Wal-Mart's Customer Service Improvement

Wal-Mart’s Customer Service Improvement Research Report Completed by: University of Outline 1. Executive Summary 2. Literature Review 3. Methodology 4. Sources of gathering customer information 5. The research process 6. Conclusion 7. Works Cited Executive Summary Wal-Mart Stores are the dominant discount retailer in the US, and now making inroads in Europe through ownership of Asda Stores. They began life in 1972 as a small rural chain operating thirty stores in Arkansas, Missouri and Oklahoma. Steady expansion and an unwavering operations strategy has been based upon two key components: the use of technology and information to track sales and coordinate replenishment along the entire supply pipeline (Dickers 2005, 34-43). However, technology alone was not sufficient, as Wal-Mart’s competitors soon discovered. Of equal importance was the establishment of proper information system procedures to ensure that the data used was accurate, relevant and timely (the technology was only a facilitator). This involved careful data and information system analysis as well as a considerable amount of skills training for staff. These were the difficult areas for competitors to replicate and the subsequent scanning, product procurement and inventory control systems provided substantial competitive advantage through a unique and customized operations strategy (Dickers 2005, 34-43). In addition, Wal-Mart also successfully employed a location advantage. In the early stages of development they deliberately chose rural locations so as not to compete head-to-head with larger competitors. Only when they had perfected their operations strategy could they move to more urban areas. Finally, in developing this operational system, they placed much emphasis upon other important building blocks: a culture of supporting values, skills, technologies, supplier- consumer relationships, human resources, and approaches to motivation that were all difficult to replicate by the competition. Most large multiple retailers will tend to construct operations strategies that differentiate them from the competition. These can include, for example, sophisticated information communication systems to manage the flow of products from manufacturing suppliers via distribution centres and warehouses to stores (Dickers 2005, 34-43). Using the Wal-Mart case this report analyses and identifies major components of the successful customer service improvement process. As illustrated in this report, these include a number of decisions on certain strategic building blocks and increased focus on customer satisfaction. Literature review Chase R.B. , Aquilano N.J. and Jacobs F.R. define the major competitive dimensions that form the position of the company in terms of its product attributes. These are the grounds of competition translated into the types of products and services on offer - the elements that form the bases of choice for the customer and consumer. Once these are established, the operational system and its strategy can be shaped as a delivery mechanism. Michael E. Porter explains how a company may gain a competitive advantage by implementing a number of practices in the organization. The author focuses not so much on the customer care but rather on the ability of the company to respond swiftly to the ever-changing customer demands and altering market needs. In other words, Porter defines key strategies or forces (superior customer service being one of them) that determine whether the corporation wins or fails. He accentuates the fact that combination of successful strategies is what brings real success in the contemporary world.

Long are gone the times when a firm could choose a strategy and pursue it for a decade or even longer. Demand fluctuations, market risk and volatility set higher standards for all branches of corporate management, emphasizing the importance of excellent (not merely satisfactory) customer care. John Dickers examines the Wal-Mart’s ways, policies, and those strategies that brought real results. The author offers a comprehensive and complete view on the Wal-Mart Stores Inc. The book doesn’t address any revolutionary or new ideas, but it provides an excellent synopsis of the corporation’s ways and approaches. The deep analysis is made regarding Wal-Mart’s expansion in Europe and great deal of attention is paid to the customer care and focus. Finally, a conclusion is made regarding what exactly makes Wal-Mart a successful company and whether or not the human factor plays a major role in its development. Methodology This report is based on the observations and examination of the number of literature and Internet sources that discus the Wal-Mart’s customer care. Also, this report uses the ideas and thoughts presented by gurus of customer focus. The limitations of the report are absence of primary data, such as interviews with top executives of Wal-Mart, over-dependence on the ideas presented by the authors (the scholars’ opinions are not guaranteed to be proven or hundred percent correct), and lack of insider information on the subject. Traditionally, Wal-Mart has gathered routine customer information only at purchase and when a customer returns a product for a refund or invokes a guarantee. It has also attempted to obtain customer reactions through customer feedback mechanisms. Feedback forms and customer surveys are administered on a regular basis in this firm. However, most often the information gathered from these efforts is worthless because of faulty designs and worse, sometimes even result in misdirected decisions because of flawed survey methodology. More often than not, the surveys are neither reliable nor valid (Lovelock 2002, 98-102). While reliability and validity as statistical measures of the psychometric stability of a scale are important for a scientific, unbiased study, Wal-Mart management can improve the utility of customer surveys with a rather simple analysis. Table 1 offers a set of guidelines for Wal-Mart customer information surveys. Structural features such as length and the time it would take the respondent to fill out the survey, the layout of the various questions in the survey, and the response format for the questions affect the effectiveness of the survey (Chase et al. 2001, 63-68). Content decisions, such as the categories of information sought from the respondent and information identifying the type of respondent filling out the survey, affect the utility of the survey, which will only be as good as the effectiveness of its administration and its usability. Thus, the process of survey delivery, customer response delivery mechanisms, and the customization of the reports to the decision maker and user of the information in their value-creating and delivery roles is critical to the success of the customer feedback exercise (Chase et al. 2001, 63-68). TABLE 1 Guidelines for Wal-Mart Customer Information Surveys Elements Analysis Structure • Length - what are the research objectives; recognize the trade-off between amount of information needed and impact on response rate • Layout - examine the construction of the survey in terms of appearance and feel • Format - examine question construction and response format; open-ended questions invite top-of-mind issues from customer, whereas close-ended questions focus on issues that are of specific concern; in close-ended questions, avoid a “yes or no” and adopt at least a 5-point scale if you want to do any serious statistical analysis Content • Categories - compare the types of information solicited with the research objectives; recognize which aspects in the customer's consumption activity cycle are covered or not covered • Profile - examine whether there is adequate and appropriate information obtained from the respondent to allow for some segment-based analysis of the responses • Identity - examine whether it is appropriate to ask for the identity of the respondent to allow for response to customer inquiries or customer complaints Process • Input - ensure that the appropriate users of the information have contributed to the research design; examine also whether the customer's perspective has been incorporated into the design of the survey • Administration - examine how the survey is being distributed as well as returned, and the impact on who will be responding (for a representative sample) and who is receiving the completed surveys (for a nonbiased information) • Output - for what purposes will the information gathered be used; determine the best reporting format and procedure for maximum benefit to the user Source (table modified) Chase R.

B. , Aquilano N.J. and Jacobs F.R. Operations Management for Competitive Advantage, McGraw-Hill Irwin, Boston, 2001. Sources of gathering customer information There are other sources of customer information that Wal-Mart has access to and may not fully utilize. The systematic way of determining what these sources might be is to list all the possible touch-points where customers interact with the firm and placing them in sequence in the three phases of consumption. In the pre-consumption phase, customers may interact with salespeople or customer service or other frontline personnel (Pierre et al. 1999, 37-43). Recognizing what these touch-points are and what kinds of information is shared between the firm and the customer is an important step. Firms must decide what data needs to be captured at the touch-points and how it is to be used in guiding decisions and activities. Wal-Mart’s frontline operations personnel are in an ideal position to gather customer information. They can be trained on when, what, and how to observe or elicit information from customers. They need to be motivated and recognized for their ability to obtain, process, and disseminate such information (Pierre et al. 1999, 37-43). Similarly, there are also the intermediaries or resellers of the Wal-Mart’s products and services that represent the firm in different ways. These intermediaries might perform functions of delivery and distribution, promotion, or customer service on behalf of the firm. Wal-Mart recognized and wielded the power it held with such customer information in negotiating terms with powerful packaged goods manufacturers, including Procter & Gamble. In the consumption phase, customers may call for assistance in using the product or on some aspect of how the solution works. This information needs to be captured and incorporated into customer education activities such as product directions-for-use instructions, or used in product development and improvement efforts. There is also a wealth of information within the firm available from customer complaints and suggestions. Service failures and recovery situations provide valuable information on customers and their experiences with the firm and its solutions.

If these are recorded and maintained on a systematic basis, they can be “mined” for patterns that yield insights not otherwise available. For example, recurrent complaints about customer service response time might suggest that the customer service process needs redesigning (Chase et al. 2001, 88-89). Often when the data is not available on which to base a decision, Wal-Mart has to collect that information. For example, say the firm has received several complaints about customer service access and wants to determine what changes need to be made to the customer service operation. In this case, the firm may want to conduct some research in order to determine the customer needs and preferences with regard to customer service. For each decision that directly relates to a customer, the firm has first to determine what kind of information is needed to make the most effective customer-focused decision. Some of this information is available in existing databases, while some may have to be gathered. To gather information, the firm needs to set up a method of determining what information needs to be gathered, how it can be obtained, and in what form it will be available (Chase et al. 2001, 88-89). The research process When the information is not available from the day-to-day activities of Wal-Mart, then research needs to be conducted on the customer on a project-by-project basis. There are a number of choices and decisions to be made regarding the methods available in researching the customer. For example, to determine what changes are needed to improve customer satisfaction, there are formal and informal customer satisfaction measures. There are qualitative and quantitative methods to obtain the information. For unique project-based decisions, there are several data collection methods. Among the quantitative methods typically used are paper and pencil surveys administered over the telephone or by mail. On the other hand, qualitative methods typically utilize structured and unstructured interviews, focus groups, or observation methods (The Evolution of Wal-Mart 1993, 82-83). A number of innovative qualitative approaches are being introduced. For example, Kimberly Clark for its diaper market, Intuit with its personal finance software, and Patagonia for its outdoor gear have used the method of “story-telling” by getting customers to tell real-life stories expressing how they use the product and feel about it. Customer case research is another method that conducts chronological case studies of actual purchases to discover previously unknown purchase drivers by systematically capturing all events leading up to the purchase decision. These approaches can uncover customer experiences and thought processes that may not be accessible through a pencil-and-paper survey approach. This research project should take a systematic approach for maximum benefit and to reduce errors (such as measurement and sampling errors) and biases. As depicted below, the steps are: • Framing the Wal-Mart research—management needs for the decision or objective • Examining existing and available information—for hypotheses, specific research questions and to guide research design • Specifying the Wal-Mart’s research questions • Determining the research design—questionnaire construction, sampling frame, data collection method, and plan of analysis • Administering the research and collecting and analyzing the Wal-Mart’s data • Reporting the results and findings (The Evolution of Wal-Mart 1993, 82-83) First, the research objective frames the management decision to be made. Information already available is used to guide the research design.

The research is then designed by making decisions on what information is needed and how and where to collect the information. The research design includes determining the questions to solicit the information, the method for administering these questions, the sample of subjects, and a plan of analysis. Qualitative research designs are appropriate when there is a need to generate ideas on what to focus on, or to get in-depth information on specific issues. Qualitative research, such as focus-group methods, can complement quantitative research, such as surveys. Quantitative research designs are useful when a broader cross-section of the customers needs to be polled about a broad range of issues. Sampling techniques are used when it is not possible or necessary to contact all the sources of information. Statistical techniques allow for generalizing inferences and conclusions on the entire population of interest based on data from a representative sample of that population. The research instrument or questions and response format are constructed and pre-tested on a small subset of the population for validity and reliability before obtaining responses from the final sample. The responses are tabulated and statistical procedures applied to the data for analysis. The findings generated are then made available to guide the decision maker. The appropriate format of tables and the report are predetermined in the plan of analysis, so that the data is collected and analyzed according to the needs of the user of that information. Conclusion Facilitating services are all those features of the product and activities of Wal-Mart that serve to facilitate the consumption of the core product. All firms have to provide some of these services at some level. Large retailers such as Sears, Wal-Mart, and Lowe's will provide assembly and installation services for a fee and sometimes for no charge. Only with an intimate understanding of the customer's value chain consumption (and creation) activities can Wal-Mart begin to see what opportunities there might be to facilitate the consumption of the core product. Wal-Mart should use their knowledge of the customer to tailor their products and messages, or to promote new services to their customers. Each customer has a value to the firm, and that information is also valuable to the firm to determine the right customer.