(Luận văn thạc sĩ) (failure in new customer approach in tan cang shipping’s reffer service)

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Thi Huong Giang Nguyen (FAILURE IN NEW CUSTOMER APPROACH IN TAN CANG SHIPPING’S REFFER SERVICE) MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2018 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Thi Huong Giang Nguyen (FAILURE IN NEW CUSTOMER APPROACH IN TAN CANG SHIPPING’S REFFER SERVICE) MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Trần Hà Minh Quân Ho Chi Minh City – Year 2018 Table of Content Executive summary Background information Methodology Problem Identification 4.1 Situation analysis 4.2 Symptoms 11 4.3 Potential problems……………………………………………………………… 13 4.4 Central problem 16 Figure 1: Initial cause – effected map .16 4.5 Potential root causes 17 4.6 Central root cause .20 Figure 2: Cause – effected map .21 Problem Solving 22 Action Plan 23 References 27 Appendix 01: Interviewees Information 29 Appendix 02: Interview guides 30 Interview Guide: Customers using referred container service 30 Interview Guide: Vice Director 30 Appendix 03: Questionnaire …………………………………………………… 32 Appendix 04: Transcript …………………………………………………… 33 Appendix 05: Estimated output/month for 40RH of TCS’s dry container customers…….38 Professional terminology and abbreviation: No Professional terminology Meaning and abbreviation 20GP 20 feet general dry container 40HQ 40 feet high cube dry container 45RH 45 feet high cube reefer container Teus Depot The production of liner shipping and slot on vessel 20GP = TUES, 40HQ=40RH=2 Tues The yard contains empty container The truck go to nearby the vessel to receive Shipside container directly does not drop container on terminal yard Closing Time Freight Plugging Fee The time which vessel will stop loading container to prepare for departing Price for transporting container by vessel Fee charge for plugging electronic of reefer container on terminal, on vessel 10 OPS Operation Service in Terminal 12 TCS Tan Cang Shipping Joint Stock Company Executive Summary In the beginning of 2017, Tan Cang Shipping expanded its service to reefer service After months of operation, the company realized that the operation of TCS’s reefer container service was not effective because the revenue could not be as expected One of the potential problems leaded to that system – failure in new customer approach was selected to analysis deeply basing on in-depth interview outcomes, market information and business report The purpose of this thesis is to use literature review, in-depth interview and survey in order to determine factors that influence sale organization effectiveness, which helps to identify why there is failure in new customer’s approach The cause – effected map is the drawn to find out the root cause The thesis intents to use groups of factors affected to sale organization effectiveness to TCS’s reefer service The result shows that most factors have faced trouble in some indicators In particular, Evaluating sale service and Rewarding are the two most noticeable indicators because of their significant influence to sale performance Setting sale performance measurement then is chosen to as problem solving for the company’s current situation Background information Tan Cang Shipping Joint Stock Company (or Tan Cang Shipping – TCS) was established on 28.11.2013 by Saigon Newport Corporation, to develop maritime transport service The beginning mission of Tan Cang Shipping is developing the transport services of Sai Gon New Port Corporation while their vision is "Leading in quality of service, customer oriented; Advanced management, professional and high quality in human resources; Military discipline, corporate culture, community responsibility " After almost years of operation, strategic direction is to develop sustainable production and business based on three pillars: Port Operation, Logistic Services and Sea Transport Despite its short time of operation, the company worked quite well, completed all the missions and developed Tan Cang Shipping becomes a prestige brand, having a strong position in the shipping industry in Vietnam nowadays With the motto "Coming to Saigon New Port, coming to one of the top quality services", Tan Cang Shipping always tries to provide their customers best quality shipping service To the Sea Transport Service, Tan Cang Shipping provides customers with domestic transport services by sea line including main routes: Ho Chi Minh - Da Nang - Hai Phong and opposite or Ho Chi Minh - Hai Phong and opposite To Logistics, they provides a full range of professional logistics services such as freight forwarding, customs clearance services, warehousing services, And to Shipping Agent, we now are acting as an agent for vessels to import and export in domestic ports as well as international port in Vietnam In addition, we are ready to provide ancillary services such as customs clearance, fresh water supply, fuel, crewmembers supplying and other support services when the customer needs Besides developing shipping service, Tan Cang Shipping also focus on hiring and training their employees With the core value: "Satisfaction, Trust and Long-term commitment of our customers", all the employees of Tan Cang Shipping are always enthusiastic, hardworking, having responsibility with work and more experience to solve customer’s requirements quickly in all situations happened during transportation Moreover, Tan Cang Shipping usually has the policies of supporting and consultation so that they can make their customers feel satisfaction when they choosing their service and want to build a long-term stable cooperation The organizational structure of Tan Cang Shipping consists of departments: Methodology This thesis was developed and supported by both primary and secondary data with particular following methods and resources: Business reports: TCS's business performance report for dry service and reefer service in 2017 checked in order to analyze how TCS achieve the target revenue as well as how each trip follows the golden structure The report on reefer container’s revenue in 2017 be classified by customer’s name and trip In-depth interview: From the results of data analysis in business report, classify the customer using TCS services into focus-group, build an interview guide and in- depth interview for each group and TCS’s Vice Director Survey: 10 questions was designed for sale team with 5-point scale and based on standards of procedures of control system Secondary Research: Online research in Viet Nam shipping line market as well as interview TCS’s customers to understand refer container market size Literature review: Classical theory of shipping line operation and management Also, contents relevant to sale management effectiveness are applied to estimate how TCS performs and how to improve the current situation Problem Identification 4.1 Situation analysis Under Sea Transport field, TCS provides customers with domestic transport services by sea line including main routes with one-way or round trip from Ho Chi Minh - Da Nang - Hai Phong and Ho Chi Minh - Hai Phong There are two main categories of container, which are dry and reefer containers In the liner industry, the twenty- foot equivalent unit (often TEU) is the unit of measurement of cargo, often used to describe the capacity of container shops and container terminals The standard intermodal container is designed as 20 feet long and feet wide Additionally, there is a standard container with the same width but a doubled length of 40 feet called 40-foot container, which equals two TEU For more example, container 40 feet = containers 20 feet = TEUS TCS’s dry containers service has been exploited quite well since the day company has opened with two types: 20GP (20 feet) and 40HQ (40feet) It is considered as core service of the company, which operated vessels per week with routines from South to North and reverse trip (Table 1) Besides TCS, there are other popular liners in Vietnam Domestic Shipping industry such as Hai An, GLS, Germadept, Vinafco, Bien Dong, Vosco, Viet Sun, … In general, TCS and Hai An currently keep significant output in comparing to others After years of operation, TCS has gained great performance and customers’ trust, Broad of Director decided to expand its service and reefer container service is a potential field to develop in the near future Therefore, in early 2017, TCS launched reefer container service, which mainly transported 45RH (45 feet) with two following objectives: • Diversifying TCS’s service: Currently, most freight forwarders – TCS’s customers are looking for both dry and reefer container service Thus, TCS want to offer variety of service choices to customers, which is not only dry container service but also reefer container field • Achieving opportunity costs: as domestic shipping lines not own empty reefer containers, customers who are owners of reefer containers have to pay for all the fee occurred Reefer service is more cost effective in comparing to dry service In details, dry service incurs many costs for the company such as repairing, stock in yard, cleaning While empty reefer containers are owned by the customer (domestic liner does not own empty reefer containers), so that customers will pay all of these fees Regarding the freight, reefer container cost 10 million VND while the dry one is million VND To calculate the opportunity profit of transport a reefer container, TCS will gain million VND from difference freight while 40HQ and 40RH is cover similar slot (2 TUES), TCS will not pay the clean (200.000 VND) and storage fee (100.000 VND/ day) because 40RH are customer’s owner Currently, there are nearly 20 customers, who used TCS’s dry container service, also has demand on reefer container service (see Appendix 05 Source: Marketing Department Report, December, 2016) TCS expects to attract 20-30% of this total number TCS has vessels with different loading capacity, Tan Cang Foundation (TCFD), Tan Cang Victory (TCVR), Tan Cang Pioneer (TCPNand Tan Cang Glory (TCGR) (see Table 1) With limited capacity and different freight of 20GP (3 million VND), 40HQ (7 million VND), 40RH (10 million VND) Table 1: Tan Cang Shipping Vessels information 10 The ratio contributes to total revenue III PROFIT BY SERVICE & PROFIT BY CUSTOMER IV BOOKING Number of booking Average value/ booking Number of canceled booking V CUSTOMER Number of new customer Number of customer lost Number of customer delayed payment Rate of customers using service (number of customers using the service/ Total number of customers) The sale program of competitors Sales skills Relationship with customers Cooperative spirit at work The initiative Ability to analyze and evaluate the sales data Ability to handle situation v Planning steps to monitoring & evaluating - Identify who will participate in the project (design, deploy, report) - Clarify the scope, purpose, intention of use, objectives, budget will be used in monitoring and evaluating - Build the question to deepen inside what really want to know - Provide indicators to measure performance, clarify performance or reflect changes, set the standards to measure sale activities (number of calls, number of visit to customers, number of working days, number of quotes sent, number of customers complained, v.v…) - Determine the method of collecting information - Analyze and synthesize collected information - Understand the findings of monitoring and evaluating - Provide feedbacks and recommendations 24 - Share findings and comments with sale team, decide how to use the results of monitoring and evaluating to reinforce salespeople’s effort Offering rewards to motivate salespeople As reported by Friedenreich K; Moine DJ and Stevens SC (5), what the sale manager wants would not really what salesperson want, thus having guidelines to set a sale incentive program is necessary Linked to TCS, there should be a reward corresponding to the number of customers and outputs that salespeople bring to the business According to Hallenbeck K (6), “the ideal sales compensation plan combines non-cash incentives with the right level of commission or bonus earning potential” The straight salary, which means every salesperson would get paid the same amount regardless of actual sales they have contributed to the business, is not satisfy by salesforce, in particular someone who works hard (Hallenbeck K 6) Related to TCS’s salary and bonus system, the salary of each salesperson is different from other’s This information is not published clearly and is depended on subjective assessment from Broad of Director’s member without any specific evaluation criteria developed Also, there is no money compensation for achieving challenging sales objective A good incentive program should meet three elements: understanding, evaluation, and performance Without these three elements, the incentive would be counterproductive Vice Trade Director must be responsible for clarifying the terms of the incentive program under document form and notice to sales team A meeting should be held to inform, explain about the content of this program Also, TCS should only reward salespeople who achieve measurable performance The form of reward should be linked to the business targets Salespeople who complete higher targets will receive more rewards Ideally, TCS should conduct surveys to understand the interests and personal preferences of salesperson to design creative rewards and meet their aspirations In addition to building an incentive program, the businesses can adopt the following ways to motivate salespeople v Bonus and commissions v Provide competitive benefits: make salespeople feel that the TCS is always supporting them and appreciate their efforts This can be done by giving them a 25 competitive benefit package, including health insurance, retirement plans, longer holidays or sick leave v Provide training and certification: investing in the professional development of salespersons is also the investment for the development of the company Provide salesforce with appropriate training and encourage them to attend exhibitions and seminars v Pursue the objectives can be obtained: the specific objectives that can be achieved are also a source of encouragement to sales team and to their success v Maintain open policy: if salespeople not easily present their problems to their superiors, those difficulties will become more serious and will degrade the morale of the group or even spread to the whole organization Therefore, sales manager, in this particular, Vice Trade Director needs to always listen to, share with the sales people their concerns, and give constructive feedback 26 References (1) Anderson and Oliver, 1987 Cited by Piercy NF, Cravens DW, Morgan NA (1999) Relationships between sales management control, territory design, salesforce performance and sales organization effectiveness Br J Manage 1999 06;10(2):95-111 (2) Bechrman & Perreault, 1982 Cited by Piercy NF, Cravens DW, Morgan NA (1999) Relationships between sales management control, territory design, salesforce performance and sales organization effectiveness Br J Manage 1999 06;10(2):95-111 (3) Cravens et al, 1993 Cited by Piercy NF, Cravens DW, Morgan NA (1999) Relationships between sales management control, territory design, salesforce performance and sales organization effectiveness Br J Manage 1999 06;10(2):95-111 (4) Eric Longino Sales management control, territory design, sales force performance, and sales organizational effectiveness in the pharmaceutical industry Ann Arbor: University of Phoenix; 2007 (5) Friedenreich K, Moine DJ, Stevens SC How to Motivate Your Sales Force Working Woman 1986 06;11(6):22 (6) Hallenbeck K BEYOND THE MONEY: Four sales incentives that will motivate New Hampshire Sunday News 2015 Aug 09 (7) Kwicien J Improving sales management effectiveness Employee Benefit Adviser 2010 01;8(1):40 (8) McAmis G, Forbes LP Sales Manager Influence Of New Product Adoption By Their Salesforce: A Theoretical Perspective Journal of Applied Business Research 2017;33(3):539546 (9) Plomaritou EI, Plomaritou V, Giziakis K SHIPPING MARKETING & CUSTOMER ORIENTATION: THE PSYCHOLOGY & BUYING BEHAVIOR OF CHARTERER & SHIPPER IN THE TRAMP & LINER MARKET Management : Journal of Contemporary Management Issues 2011 06;16(1):57-89 (10) Piercy NF, Cravens DW, Morgan NA Relationships between sales management control, territory design, salesforce performance and sales organization effectiveness Br J Manage 1999 06;10(2):95-111 27 (11) Spiro & Weitz, 1990 and John & Weitz, 1989 Cited by Piercy NF, Cravens DW, Morgan NA (1999) Relationships between sales management control, territory design, salesforce performance and sales organization effectiveness Br J Manage 1999 06;10(2):95-111 (12) Yuen KF, Thai VV Service quality and customer satisfaction in liner shipping International Journal of Quality and Service Sciences 2015;7(2):170-183 (13) Zallocco R, Ellen BP, Mallin ML A re-examination of B2B sales performance The Journal of Business & Industrial Marketing 2009;24(8):598-610 28 Appendix 01: Interviewees Information No Interviewee Company Focused-group Hà Nội Container Postion Sales Vũ Mạnh Hà (HNC) Key Acoount Executive Đặng Thanh Tùng Hải Đằng Phát (HDP) Regular Customer Director Sales Lê Thị Ngọc An Lưu Thị Hoàng Yến GL Việt Nam New customer Executive TCS Vice Director Tân Cảng Shipping (TCS) 29 Appendix 02: Interview guides Interview Guide: Customers using referred container service i Please tell me from where you know TCS's reefer container service and you decided to use TCS’s service in which situation? ii Why you decide to use reefer’s service at TCS? iii What is the pros / cons of TCS reefer container’s service compared to competitors? (PROMT: tariffs, policies, services, support and customer service) iv Can you please suggest how TCS will develop more reefer teus from the company? v What is your average monthly reefer container tues and how you distribute your goods to the shipping lines? vi How would you evaluate your reefer container goods in the near future and you plan to distribute your company's structure on shipping filed again? vii How many lines of your company are using? viii Your current goods at TCS is not high, you intend to increase slot in the near future? Interview Guide: Vice Director Known that you are the one who has the most dedication in finding and persuading partners to use TCS's reefer service Can you talk about the process of building and understanding customers as well as persuading them to use TCS’s service? (PROMPT: Where does data of customer be collected?, How to approach customer? …) Does the sale department work well in order to help you find out more customers to use reefer service? 30 What strategy you have to find and attract new potential customers in the market / competitor? At present, some regular customers using dry container service are supporting TCS by using reefer container’s service, however the number of tues is not much, what strategies you have to increase goods from this filed? Do you see anything about the reefer container market trend as well the demand of customers in the coming time? How you rate TCS's reefer container service (pros and cons) compared to competitors in the market? 31 Appendix 03: Questionnaire NAME: AGE: GENDER: OCCUPATION: Please spare a few minutes of your valuable time to answer this simple Questionnaire Circle the number that best reflects your response to each statement (1= Never, 2=Rarely, 3=One in a while, 4=Sometimes, 5=Always) How often does the sale manager spend time with sale team? How often sale manager review call reports from sale team? Does sale manager observe the performance of sale people? Does the company has policy encouraging sale people to increase their sale result by rewarding them for their achievement? 5 Does sale manager actively participate in training sale people? How often sale manager evaluate sale people’s performance? Does sale manager often evaluate profit contribution achieved by each salesperson Does sale manager provide performance feedback to each salesperson? Does the company has policy to reward salespeople based on quality of sale activities? 10 Does the company use non-financial incentive to reward salespeople for sale achievement? 32 Appendix 04: Transcript Questions Key account - Regular Customer: New customer: HNC - 46.88% HDP 4.43% GL - 0.4% Quality of Service Please tell me from Through transport TCS's staff, he is Through transport where you know market's manager in equipment market's TCS's reefer container information department information but I service and you decided did not see to use TCS’s service in anyone from TCS which situation? come and introduce about its service In the high season while my popular shipping line was almost full, I decided to shift some volume to TCS Why you decide to TCS has good Shipping schedule Shipping schedule use reefer’s service at development consistent with the fix with TCS? strategy HNC packing schedule customer's believes TCS demand service What is the pros of The service quality Nothing out of the route/ week It TCS reefer container’s is stable, the competitor from the is similar with Hai service compared to freight rate is freight, customer care, An Line competitors? (PROMT: good, the number shipping schedules 33 tariffs, policies, services, of ships is good, support and customer the schedule is service) stable, the customer care is good What is the cons of Port change many The freight is not It is difficult to TCS reefer container’s times, the team of competitive, the policy book a slot in service compared to ops and reefer is unclear, there is no TCS on the peak competitors? (PROMT: technique team are specific policy, support season, customer tariffs, policies, services, not commensurate and care in the medium service and sales support and customer with the size of the level Missing the team even not service) company, high important goods, no answer the phone plugging fee, 128 fixed closing time, While I want to HP port does not charge the plug at the increase the allow to shipside port but not Very little volume or divide reduction or the book, I don’t exemption In the high know who season, call the book directly in charge not listen / not with my receive requirement Lacking of support customer for unexpected problem in port Can you please OPS and reefer Investigate the market Training again suggest how TCS will engineering need needs and policies of customer service, develop more reefer teus to be improved other shipping lines to OPS about reefer from the company? build a competitive container's 34 bargain, and provide knowledge to customer support that easily solve other carriers not customer's yet have problem Referred Container Market What is your average 60% for TCS 10% for TCS 1-2 container How would you I not intend T have no comment I not change evaluate your reefer changing schedule about this issue the schedule monthly reefer container tues and how you distribute your goods to the shipping lines? container goods in the near future and you plan to distribute your company's structure on shipping filed again? How many lines of your company are using? Your current goods at If my company has Currently, the I have not thought TCS is not high, you more goods company is using the about this yet intend to increase slot in service of Hai An, the Our current the near future? cooperation is very cooperation is convenient, good well freight, good support, TCS has no outstanding 35 advantages, so there is no plan to switch to Insight : Vice Director Known that you are Currently, the reefer container goods mainly come from dry the one who has the container customers, the reefer market has little potential, the most dedication in majority market share is owned by Hai An shipping company finding and persuading Therefore, there is no plan to expand reefer customers New partners to use TCS's customers in the peak season, can not book in the other liner will reefer service Can you find to TCS by themselves because the domestic shipping is talk about the process of only five liner carry reefer container route South-North building and understanding customers as well as persuading them to use TCS’s service? (PROMPT: Where does data of customer be collected?, How to approach customer? …) Does the sale team At the moment, just me who is the one find out new customers work well in order to for TCS’s reefer service Currently, TCS’s sale team has not help you find out more equipped knowledge about reefer service, no one in them has customers to use reefer experience about this field, and they just focus on dry service service? Also, at the moment, TCS has not build any specific plan for them to sale this new service 36 What strategy you have to find and attract For groups with deadslot contracts, TCS will have policies to new potential customers support the reduction of plugging fees, their freight are also in the market / lower than other customers Prioritize receive their booking in competitor? peak season For new customers, there is no specific orientation, because reefer container through sea ship is not too much At present, some regular customers using If their booking are stable, they will sign deadslot contracts, then dry container service are there will be price support policy Stable in 2-3 months can sign supporting TCS by using the contract then reefer container’s service, however the number of tues is not much, what strategies you have to increase goods from this filed? Do you see anything Not big, nor more developed about the reefer container market trend as well the demand of customers in the coming time? How you rate TCS has a large Tan Cang brand in the market, which has many TCS's reefer container advantages from its member companies, satellite and general service (pros and cons) corporations such as ports, repair services, depot… compared to competitors in the market? 37 Appendix 05: Estimated output/month for 40RH of TCS’s dry container customers No Customer's name 10 11 12 13 14 15 HNC 16 17 18 19 20 21 22 23 24 25 26 CARIMEX VINACONNECT HAI DANG PHAT TCRF COLLYER VINALINES VIET SAC SCL HAMITRANS TNN GLOTRANS GREEN LOG DELTA GMD KIM THANH SINH HP CYPRESS LAM LOG TAN THANH TAN BIEN TEXHONG TBM VSICO YUSEN TRACO 38 Estimated output/ month for 40RH Expected to attract 80 70 100 50 50 80 20 20 15 10 40 10 50 20 60 35 50 20 20 40 5 15 25 0 10 20 0 40 20 30 0 0 20 15 ... HO CHI MINH CITY International School of Business Thi Huong Giang Nguyen (FAILURE IN NEW CUSTOMER APPROACH IN TAN CANG SHIPPING’S REFFER SERVICE) MASTER OF BUSINESS ADMINISTRATION... missions and developed Tan Cang Shipping becomes a prestige brand, having a strong position in the shipping industry in Vietnam nowadays With the motto "Coming to Saigon New Port, coming to one of the... Average value/ booking Number of canceled booking V CUSTOMER Number of new customer Number of customer lost Number of customer delayed payment Rate of customers using service (number of customers using the service/ Total number of