GameStop Corporation: A Company Analysis - Essay Example

? GameStop Corporation: A Company Analysis GameStop Corporation: A Company Analysis Background GameStop Corporation is one of the largest retailers of video games and PC entertainment software in the United States (Plunkett, 2006). This may be a significant leverage; but the fact that it does not monopolize the industry suggests steering clear of complacency. GameStop Corporation, as stressed by Wingfield (2011), is facing competition from Tower Records in music to Borders Group Inc. in books to Blockbuster Inc. in movies. On top of that, he continued, is the “surge in the popularity of inexpensive, easily downloadable games on smartphones, Facebook, and tablet computers such as Apple Inc.’s iPad”. In terms of used game trade-in programs, GameStop Corporation also has to contend with Amazon,com and Wal-Mart Stores Inc. as well as the growing digital distribution model favored by publishers (Lynley, 2010). Prices are easily adjustable and usually standardized by major distributors, thus is rarely a factor to account for a company’s success. But what makes a considerable difference apart from location, product features, and advertisements, is superiority of customer service.   Needs Assessment Methodologies The core purpose of GameStop corporation, as reflected in its mission statement is, "Our GameStop, EB Games and Electronics Boutique retail locations set us apart in the industry. Everything that we offer our customers-from our expansive selection of new products, to our knowledgeable associates and our value-added pre-owned products-is geared to deliver customer satisfaction. We complement our store network with GameStop.com and EBgames.com, and publish Game Informer, one of the industry's largest circulation video game magazines" (GameStop Corporation). This clearly indicates that for GameStop, customer satisfaction is what drives all aspects of their business—from products to policies to people and services. It can be deduced then that, when the company fails on customer service, it also fails on its purpose. A number of methodologies were applied to determine whether GameStop is successful in its mission, the underlying factors that contribute to customer satisfaction, and the solutions that can be recommended to address the inadequacy, if this would be the case. 1. Customer satisfaction survey. Randomly selected customers were given a survey form that consists of questions all focused on satisfaction. Pressed by time, only about 30 people were given the chance to rank GameStop on their level of customer service, the staff on their competency and behavior when dealing with customers, and the stores in general in handling customer complaints. GameStop received a passing score in the first two areas, but is graded low by majority of respondents in terms of customer complaints handling. 2. Compiled reviews from the internet and printed literatures. In order to learn the sentiments of other distant customers, reviews posted on dedicated websites and blogs were gathered and analyzed. This may not be given much weight because it is a fact that customers who will take time to read and post comments, are mostly those with grievances. Nevertheless, about ninety percent were unsatisfied with GameStop customer service, and have their complaints left unresolved. 3. Employee skills assessment. A few selected employees were asked to fill out a questionnaire that will test the level of their skills in different categories (See Figure 1). The best scores belonged to active listening, teamwork and technical skills, while the lowest to understanding of company policies, customer information, and decision-making skills. Recommendations In response to the needs assessment presented above, GameStop Corporation is recommended to instigate the following strategies: 1. The development of a policy statement that will address customer service procedure and complaints. The initial proposal therefore, is to develop a characterization of standard and nonstandard behaviors consequential to a precise sanction that everyone in the organization will abide by. In other words, create a policy statement that will accommodate matters and ramifications associated with poor customer service. To make it official, such policies will have to be included in the employee handbook. But before distribution, an orientation will be necessary to explain details of the policy and answer questions that will arise there from. 2. The conduct of a customer service training, specifically handling of customer complaints, to be participated by all employees that deal fact-to-face with customers, and those assigned in the Helpdesk and Customer Care sections. Discussions on specific theories to improve skills in handling upset customers, to efficiently attend to their demands, and to resolve issues at hand. To maximize learning opportunities, interactive exercises will have to included in the program. Policy Statement Rationale of Policy In an organization, policy is defined as “the basic principles and associated guidelines, formulated and enforced by the governing body of an organization, to direct and limit its actions in pursuit of long-term goals” (BusinessDictionary.com, 2011). It serves as the basis for standard behavior in the workplace firmly implemented to all employees in all levels in the organization. It defines the consequences of any disagreeable act, sets the boundary to authority and maintains the rights and privileges of employees. The need for policies is attributable to the fact that organizations involve people. “With human nature being what it is, employees will test limits and act "creatively" in workplace situations, so you need a strategy for developing, communicating and enforcing a set of policies and practices that reflect your standards of acceptable behavior” (Sarvadi, 2009). People, though intellectually capable of controlling actions and identifying between right and wrong, will do what is necessary or desirable for pursuit of a certain end. Policies will have to be set in order to regulate such actions and avoid the risks of anything or anyone being compromised. Policies, in this regard, are designed to ensure safety and fair treatment of people in the work environment. It discourages actions or behaviors that jeopardize the wellbeing of both the business and the people in it. It provides the guiding principles from where managers will adhere to in making their decisions Policy Statement Model Plan The result of the survey denotes that customer complaints are not handled properly because employees do not exactly understand how to begin, who should be involved, and the timeframe to give the complainant. The Policy Statement recommended for inclusion in the Employee Handbook is as stated below. 1.0. The Policy Statement GameStop is committed to inspiring customers with service and merchandise to create long-lasting relationships. The management and staff hereby pledge to act in the best interest of our current customers, and continuously innovate to, at the least, meet their expectations. We will strive to make each visit at GameStop a delightful experience. 2.0. Purpose of the Policy The policy statement is to make certain that GameStop gets the best rating not just in terms of product innovation but also of customer care; that every employee exhibits the most appropriate behavior when dealing with customers; and that all procedures to execute are in accordance with the GameStop trademark. The subjects above are considered most important in policy development. From these will stem out the standard procedures that all covered employees will have to abide by. It should not be limited to handling of customer complaints but encompass the most appropriate ways to deal with customers, know their needs, and answer to those needs in accordance with the rules set forth by GameStop Corporation. A code of practice will also have to be implemented, to include empathizing with a frustrated customer, active listening, finding the solution, and setting customer expectations. Complaints Handling Training Rationale of Complaints Handling Training In a 2002 article, author Ron Zemke stated that poor customer service directly affects satisfaction which in turn affects customer retention; and that this is no longer offset enough by lower prices according to Professor Claes Fornell, who compiles and analyzes the American Consumer Satisfaction Index (ACSI)” (as cited in Torasorras, 2008, pp. 34-35). It has been verified that long term customers are more likely to make referrals and give positive word of mouth comments to others, initiating increased profitability. Moreover, customer loyalty provides a level of price insulation that allows firms to charge higher (Torasorras, 2008). Customers are willing to pay a little bit more for a product sold by a manufacturer of their preference. On the other hand, faults are inevitable and give rise to customer complaints. It is either complaints are dealt with and resolved competently, or the customer gets utterly disappointed. An IBM study suggests that “if customers leave an establishment with an unresolved problem, less than half will repurchase. On the other hand, if customers feel their problems have been satisfactorily resolved, almost all will give the company another chance” (Barlow, 2008, p. 41). Consumer research tells us that a large fraction of customers renounce a business owing to poor handling of complaints; thus if customer retention is on top priority, then a company will have to ace customer complaints handling. GameStop Corporation answers queries, requests, and complaints through telephone conversations and electronic mails. The sophistication of today’s technology should boost interactions between companies and their customers. Nevertheless, words of mouth and independent reviews by consumers and critics charge GameStop of poor customer service. An unreceptive employee could mean a lot of things, but complaints left unsettled, from a customer’s perspective, always boils down to incompetency. Many have noted about defective items, incomplete accessories, and delayed shipping. Jenny Darroch (2010), in her book Marketing Through Turbulent Times, talks about her experience with GameStop. She ordered an Xbox unit due for delivery within 24 hours, only to actually receive it 5 days later because deliveries from the East coast were grounded due to snow storms. To not get an order in time is already frustrating for customers, but what can make the situation worse is not being notified beforehand and getting futile responses from helpdesk. This is one area that GamesStop should focus to maintain its position. Developing a Training Model In order to decide on the most applicable training program that can address the foregoing issue with customer service, it is imperative that a model is created for comparison with those available from outsourced training experts. Based on the needs assessment, particularly the results of the data-collection methodologies applied, below is what the training should encompass. 1. Customer knowledge. This should discuss the different types of customers, their attitudes and expectations of a business, and a generalization of how they want to be treated. To better take up the issue that has been pressing customer service, it should also be noted that most complaints have to do with defective units, promises not kept, unwelcoming staff, delayed orders. Strategies on how to apologize, listen, and empathize with customers who are disappointed in the business should all be addressed. 2. Communication. Usually, it is lack of communication or rather poor communication that leads to exacerbated issues. The training should describe all types of communications and proper decorum for mail, personal, and telephone conversations. This should also include active listening, and responding confidently when appropriate. Further, the barriers to communication must be discussed and how to they can be overcome. 3. Attitude. Customers are critically affected by attitudes demonstrated by employees. The training should teach participants how to act and react when faced with a difficult circumstance, and especially in front of a customer. A customer is more inclined to trust an employee if he seems positive and concerned. In addition, problems will not be solved if one feels tense, thus techniques on how to keep calm is also essential. Cost/Benefit Analysis (ROI) As mentioned by Buckberry (2004), studies show that in-house training costs 73% more than outsourced training. Thus, this section will discuss cost and benefit ratio of an outsourced training program. An analysis of possible expenditures and inquiries from companies that offer training resulted in the following data: Training Cost (1-day session) is $270 per person inclusive of manuals and miscellaneous expenses; therefore for 100 employees, total estimated cost is $27,000 (See Figure 2). There was no information regarding wages of GameStop employees but The Fair Labor Standards Act (FLSA) set regular pay rate to a minimum of $7.25 per hour. Since the training will take 8 hours, that will be $5800 or higher for 100 employees. Other expenses will arise from record keeping and administration, clerical works, course maintenance and development efforts, etc. This should not take much time and expense, and for 100 employees may be approximately $1000. About $33,800 will be spent on training of a hundred employees. While the most exhibited objectives of trainings are enhancement of employee skills, the bottom line is still increased profit by the business. In return of investment analysis, the information below shall be taken into account. Training helps retain employees. A Louis Harris and Associate poll suggests that among those who claim that they do not receive sufficient training from their company, more than 40% plan to resign within 12 months (Buckberry, 2004). A four-year study by the American Society of Training and Development shows that firms who invest $1500 per employee in training compared to those that spend $125, experience on average: 24% higher gross profit margins and 218% higher income per employee (Buckberry, 2004). A number of customers were lost due to ineffective handling of complaints. When employees learn the best ways around a customers, as well as the strategies to resolve an issue fast, not only will customers continue their patronage but convince others to give the business a try. This pattern is projected to increase sales by 2%. Training Evaluation Plan To justify aforementioned training benefits opposite the costs, the aftermath with respect to changes in employee performance, sales rate, and customer behavior will be evaluated. Below is a recommended format. Level Indication Description Features Level 1 Whether participants feel positive about the training Gauging reactions by participants from the training;, and the changes in their outlook about their work and the company The scores will determine the types of plans or actions to be implemented to maximize training benefits. Level 2 What participants learned from the training and how much is retained Measuring skills, theories, and values learned. This will rate changes in participants’ attitude towards customers, their colleagues, and the management. Level 3 Whether participants use what they have learned Weighing up application of all learned from training on the job This will assess actual changes in participant’s behavior towards the customer and their comments and complaints. Problem-solving efficiency will also be considered. Level 4 Whether the company benefited from the training Identifying business results from the training This will assess the output, sales rate, employee productivity, customer retention, etc. Level 5 Return of investment Calculating the actual costs incurred in training and real output. This will compare actual costs to return of investment. Conclusion A policy will not accomplish its purpose to the fullest if not effectively disseminated to everyone in the organization. If its presence is not recognized, it will not have considerable impact, and the development expected in the work environment can never materialize. Also, the quality of a policy is dependent upon the competence of the human resources manager in putting the same into practice. Without ingenious strategies to make it work, a policy will remain mere fillings in the employee handbook. Some tend to overlook the littlest details and in effect, head the wrong way. A policy though constructed as guide to our conduct, will still have to be maneuvered correspondingly by proficient hands. Based on data collection performed, GameStop Corporation lacks competence in handling customer complaints because of two main reasons: first, there is no standardized procedure in processing complaints; and second, employees do not have the skills to deal effectively with disappointed customers. Thus apart from developing a policy, training is deemed necessary. Employees are more likely to show positive behavior and confidence in handling complaints when given the opportunity to learn and experience. References Barlow, J. (2008). A complaint is a gift: Recovering customer loyalty when things go wrong. California: Berrett-Koehler Publishers, Inc. BusinessDictionary.com (2011). Definition of Policy. Retrieved from http://www.businessdictionary.com/definition/policy.html Darroch, J. (2010). Marketing Through Turbulent Times. New York: Palgrave Mcmillan. Lynley, M. (June 15, 2010). Gamestop shares drop 5 percent as competition grows. Reuters. Retrieved fromhttp://www.reuters.com/article/2010/06/15/us-gamestop-shares-idUSTRE65E5W320100615 Plunkett, J.W. (2006). Plunkett's entertainment and media industry almanac. Texas: Plunkett Research, Ltd. Sarvadi, Paul (2009). The Importance of an HR Policies & Practices Strategy. Learn the keys to establishing procedures and guidelines necessary for your employees--and business--to thrive. Entrepreneur.com. Retrieved from http://www.entrepreneur.com/humanresources/article76982.html Trasorras, R.J. (2008) The relationship of value, satisfaction and loyalty on customer retention in the professional service sector. Michigan: ProQuest LLC. Wingfield, N. (April 1, 2011). GameStop bulks up on the web. MarketWatch. The Wall Street Journal. Retrieved from http://www.marketwatch.com/story/gamestop-bulks-up-on-the-web-2011-03-31 Skills 1 2 3 4 5 ? Rank 1. Product knowledge 0 0 8 2 0 32 5 2. Customer information 7 1 2 0 0 15 12 3. Understanding of company policies 0 10 0 0 0 20 10 4. Familiarity with company culture 3 7 0 0 0 17 11 5. Communication skills, building rapport 2 2 5 1 0 25 8 6. Active listening, empathy 0 2 3 5 0 39 3 7. Teamwork, relationship w/ colleagues 0 0 0 7 3 43 2 8. Customer satisfaction 0 2 6 2 0 30 6 9. Fair treatment of customers 0 0 5 5 0 35 4 10. Service quality 0 0 5 5 0 35 4 11. Leadership/initiative 3 3 2 2 0 23 9 12. Responsibility, self-development 0 0 5 5 0 35 4 13. Technical skills (phone, computer, fax) 0 0 0 2 8 48 1 14. Problem solving, decision-making 0 10 0 0 0 20 10 15. Competitiveness 0 3 5 2 0 29 7 Appendices Figure 1.0. Result of Employee Skills Survey Note: Skills with the highest scores are shaded in green, and those with the lowest in red. Figure 2.0. Estimated Training Cost (1-Day Session) for 20 Employees Course $3000 Student manuals $1300 Travel Cost $1000 Miscellaneous expenses $300 Total estimated cost $5600 Total estimated cost per student $280 Read More