefitted from good health and popular fitness guidelines issued by experts to drink 8 -- 8 ounce servings of water each day. Consumer attitudes and behaviors play a huge role in this industry.

The distribution system followed a pattern of channel evolution. "Class to mass" meant Brita would become "first is class", "first in mass" and "alone in grocery". This involved adding to the product selection. It included the "Ultra" and multi-pack filters. They established MAP a minimum advertised price where no retailer could charge less than this price.

Their advertising focused on taste before health they felt it would be more difficult to compete on the quality of filtration which could be factually analyzed verses a subject element like taste. They believed the industry had not been originally focused on health, Brita successfully focused on the "waterfall" imagery.

The decision on how to take Brita forward was to be difficult. As of January 3, 1999, sales were up by $1 million, their net loss had doubled to $7.2 million its stock had dropped by $25 share to $10. However, in comparison to PUR's losses they were still doing better. In the midst of his decision, he received notice that Procter and Gamble the largest competitor to Clorox was about to acquire PUR. Aside from this merger, Brita's plans were halted mid-step by the use, in a prominent big-box chain, of a display sign with check-marks denoting filtration qualities of the various filters on the market. This display gave marks to each brand that met a specific filtration qualifier - particulate, chemical, bacterial, etc. Taste was not a factor and, against the brands, Brita did fare well on this scoreboard.

I don't think the water filteration markets would work for perfect competition because there are too many barriers to entry. First is the cost to develop and patten a water filteration system. Second is the strong market share that Brita has and would fight to keep. Brita could easily lower their prices to drive competition out of the market. Perfect competition would hurt Brita because it would bring a number of new companies that they would have to compete with. The one thing that would make for perfect competition is that the systems do basically the same things and the company have to fight over who does it better. But there is also a fight over price which doesn't not happen in perfect competition.


 * In Class Presentations:**

An item of note was that several teams felt that a continued presence in the states was very important in providing the exemplary customer service. It seems that many of the responses from the case were reactive as opposed to being properly prepared and proactive with the customer. The company was waiting for issues to be escalated before reacting.

Team: As a Team We Thought That.... Team As A Team We Thought That, as a team, thought that there was a lot that could be done to improve the customer service by implementing an advances CRM system at Atida. The advanced CRM system would allow Atida to develop a sophisticated way to segment their customers. By properly segmenting their customers Altida will solve multiple issues within the company but mainly the customer service issue. An escalation process would be implemented based off of the CRM segmentation to properly route and escalate issues both before a call or complaint is made and after. First and foremost, (or lastly, however you want to think about it) if Atida is going to make an effort to improve their customer service, they should make sure consumers know. A positive perception of Atida’s customer service would go a long way in minimizing the impact of any future youtube videos to the contrary. This could become the main idea of their next ad campaign or a gorilla effort on the internet with videos of their own, potentially produced by satisfied and enthusiastic customers. We weren't adverse to "firing" customers who present expansive service challenges that cost Atida time and money. We were also adverse to the idea of abandoning the commitments Atida had just recently made in setting up the India call center. It was too early in our minds to go back to the drawing board. Rather, we would reemphasize the India call center as the "first line" for the new customer segment and, perhaps, the potential problem customers. Repeat/loyalist customers would have access to accelerated escalation of customer service and/or service recovery from the front line, in some cases being in cue to go right to service "managers". We would also invest in additional training for the India service center to avoid the mistake in communication that was made ("sorry for the inconvenience").

Team: Top Gun

Team: The Known Unknowns When a customers call is received at the call center, their information is pulled from an elaborate data base that includes customer history, size of the account, customer lifetime value, and any business related issues with the customer. An algorithm highlights key data points that determines the level of immediate service that the customer receives. We proposed a tiered service plan, that is designed to handle all inquiries. Tier 1, front line overseas call center. Tier 2, customer service department in the United States, prepared to recommend compensations for issues. Tier 3, elite high CLV customers, management handles these calls, and works to preserve critical customer relations. Our service department also initiated a blog on our website, that encourages the customer and the service department to communicate freely in the public domain. This blog enables the customer to complain about issues, observe other customer issues, and see how management is resolving customer complaints. (Please note- This scenerio is not meant as a rewards system aka. mileage plan, but as a way of escalating issues and resolving issues based on CLV). Team:

Question: Just out of curiosity, how would the company keep the "diamond level" service exclusive? Is there a separate number, or are these customers identified by a customer number and then routed through? A lot of groups (even ours) talked about "patching" valued customers through to a more elite customer service department. How will it effect satisfaction to have to be bounced from one representative to another?

The "diamond level" as we call is not a separate number. Once a call is determined to require elevation to that level, the call center will automatically patch the caller to this service. For my own personal opinion as a customer, I would not mind being patched through to another person as long as my issue is resolved. The frustration comes when you are moved from one operator to another without gaining any results. The call screener woud also have computer cues that indicate that a caller is "diamond level" so that they don't waste time in the initial call. This can be just as frustrating if the caller is used to this level __**of service and doesn't have this consistently presented.**__

I think that the diamond level should be a separate number. The more people I have to talk to on a support call the more frustratrated I get. Another advantage of the diamond level should be a shorter wait time but if they call the same number their wait time to get to the right people would actually be longer. The only was for diamond service to work and provide the proper benefits is if it is a separate number that goes to a different location.