LV Thạc sỹ_Improving customer satisfaction at LIMVINA company

1 ACKNOWLEDGMENTS I would like to express my deepest gratitude to my supervisor, Doctor … Hanoi, Oct … … TABLE OF CONTENTS LIST OF TABLES………………………………………………………… LIST OF FIGURES………………………………………………………… EXECUTIVE SUMMARY………………………………………………… CHAPTER 1: INTRODUCTION…………………………………………… 1.1 Rationale………………………………………………………………… 1.2 Research problem……………………………………………………… 1.3 Research objective……………………………………………………… 1.4 Research questions……………………………………………………… 1.5 Research methodology………………………………………………… 1.6 Research scope………………………………………………………… 1.7 Thesis structure………………………………………………………… CHAPTER 2: THEORETICAL BACKGROUND………………………… 8 10 11 11 11 13 14 2.1 Overview on customer satisfaction…………………………………… 2.1.1 Customer satisfaction concept……………………………………… 2.1.2 Factors impacting on customer satisfaction………………………… 2.2 Service quality concept………………………………………………… 18 18 2.2.1 Overview on service quality………………………………………… 2.3 Service quality model………………………………………………… 2.3.1 SERVQUAL Instrument……………………………………………… 2.3.2 The Expectation-Service Gap Grid Model…………………………… 2.4 Factor impacting on Service quality…………………………………… 2.4.1 External factors……………………………………………………… 2.4.2 Internal factors……………………………………………………… CHAPTER 3: CUSTOMER SATISFACTION AT LIMVINA CO., LTD… 3.1 Overview of LIMVINA CO., LTD…………………………………… 3.2 Research Findings……………………………………………………… 3.2.1 Customer survey result……………………………………………… 3.2.2 Result of in-depth interview………………………………………… 3.2.3 General Analysis of Customer survey and in-depth interview……… 3.2.4 Problems and Causes………………………………………………… 22 24 24 28 29 29 31 33 33 38 38 46 47 CHAPTER 4: RECOMMENDATION……………………………………… 4.1 Orientation of company about Customer Satisfaction………………… 56 4.2 Recommendation for improving customer satisfaction at LIMVINA… 4.2.1 Human resource quality improvement……………………………… 7 60 4.2.2 Diversifying service………………………………………………… 4.2.3 Applying customer satisfaction measurement (CSM) in quality of service………………………………………………………………………… 4.2.4 Strengthening communication with customers……………………… 4.2.5 Expanding service supplied network………………………………… 4.2.6 Strengthening logistic system…………………………………………… 4.2.7 Recommendation about LIMVINA’s organization structure…………… CONCLUSION……………………………………………………………… DECLARATION OF ACADAMIC HONESTY……………………………… REFERENCES……………………………………………………………… APPENDICES…………………………………………………………………… 61 62 63 64 64 66 67 68 70 LIST OF TABLE Table Table Table Table In-depth interview structure……………………………………… LIMVINA’s turnover…………………………………………… The SERVQUAL Score (Gap Score)…………………………… The Mean SERVQUAL Score (Mean Gap Score)……………… 13 36 39 42 LIST OF FIGURES Figure Figure Figure Figure Figure Figure Figure Figure Figure “Five Gap” Model of Service Quality…………………………… Perceived Service Quality……………………………………… The Expectation – Service Gap Grid Model…………………… Limvina’s Organization structure……………………………… Gap Score Chart………………………………………………… The Mean Gap Score by Five Dimensions……………………… Expectation-service Gap chart…………………………………… Quadrant for Expectation – Service Gap………………………… LIMVINA’s new organization structure………………………… 25 28 31 38 42 44 45 46 65 EXECUTIVE SUMMARY It seems self-evident that companies should try to satisfy their customers Satisfied customers usually return and buy more, they tell other people about their experiences, and they may well pay a premium for the privilege of doing business with a supplier they trust Statistics are bandied around that suggest that the cost of keeping a customer is only one tenth of winning a new one Therefore, when we win a customer, we should hang on to them However LIMVINA is facing with the problem is that decreasing in its customer’s loyalty 5% of customers left LIMVINA to other suppliers are regarded as alarmed percentage of customer loyalty for LIMVINA Moreover, Vietnam is becoming WTO member since 2007 and now on the way of WTO integration route until 2012 Day by day Vietnam opens its market larger This creates both chance & threat for LIMVINA FDI increasingly invest into Vietnam Almost of FDI projects are manufacturing factories Demand for generators and generator related services increases This is a chance for LIMVINA to extend its market share However, there is appearance of more competitors in the industry Recognizing that customer satisfaction is the key of success for not only LIMVINA but also for all companies, the author choose topic “improving customer satisfaction at LIMVINA CO., LTD” to be the research project for master of business administration thesis The research objects of the thesis are to analyze the situation of customer satisfaction during using LIMVINA co., ltd’s products & services, to find out and evaluate factors impacting on customer satisfaction, to understand customer’s expectation about LIMVINA’s service quality and to propose recommendations and solutions for Limvina co., ltd to improve its customer satisfaction To collect primary data, the author conducted a survey with questionnaires, and in-depth interview To collect secondary data, the author use LIMVINA’s reports This thesis discussed customer satisfaction at LIMVINA basing on customer expectation and customers’ perception, customers’ assessment The structure of this study was constructed based on the SERVQUAL instrument submitted by Parasuraman, and the research on the employees of customers in Northern provinces, with the analytical tool of excel The purpose of this study was to discuss the difference between customers’ expectation and customers’ perception The study used Five Gaps Score Model for reference To measure LIMVINA’s service quality and customer satisfaction, the original model was based on sixteen attributes under five dimensions: Tangible, Reliability, Responsiveness, Assurance, and Empathy The Expectation-Service Gap Grid was also used in the data analysis to identify shortfalls under these five dimensions In addition, author also conducted interviews with managers of purchasing departments, directors of customers in order to find gap service more detail Research results indicated that: Overall, service quality at LIMVINA fell below customer’s expectation, all attributes had negative mean scores • The customers are not satisfied with company’s ability to provide service as promised And the cause is Vietnamese engineers lack experience • Responsiveness of LIMVINA is not on time and quick And the causes are weak inventory and logistic activities and company’s location are far from customer’s place • Customers are not satisfied with LIMVINA’s staff enthusiasm And the cause is that Employees work passively and they think reward & contribute is not fair • Range of LIMVINA’s service is narrow, lack of service to meet customer demand • Author found shortfalls about LIMVINA service quality from customer survey, in-interview managers & director of customers Concurrently, author got also their comments for improving quality of service From then LIMVINA can improve its customer satisfaction Base on the collected data, author analyzed, assessed LIMVINA service quality and gave several recommendations for improving customer satisfaction: Human resource quality improvement; expanding service supplied network, strengthening communication with customer, diversifying service range, strengthening logistic system, applying Customer Satisfaction Measurement (CRM) in quality of service and recommendation about LIMVINA’s organization structure CHAPTER 1: INTRODUCTION 1.1 Rationale COMPANY NAME: LIMVINA CO., LTD Head-office: #506, CT3-2 Block, Me Tri Ha Urban zone, Me Tri ward, Tu Liem Dist., Hanoi Business scope: Trading Main trading products: Generator LIMVINA is the sole agent of EASTPOWER – the Korean brand name of generator in Vietnam Services: engineering services (Installing, maintaining, repair) Customers: Manufacturing companies It seems self evident that companies should try to satisfy their customers Satisfied customers usually return and buy more, they tell other people about their experiences, and they may well pay a premium for the privilege of doing business with a supplier they trust Statistics are bandied around that suggest that the cost of keeping a customer is only one tenth of winning a new one Therefore, when we win a customer, we should hang on to them During years running the business, LIMVINA sees that 5% of customer left it for other suppliers The percentage of customer returns to use LIMVINA’s product and service is 0% This has caused decrease in turnover and bad impact on the company’s long-term strategy, reputation Through a verbal survey, we recognize some reasons of decrease in customer’s loyalty are quality of machine, late delivery time Moreover, Vietnam is becoming WTO member since 2007 and now on the way of WTO integration route until 2012 Day by day Vietnam opens its market larger This creates both chance & threat for LIMVINA FDI increasingly invest into Vietnam Almost of FDI projects are manufacturing factories Demand for generators and generator related services increases This is a chance for LIMVINA to extend its market share However, there is appearance of more competitors in the industry To win in the competition debate, improving customer satisfaction is essential for LIMVINA CO., LTD 10 The verbal survey is not enough for LIMVINA to find out reason why customer left it for others and what customers expected about product and services With the above reasons, I choose this topic to the research with the hope that the research can help to find out weakness, mistake in our customer satisfaction policies Since then, we can avoid mistake and have solution to increase level of customer satisfaction in the future, reduce time, cost for the company 1.2 Research Problem Problem statement: How to improve customer satisfaction at LIMVINA CO., LTD At present, LIMVINA’s customers are manufacturing factories in the Northern of Vietnam Almost of them is Korean FDI projects located in Industrial parks With power cut often in the summer, keeping stable production is the most importance requirement for them That why every factories have to buy generator and generator related services (installing, maintaining and repair) Each customer buys generator just or times but to keep the generator work well they have to buy generator related services monthly or quarterly (after 2500 hours of machine-working.) However, LIMVINA is facing with the problem is that decreasing in its customer’s loyalty 5% of customer who left LIMVINA to other suppliers is regarded as alarmed percentage of customer loyalty for LIMVINA This means that the level of customer satisfaction at LIMVINA is decreasing “How to improve customer satisfaction at LIMVINA Co., Ltd” is the problem statement for this research 10 65 some emergency case, weak inventory make LIMVINA not response customer on time Therefore, customer did not satisfy This is due to weakness of logistic system of the company So, to strengthen logistic system for LIMVINA is a very important work in this time The author proposes that LIMVINA may apply a soft-ware which helps LIMVINA to control stock, input & output on time Applying the soft-ware make LIMVINA know exactly quantity of goods they keep stock, when they need to import so that LIMVINA always have enough goods to implement its service timely Beside, LIMVINA should set up good relationship with several logistic companies who will help to collect goods in oversea, oversea transport and domestic transport for it This is a good way to help LIMVINA shorten time during transportation and increase customer perception in responsiveness dimension 4.2.7 Recommendation about LIMVINA’s organization structure To improve customer satisfaction, LIMVINA should pay its attention to customer care Therefore, the author recommends that LIMVINA should create more customer care centre This is a centre where LIMVINA can collect all comment, complain from customer, then transfer it to other department such as technical department This centre helps LIMVINA to understand more about customer’s concern The organization structure of LIMVINA may as following: Figure 9: LIMVINA’s new organization structure 65 Customer care Centre 66 Vice Director Technical Dept Mechanical Group Electrical Group Vice Director Sales Dept Logistic Dept Administration & Accounting Dept General Director Source: Author’s recommendation CONCLUSION 66 67 After conducting survey and in-depth interview customers, the author had a wide perspective about service quality and customer satisfaction at LIMVINA Main target of thesis was measure and analyze customer expectation and needs in order to gain a better perspective of the provided service For this, author tried to mix her knowledge, information of company and information of customers in order to have a better understanding of what customer wanted The company continuous improvement was based on the five dimensions (Tangible, Reliability, Responsiveness, Assurance, and Empathy) which mentioned in chapter III These dimensions would help the company with the current work structure to cover system aspects and update company goals, customer expectations and needs With these well established dimensions, the company would avoid obstacle like lack of quality in work and in provided service In order to measure the customers’ satisfaction, the main method that author was using in this thesis was SEVQUAL This was a good method to find and measure the potential gaps in quality of service The commitments that they were using in the SERVQUAL method was: Tangible, Reliability, Responsiveness, Assurance, Empathy Beside, reason of gap service was also discovered Bas on gap service and reasons, author had proposed recommendations for improving customer satisfaction at LIMVINA DECLARATION OF ACADEMIC HONESTY 67 68 I hereby declared to have written this Master’s thesis by my own, having used only the listed resources and tools and this was also the first thesis of improving customer satisfaction at LIMVINA Co., Ltd The listed resources and tools were well known to me I am sure that it was deemed to be an offence against the examination regulations of NEU Business School and National Economic University Hanoi, Dec, 2010……………………………………… Signature of author REFERENCES 68 69 Le Dinh Quynh (2010) “Improving Mega-VNN Service Quality at Vietnam Data-communication company (VNPT/VDC)”; Albert Azzam and Niel Ransom; Publisher: Mc Graw-Hill; ISBN: 0071350608 Title: Broadband Access Technologies Bergman, B & Klefsjö, B (2003) Quality from Customers Needs to Customer Satisfaction Studentliiteratur, Lund Chakrapani, C (1998) “How to Measure Service Quality & Customer Satisfaction: The Informal Guide for Tools and Techniques” p207273D Chow-Chua, C & Komaran, R (2002) “managing service quality by combining voice of the service provider and voice of their customers” managing Service Quality; Volume: 12 Issue: 2; p10 Christopher, M (1998) “Logistics and Supply Chain Management”, nd ed Financial times Prentice hall London P 293 Edwardsson, B, Thomasson, B (1993) “Quality of Service, making it really work”, Mc Graw Hill, Quality in action series Garvin, D (1984) “What does Quality Mean?”, Sloan Management Review, Vol 4, 1984 Helga D (1992) “The Quality Movement: What Total Quality Management is Really all about!” Liverpool, p.13 10 kang, G., Jame, J., Alexandris, K (2002), “Measurement of internal service quality: application 11 Mitra (1993), Fundamantal of Quality Control and Improvement Macmillan Publishing 12 Norman, R(1984) “Service Management” Chichester, Sussex: John Wiley & Sons 13 Scherkenbach, WW (1986) “The Deming Route to Quality and Productivity”, mercury London, p1 69 70 14 Stamatis D.H (1996) “Total Quality Service: principles, Practices, and Implementation” (St Lucie) p.162-170 APPENDICES 70 71 Appendix 1: LIMVINA CUSTOMER SATISFACTION QUESTIONAIRES………… 70 Appendix 2: FINDING FROM CUSTOMER’S ………………………………… Appendix 3: IN-DEPTH INTERVIEW FORM………………………………………… Appendix 4: LIST OF INTERVIEWEES……………………………………………… 73 75 APPENDIX LIMVINA CUSTOMER SATISFACTION QUESTIONAIRES 71 72 Firstly, thank you so much for your help, there will be no right or wrong answers, I would like to know your expectations and perceptions about LIMVINA service quality It is very important information for me to finish my Thesis PART 1: GENERAL INFORMATION Respondent:…………………………………………………………………… Year of Birth (Olds):…………………………………………………………… Sex:… Male/Female…………………………………………………………… Company name:………………………………………………………………… Department name:……………………………………………………………… Telephone Number:………………………Email Address:…………………… PART 2: SURVEY OF YOUR EXPECTATION AND PERCEPTION OF LIMVINA SERVICE QUALITY Based on your experiences as a user of LIMVINA service, please indicate: On the left side, please show the extent to LIMVINA service quality which you expect On the right side, I would like you to rate your feeling about LIMVINA service quality, which you have perceived Please tick “V” in the blanks beside questions (If you feel that expectations or perceptions of LIMVINA service quality is excellent, tick “7” If you feeling is less good, tick one of the numbers in the middle or low.) 72 73 Expectations of LIMVINA Perceptions of service quality LIMVINA service quality Low………………….High Q1 TANGIBLE DIMENSION Low………………… High Spare-parts, materials provided and associated service look good quality Equipments, means used by employees during Q2 implementing service look modern Employees who have a neat, professional Q3 appearance Information in Checking report is clear Q4 Low………………….High RELIABILITY DIMENSION Q5 Service is provided as promised Q6 Goods is provided at the promised time Q7 Employees who have a neat, professional Low………………… High appearance Low………………….High RESPONSIVENESS DIMENSION Low………………… High When there is a problem, provider respond to Q8 customers' requests readily & quickly Q9 Willingness of employee to help customers Q10 Customers contact supporters easily Low………………….High ASSURANCE DIMENSION Low………………… High Enthusiasm of employee when working Q11 Employee Q12 explains to customer enthusiastically and politely Q13 Making customer feel safe with engineer's skills & knowledge Low………………….High EMPATHY DIMENSION Low………………… High 73 74 Q14 7 Making the effort to know customers and their needs Q15 When client contacts service point, employees will listen to their problem and demonstrate understanding and concern Q13 Employee takes interest in customer/sharing individual information Other comments (if you have):………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… You have reached the end of questionnaire Thank you so much for your help! APPENDIX FINDING FROM CUSTOMER’S TANGIBLE DIMENSION Spare-parts, materials provided and associated PERCEPTION EXPECTATION P E 4.84 6.32 GAP SCORE G=P-E -1.48 74 75 service look good quality Equipments, means used by employees during implementing service look modern 4.16 5.95 -1.79 Employees having a neat, professional appearance 3.84 5.97 -2.13 Information in Checking report is clear 5.04 6.45 -1.41 4.47 6.17 -1.70 4.10 6.29 -2.19 4.95 6.43 -1.48 3.88 6.00 -2.12 4.31 6.24 -1.93 4.26 6.21 -1.95 Average Tangible RELIABILITY DIMENSION Service is provided as promised Goods is provided at the promised time Keep in touch with customer well after service completed Average Reliability RESPONSIVENESS DIMENSION When there is a problem, provider respond to customers' requests readily & quickly Willingness of employee to help customers 4.82 6.60 -1.78 10 Customers contact supporters easily 4.84 6.37 -1.53 4.64 6.39 -1.75 4.61 6.10 -1.49 4.26 6.13 -1.87 4.00 6.08 -2.08 4.29 6.10 -1.81 3.84 6.01 -2.17 4.97 6.24 -1.27 3.66 5.20 -1.54 4.16 5.82 Average Responsiveness ASSURANCE DIMENSION 11 12 13 Enthusiasm of employee when working Employee explains to customer enthusiastically and politely Making customer feel safe with engineer's skills & knowledge Average Assurance EMPATHY DIMENSION Making the effort to know customers and their 14 needs When client contacts service point, employees will 15 listen to their problem and demonstrate understanding and concern 16 Sharing individual information with customers Average Empathy AVERAGE SATISFACTION - -1.66 -1.77 Source: Author’s calculation 75 76 APPENDIX IN-DEPTH INTERVIEW FORM GENERAL INFORMATION Name:…………………………………………………………………………… Department:…………………………………………………………………… Position:………………………………………………………………………… 76 77 Joining Date: …………………………………………………………………………… QUESTIONS: Question 1: What don’t you like when using LIMVINA’s service? ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… Question 2: Which factors you think are important for an engineering service supplier? ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… Question 3: What you think LIMVINA should change during supplying service? How to change it? ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… Question 4: Will you continue using LIMVINA’s service if you have enough power to decide? ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… 77 78 ………………………………………………………………………………… ………………………………………………………………………………… You have reached the end of questionnaire Thank you so much for your help 78 79 APPENDIX LIST OF INTERVIEWEES 79 ... loyalty for LIMVINA This means that the level of customer satisfaction at LIMVINA is decreasing “How to improve customer satisfaction at LIMVINA Co., Ltd” is the problem statement for this research... that need to find the answers to solve the problem: - What is the current status of customer satisfaction of Limvina? ??s product & services quality? - What are factors impacting on customer satisfaction? ... situation of customer satisfaction during using LIMVINA co., ltd’s products & services - To find out and evaluate factors impacting on customer satisfaction - To understand customer? ??s expectation