Services Problem of Samsung - Case Study Example

Services Problem of Samsung Jinyi Zhou Quantum Tech Consulting, Inc The paper is derived from a white paper concerning the services problemof Samsung. Sufficient research has indicated that Samsung is adversely affected by poor customer service relations. It should be noted that weak customer relations have adverse effects on productivity. The customer service scoreboard rating is a clear evidence of the poor relations between the company and the consumers. Samsung can salvage business operations by adopting comprehensive customer relations mechanisms. The company can outsource the customer services from KANA. KANA is a company that specializes in customer relations management. The proposal commences by assessing why Samsung is the best possible company to explain the effects of poor relations between the company and consumers. The root problem for Samsung, as explained in the proposal, has a significant influence on business operations. The adverse effects of poor customer relations have been outlined in the proposal. The proposal goes ahead to recommend public relations services that can be implemented to solve the problem. In addition, the proposal underscores the need for the company to adopt services from KANA to improve its customer relations. Finally, the proposal discusses a plan on how it will adopt the services from KANA. This involves talking about the mode of operation between the two companies. In addition, the plan will involve any forecasts that positive customer relations will have on productivity. Contents Abstract 2 Why Samsung? 4 Root of the problem 6 Dangers of negative customer service 7 Switch to KANA 7 Company Overview 7 Fresh and Innovative Perspective 8 Brand Paradox 8 Public Relation Services (PRS) 8 High-cost performance 9 Conclusion: The Plan 10 Promote delivery for a better customer experience 10 Simplify the management and deployment of products 10 Strive to enrich products for an engaging experience 10 Reference List 11 Introduction Why Samsung? Samsung is a multinational is a publicly traded conglomerate company, located in Seoul. The Samsung group was established in 1938 and served as a trading company. The company has numerous subsidiaries and associates. All the subsidiaries and associates are united by the Samsung brand. Samsung is a global brand with a 45-year history of electronic manufacturing. Its revenue stands at $228.692 trillion as of 2013. In addition, it is declared as the worlds largest information technology company by revenues with a market share of 32.4 % (Strategy Analytics). Samsung offers a wide range of products from domestic electric appliances, smartphones, consumer electronics and telecommunication components. However, in this highly competitive industry consumers expect more than just quality goods from Samsung. The company strives to achieve a competitive advantage, competing against companies such as Apple, Huawei, Techno and LG promoting similar products and services. One of the extremely important areas is customer service, and Samsung suffers a significant customer service problem. However, the company can adopt a public relation services (PRS) program to mitigate the adverse effects of poor relations between the company and the consumers. The pubic relation services are cost effective and will spare the company revenue that would have been lost through a decrease in the customer base (Conti, 2006). According to Giachetti, (2013), competition in the mobile industry is harsh. Samsung and Apple seem to be the most significant among the other companies. In 2013, Samsung and Apple took up profits amounting to 110% of the profits reported in the mobile industry (Hughes, 2013). However, there was a significant disparity in the profits reported by the two firms. Despite Samsung having the highest unit sales on phones, Apple managed to report profits amounting to $10billion ($3.3billion more than Samsung reported). It should be noted that the profits reported by Apple were attributable to the unit sales of iPhones, whereas the profits reported by Samsung were attributable to the unit sales of the entire Samsung electronics (Dilger, 2013). The unit sales and profits are illustrated in the diagrams below: Figure 1: Unit sales made by the electronics companies in 2013 (Dilger, 2013) Figure 2: Profits reported by the electronics companies in 2013 (Dilger, 2013) The graphs shown above indicate that there is an inherent problem within the business operations of Samsung. There is a wide drift between the profits reported by Apple and those reported by Samsung, considering that Samsung sold the highest number of mobile phone units. KANA is an international customer relation consultant company with access to the best minds in the service provider industry. It has a long history and a wide range of customer relations programs and successes in the media industry. If KANA involves in this situation, Samsung will not require an apology in a highly competitive world. Apologies tend to scare away investors and potential customers. KANA can change that and make sure that Samsung has not only satisfied customers, but also an efficient service team that responds, connects, and performs to its best level. Root of the problem According to the authoritative company rating service, Customer service scoreboard rating, Samsung customer service ranks no 465 out of the 747 companies that have a Customer Service Scoreboard rating. A quantitative research based on inferential statistics indicates that a significant proportion of the consumers of Samsung products are not satisfied with the customer relation services from Samsung. According to the survey of 1,771 customers of Samsung, there were 1,692 negative comments about the customer services offered by the company. This is an overall score of 29.97 out of a possible 200 based upon 1831 ratings. The score rates Samsung customer service and customer support as inadequate. Most of the customers claimed that they would not refer anyone to purchase Samsung products. In addition, the respondents of the research indicated that they preferred Samsung products to Apple products because they are cheaper. However, most of them were in doubts whether they would purchase any other Samsung product. The most evident sign of poor customer services was the poor trend in consumer loyalty for Samsung products (Farkas, 2011). Figure 3: Consumer preferences for new mobile phone purchases (Blokdijk, 2008) The graph above indicates that there is a relatively lower preference for Samsung mobile phones among Samsung handset owners. The trend is the direct opposite of what is experienced in Apple. It is evident that customer loyalty is diminishing. The negative trend is primarily attributable to poor relations between the company and the customers. The research further indicated that most customers complained about the staff being rude and dishonest. Such behavior is experienced in public offices whereby there are numerous clients with differing needs whereas the employees are relatively few. A common occurrence of an imbalance between employees and clients is that customer services are slower than the customers expect. Samsung has a higher preference for its products because they are affordable. Therefore, the customer base is significantly higher than that in Apple. With the increasing customer base and a relatively lower workforce, the customers become disgruntled with the customer service offered (Blokdijk, 2008). The negative comments keep repeating themselves. This is not only a ticking time bomb but also a disaster as far as public relation is concerned. For Samsung, this is certainly something that needs to be fixed urgently. Samsung needs to focus on reconstructing the customer service program to ensure that customer loyalty is maintained. After a scrutiny of the customer service department, Samsung can incorporate the services of KANA to identify and correct the inherent customer relation concerns. Dangers of negative customer service According to Lenz (2007), customer service is directly proportional to customer satisfaction and customer loyalty in the long-run. The linkage between customer satisfaction and loyalty is paramount to the success of any business. As customer satisfaction levels reduce, customer loyalty reduces with a similar proportion. Customer loyalty reduced for individuals with Samsung handset devices. Most of the respondents in the research conducted by customer rating authorities indicated that the purchase of Samsung mobile devices was a one-off trade, and it was highly unlikely that they would purchase Samsung products. With mobile phone units generating a profit of $6.7million in 2013, a 50% reduction in sales will certainly be a catastrophe for the company. Samsung is set to experience a loss of market share to other industry players due to poor customer service (Lenz, 2007). It is forecasted that the company will increase its prices by 60% on all units produced to cater for the loss of market share. Financial advisers have warned Samsung from raising its prices to fill the gap left by disgruntled customers. They offer the advice that Samsung should reconstruct its customer service department to attract new customers and restore customer loyalty among the existing customers. Cartwright, (2000), convincingly argue that customers care less to inquire about a problem from a company. Most customers base their inference on word-of-mouth. Therefore, if a significant number of customers complain about the customer services from Samsung, it would affect the entire customer base. Customer loyalty typically drops by 25% among customers who experience problems. Customer service is not merely responding to customers’ issues. It involves giving a welcoming service, treating customers with dignity and utmost respect, responding honestly to problems, and keeping a determined schedule of feedback with the correct amount of information. According to Seybold; “The Company needs a new strategy to achieve refined customer service relations” (Seybold, & Lewis, 2001). As a global brand, Samsung needs to be responsible for a reputable customer service. Switch to KANA Company Overview Samsung ought to switch to KANA to reconstruct the customer relation strategies. KANA is a Verint Company that deals with customer relations management. The company focuses on improving the overall customer service experience. KANA would be the best possible company to reconstruct the customer service strategies utilized by Samsung. The company would transform the customer services used by Samsung to build great brands. In addition, the company is dedicated to developing solutions that deliver the expected service experiences for the customers and other companies. Fresh and Innovative Perspective KANA acknowledges that there are numerous customer challenges affecting the productivity for most companies. Customer challenges can be mitigated by establishing brand advocacy between the products and the customers. Samsung requires an overhaul of the entire customer service structure to pave the way for a ‘fresh and innovative’ perspective. KANA focuses on engendering brand advocacy with the consumer experience within the company. The company explains that customers must be kept engaged with relevant information to ensure that inquiries are resolved within a short period. KANA provides both internal and external services that improve the customer experience. Blokdijk, (2008), convincingly argues that the public relation services encompass a myriad of services that aim to achieve brand advocacy. Brand Paradox KANA focuses on engendering brand advocacy for better consumer experiences. The company attributed the problems encountered by Samsung to brand paradox. According to Van Belleghem, (2013), Samsung boasted of a strong and stable customer base before the recent global economic recession. In an attempt to recover from the recession, it opted to increase productivity at a lower cost to attract a large consumer base. Such a move resulted in brand paradox, whereby the products did not meet the standards expected by the consumers. The loyal consumer base has since indicated a downward trend. Consumers become attached to brands, regardless of the cost of obtaining the product. If the brand fails to maintain the expected standards, consumers shift to other brands that address their needs (Van Belleghem, 2013). KANA will aim to salvage the Samsung brand by utilizing the public relations services to improve the overall organizational structure. Public Relation Services (PRS) KANA will adopt public relation services to boost the overall customer experience between Samsung and its customers. Among the best possible public relation services to be implemented are (Van Belleghem, 2013); Staff recruitment, Promotions, Training, and Adopt better logistics Staff recruitment Samsung has a workforce of 326,000 employees worldwide as of 2014. In addition, the company reported an operating income amounting to $36.785 trillion in 2013 (Conti, 2006). The company can afford to increase the number of staff in the customer service department. There is a need for new brand ambassadors, faster response to issues, and a catalog of all the problems to keep track of the progress. Samsung needs to recruit the right people by using effective selection techniques. Promotions According to Brondmo, (2000), most promotions tend to have positive results with great odds mostly in favor of them. Samsung ought to promote its employees regularly to motivate them to offer the required standard of service to consumers. On the other hand, promotions can take the form of marketing strategies where Samsung recalls the customers who experienced poor service in the past fiscal year. Such customers will be encouraged to maintain customer loyalty by realizing that Samsung acknowledges them as loyal consumers. As the service experience differs among customers, those with warranties will be offered a free upgrade of their products where possible. In addition, offers, cash prizes and rewards to the customers who have maintained their products would boost the customer experience with the Samsung brand. Therefore, promotions serve as an assurance for maintaining customer loyalty (Brondmo, 2000). Training Zeithaml and Bitner, (2003), stated that reviewing the negative feedback from the customers raises a need to train the staff on customer handling. Additionally, the staff needs training on better methods to interact with customers. Samsung needs to work on the personality of its staff by offering guidelines and protocols for every different possible scenario as the first step. The company ought to conduct an independent review on individual performance of the employees regularly. Samsung should also direct a proportion of its income to training staff on basic technical skills to respond to queries as well as maintain an online profile. Finally, it is imperative for Samsung to establish an effective communication module where customers will feel appreciated and welcome to be part of the Samsung family. KANA explains that Samsung should consider setting up customer service awards whereby individuals, colleagues, and customers can nominate employees who demonstrate exceptional customer service (Zeithaml, &Bitner, 2003). Be better in logistics According to Seybold and Lewis, (2001), providing better logistics means that companies need to improve the transportation and communication channel for delivery systems. Samsung should maintain a system to monitor feedback and complaints. In addition, it should keep track of products and records, by automating the customer service system. Adopting information systems would ensure that the customer service systems are automated for easier access. Customer services system should be automated more so to ensure that information is readily available on the internet for all the stakeholders and consumers. It is necessary to assemble a team of employees with the relevant technical skills for the market industry. Make sure to keep a better management structure on this core group. However, the customer service department should be flexible to accommodate different consumer needs (Seybold, and Lewis, 2001). High-cost performance The public relations plan does not cost much, and it just involves some easy steps. An improvement in customer satisfaction will ensure that existing customers are maintained while attracting new customers. A 32.4% market share (strategy analytics) thus provides a large pool of loyal customers besides the additional market share generated from good customer service. It will not only improve customer service relation of the image of the company, but also create a better public portfolio. Samsung should conduct a cost-benefit analysis on the public relation system to ensure that it is beneficial for the company. In addition, Samsung needs to apportion a significant amount of the income reported to improving the customer service system. Furthermore, an efficient customer service system would have the following benefits; Create a broad consumer base, Increase productivity, and Improve business performance. Conclusion: The Plan Samsung can only look forward to a better future ahead, and a great partnership built on mutual prosperity after adopting the recommendations listed below and enforcement of positive customer service relations. A partnership with KANA is a partnership for the future (Barlow and Stewart, 2004). Samsung will need to implement the recommendations stated by KANA to ensure that an efficient customer services system is established and maintained. Among the most important recommendations will be (Farkas, 2011); Promote delivery for a better customer experience, Simplify the management and deployment of products, Strive to enrich the products for an engaging experience. Promote delivery for a better customer experience Strengthening the customer service system will improve the delivery of products to the customers. The customer service department will be attractive and impactful to increase the customer relations with the company. Simplify the management and deployment of products Samsung needs to ensure that its products are accessible to a wide population. Most consumers fail to have brand advocacy due to the inaccessibility of products. It takes a strong customer service system to ensure that there is no disparity between the accessibility of goods and customer satisfaction. Strive to enrich products for an engaging experience Samsung has been accused of brand paradox by a significant portion of its customers. KANA suggests that Samsung should enrich the products to establish an engaging experience between the products and the customers. Products that address the consumer needs promote brand advocacy, hence customer satisfaction and customer loyalty in the long-run. Reference List Barlow, J., & Stewart, P. (2004). Branded customer service: The new competitive edge. San Francisco, Calif.: Berrett-Koehler. Blokdijk, G. (2008). CRM 100 success secrets. [S.l.: Emereo]. Brondmo, H. (2000). The Engaged Customer: The new rules of Internet direct marketing. New York, NY: Harper Business. Cartwright, R. (2000). Mastering customer relations. Basingstoke: Macmillan. Conti, J. (2006). Samsung where are you going? [consumer electronics]. Communications Engineer, 4(1), pp.38-43. Dilger, D. (2013). Apple earned more than Samsung, LG, Nokia, Huawei, Lenovo & Motorolas mobile shipments combined. Appleinsider. Retrieved November 29, 2014, from http://appleinsider.com/articles/13/10/30/apple-earned-more-than-samsung-lg- nokia-huawei-lenovo-motorolas-mobile-shipments-combined. Farkas, V. (2011). Customer relations. New York: Nova Science Publishers. Giachetti, C. (2013). Competitive dynamics in the mobile phone industry. [Basingstoke]: Palgrave Macmillan. Hughes, N. (2013). Apple & Samsung take massive 109% of mobile industry profits while competitors lose money. Appleinsider. Retrieved November 29, 2014, from http://appleinsider.com/articles/13/11/14/apple-samsung-take-massive-109-of- mobile-industry-profits-while-competitors-lose-money. Lenz, V. (2007). The Saturn Difference: Creating customer loyalty in your company. New York: J. Wiley. Samsung customer service complaints, reviews, ratings and comments (2014). http://www.customerservicescoreboard.com/Samsung Seybold, P., & Lewis, J. (2001). The Customer Revolution: How to thrive when customers are in control. New York: Crown Business. The Teardown: 4G Samsung Galaxy Attain. (2012). Engineering & Technology, 7(10), pp.94-95. Van Belleghem, S. (2013). Why customer loyalty is declining and what companies can do about it. Retrieved November 29, 2014, from http://stevenvanbelleghem.com/blog/why- customer-loyalty-is-declining-and-what-companies-can-do-about-it Zeithaml, V., &Bitner, M. (2003). Services marketing: Integrating customer focus across the firm (3rd Ed.). Boston: McGraw- Hill/Irwin. 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