Customer Satisfaction
Research
Satisfy your workshops
and they will keep you satisfied!
Wojciech Kordas 2005
CSR
Satisfy your workshops
and they will keep you satisfied!
Author: Wojciech Kordas (1228439) Date: 1 July 2005
Supervisor V.A.W S.L.: David Garcia First supervisor RuG: Drs. R. de Vries Second supervisor RuG: Dr. J. Horgan
Institute: RijksUniversiteit Groningen
Faculty of Management and
Organization
Preface
This report has been written in the scope of the final phase of my International Business studies at the faculty of Management and Organizations, University of Groningen.
I have learned a great deal about doing research and about how many things work within big companies. This experience has been of great value for me and I hope for Carmaker A for whom this report has been written.
Rests me to direct a word of thanks to people that helped and supported me in the effort to do this research and write this thesis. In the first place I would like to thank David García for believing in me and giving me the opportunity to do this research. Special thanks go to Javier León and José Mendoza, who stood by me during this exciting experience and helped me in any way they could. I want to thank my supervisors R. de Vries and J.Horgan, for helping me realize this thesis. Their advise has been key.
Management summary
After-sales is of crucial importance to the carmakers for several reasons.
Therefore, it is of great importance, for the carmaker to ensure that the policies for after-sales delivery are functioning well. One of these policies is to support the dealers and workshops that actually provide the after-sales to the end customers. This report addresses the satisfaction that the workshops have with the provided support from carmaker A. The service department of Carmaker A has ordered a Customer Satisfaction Research (CSR) to get an insight in the satisfaction of its own workshop network as well as that of the competition to be able to make a comparison and set future goals. This was translated into the following problem definition:
Research objective: To inform the service department of Carmaker A about the satisfaction levels within their workshop network on the products and support services the service department of Carmaker A provides, and compare those to that of the competitors, in order to help them improve the satisfaction, and set future goals.
Research question: To what extent are the workshops satisfied with the products and services provided by the service department of Carmaker A and how does this level of satisfaction compare with what other brands provide to their workshops?
The products and services investigated in this report comprise of technical documentation, diagnosis system, tools and the help desk. The value of these products for the workshops depend on several factors, like: the overall performance of these products, the separate attributes and the availability of these products. To obtain information about the satisfaction of these products, field study research was conducted. 83 workshops of different brands (Carmaker A, Carmaker B, Carmaker C, Carmaker E, Carmaker F and Carmaker G) were visited for a face to face interviews and a questionnaire was used to obtain information for statistical analysis.
Results
Within the technical documentation of Carmaker A the workshops indicated a satisfaction about engine manuals that is comparable to that of the rest of the sample. Carmaker A’s workshops indicated a level of satisfaction about the electrical diagrams that was in line with the members of the group to which carmaker A belongs (together with Carmaker B and C) and even higher than those of the benchmark brands: Carmaker E, Carmaker F and Carmaker G. But compared to the benchmark Carmaker A’s workshops indicate a considerable lower satisfaction on body work manuals and especially on repair times.
The satisfaction level within the workshops of Carmaker A about the diagnosis system was higher than that of the group members, equal to that of Carmaker F and Carmaker G and lower compared to that of Carmaker E.
The indicated satisfaction about tools was almost equal within the whole sample. Yet workshops of Carmaker A were the only workshops that expressed
dissatisfaction about the quality of the tools. Furthermore, all brands within the sample indicated a low satisfaction about the relation between the price and the utility of the tools and equipment.
A low satisfaction was measured within the workshops of Carmaker A when investigating the help desk. Carmaker B and C are in the process of changing the help desk due to low satisfaction in the past. Carmakers F, G and especially Carmaker E show a significant higher satisfaction about the help desk that is to their disposal.
Drawing from the results, the service department of Carmaker A has to improve the body work manuals, repair times, and the help desk to reach higher satisfaction levels in the future within their workshops network.
From the benchmark, it became clear that other brands use information systems to provide their workshop network with quicker and more adequate information. Carmaker A is the only brand in this sample that does not use the opportunities that information systems provide to its full potential. Future goals should incorporate this use of information technology.
1.1 Carmaker A ...8
1.2 The service department of Carmaker A...8
1.2.1 The products ...8
1.2.2 The workshops...10
1.3 The environment...10
1.3.1 Economical ...10
1.3.2 Technological...11
1.3.3 Legal ...11
2.1 Literature review ...13
2.1.1 After-sale Strategy ...13
2.1.2 Customer satisfaction ...14
2.1.3 Customer satisfaction in b2b context ...15
2.1.4 Linking customer satisfaction with benchmarking ...16
2.1.5 benchmarking ...16
2.1.6 Benchmarking exercise...19
2.1.7 Gap analysis ...19
2.1.8 Carmaker A working together to improve satisfaction...19
2.2 The problem definition ...20
2.2.1 Sub questions ...20
2.2.2 Constrains of the research ...21
2.3 The conceptual model ...23
2.3.1 Explanation of the conceptual model ...23
2.3.2 Definitions in the conceptual model ...24
3.1 Population Specifications ...25
3.1.1 Target population ...26
3.1.2 Sample size ...26
3.2 Research objects...28
3.3 Field study visits ...28
3.3.1 Reliability & Bias ...30
3.3.2 Validity ...31
3.4 Data analysis ...31
4.1 Carmaker A and the group ...35
4.1.1 Performance ...35
4.1.2 Attributes...38
4.1.3 Availability ...39
4.2 The benchmark: Carmakers E, F and G...40
4.2.1 Performance ...41
4.2.2 Attributes...43
4.2.3 Availability ...44
4.3 Conclusions...44
5.1 Carmaker A & the group ...46
Preface ...2
Management summary ...3
Introduction ...7
Chapter 1: Carmaker A ...8
Chapter 2: The problem definition...13
Chapter 3 Methodology ...25
Chapter 4 Technical Documentation ...35
Chapter 5 Diagnosis systems ...46
5.1.1 Performance ...46
5.1.2 Attributes...47
5.1.3 Availability ...48
5.2 The benchmark: Carmaker E, F and G...49
5.2.1 Performance ...50
5.2.2 Attributes...51
5.2.3 Availability ...51
5.3 Conclusions...51
6.1 Exclusive tools: Carmaker A & the group ...52
6.1.1 Exclusive tools: Carmaker E, F and G ...53
6.2 Help desk: Carmaker A & the group ...54
6.2.1 The benchmark: Carmaker E, F and G ...55
6.3 Conclusion...56
7.1 summary of results ...57
7.2 Improvements...58
7.4 Future goals ...61
7.5 Future research ...64
7.5.1 reflection ...64
7.5.2 Recommendations for further research...65
Appendix 1 questionnaire ... Error! Bookmark not defined. Appendix 2: Analytical data ... Error! Bookmark not defined. Chapter 6 Exclusive tools & the Helpdesk...52
Chapter 7 Recommendations ...57
References: ...66
Appendix 3: Correlations & ANOVA ... Error! Bookmark not defined.
Introduction
This research has been conducted for Carmaker A, (who will be kept anonymous in this report) and in particular for the technical support department of Carmaker A.
After-sales is of crucial importance to the carmakers for several reasons, like revenue or customer satisfaction, and it could be a source of competitive advantage. Therefore, a high importance is put on policies that ensure the after- sales service delivery. One of these policies is to support the distribution channel that actually provides the after-sales to the end customers. The service department of Carmaker A is charged with this activity, and this implies that it provides the workshops with all the necessary products and support activities to adequately prepare workshops to operate effectively and satisfy the costumer.
The service department of Carmaker A operates in a Business to Business context.
The executive management of Carmaker A is concerned with the satisfaction that these workshops have with the products and support activities that the service department of Carmaker A provides. The executive management is also interested in knowing how the competitors perform in this area. The researcher has been offered the assignment to research the satisfaction of these workshops and compare it to that of the competitors. This in order to improve and set future goals about the workshop satisfaction.
The first part of this thesis starts with a short description of Carmaker A, the products that they provide and the environmental conditions in which this research takes place. In chapter 2 the research definition and in chapter 3 the methodological approach will be given.
In the second part of the thesis the results will be presented. Before any recommendations can be given, first the actual costumer satisfaction level has to be researched and determined. To give more accurate recommendations, a benchmark exercise was performed to get an insight in the satisfaction levels of competing brands. These satisfaction levels were compared to those already obtained from Carmaker A workshops. This analysis is presented in chapters 4 and 5 and 6. Finally, chapter 7 gives recommendations drown from the research results.
Chapter 1: Carmaker A
Introduction
In this chapter a short introduction will be given of Carmaker A and its technical support department. A short description of the workshops, will also be given.
And finally, the environmental factors that influence the carmakers decisions about the after-sales delivery will also be described.
1.1 Carmaker A
(deleted for anonymity reasons)
1.2 The service department of Carmaker A
(deleted for anonymity reasons) 1.2.1 The products
The core activity of the service department of Carmaker A is to provide technical support to the workshops. This is done by providing adequate products that make it possible for the workshop to maintain a high standard of afters-sales service. These products will play a main role throughout the rest of this report. The products provided are the following:
Technical documentation, which comprises:
• Manuals
o engine manuals o gearbox manuals o bodywork manuals o maintenance manuals
Consist of written instructions about the car and how to repair a malfunction within the car.
• Electrical diagrams
Electrical diagrams describe the wiring of the car. They can be used to detect and repair malfunctions in the car's electrical system.
• Repair times
Consist of time tables that give an estimation of the time needed to repair the malfunction for each car model and type of repair.
• ELSA
The ELSA software enables the workshops to access the manuals digitally through a P.C. This software is used by all group members.
The technical documentation is designed and developed by Verlag Automobil wirtschaft (VAW) in cooperation with Carmaker A. VAW plays an important role
in the supply chain of the service department of Carmaker a. This company, from German origin, is specialized in making technical manuals. In the VAW workshop a car is taken apart and all the possible dismount, mount and repair actions are described and illustrated. Furthermore, VAW is also responsible for the graphical design, layout and translation of the manuals.
The only two manuals that are not made by VAW are the electrical diagrams, which are outsourced to VAW’s competitor, and the repair time tables. The time it takes to dismount and mount any part of the vehicle is measured by a Swiss company specialized in this field. Within this company the time for every action is stop-watched. The separate measured times are then put into a software within the service department of Carmaker A where the times are calculated for each possible task that can be made when repairing a car, by adding the separate times according to the task that has to be performed.
Diagnosis systems:
• Diagnosis equipment
Carmaker A equips the workshop with two types of diagnosis systems.
Diagnosis systems are systems that can be connected to a car in order to diagnose it. The cars are equipped with an onboard ‘computer system’
that operates the car. Malfunctions in this computer system can cause the car to malfunction.
• Diagnosis software
This is the software that enables the diagnosis system to function and helps detect malfunctions. This software is specially designed for the diagnosis system and guides the mechanic through a series of actions in order to diagnose, and repair the car. These guided functions are designed according to the car model. Each car model has a specific set of guided functions.
The diagnosis system is a universal system used by all members of the group, and designed and produced by a third party in Germany. The software that operates this diagnosis system for the Carmaker A workshops is designed and developed in the service department of carmaker A with the cooperation of VAW. Since the software has to be custom made to correspond with the car models and is usually based on the repair manuals made by VAW, VAW’s and Carmaker A’s know-how is combined to develop the software and the guided functions.
Special tools:
• The term special tools, refers to the tools that are exclusively made for the car models of Carmaker A. These tools are designed for every repair that has to be made. The tools are provided by Carmaker A whenever a new car model in put on the market.
The service department of Carmaker A designs, develops and distributes the tools to the workshops. The production of tools is outsourced to a company that is specialized in making tools.
The value for the workshops of all products motioned before depends on:
• The performance of these products
• The attributes of these products
• The availability of these products.
1.2.2 The workshops
Workshops are mostly private owned companies that have a contract with the carmaker to sell his cars and maintain them. The service of repairing the car depends on both the expertise of the mechanic and the products and technical support he has to his disposal. Both are provided by the carmaker. The carmaker organizes courses for mechanics on the latest technologies and provides literature on the subject. The carmaker also provides the equipment that enables the mechanics to repair the car. The survival and the competitive advantage of the workshop strongly depends on support received and the after- sales policies laid out by the car manufacturer.
The workshop is a part of the dealer, where the after-sales activities take place.
A workshop manager is responsible for the after-sales, and has at least 3 qualified mechanics to his disposal (minimum requirements laid out by the carmaker). All workshops perform repairs on the mechanics and electronics of the car. The bodywork repairs are not always performed in every workshops, because of the high investment costs, this part of the repairs is usually
performed by larger workshops. All workshops work with the same products and equipment provided by the service department of Carmaker A.
1.3 The environment
In this section the environmental changes will be discussed that Carmaker A has to take in account when delivering support to the network of workshops.
The environmental factors that will be discussed are the following: economical, technological and legal.
1.3.1 Economical
The aftermarket is characterized by change due to the new regulations, a large competition from the ‘quick fix’ repair workshops and the upcoming independent workshops and the stagnating car sales. The European car aftermarket is worth
€65 billion. Spare parts and service are 16% of automakers revenue and 41%
of automakers profit. There are a total of 22.000 franchised service outlets and another 22.000 independent ones.
The high percentage of profit that the spare parts and service represent indicates the importance of the aftermarket for the carmakers. (McKinseey)
The industry in which these workshops operate is characterised by increasing capital requirements to meet the standard service levels laid out by the car manufacturer. Another characteristic is the loss of market share to independent repair shops, especially when regarding the older cars and recently also with new cars, as a consequence of the new European regulations.
1.3.2 Technological
The technological development in the aftermarket depends on that of the car industry. Service products and support have to be adapted to the technological development in the car industry, in order for the workshops to be able to repair and maintain the car according to the highest standards and, if possible, to differentiate themselves from the competition by providing quicker and more effective repairs.
Microelectronics will be more fully applied to future automobiles and will become as commonplace as radios are today. There are on-board systems available that enable drivers to find destinations through voice-activated navigation or make cellular calls using the computer. These computers can access the Global Positioning System (GPS) and display maps to help drivers avoid congested freeways and find better routes to destinations. As a consequence, the future tools and equipment delivered to the workshops and the workshop support will have to keep up with the technical development of the car.
The information system revolution of the past decade did not pass unnoticed by the automobiles aftermarket. This development made it possible to enlarge and speed up the diagnosis possibilities of the workshop.
Carmakers also use information systems and Internet to provide technical assistance to workshops. This development is assumed to continue in the future, and will imply a development of repair equipment supported by information systems and Internet.
A consequence of this rapid and continuous development of technologies is on the one hand: that the carmaker has to provide equipment that keeps up with the technological standard of the car and better educate and train the mechanics in the field of electronics, and on the other hand: that workshops can be equipped with information systems and the mechanics will have to be better educated and trained in the field of electronics and information systems.
1.3.3 Legal
Europe's car manufacturers were shielded from normal competition rules for decades, but that changed on October 1st, 2004, when new regulations took effect. They retained a degree of control over who can sell and repair their vehicles, but new rules aim to give more power to independent repairers by demanding that distinct selection criteria for after-sale service are defined, made public and applied indiscriminately.
Independent workshop owners are often unable to provide repair services because the manufacturer makes the relevant technical knowledge available only to firms which are network members. (Explanatory brochure: Distribution of motor vehicles, Regulation (EC) n 1475/95 published in the official journal L 145 of 29th June, 1995.) The new regulation stipulates that carmakers must provide equal access to technical information (including training, software, tools and equipment) for all operators involved in repair, training and technical assistance, regardless of whether they are authorised or independent repairers. Basically, this means that exclusive workshops will lose the competitive advantages of having exclusive access to technical information from the brand.
Under the old regulations, car producers had the right to bind dealers and workshops to sell only their original parts and products as well as use the equipment to repair the cars. The dealer/workshop was therefore bound to buy from his car producer even when the prices were not favorable. These price policies affect the end user and therefore are very important for both the dealer/workshop and the producer. The price at which a workshop offers after- sales service is, to large extent, affected by the price conditions he is offered by the manufacturer. With the coming of the new regulation and the appearance of a more intensive competition from the independent repair workshop, the prices for the products and support will become more important for the workshops to remain competitive.
"European Union regulatory changes to loosen the automakers' grip on servicing and repairs could cost ear companies as much as 50 percent of aftermarket profits in the next five to ten years, says a study by consultants at Booz Mien Hamilton." (Automotive News Europe, 10/4/2004, Vol. 9 Issue 19, p3, 2p).
And finally, the relation between the car maker and the dealer/workshop will change. Carmakers will lose some of the grip on the workshops they enjoyed for so many years. With the introduction of the new regulations, workshops will become less dependent of the carmaker and more on the market.
Now that the company, its products, its customers and the environment are presented, the research will be introduced. In the next chapter the problem definition will be given. By reviewing the literature, the problem question will be formulated and the approach to answer that question will be presented.
Chapter 2: The problem definition
Introduction
The high importance of after-sales implies that the service department of Carmaker A has to do a good job in providing the workshop with all the necessary products and support activities. To ensure that this policy is adequate, the workshop’s satisfaction about these products and support activities should be measured. In addition a benchmark exercise should be performed to see what products and support services are being offered by the competition and how satisfied they are with it.
This chapter consists of a literature review from which a problem definition can be constructed. The research objective and the research questions that have to be answered in order to achieve that objective will be discussed.
2.1 Literature review
In this section the problem is defined by reviewing the literature. Literature that will be used was selected based on academic relevance.
2.1.1 After-sale Strategy
The service department of Carmaker A operates in the so called aftermarket. A sound after-service is of high importance to manufacturers because it can be:
A) a major source of revenue, B) It is also essential for achieving final customer satisfaction and repeat sales, and C) it can provide a competitive advantage.
(Goffin, K, 1999)
Based on the research done by O. Ehinlanwo and M. Zairi (1996) on after-sales in the car industry, a number of policies can be identified as being critical or crucial to achieve these revenue’s, customer satisfaction and competitive advantage through after-sales delivery. These policies are: price, product, promotion, distribution, service and environmental policies.
• Product: The car has to be designed in a way that allows easy maintenance and repair.
• Price: The price at which the workshop offers its after-sales services is, to a large extent, affected by the price conditions he is offered by the producer.
• Promotion: In order that the target audience becomes aware of the after- sales possibilities offered by both the producer and the workshop, a well designed promotion policy is required.
• Distribution: The availability of the after-sales products affect the after- sales delivery.
• Environmental policies: Customer trends demonstrate the ‘coming of age’ of environmental considerations.
• Service/ support: The product technology is becoming universal. Service has become a way in which policies and offerings can be differentiated
from those of competitors. Granted that all other critical policies function effectively, the service policy is by far the most important. The competition and the continuous technical evolution of the car has made it critical for the producer to offer their workshops a whole range of support and training measures, to help them secure the additional support required to both satisfy and bind the final customer.
All these policies employed by the manufacturer revolve around ensuring that their representatives, i.e. dealer and workshops, are adequately prepared and able to satisfy the final customer. The service department of Carmaker A is charged with providing support measures. The focus of this research will be therefore on the service policy, i.e. products and support service that the service department of Carmaker A provides to the workshops, as well as the distribution of these products, in order to prepare the workshop to service the final customer adequately.
The workshops are the ones that can judge this support by expressing their (dis)satisfaction about the received products and technical support.
2.1.2 Customer satisfaction
Customer satisfaction is mainly based on the disconfirmation paradigm, which states that the customer's feeling of satisfaction is a result of a comparison process between perceived performance such as comparison (to previous experiences of experiences with competitors) and expectations. The customer is satisfied when he/she feels that the product's performance is equal to what was expected (confirming). If the product's performance exceeds expectations, the customer is very satisfied (positively disconfirming), if it remains below expectations, the customer will be dissatisfied (negatively disconfirming) (Eggert A, 2002: 107).
The Customer satisfaction has become increasingly popular in the last two decades. The following are just a few references from literature on customer satisfaction:
"Service quality and customer satisfaction are inarguably the two core concepts that are at the crux of the marketing theory and practice (Spreng and Mackoy, 1996). In today's world of intense competition, the key to sustainable competitive advantage lies in delivering high quality service that will in turn result in satisfied customers (Shemwell et al., 1998). …there is not even an iota of doubt concerning the importance of service quality and customer satisfaction as the ultimate goals of service providers." (G.S. Sureshchandar, 2002: 363- 379)
"To meet the desires and expectations of customers or to ensure pleasurable fulfillment of customers´ needs, companies have to deliver quality products and services. Companies are learning to listen to customers and provide them with quality and service or face severe consequences. "(Zemke & Schaaf, 1989) The only way to improve customer satisfaction is by measuring it first.
"Customer satisfaction measurement is the principal tool by which companies asses the health of their relationships with their customers." (Rossomne J.
2003)
2.1.3 Customer satisfaction in b2b context
In the business to business context in which the service department of Carmaker A operates, added complexities are present when conducting Customer Satisfaction Measurement. (Rossomne J, 2003: 179) Complexities of multiple respondents and complex product/service attributes are a few of these added complexities.
The first challenge relates to measuring the satisfaction of an entire firm.
Traditional CSM, rooted in consumer behaviour, focuses on an individual's assessment of his or her satisfaction with a specific product or service.
Likewise, most b2b research thus far has focused on the use of a "key informant" or a single client contact as a proxy reporter for the firm. Satisfaction measures of a firm must be a composite of the satisfaction evaluations of all relevant client organization members. Identification of such members is a critical element in measuring customer satisfaction in a b2b setting.
(figure 2.1 , Rossomme J. 2003, CSM model)
The model outlaid in figure 2 demonstrates business buyer-seller relations as multiple links between the receiving and offering organization. The influence screen determines the strength of these links. This CSM model is seen as a composite of the satisfaction measures of each buyer-seller link though the decision and usage events of pre-purchase, purchase and post-purchase.
When analyzing the buyer-seller links between workshops and carmaker, the following can be said. On the one hand, the first part of the model does not
apply for this research. There are no pre-purchase decisions involved.
Workshops are obligated to purchase the products to fulfill the standard laid out by the carmaker. As a consequence of this, no information satisfaction can be measured and no deciders and influencers can be identified.
Secondly, the buyers, the ones that have the formal authority to select suppliers, are the workshop managers; they are the ones that place the orders (in the case the product is not automatically provided by the carmaker). They are also the ones that can best judge the performance satisfaction.
And finally the users, the mechanics who will have experience with the product or service. They use the products on a day to day basis, and can judge best the attribute satisfaction.
After determining the customer roles that are relevant for the satisfaction measurement, the satisfaction elements have to be determined. The b2b model used here incorporates specific satisfaction elements to better measure the varying experiences and perceptions of different customer roles. The elements that should be distinguished are the following:
• Performance satisfaction: is a general construct. It is the degree to which the overall performance is satisfactory
• Attribute satisfaction: is a more specific subjective satisfaction judgment resulting from observations of the performance of a product or service feature or dimension. This micro-measure of satisfaction is important to identify problem areas with the actual product of service itself.
Since the distribution policy is also fundamental for the after-sales delivery, the availability of these products should also be investigated.
2.1.4 Linking customer satisfaction with benchmarking
The success of companies is greatly determined by the customer. Companies can no longer afford to develop objectives and measures which are internally driven. Strategies that lead to superior competitiveness are based on a clear capability to deal with changing customer demands and on the ability to respond quickly, effectively and economically. The customer becomes more important in strategic planning. This is increasingly recognized, also in business literature. According to Keinichi Ohmae:
"Competitive realities are what you test possible strategies against. You define them in terms of customers… Of course it is important to take the competition into account, but in making strategy that should not come first. First comes painstaking attention to the needs of customers." (M. Zari, 1994: 34)
The customer is the key determinant of strategic planning, and competitive analysis is the most essential tool in strategic planning. (M. Zari, 1994: 34) Looking at your competitors helps you to determine how big the gap is between you and the competition.
2.1.5 benchmarking
The following definitions of benchmarking where found:
The first written definition of benchmarking was by Micheal J. Spendolini in The Benchmarking Book, in 1992:
"A continuous, systematic process for evaluating the products, services and work processes of organizations that are recognized as representing best practices for the purpose of promoting organizational improvement."
Other definitions found in the literature:
"Traditional benchmarking, is the process of comparing oneself against the best competition, then setting goals such that the organization becomes and remains competitive." (Balm, 1996: 28-33)
“Benchmarking has now become a management process whereby an organization’s results are compared with those of its competitors, and with the industry as a whole. It then typically sets itself the objective of matching best practice implementing the lessons to be learn from the top performers" (Mercer.
D.1999).
In these definitions, two things stand out, both definitions indicate that the benchmarking (1) is a process of comparing and adapting, and (2) the comparison should be made against best competition.
Many world leading companies already have used the benchmarking tool to improve their performance. The most well know of them is XEROX, who helped in developing the benchmark to its current level. Xerox performed an internal benchmark among its country units. The sales figures for the various country units revealed varying core competencies. By applying the best practices of the different units to the company as a whole, a considerable increase in sales was achieved. (www.best-in-class.com)
GTE, a telecommunication company based in the USA, badly needed to change its approach to customer service. A combination of rapidly emerging technologies and regulatory changes, had dramatically changed competition.
Customer satisfaction studies indicated that many customers were leaving due to price issues; yet the benchmark study told GTE that in many cases they offered competitive price packages. Another thing that the benchmark showed was that the competition was simply doing a better job in positioning the advantages of the services. In response, GTE focused on advertising their price packages and matching them to the using rate of its customers. (www.best-in- class.com)
These examples show that there are different types of benchmarking with different objectives. Furthermore, the second example shows that benchmarking can reveal issues that otherwise could be overlooked with customer satisfaction measurement alone.
Three objectives of benchmarking can be named: to compare performance for the purpose of determining your position as compared to others; to compare processes in an effort to improve your own process; and to compare strategies in order to change your own strategy. (Bhutta S, and Huq F, 1999)
According to literature there are four main types of benchmarking. (a)internal, (b)competitive, (c) functional, and (d) generic benchmarking (M. Zari, 1994: 47).
Ad a) Internal benchmark: Is a comparison of internal operations, e.g. project vs. project, or unit vs. unit.
Ad b) Competitor benchmark: Is a comparison against your direct competitors for a specific product or service.
Ad c) Functional benchmarking: Is comparing yourself against companies, (companies from all industries and segments), who have the same process as you do.
Ad d) Generic benchmark : Is a comparison of business functions against the industry.
(Table 2.2: Bhutta S, and Huq F, Benchmarking-best practices: an integrated approach, (1999))
To compare the performance of the products and support services that the service department of Carmaker A provides to that of the competitor, a competitor benchmarking would be the most adequate tool to use. This type of benchmarking can also help form strategy.
This kind of benchmarking can yield several valuable results. Finding out how good or bad you are doing compared to the competition can help in improving the bad points and underline the strong points. Finding out how well the best organizations are currently performing helps in goal setting. And detecting who the best are helps in determining future productive benchmarking partner organizations.
The relevant type of benchmarking for this research is the competitive benchmarking. As the name implies, competitive benchmarking can be used as a way of informing people how badly or well they are doing against direct competition. The main disadvantages are that it is not easy to obtain information on competitive processes or targets. Information obtained through anonymous surveys conducted by independent consultants (the researcher) can provide
Internal
Benchmarking
Competitor Benchmarking
Functional Benchmarking
Generic
Benchmarking Performance
Benchmarking
Medium High Medium Low
Process
Benchmarking
Medium Low High High
Strategic Benchmarking
Low High Low Low
excellent objective indicators of a company versus competitive performance and is one method used to compensate for this disadvantage (M. Zari, 1994: 47).
2.1.6 Benchmarking exercise
The Rank Xerox benchmarking methodology is the best known and perhaps most widely used one (M. Zairi, 1994: 51). The benchmarking exercise in this research will be largely based on this approach:
Planning:
1. Identifying what is to be benchmarked:
2. Identifying comparative companies 3. Determining data collection method Analysis:
4. Determine current performance gap 5. Project future performance level Integration:
6. Communicate findings to the service department of Carmaker A 7. Recommend actions
2.1.7 Gap analysis
To analyse the difference between the satisfaction levels obtained from the Carmaker A workshops and those of the competing brands, a gap analysis can be used. The satisfaction levels of the different types of products are used as the key measurements. The satisfaction level for each brand is determined by the mean of satisfaction scores collected from the sample. The gap analysis analyses key measures as radii of a circle or spokes in the wheel. At the centre of the circle, each measurement assumes its worst value. At the circle’s perimeter, each measurement assumes a value at with it would be deemed to achieve total customer satisfaction.
This analysis of the gaps between baseline (your current satisfaction level) to benchmark (current level of the best companies) will give an insight is Carmaker A’s strong and weak points and will help in prioritizing resource allocation to those areas that are not satisfactory.
2.1.8 Carmaker A working together to improve satisfaction
Working together in order to improve product and services has been suggested by writers of business literature:
"Today's companies cannot passively offer products or services to customers.
Instead, they must constantly look for innovative ways to better map their offerings to the requirements of their customers. This innovation cannot be carried out by the company in isolation, but requires the partnership of the company, its customers, and its suppliers. " (Ramaswamy, 1996)
For the service department of Carmaker A to achieve workshop satisfaction, it has to fulfil their needs and expectations. However, satisfying the workshops
requires not only the effort of the service department of Carmaker A, but also the support and resources of its suppliers (Wong. A, 2000: 427). This is especially true for companies like Carmaker A. that have outsourced many of their companies´ activities to their suppliers. As mentioned before VAW is an important element in the supply part of the service department of Carmaker A Therefore, Carmaker A and VAW should work together to meet the needs of their customers.
First, by involving VAW in this research, the benefits of their expertise in the field of technical documentation can be used to determine the key measurements and attributes.
Second, as mentioned by Zairi, it is difficult to obtain information from a competitor. By conducting the survey under the name of VAW, competitors might be less hesitant to give information. This way the difficulty can be overcome.
The name VAW should also be used when interviewing Carmaker A’s own workshops. This way the workshops will not feel intimidated and might be less inclined to give ‘politically correct’ answers about Carmaker A.
2.2 The problem definition
The importance of after-sales makes it an area that needs close watching.
Workshops are the ones that deliver the after-sales to the final costumer and have to be well supported by the carmaker to do so. Carmaker A requested this research to find out if the workshops are satisfied with the products and services they provide, and if and how these services and products should and/or could be improved. In addition, by looking at the competition, a comparison can be made of how good or bad this support is, and can help in setting future goals.
This research is carried out in cooperation with VAW. VAW is one of the suppliers of technical documentation to the service department of Carmaker A and has the experience and know-how to best capture the determining factors that are relevant for the satisfaction of the Carmaker A workshops.
The research problem consists of two parts: the research objective and the research question (Verschuren, 1986).
Research objective: To inform the service department of Carmaker A about the satisfaction levels within their workshop network on the products and support services the service department of Carmaker A provides, and compare those to that of the competitors, in order to help them improve the satisfaction, and set future goals.
Research question: To what extent are the workshops satisfied with the products and services provided by the service department of Carmaker A and how does this level of satisfaction compare with what other brands provide to their workshops?
2.2.1 Sub questions
In B. Henderson´s definition of strategy he notes: "…For any company the search is an iterative process that begins with a recognition of where you are and what you have now.." (Zari M, 1994). Hence, Carmaker A has to define where they are now.
As mentioned in the literature review, the factors that can construct the overall satisfaction are: performance, attributes and availability.
1. To what extent are the Carmaker A workshops satisfied with the performance, attributes and availability, of the products and support services?
Carmaker is part of the a group (Carmaker B and Carmaker C). All members use basically the same products. The products are adjusted to each brand. By investigating the satisfaction of the others group members, a comparison can be made of the satisfaction level within the group. This is valuable because it can show if the adjustments to the basic product for each brand results in difference in satisfaction.
2. To what extent are the other group workshops satisfied with the performance, attributes and availability, with regards to the same products and support services?
Also the competitors of Carmaker A have to be taken into account. Customers (in this case the workshops) define value in relation to rival offerings (Fleisher, 2002: 189), therefore, it is important to find out what are the products and services that workshops of competing brands have to their disposal and how satisfied they are with those products and support services. This will show Carmaker A how well or bad they are doing compared to the competition, and it can offer valuables information on how to improve.
3. How is the performance satisfaction, attribute satisfaction and availability of the products and support provided by the competing brands, with regards to the same products and support services?
Once confronted with the satisfaction levels of the workshops, what should be done?
4. Based on the current satisfaction levels of the Carmaker A workshops and the competitors range of products and services and satisfaction levels , what should be improved in the current range of products and services provided by the service department of Carmaker A and what goals should be set for the future?
2.2.2 Constrains of the research The constraints in this research are:
¾ The research has to be completed before the end of February 2005
¾ Only the performance of the competition will be measured, contacting the benchmark companies for a productive process benchmarking was not permitted by the executive management of Carmaker A.
¾ This research will be performed in only one area, because of time and costs constrains, and should be seen as a pilot project for future research about this subject.
¾ The gathered information has to be handled with care because of the political implications it could have within the Carmaker A concern.
¾ It is allowed to consult everybody within the VAW company, consultation within the service department of Carmaker A has to be approved by the coordinator.
¾ The implications of this research are only to be judged and acted upon by the service department of Carmaker A.
2.3 The conceptual model
To visualize the research problem, a conceptual model is presented. The central topic is customer satisfaction.
Macro environment
Operational environment
(figure 2.3: Conceptual model)
2.3.1 Explanation of the conceptual model
In the conceptual model the operational environment consists of the relation between the service department of Carmaker A and the workshops. This connection implies a relation between the two that can be assessed in terms of
Carmaker A
Carmaker A Workshops
Carmaker A Satisfaction levels:
- Performance - Attribute - Availability
Improving and /or adding products and services
Improving satisfaction and setting goals for the future VAW
Benchmark data:
- group (Carmaker B, C and D) Performance satisfaction Attribute satisfaction Availability satisfaction
- Competitors (Carmaker E, F, G and H)
Performance satisfaction Attribute satisfaction Availability satisfaction
Analysis of Satisfaction and of the Satisfaction Gap
End users
satisfaction. By measuring the satisfaction and comparing it to satisfaction levels obtained from the benchmark, a satisfaction gap can be determined. This gap indicates the relative space for improvement, depending on the necessity and the capabilities to improve. Analysing this gap is targeted on improving the satisfaction and setting goals for the future.
2.3.2 Definitions in the conceptual model
• Workshops: A part of the dealer that is specialized in repairs and maintenance and which is part of the official workshop network of Carmaker A.
• End user: Customers of Carmaker A workshops.
• Current provided products and services: Comprises the technical documentation, diagnosis systems and special tools.
• Satisfaction: Consists of performance, attribute satisfaction and availability. Needs and complaints will also be taken into account as part of the total satisfaction.
• Benchmark data: The information gathered from the benchmark (the process of comparing oneself against the best competition).
• Satisfaction Gap: A gap analysis that shows the gap in satisfaction from baseline (current performance level) to benchmark (current performance level of best companies) (Balm. G. 1996).
Chapter 3 Methodology
Introduction
In this chapter the methodological approach taken in this research will be explained. Which primary and secondary information was gathered and how, will be discussed below.
The policy to service and support the workshops by the carmaker is not only determined by what the carmaker and its competition do, It is also influenced by the environment in which the workshops and the carmakers operates.
Secondary information was gathered to describe the most important external factors that influence this policy and was presented in Chapter 1.
Primary information was gathered on Carmaker A’s workshops and those of the competition. In this study the satisfaction of workshops support by carmakers was investigated. To conduct this exploratory research, field study methodology was chosen as an appropriate approach. The research was designed in four main stages, that will be described in the following sections:
Population specifications and determining the sample that was to be researched: A geographic area was chosen where the field research was conducted. The target population was determined and sampling was conducted.
Research objects were to be determined: the products that would be investigated were chosen according to the importance given to them by the service department of Carmaker A.
Field study (questionnaire): Workshops of various brands were contacted by telephone or fax to obtain their agreement to participate in the research.
Before the interviews, the respondents were presented a questionnaire where they could indicate their (dis)satisfaction about the products and support on an scale form 1 to 10.
Field study (face to face interviews): Visits were made to the workshops to conduct semi-structured interviews with workshop managers and mechanics.
The interviews lasted from half an hour to one hour.
Data analysis and post visit conduct: After each day of visiting, data analysis and reduction was conducted, following a statistical analysis. Post visits were made to verify the obtained data in a few cases where the collected data was unclear.
3.1 Population Specifications
Due to time and costs constrains, the executive management of the service department of Carmaker A assigned one area as the area for the research. In spite the relatively small research area, it is an area that can provide valuable information for two reasons:
This area is one of the most important areas when in come to the automotive industry. Statistical data indicates a high turnover for the car industry in this area. Many car importers are located in this area.
By analyzing workshops of other brands that are in the same area a justified comparison can be made.
Seven car manufacturer brands were selected additional to Carmaker a as an exploratory sample for the research. Carmaker B, C and D are part of the group to which Carmaker A also belongs, and therefore are a relevant sample to compare with Carmaker A
Furthermore, Carmaker E, F, G and H where identified by the executive management as relevant competitors to investigate. Their concentration of workshops in the research area is comparable to that of CARMAKER A.
3.1.1 Target population
The target population consists of 257 workshops.
The sample frame is based on the internet sites of the brands where all brand workshops are listed, as well as the place in which they are located. This way a list was made of only workshops that are situated inside the research area.
The target population consists of 8 brands. To ensure that the samples taken from each brand are comparable, the confidence level within each sample should be the same.
Furthermore a high confidence level of each group would ensure the that the sample itself is representative of each brand.
3.1.2 Sample size
Textbooks tend to take a statistical approach to sample size that calculates the size of sample needed in order to achieve a specified degree of sampling error and a minimum level of accuracy. The problem with such calculations is that they assume that the researcher is able to specify an acceptable level of sampling error in advance of undertaking the research. This is usually impossible, since errors will vary from variable to variable. Such calculations also fail to take into account very practical issues, that the researcher came across in this research, such as larger samples will cost more and will take more time to complete.
The relation of minimum sample size needs to be seen in relation to the declining payoff of increasing sample size in terms of accuracy (Kent. R, 2001).
The increase of the sample is not linear with the increase in accuracy.
Directions for the determination of the sample size (n) for a finite population according to Normal distribution law
K2 · p · q · N . n =
e2 (N-1) + K2 · p · q
where N is the size of the population and e is the target error.
p and q are related to the probability of individual event. In most conditions parameters of the population are not known, then p = q= 0.5
K is the Normal law constant, then for a confidence limit of 95,5% K = 2.
In this case, the formula may be applied as:
N .
n = e2 (N-1) + 1
(Teresa Raventós,SpainBase, 2004)
By using the formula above, we can calculate the error for each brand. Initially the maximum error of less than 10% within the sample of each brand was specified, to ensure a high level of accuracy. Using the formula above the needed sample size for each brand was calculated to reach a error of less than 10%.
Within each group random sampling was used.
In non of the cases it resulted to be possible to collect the required sample size.
The collected sample sizes are listed below. By taking the actual collected sample and putting it back in to the formula the obtain margin error for each sample was calculated.
As a result we see that for example the sample of Carmaker A has an error margin of 16%. Which means that, if the same research was done a 100 times, in 86% of the cases the same results would have been obtained. Furthermore the margin errors between the brand do not differ much from each other, and therefore can be assumed to be relevant for comparison, with the exception for Carmaker D. Data gathered from the Carmaker D workshops will not be presented in this report, because of the low response rate and the high margin error. Data gathered on the satisfaction level of Carmaker D workshops is seen as not representative for this study.
The executive management of Carmaker A did not consent the additional time and costs to get a larger sample size, and thereby lowering the sample error.
The margin errors for each brand presented above were accepted by the
executive management, keeping in mind that the result should be seen as strong indications and not as 100% reliable.
None of the workshops of competitor: Carmaker H, agreed to participate in this research. After contacting the head after-sales department, it was brought to our attention that Carmaker H’s policy forbids workshops to give information of any kind to third parties.
Furthermore, there will almost certainly be a degree of fluctuation from one sample to another. This is called random error. Over a large number of samples such errors will tend to cancel out, so that the average of such samples will be close to the real population value. However, in this research the sample size is limited and therefore more sensible to this kind of error. Analytical tests will have to determine if the data is significant or not.
3.2 Research objects
The service department of Carmaker A as mentioned in the first chapter, provides workshops with special tools, diagnostic systems and manuals. In this section, the products and its attributes that according to the service department of Carmaker A are the most important with regards to the service policy provided, will be identified.
The technical documentation that was chosen to be investigated are the engine and bodywork manuals, the electrical diagrams, and the repair time manuals.
These are the manuals most used within any workshop. All manuals will be judged on their overall performance and the attributes as: accuracy, comprehension of the instruction and the clarity of the illustrations.
The performance satisfaction of the diagnosis system will be measured as well as the attributes: the guided functions that guide the mechanic through the diagnosis process, as well as the up-dates necessary to keep up with the development of the car model.
The range of tools and equipment will be judged, whether it is complete or not, and the quality of the tools, as well as the price/utility relation.
During the interviews, it became clear that a high dissatisfaction was indicated by the workshops about the telephone assistance (from now on: Help desk) received from the brand. Initially, this aspect of technical support was not within the scope of this research. The Help desk is not one of the core activities provided by the service department of Carmaker A and therefore was not seen as relevant by the executive management. The data on this support activity was none the less taken into account in this research, al be it not as detailed as the other research objects.
3.3 Field study visits
The main data collection was performed during visits to the workshops. These were made over a period of two months in 2004. During each visit, a
questionnaire was filled in and a semi-structured interview was conducted with a workshop manager, a mechanic or both. All the visited workshops are directly supplied by their brand. All the interviewed persons within those workshops had direct contact to the products and services provided by their brand. They work with these products on a day to day basis.
When designing a questionnaire for a satisfaction survey, usually a 5-, 7- or 10 point scale, where the end points are labeled, are used: very dissatisfied and very satisfied. The fewer the response options, the cruder the measurement, ea. the more answer options, the more accurate the measurement. The respondents are supposed to pick a point on the scale that represents their attitude, in this case, satisfaction. The biggest weakness of such measurement technique is the fact that respondents are usually hesitant to give very negative responses. Thus, responses are skewed to the ‘satisfied’ side of the scale, resulting in a slightly over positive result. (Naumann E.1995). Therefore the definition of the satisfaction levels was also skewed to the ‘satisfied’ side of the scale:
Satisfaction: Very low Low Average High Very high Satisfaction
score:
< 3.9 4 - 5.4 5.5 – 6.9 7 -8.4 8.5 - 10
The questionnaires consisted of 36 questions of which 6 were open questions, where the respondent had the opportunity to comment on the topic. The closed questioned contained a scale of 1 to 10, where the respondent could indicate his/her satisfaction about the products and support: technical documentation, diagnosis systems, tools and equipment and the help desk. Interval scaling is a technique whereby the respondent is asked to read a statement about a product or service and indicate the satisfaction of the attribute or issue. (see appendix 1)
Questions 1,2 and 3 where designed in a way that the workshops could be classified according to size and respondents according to their functions. Size was determined by looking at the number of employees working in the workshop. Categories were made determining the size: workshops with less that 5 employees were labeled as very small, workshops with 6-10 employees as small, workshops with 11-15 were labeled as average, workshops with 16-20 employees as big and workshops that employed more than 21 people as very big. Furthermore respondents were labeled according to their function:
workshop manager or mechanic.
This was done to find out if there was any relation between those factors and the satisfaction.
Questions 4 – 18 concern the technical documentation. Question 4 determines workshops’ satisfaction about the technical documentation is general. This way not only an average satisfaction level could be determined within each brand, but also a comparison could be made between the different brands. Question 5 and 6 determine the availability of the technical documentation by measuring the interval between each update of the manual. The availability was defined by how often do the workshops receive the updates from the carmaker: with an
interval of 1 to 2 months, with an interval of 3 to 4 months, with an interval of 5 to 6 months or even more than 6 months.
Questions 7, 13 and 16 determine the use frequency of the different types of technical documentation, by asking how many times a day the responded uses a given manual. The respondents could choose between the options: never uses manuals, 1-10 per day, 11-20 per day, more than 21 times a day and the
‘don’t know’ option. This question was asked to find out if there is a significant difference in the use frequency between brands. Questions 8 and 9 concern the satisfaction of the separate manuals, and questions 10 and 11 the satisfaction about the manuals attributes. Questions 14 and 17 determine the satisfaction of the electrical diagrams and the repair times. And finally questions 12, 15 and 18 are open questions where the responded can write down concrete complains of make suggestions about the improvements of each of the different types of technical documentation.
Questions 19 – 29 concern the diagnosis systems. Question 19 determines the general satisfaction about the diagnosis system. Questions 21 – 25 determine the satisfaction about the different attributes of the diagnosis system. The attributes here are the known attributes that the group uses. Question 26 and 27 determine the availability by looking at the interval with which the updates are delivered. And questions 28 an 29 are open questions where the responded can write down concrete complains of make suggestions about improvements that are needed.
Questions 30 – 35 concern the tools and the equipment. The satisfaction of these is measured through question 30 and 31. Question 32 concerns the attribute: quality, and their satisfaction about it. And question 34 is again an open question.
Question 35 measures the general satisfaction about the help desk.
The same questionnaire was used for the benchmark, with one difference: the questions about the specific attributes of the diagnosis system were deleted, since no specific information was available about the attributes that the different brands have to there disposal.
The interviews at each workshop were based on the questionnaire, covering the performance, attributes and availability of the products. Special focus was put on the complaints and ideas to improve the current products and services.
3.3.1 Reliability & Bias
Reliability is the extent to which research results would be stable or consistent if the same techniques were used repeatedly. Bias occurs when some aspect of the research design causes the respondent to respond in a certain way, regardless of what the respondent's true feelings are (E. Naumann, 1995: 36).
During this research, different types of threats had to be taken into account.
The first was subject error. The workshops selected for the research had to agree to participate in the research. This implies that they had certain
expectation about the interview to which they agreed. These expectations could have influenced the responses.
The second was subject bias. To avoid subject bias, the research was carried out in the name of VAW (an independent company from Carmaker A). As mentioned before VAW makes the technical documentation used by the workshops and, therefore, has the needed know-how to obtain valuable information. When ever possible, it was avoided to mention that the research results were also ordained by Carmaker A, in order for the workshops not to feel obligated to answer ´politically correct´, and for competitors not to portray the reality better than it is or to hesitate in taking part in this research. To further eliminate potential politically correct answers, the anonymity of the respondents was guaranteed.
Observer bias can effect the reliability of this research. In this case, during all the interviews, an employee of VAW with expert knowledge about diagnosis systems, was present. His interventions ensured that the additional valuable information was gathered, but also influenced the standard structured interview.
Respondents might have been influenced by the interventions during the interview and might have answered differently on different occasions.
The second aspect of the observer bias is that the perspective of the interviewer is unique. Every person has a (slightly) different view of the world around him/her. The observer bias was limited by discussing the responses with the employee of VAW present during the interviews.
3.3.2 Validity
Validity is concerned with whether research measures what it is supposed to measure (E. Naumann, 1995: 36). To guarantee a high validity, the interview and questionnaire questions were tested on employees of the company that formerly worked as technicians in workshops, and a pre-test was made on a limited number of workshops to test the questionnaire.
Furthermore, with a semi structured interview it was possible to gain qualitative information by reacting to the answers given. Semi structured interviews implies that questions are also formulated during the interview, according to the responses given. Additional questions were asked whenever the respondents answers were unclear. By collecting qualitative data, the level of validity could be assumed to be high.
3.4 Data analysis
Data analysis is the process where the researcher takes the raw data and creates information that can be used to tackle the objectives for which the research was undertaken (Kent. R, 2001)
The researcher has the objective in this report to summarise the data obtained from the workshops and to draw conclusions from the data about the obtained satisfaction level from the Carmaker A’s workshops.
The objective of this research is to find significant differences between satisfaction levels between Carmaker A and the other brands. To summarise the data the means (the averages) will be presented of the obtained satisfaction
levels for workshops of each brand. This will allow the researcher to make comparison and to see if there are actual differences in satisfaction between the brands. A significant difference in means would indicate that there is a difference in satisfaction. This way the researcher will be able to establish if Carmaker A workshops are less or more satisfied than other members of the group and the competition.
To determine the significance of the differences between the groups in terms of satisfaction levels, the researcher will use an analysis of variance (ANOVA).
Analysis of variance is used to test the hypothesis that several means are equal. This technique is an extension of the two-sample t-test. The logic of ANOVA is that it compares the variance of scores between the groups with the variance within the groups. If the variance between the groups is larger, we can conclude that the groups differ; if not, a conclusion can be made that the results are not statistically significant. The ratio between the group variance and the within group variance is called the F-ratio. When the F is large, between group variance is significantly greater than within group and there are significant differences in the means between the groups (Kent, 2001). The differences are statistically significant when Sig. (p-value) is 0.05 or there is a strong tendency when p-value is between 0.05 ÷ 0.10. This test was used to ensure that the differences in means of satisfaction, did not occur due to fluctuations in the sample, but are statistically valid.
In this research the one-way ANOVA will be used since there is only one basis for classifying the groups: the brand (Carmaker A, B, etc).
When only two groups are compared the ANOVA is identical to what is called a
‘two sample T-test’. (Kent. 2001)
