How to recapture lost customers at avergreen shipping agency (vietnam)

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business NGUYEN THI PHUONG TRINH HOW TO RECAPTURE LOST CUSTOMERS AT EVERGREEN SHIPPING AGENCY (VIETNAM) ID: 22130086 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: PROF NGUYEN THI MAI TRANG Ho Chi Minh City – Year 2016 0|Page EXECUTIVE SUMMARY Suppose that the shipping industry is a potential & challenge field in Viet Nam which we need to explore and develop the service quality more strongly & fruitfully The author of this paper who has ever spent the working time at the Evergreen shipping Agency (Viet Nam) (EGV); has a bit of experience in this shipping field and decides to choose the subject of thesis relating to this field with hoping that the thesis can help the company to realize the organization problem and find the suitable solution to improve service quality better to gain the top position in the shipping industry The author has a chance to contact with many departments in EGV and decides to focus mainly on the business department because the author was learned that business department is the most important department to help to bring to the profit for the wholly company Recently, the author is informed that business department needs to be improved because its performance is too bad During researching, the author finds that business department is facing with the main problem: Lost accounts leading to cargo lifting decreased too much during the first quarter of 2016 First, the author discovers the causes and effects of the problem There are many causes leading to lost account of EGV and the author proceeds to survey, evaluate and gives the conclusion of the most important cause which affects strongly to EGV’s lifting falling The main cause is regarding to rate issue which salesperson in charge can’t match suppliers’ request Many accounts were lost or stopped using EGV’s service to move to other competitors who can meet their expectation However, the main cause which is stated here is still unclear that needs to investigate deeper to find out the real problem and the author 1|Page continues to the second survey in next step and find that the real cause is the failure of customer retention With the increase in the pressure of external threats in an unpredictable and uncertain market circumstance, liner shipping companies have to make clear strategies to survive The result of a study intends that EGV still have many occasions to adjust and improve in the strategic decision-making on business problem in maintenance and improvement of customer retention Once the business problem and its most important causes have been identified and validated, a solution can be designed There are two solutions given to discuss as below: Solution 1: Freight adjustment to meet customer’s expectation (direct solution) Solution 2: Developing a system for measuring the performance of a sales department (indirect solution through human resource aspect) The author evaluates and makes a comparison to choose the best suitable solution Suppose that once internal support system is improved effectively, EGV has many chances to attract customers towards the service more and more So, the second solution is chosen the best one for project-oriented evaluation In order to help the readers to understand more details and take this paper as the sample to make a reference for the similar organization situation in the shipping industry Through this paper, the author will present, analyze, evaluate the symptomatic phenomena of a specific problem of the project throughout the whole process and give valuable comments for the organization 2|Page HOW TO RECAPTURE LOST CUSTOMERS AT EVERGREEN SHIPPING AGENCY (VIETNAM) ABBREVIATION & NOTES ACKNOWLEGEMENT I/ COMPANY INTRODUCTION II/ PROBLEM IDENTIFICATION III/ EXPLORATION OF POTENTIAL SOLUTIONS FOR THE PROBLEM 35 IV/ IDENTIFICATION / ACTION PLAN 46 V/ CONCLUSION 50 VI/ SUPPORTING INFORMATION 51 REFERENCES 55 APPENDIX 60 RESEARCH TRANSCRIPTS CUSTOMER SATISFACTION SURVEY TEMPLATE 3|Page ABBREVIATION & NOTES 2M: container shipping industry alliance between Maersk (MSK) and MSC BCC: Business Controlling Center B/L: Bill of lading CEM: prefers to the main service to Europe EGL: Evergreen line (group) EGV: Evergreen Viet Nam FOB & CNF: payment term under collect and prepaid respectively Global NOVCCs and Tender A/C(s): a/c(s) belongs to these groups considered as VIP account GPS: Global Position System to calculate the user's exact location and determine the user's position G6: the six largest European Union members (APL, HAPAG-LLOYD, HM, MOL, NYK, OOCL) KPI: Key Performance Indicators NE2: prefers to the new direct service to Europe which hasn’t still exploited by EGV NLRDM/DEHBG/GBFLX/FRLHV/GRPIR: main ports of WB service 4|Page NVOCC: stands for Non-Vessel Owning Common Carrier NVOCC operation comprises of sales, stuffing and transport of the containers to gateway ports O3: Ocean three alliances of three members USAC, CSCL and CMA POL: port of loading SUP-PSN: Humane Resource department WBD: West Bound department (for long haul section consist of two trades: Europe (EUR) and Mediterranean (MED) 5|Page ACKNOWLEGEMENT I thank the anonymous reviewer for the valuable comments during doing the researching Further, I am indebted to my supervisor, Prof Nguyen Thi Mai Trang for productive comments that led to improvements in this paper Finally, I sincerely thank the support from my colleagues and managers at Evergreen Viet Nam to help me so much in the data collection and contribute the valuable knowledge in the shipping industry If there are not the great supports from you, the author can’t finish this paper effectively and usefully 6|Page I/ COMPANY INTRODUCTION Evergreen Line is ranked in Top 10 of 100 carriers having the best service in the shipping industry in the world during over the past 40 years As one of Taiwan’s most recognized global brands, Evergreen Line will maintain all of the services currently operated and develop new trades to meet worldwide customer demands Evergreen Line serves over 240 locations around the world in Asia, America, Europe, the Middle East, Australia and Africa Evergreen is well respected in the shipping industry with a reputation for providing customer-focused solutions, a quality-through-excellence approach and continual innovation It is also an industry leader in the use of information technology and e-commerce to manage the entire cargo process Evergreen Shipping Agency (Viet Nam) was established in 2002 as the agent for Evergreen Line in Viet Nam Currently, Evergreen Viet Nam has Head Office in Ho Chi Minh City, sub- agents (Da Nang, Quy Nhon), and branch offices in Ha Noi and Hai Phong with totally over 200 employees Each year, EGV celebrates times to review and evaluate the performance of ports of loading POL(s) in area According to EGV lifting statistics of 2012-2014, VNHCM office is main one holding largely lifting with 75% per total lifting of EGV So, this study will concentrate on VNHCM office to review and evaluate service quality at the beginning months of 2015 when we were learned that its performance is on alert Faced with more and more competitive market in shipping & logistics field, building and maintaining a good relationship with customers is essential to longterm business survival Known that business department of the company is the most 7|Page important section to distribute on increasing total revenue yearly In business department, we are divided into separated departments: BIZ-IAS (short haul section), BIZ-LHS (long haul section) & BIZ-IMP (import section) (Figure 1) EVERGREEN VIETNAM‘S SALES ORGANIZATION CHART PRESIDENT SALES REPRESENTATIVE HUMAN RESOURCE DJVP BUSINESS IAS Manager Salesman LHS Manager IMP Manager Salesman Salesman FIGURE 1: Evergreen VIETNAM’s Sales Organization Chart 8|Page II/ PROBLEM INDENTIFICATION To check the validity of the problem statement, the factual information has to be collected The secondary data collection is the step in the process The empirical analysis of the business problem must be given Through monthly/weekly management meetings, West Bound group (WBD) belongs to BIZ-LHS section is targeted and reported about the bad situation during the beginning months of 2015 when the lifting always goes down and no signal to increase back Prior to this period, from 2012 to 2014, WBD often gained good performance (see table1); however, the data in Table conveyed the impression that total transportation expenditures have exhibited a declining trend since the beginning period of 2015, decreasing 25% lifting compared with the same time in 2012, down 27% compared with 2013 and kept going down 16% compared with 2014 With hoping that WB group will maintain the top position in shipping industry as before ( see Table 3) and overcome the difficult situations to gain the better result, an attempt to search for potential antecedents that have high power to explain customer’s satisfaction and loyalty towards services 9|Page plays an important role in the analysis of data The purpose of the study was to gain information from the respondents how EGV-WBD could improve their level of service and qualitative methods are best for this purpose EGV-WBD wanted to conduct a customer satisfaction survey and to get an idea what their potential B-to-B customer’s expectations are The goal was to get some beneficial information on how EGV-WBD could improve their level of service and enhance the level of B-to-B customer satisfaction and retention In service business, it is important to meet the customer expectations and even exceed them because customers buy services they want to buy and not the ones they actually need (Zeithaml & Bitner 2006, 142) According to Ghauri (2002, 102) the best data collection method is interview because there is real interaction between the researcher and the respondent The advantage of interviews is that questions can be formulated in many different ways, they can be explained better and even further questions can be asked There are three main types of interviews: interview by mail, interview by telephone, and personal interview (Ghauri&Gonhaug2002, 101).The survey is not made for marketing purposes, so it is valid and it is not biased After choosing the right research method, the next step was to prepare the questionnaire for the interviews The semi-structured interview technique was used in this survey It means that the topics and issues have to be covered, people have to be interviewed, and questions to be asked have been decided beforehand (Ghauri & Gonhaug 2002, 101) In order to get the relevant information for the assigning company, the questionnaire was prepared together with representative of EGV, Ms Judie She told me what kind of information they would like to get from the survey 52 | P a g e and the questionnaire was made according to her wishes After the first draft of the questionnaire was done, Judie made some comments about the questionnaire and added some questions to it before the final version of the questionnaire was done for the second qualitative research The collection of primary data was started in September 2015 at HCM office of Evergreen Shipping Agency (Viet Nam) West Bound group belongs to business department is focused to explore the problem for next improvement Customers, staffs & Managers are interviewees of this second qualitative research EGV-WBD provided a list of 220 companies and their telephone numbers The task was to reach as many respondents as possible While collecting the primary data, the complexity of task was noticed - it took about one hour to get one response The total number of responses was lower than expected, but the response rate was still satisfactory: 90full answers from the regular customers and 60 from potential customers About one fourth of the numbers on the list did not answer at all or they were out of function and one fourth did not want to take part in the survey Reaching the right people to answer the questions was also difficult because there were many call center numbers on the list After collecting all the primary data, the analyzing of the responses was done The purpose of the analysis is to find out the meaning to the mass of collected data It is usually the most time consuming and the most challenging process for the researcher The drawing of conclusion is an important phase and the purpose is to arrive at valid explanations The researcher must be careful in this phase because alternative explanations are possible in most cases (Ghauri, Gronhaug 2002, 136- 53 | P a g e 138) Findings of the research are represented on the above analysis In order to ensure that the research is not a bias, the author had proceeded the third times of interviews and analyzed the findings/responses basing on data collection& supporting literature to find out the real problem and actual causes against the organization’s problem Once problem identification is executed properly& specifically, the researcher continues to make an empirical study to explore the suitable solution for the business problem on the theory-informed – knowledge of the problem and its possible solutions – deciding one’s literature to use appropriately The results of the research may be used by EGV’s management in improving their B-to-B customer relationships in the future 54 | P a g e REFERENCES Anderson, E.W., Fornell, C., & Lehmann, D R (1994) Customer satisfaction, market share, and profitability: Findings from Sweden Journal of Marketing, 58(3), 53-66 Anaraki, N K (2014) Effects of euro devaluation on Eurozone exports International Journal of Economics and Finance, (2), 19-24 Berry, L.L (1995) Relationship marketing of services; growing interest, emerging perspectives Journal of the Academy of Marketing Science, 23, 236-45 Bolton, R.N., Kannan, P.K., & Bramlett, M.D (2000) Implications of loyalty program membership and service experiences for 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Could you please share your experience about the problem which your department is facing? Which factors affect your lifting falling? Each interviewee’s below reply: (1) Mr Elton, a DJVP, a head of BIZ-LHS department Our company has problem with less support from customers of WBD during the past months We need to review all accounts and find out the real cause and effect leading to the weakness From that, we will find the best solution to develop service better and more effectively His face become a little of sad but his attitude is very aggressive and decisive (2) Ms Julie, a Deputy Manager of WBD department She frowned a bit She looked sad and tired We tried to everything to overcome the current situation Our sales team did effort to push harder customer to support to our service, but our lifting continue to be down in past time We reported daily on the meetings about this bad situation By all means, we will find the solution to solve this problem as soon as possible (3) Ms Tracy, inside salesman of WBD department I made many phone calls to contact with existed customer, potential customers to maintain the relationship The most importance is that we need to know the forecast of these accounts During 60 | P a g e the talk we learned that there is no order or less order in this time and almost account switched their option via our competitor such MSC, UASC, MEARSK, OOCL … She looked sadly and look down the table with voiceless (4) Ms Olive, outside salesman of WBD department She knocked the head and looked at the author and seemed to ask herself “What’s up? What’s the hell?” I tried to my best to offer the best rate; however, our customer still refused to book with us They said that our service is not good and price is higher than other competitors I lost many customers and can’t re-gain these biz We almost can’t fulfill given allocation in the past months I always get bad performance in the past period evaluation Too sad! Right? She knocks the toe on the table…My team works overload and seems that we are very tired to report so much to our supervisors about this event Many times, I have to spend my time at home to write the report to submit before the deadline These simply take way too much time I am boring now due to no solution for this situation until now (long pause) From my research, there were a lot of opinions on this service, although the overwhelming response seemed to be negative in satisfaction evaluation term CUSTOMER’S RESPONSE WITH INTERVIEW TRANSCRIPT (1) SDV logistics Ltd – Mr Tri, a Sales Manager responses: ( at SDV office) You know, we are a VIP account who has supported regularly your service in many years Our volume is 50TEU per month under SQ#E990065 to Le Havre, Rotterdam, Hamburg as main ports Truly, your transit time in the past is not good, but also not too bad! But your service is good We keep supporting in many years However, recently, from Feb to May, we can’t get the ideal freight (he is silence at bit) Although we still want to support EGV, our direct shippers don’t agree with your offer We must switch their order to MSC which can offer the best rate I am very sorry about 61 | P a g e this, but truly, it is the most important factor which we give decision to choose the carrier for exporting our cargo (he smiles gently) The author: we will review this issue In next time, what is your suggestion for EGV service? Mr Tri: as I mentioned above, your service is rather good Only if you can offer the ideal rate matched with our request, we will re-book via your service (2) Global Star logistics company, Mr Hoang, a Sale Manager ( at Global Star office) The author: we know that you are a potential account to book to FRLHV We thank for your contribution to our lifting in the past time with 120TEU per month However, recently we find out that you stopped using our service Could you please let us know the reason of this failure Mr Hoang: Our cargo is under FOB term, our consignee’s instruction is that they need stable schedule to match with L/C payment They need total t/s day to FRLHV is 27 days Your service is good in the past However, you just have new port rotation and can’t match the request while OOCL is possible to supply us the better transit time Moreover, they also offer us the better rate Your offer is often higher than USD50 Come on…please report to your head office to adjust the charge to follow with the market rate, I suggest so Also, please review direct service to get the shorter transit time We will come back when all is done well (3) DMG logistics co., Ltd - Mr Hai, a salesperson in charge (at EGV office) The author: Hi guy! Hope you are fine! Have you breakfast? Take a drink, please You are a new account of us in the previous month in May You book with EGV two voyages with 5TEU for each respectively However, you stop booking with EGV in this month June Could you share with us your idea or any suggestion for EGV? Mr Hai: (he smiles gently…) Thank for your concerning! I know that your salesman tried to gain my biz and tried your effort to give us the kind support for all cases Salesperson in charge promise to offer us the rate of June equal to May But finally, salesman in charge can’t match the requested 62 | P a g e rate We are very sorry about that We switch the order to MSC at once We have no reason to continue to book via EGV once cost is the most importance to us to choose the carrier However, sales in charge re-contact with us to re-gain this biz and he said that head office of EGV agree to keep the rate Uhm… But, your feedback is slow We booked with MSC as soon as our request isn’t accepted 63 | P a g e APPENDIX II IN DEPTH-INTERVIEW WITH QUESTIONAIRES TABLE Customer Satisfaction Survey Template Overall, how satisfied or dissatisfied are you with our company? Very satisfied Somewhat satisfied Neither satisfied nor dissatisfied Somewhat dissatisfied Very dissatisfied Which of the following words would you use to describe our service? Select all that apply Reliable High quality Useful Unique Good value for money Overpriced Impractical Ineffective Poor quality Unreliable How well our products meet your needs? Extremely well Very well Somewhat well Not so well Not at all well How would you rate the quality of the service? Very high quality High quality Neither high nor low quality Low quality 64 | P a g e Very low quality How would you rate the value for money of the service? Excellent Above average Average Below average Poor How responsive have we been to your questions or concerns about our service? Extremely responsive Very responsive Somewhat responsive Not so responsive Not at all responsive Not applicable How long have you been a customer of our company? This is my first purchase Less than six months Six months to a year - years or more years I haven't made a purchase yet How likely are you to use our service again? Extremely likely Very likely Somewhat likely Not so likely Not at all likely How likely is it that you would recommend this company to a friend or colleague? Extremely likely Very likely Somewhat likely Not so likely 65 | P a g e Not at all likely 10 What reasons clients give for choosing the most preferred shipping line? Freight rate Delivery time Document handling Equipment availability & quality Others (please advise if any) …………………………………………………………………………………………… 11 Do you have any other comments, questions, or concerns? Please advise in detail 66 | P a g e ... cause leading to lost customer of the firm threatened Freight issue Un-satisfied rate with customer’s expectation Lateness of updating the market rate High competition in market share LOST ACCOUNTS... Lowenstein, Michael (2016) “Customer Winback: How to Recapture Lost Customers and Keep Them Loyal.” Eberle, Milan and Matos (2016) “Antecedents to customer retention in a corporate context.” Kukar-Kinney,... overload that she had to many paper works at working time and there was really no enough time to visit customer outside to bring back the market information to update the market rate to BCC for