Sheltering the Customer

Sheltering the Customer

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 per cent. 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 per cent market share in microwaves.

However, in 2004, the 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 $745 thousand initially and about $370 thousand 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.

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