The new mantra at Voltas
By Mohini Bhatnagar | 11 Jan 2000
"In today’s market, if we cannot satisfy the customer we might as well not be in business". This is the philosophy of Nawshir Khurody, managing director of Voltas, the engineering and air-conditioning major. He is using this philosophy of customer satisfaction to usher in a change at the, otherwise, staid company.
The last few years have been very rough for Voltas. The company has been undergoing a restructuring process to get a focus on core competencies, which, the management felt, lay in the engineering goods and air-conditioners business. The company undertook several internal restructuring measures, like hiving off of the white goods business, cost cutting steps like closing down a number of branch offices all over the country and offering a voluntary retirement scheme to 1,700 staff members.
These measures were followed by the launch of 44 models of air-conditioners and customer-friendly financing schemes. However, the revamp and reoriented focus did not help the company much, as its sales stayed sluggish, thus helping rival Carrier Aircon to maintain its dominance in terms of market share. The management realized the gravity of the situation in the market place and launched a serious attempt to rectify this situation. The philosophy of ‘customer satisfaction’ became the fountainhead of this strategy.
The focus for the moment, however, is on the unitary products air-conditioning business which caters to the household segment. Company officials say that while the industrial air-conditioners business continues to perform satisfactorily, the unitary products business catering to the consumer segment is causing concern.
Officials say that the unitary air-conditioners manufacturing plant located as it is at Dadra was the cause of the problem. This Union Territory, which is a six-hour drive from Mumbai, suffers from a perennial telecommunications problem. The public telecom network being highly unreliable was the main bottleneck as far as sales are concerned.
Voltas also conducted an internal study, which revealed that the non-existent customer response department in the company, shoddy delivery and installation schedules, had virtually paved the way for it to lose almost 16,000 potential customers for various reasons—dissatisfaction with company response, non-availability of machines and inaccessibility of sales people. In other words, there was no customer service at all.
To understand the level of customer satisfaction the
company enjoyed, Voltas adopted a method evolved by the Technical Assistance Research
Programs of the US government to assess the levels of customer satisfaction. The
fundamental principles of this model are:
- Customers who have complained to an organization and have had their problem satisfactorily handled tell an average of 5 people about the treatment they received.
When the company undertook the assessment using these principles, the result was:
- 63 irate customers wrote to the managing director in 1997.
- This number represents 4 per cent of the total of unhappy customers.
- Hence total number of unhappy customers: 1575
- These customers tell approximately 9-10 people about their experiences.
- Therefore, total number of potential customers lost :15750
As a result of these findings, the company put together a crack team, under the direct supervision of the managing director, to evolve a system to improve the customer satisfaction levels. The new measures that this team is seeking to put in place, concentrate on three aspects:
- speeding up delivery time schedules;
- quick installation of air-conditioner units; and,
- efficient company response to customer queries.
All this is set to be accomplished through a single-point mechanism – a dedicated call center that has been backed up by a powerful telecom network - which will handle everything as far as sale of an air-conditioning unit is concerned – be it customer query, placing and processing of orders, or after-sales service. This single call centre, located in Mumbai, will soon progress to a single telephone number that will cover the entire country.
In the new scheme of things, speeding up of delivery schedules is very high on the company’s agenda. Company officials claim the average delivery time for an air-conditioner, which was 29 days in 1998, has been brought down to just seven days in 1999.
How has this been made possible? Voltas has put in place an effective supply chain management system that that leverages upon the speed offered by its newly set-up telecom network. This telecom network has ensured that each link in the supply chain is well connected so that the progress of an order - from inquiry to installation - can be tracked on a computer.
Established at a cost of Rs 3 crore, the telecom network – which makes effective use of leased lines and VSATs - was commissioned in the latter half of 1999 and provides the backbone to its communication problems, especially in the case of its main factory located at Dadra. The infrastructure backup at this location was so bad, that it was impossible to get through to the factory even by phone. Now, the new telecom network ensures that the factory is directly linked to the powerful computer systems set up at the Voltas head office in Mumbai. The system in Mumbai serves as the hub and, in turn, links Voltas’ sales offices, dealers and the call centre. The system uses a sales administration software, or SAS, which tracks every stage of an order.
The aim for the future
- to bring down the delivery schedule time to 3 days from 7 days at present.
- to set up a single call number centre for all parts of country for customer convenience. This customer response cell will handle all aspects of customer requirements like queries, order processing, follow-up on orders etc.
However, looking at the growing competition in the air-conditioners market, Voltas has to get its act together and fast. New players like LG and Samsung as well as more established ones like National and Amtrex are slowly gaining market share, while Carrier Aircon continues to be the undisputed leader. Market sources claim that Voltas has lost dominance in the air-conditioners market due to reasons other than being customer friendly. Some sources say that Voltas no longer offers a technologically superior product, as its compressor, being a reciprocating type is not as fuel-efficient as the rotary compressor offered by others like LG, Samsung, Carrier Aircon etc. Others sources say that a short warranty period of one year offered by Voltas against a six-year warranty offered by others like LG, Samsung, National could be another reason for falling sales. The company has also suffered an erosion of image due to its shrunken product portfolio.
However, there is a unanimous feeling in the market that product delivery schedules have indeed improved and the product is being delivered at a short notice.
For the time being, company officials are pleased at the concerted effort taken on the customer front by the company and all said and done it is a step in the right direction. As they say in a market economy, "the customer is king."
