Low performing customer service staff in Lazmall Channel of Lazada Vietnam

Contents ACKNOWLEDGEMENT .............................................................................................. 3 EXECUTIVE SUMMARY ............................................................................................ 4 LIST OF ABBREVIATIONS:........................................................................................ 5 LIST OF TABLES.......................................................................................................... 6 LIST OF FIGURES ........................................................................................................ 6 1. Company background ............................................................................................. 8 2. Symptoms ............................................................................................................. 11 3. Problem identification........................................................................................... 15 3.1. Potential problems ........................................................................................... 16 3.1.1. The first possible problem: Low performing Customer Service staff .. 17 3.1.2. The second possible problem: Complicated process ............................ 23 3.1.3. The third possible problem: Competitive market with increase in customer demand .................................................................................................. 25 3.1.4. Bad experience with product quality and delivery service ................... 28 3.2. Problem validation .......................................................................................... 32 3.2.1. Eliminating complicated process as main problem .................................... 32 3.2.2. Eliminating competitive market with increase in customer demand as main problem ................................................................................................................. 32 3.2.3. Eliminating Bad experience with Product quality and Delivery service as main problem ........................................................................................................ 33 3.2.4. Identify Low performing CS staff as the main problem............................. 35 4. Justify the importance of Low performing CS staff ............................................. 35 5. Potential causes ..................................................................................................... 38 5.1. Potential cause 1: Stress at work ..................................................................... 38 5.1.1. Potential sub-cause 1: Lack of headcount due to wrong forecast ......... 38 5.1.2. Potential sub-cause 2: Too much distracting noise............................... 40 5.2. Potential cause 2: Poor work engagement....................................................... 41 5.2.1. Potential sub-cause 1: Lack of bonding in team ................................... 42 5.2.2. Potential sub-cause 2: Unpleasant task ................................................. 44 1 5.2.3. Potential sub-cause 3: Limited praise and recognition ......................... 45 5.3. Potential cause 3: Robotic staff ....................................................................... 46 5.3.1. Potential sub-cause 1: Lack of soft skill agent...................................... 46 5.3.2. Potential sub-cause 2: Limited learning and development opportunity 48 5.4. Cause validation .............................................................................................. 49 6. Alternative Solutions ............................................................................................ 51 6.1. Alternative solution 1: Design a set of team building activities ..................... 52 6.2. Alternative solution 2: Organize a buddy program......................................... 54 6.3. Alternative solution 3: Change in appraisal scheme to motivate agents......... 56 6.4. Solution justification ....................................................................................... 58 7. Change plan design ............................................................................................... 60 7.1. Objectives ........................................................................................................ 60 7.2. Expected outcomes.......................................................................................... 60 7.3. Plan implementation........................................................................................ 61 8. Conclusion ............................................................................................................ 66 9. Supporting information......................................................................................... 66 9.1. Methodology: .................................................................................................. 66 9.2. Interview guide .................................................................................................. 66 9.3. Transcript ........................................................................................................... 69 REFERENCES ............................................................................................................. 83 APPENDIX................................................................................................................... 89 2 ACKNOWLEDGEMENT First of all, I would like to deliver my gratitude to ISB for giving me such valuable opportunity to apply all knowledge I have learned during my master of business administration course. I have been inspired a lot by enthusiastic and experienced professors and lecturers during my academic years. Specifically, I would like to sincerely thank my thesis supervisor - Assoc.Prof.Dr. Nguyen Thi Mai Trang for her careful and clear guidance. I cannot have completed this thesis without her advice and support. She is the one who is delivering me the very first knowledge about problem solving in organization with all her passion. In addition, I would like to express my appreciation to all people who have co-operated very well with me for my in-depth interviews and are very willing to spend their precious time to share valuable information for me to add in my thesis. Last but not least, I want to show my grateful attitude to my family members for the sympathy as they are always stand by me during my master thesis period. 3 EXECUTIVE SUMMARY Customer satisfaction is a term that many companies are trying to achieve in this modern economy, as customer is the base for any enterprise to survive. However, in recent report of Lazada, Lazmall team has been achieved lower customer satisfaction than target, which goes against expectation of the management team in the company. Lazmall team has been founded in 2018 with the purpose to bring out the extraordinary experience for customers who buy authorized products on this platform. Therefore, in-depth interviews were conducted and data were collected to analysis the situation of Lazmall team. With the strong support of literature, the research comes up with some potential problems: Low performing customer service staff, complicated process, competitive market with increase in customer demand and bad experience with product and delivery service. After validation, the main problem as low performing customer service staff has been revealed. Further analyzing, the research shows some potential causes for the main problems, which are: Stress at work, no work engagement and robotic staff. After that, the main cause was identified as lack of work engagement, and some alternative solutions for the main cause were designed. The best solution to solve the main cause has been chosen basing on its feasibility and the adaption with company‘s situation. In a word, the thesis investigate the central problem in Lazmall team of Lazada, the main cause of that problem and the proposed solution, in order to improve the customer satisfaction score in Lazmall channel. 4 LIST OF ABBREVIATIONS: CS: Customer service CSAT: Customer satisfaction DSAT: Dissatisfaction KPI: Key Performance Indicator SLA: Service Level Agreement Backlog: Ticket of customer that is not resolved within SLA NPS: Net Promoter Score SKU: Stock keeping unit SOP: Standard operation process 5 LIST OF TABLES Table 1 CSAT monthly of Lazada in 2019 Table 2 Ticket related to process of Lazmall in 2019 Table 3 E-commerce usage habit in Vietnam Table 4 Order beyond promised date divided by delivery method Table 5 Problem with Lazmall products received in 2019 Table 6 Call productivity of agents in campaign 11.11.2019 Table 7 Employee satisfaction toward company‘s physical working environment Table 8 Employee satisfaction of Lazada in 2019 Table 9 Quality scorecard result divided by criteria Table 10 Educational background of customer service employees in Lazada Table 11 Years of experience in same industry prior to Lazada Table 12 Cost for alternative solution 1 Table 13 Cost for alternative solution 2 Table 14 Cost for alternative solution 3 Table 15 Cost for selected solution Table 16 Action plan implementation LIST OF FIGURES Figure 1 Company structure of Lazada – Dec 2019 Figure 2 Lazmall customers by age – 2019 Figure 3 Lazmall customers by gender – 2019 Figure 4 Lazada customers‘ income by channel Figure 5 Lazada Customer service structure Figure 6 Lazmall CSAT and DSAT monthly Figure 7 CSAT Lazmall break down by agent‘s tenure Figure 8 Lazmall functional structure Figure 9 Lazmall DSAT root cause Figure 10 Potential problem diagram Figure 11 Lazada CS monthly quality score 2019 Figure 12 Quality score by tenure of Lazmall agent Figure 13 Lazada monthly backlog per headcount 2019 6 Figure 14 Lazmall DSAT deep dive Figure 15 CS mistake contribution to DSAT in 2019 Figure 16 Process of handling transaction Figure 17 Traffic of users in Vietnamese Ecommerce Figure 18 Criteria cared by customer during shopping Figure 19 DSAT counts by contact reason Figure 20 Shipping and delivery issues contribution in Lazmall Figure 21 Net promotion score between Ecommerce site Figure 22 Potential causes Figure 23 Process of transaction handling in Lazada Figure 24 Updated cause effect map 7 1. Company background Founded in 2012, Lazada Vietnam is a part of Lazada group – a Southeast Asia‘s leading E- commerce platform presenting in six countries. Lazada Group is majority owned by Alibaba Group Holding Limited. Lazada Vietnam is one of the pioneers in E-commerce industry, with its vision is to change Vietnamese consumer behavior, from traditional market to an online platform. On that platform, sellers can provide products from various categories like: Fashion and accessories, Health and Beauty, Groceries, Electronic products, Sport and toys, while shoppers can easily look for a product they want. In a word, Lazada‘s mission is to deliver an ―Effortless shopping experience‖ to buyers, by offering them a huge marketplace whereby they can approach online to millions of products from thousands of sellers. Focused on delivering an excellent customer experience, Lazada Vietnam offers multiple payment methods including cash-on-delivery, comprehensive customer care and hassle-free returns through its own first- and last-mile delivery arm supported by different logistics partners. Organizational structure: James Dong is the Chief Executive Officer of Lazada Vietnam and Lazada Thailand. James joined Lazada in June 2018 as the CEO of Lazada Thailand and was appointed CEO of Lazada Vietnam one year later, in addition to his existing role. Prior to joining Lazada, he was the Head of Alibaba Group Globalization Corporate Development and Business Assistant to Group Chief Executive Officer, Daniel Zhang. Under the CEO, there are six different departments, of which Customer Service belong to Customer care department. Figure 1: Company structure of Lazada – Dec 2019 (Source: Internal Lazada report 2019) 8 LazMall Launched on the Lazada platform in August 2018, LazMall connects shoppers to over 1,500 leading authorized brand distributors. Lazmall is the flagship stores of Lazada, with the mission is to provide genuine and trusted along with reliable service and quality assurance. It is to say that Lazmall is a virtual mall, which allows Lazada to set a new higher standard in retail. Shoppers can check out with the assurance of 100% authenticity, 15-day hassle-free returns, and next-day delivery. All Lazmall products are distributed by the top famous brand like Apple, Samsung, Xiaomi, Laneige, Vichy, Za, Huggies, Pamper, Moony. For brands and sellers, LazMall offers an opportunity to create a customized experience for their customers. Lazada, hence, decided to build a special team to take care of consumers for this mall, called Lazmall customer service agent (Lazmall CS). The requirements for those agents to be recruited to this channel is very high, in order to deliver the wow experience for customers. It has been a big honor for those employees who were chosen to serve customers in this special channel. According to an internal survey of Lazada Customer Care, Lazmall buyers‘ background is illustrated in the following figure: First of all, the customers‘ age in 2019 is shown below: Figure 2: Lazmall customers by age – 2019 (Source: Internal Lazada report 2019) 9 According to Figure 2, the participants who are from 25 to 35 years old accounted for the greatest portion with 41%, and the second majority are group between 36 to 45 years old. Meanwhile, the group of under 25 and over 45 account for the smallest part, which are at 16% and 13% respectively. Below is the gender structure of the customer database in 2019: Figure 3: Lazmall customers by gender – 2019 (Source: Internal Lazada report 2019) For online shopping on Lazada, it is witnessed that women and men population account for almost equal part, which are 55% and 45% respectively. However, the proportion of female buyers is still higher than the percentage of male consumers in general. Next is the monthly income structure of purchasers on Lazmall compared to non-Lazmall channel in 2019: 10 Figure 4: Lazada customers‟ income by channel (Source: Internal Lazada report 2019) At a glance, figure 4 shows that Lazmall customers have the major population (35%) with income varies between 16-20 million VND, while non-Lazmall customers‘ monthly income mostly under 15 million VND (33% at 10-15 million dong and 31% under 10 million dong). It is obvious that Lazmall customers‘ earnings tend to be higher than non-Lazmall‘s. 2. Symptoms In recent months, from October 2019, it is observed that Lazmall channel have the lowest customer satisfaction score (CSAT) among other channels, and the score seems to decrease by time and even under target. For lots of enterprises, controlling customer dissatisfaction (DSAT) is extremely essential to maintain a stable and profitable growth. (1) In the condition of growing markets and under intense competitive pressures, many companies are spending their efforts on retaining a loyal customer base. Loyal consumers help on saving to service, are willing to spend more their time and money with the service & products, and open up a potential source for further business opportunities (1). The below graph the target set by Customer care department for the customer satisfaction score (CSAT). This target is set by regional Lazada team, all over six countries where Lazada is operated in, basing on the average CSAT score of history. 11 Figure 5: Lazada Customer service structure (Source: Internal Lazada report 2019) The formula to measure CSAT is: % CSAT = Total CSAT Total CSAT + DSAT The way Lazada calculate the score of CSAT is through customer response after they are being served by Customer service team. For every issue raised by customers, agent will create a ticket on system, after the ticket is resolved, system will automatically sent out a survey to get feedback from customers, whether they are satisfied with the solutions provided or not. Eight in-depth interviews with key persons of Lazada Customer service department, the Lazmall CS agent and Lazmall customers have been conducted to find out the possible problems. Mr. Thien - Customer Service manager also provided his idea that: „CSAT score of Lazmall team has been a crisis in the last quarter of 2019 that draws concern from not only Lazada Vietnam‟s CEO but also the regional management team. This reflects the fact that all the customers‟ attitude toward Lazmall team has been gone against our expectation of giving customers a better online shopping experience‟ (Pham Hoang Thien, Customer Service manager, 38 years old). Mr. Thien raised a big concern about the drop in CSAT score of Lazmall and emphasized that this problem brings a lot of attention from management team with the purpose of driving Lazmall team to the right track. The CSAT score record is reflected in the table below: 12 Table 1: CSAT monthly of Lazada in 2019 Unit: % Channel Target Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 CS non-Lazmall 88 89,60 89,28 90,98 90.54 90,94 89,94 90,83 CS Lazmall 90 91,55 91.65 91.13 90,85 88,89 88.69 88,76 (Source: Internal Lazada report 2019) The CSAT score of CS non-Lazmall has been always above target, while the figure for CS Lazmall was unstable and became under target in the last quarter of 2019. Prior October 2019, the percentage of customer satisfied with Lazmall varied around 91% of survey respondents. Nevertheless, right after that, the score declined to 88.89% and stayed lower than 90% in the whole quarter. This is a threat to Lazada Vietnam, as Lazmall CS team was built with the purpose to provide customer exclusive experience at the first priority compared to others products channel. In three continuous months, the CSAT score for Lazmall CS was even lower than non-Lazmall agents, by up to 2% in the month of December. According to the sharing from Ms. Tu – Team leader of Lazmall: „The CSAT of Lazmall team had been always retained over target of 90% since the first day we started. However, recently, that number becomes the most serious concern for all of us. There are too many customers raise DSAT every day that it becomes more difficult for us to increase the overall score.‟ (Nguyen Thi Cam Tu, Lazmall Team leader, 29 years old) As mentioned by Ms. Tu, the CSAT score of Lazmall decreases in recent time and she claimed for the accretion of DSAT number raised by customers. The trend of CSAT/DSAT number among channels is shown in Figure 6: 13 Figure 6: Lazmall CSAT and DSAT monthly (source: Internal Lazada report 2019) Have a glance at the DSAT number in green has the fluctuated trend in the first half of 2019 and the number always stayed smaller than 40 during this period. Meanwhile, in the second half, it observed the common trend of DSAT count, which was increase from 46 in July to 85 in December. Consequently, the %CSAT score also dropped from 91.65% to 88.76% in same period, which can prove for what Ms. Tu was sharing. The CSAT score broken down by tenure of Lazmall agents is shown in below figure: Target Figure 7: CSAT Lazmall break down by agent‟s tenure (source: Internal Lazada report 2019) 14 Figure 7 shows that, the group of agents under three months of experience in Lazmall are always under target of CSAT, and this group is also the most fluctuated in CSAT score over the year. Functional structure of CS Lazmall: Figure 8: Lazmall functional structure (Source: Internal Lazada report 2019) Within Lazmall customer service team, there are three main departments, which are Training, Quality assurance (QA) and Operation department. Training team is responsible for onboarding and qualifying new CS agent, while QA team‘s duty is to make sure agents perform well in quality metric. Operation team is in charge of productivity, CSAT score and headcount arrangement, to maintain the service level of Lazmall channel. 3. Problem identification With the DSAT data analysis collected from Quality team, ones can observe the factors leading to the decision of raising a DSAT from customer in below figure: 15 Figure 9: Lazmall DSAT root-cause (source: Internal Lazada report 2019) According to Figure 9, four main internal factors that are considered to bring the major impact to customer dissatisfaction in Lazmall team are: logistics (30.3%), process (24.24%), CS staff mistake (20.45%) and product (19.7%) 3.1. Potential problems Through in-depth interview with key people in the company, the initial cause-effect map is found with some potential problems for low customer satisfaction of Lazmall CS team: 16 Figure 10: Potential problem diagram (source: Author synthesis) Three symptoms were found including: the number of customers‘ complain increases, more tickets are reopen because customers disagree with resolution of Lazmall CS agent and the decrease of customer satisfaction score. Problems leading to the inflation of customer complaints are competitive market with increase in customer demand and the bad experience of buyers with Lazmall product quality and delivery service. Besides, the problems lead to more reopen tickets are complicated process of Lazmall and low performing Customer service staff. 3.1.1. The first possible problem: Low performing Customer Service staff In the interview with Mr. Khoa – Head of Customer care department, he stated that at the first stage, Lazmall team was built to represent for the whole Lazada and to increase the experience for Lazada customer. „This was our baby project for a long time and so far, Lazmall remains our first concern for any of our decision. We would like to build a strong and effective Lazmall team, in order to pull up the experience for Lazada buyers, by providing them a special care that they have never got before.‟ (Tran Dang Khoa, Head of customer care of Lazada, 35 years old) 17 It was proven by prior research that customer service has positive impact in increasing customer satisfaction, from there the purchase intentions is developed through word-of-mouth recommendations (2). In customer service, the employees play the main role to define the success in terms of bringing customer‘s experience. There exists an interdependence between customers and service employees and the activities or behaviors of one could mutually impact those of the other. (3) At the beginning of the Lazmall project, Mr. Khoa will directly interview in the final round to pick up every CS agent who had enough skills and experience. It was such a big honor for the selected agents to work in Lazmall. In addition to that, they were undergone an additional in- depth soft-skill training to be able to handle tough complain. However, after more than a year of running project, the tittle Lazmall CS is no longer fancy in agents‘ mind as it used to be. „I was forced to join Lazmall CS team. I used to work in non-Lazmall team, and I was quite comfortable with that. However, since I was picked to Lazmall, my performance tends to decrease.‟ (Duong Thi Suong, Lazmall CS, 22 years old) According to the sharing from agents, recently, there was no interviewed conducted to select CS for Lazmall team and they were picked up from other channels. More importantly, some of them were forced to move to Lazmall rather than being willing to join. This is because of the fact that, there is a rule Lazada has set up for this team that Lazmall agents should be top performing CS. In case the agents no more perform well, he will be removed and replaced by other CS from non-Lazmall team. However, the overall KPI of the team continues to drop down with the above strategy. Mr. Thien said that: „The KPI of Lazmall team is a crisis problem in these months, while all the numbers of transaction quality, response speed are falling, and the number of backlogs increases more and more. This is unacceptable due to the fact that we have selected the best performed agent to work here‟. (Pham Hoang Thien, Customer Service manager of Lazada, 38 years old) In Lazada, each CS agent is evaluated by monthly KPI scores, including: - Response speed: counted by the percentage of transaction in which CS can first response customer within 30 seconds. - Transaction quality, measured by a scorecard monitored by quality assurance specialists - Backlog (ticket which is not resolved within 48hours) 18