Poor customer relationship management a case study in Nhi Long JSC

Nhi Long joint stock company (Nhi Long JSC.) is one of small companies in Vietnam. This firm is working in interior field, and now it has imported rugs from Turkey to distribute in Viet Nam market. About company history, Nhi Long JSC stemmed from a small business that first opened in 2005, working in gemstone painting industry, and was established officially in 2013.

When it had become strong competition in paintings market, in 2013, director of Nhi Long Company decided to switch over to new products of rugs and carpets. In August 2013, the first container of rugs were imported from China by Nhi Long JSC. After selling Chinese rugs in one year, Nhi Long Company had got so many complaints from customers about rug quality.

Through this problem, Nhi Long director realized that although partner of Nhi Long company at that time was a biggest factory which produced rugs in China, Chinese rugs were not high quality products as he expected because of producing technology of Chinese itself. So, director of this company tried to find more new suppliers who had better quality products to solve complaint from his customers. In May 2015, after nearly two years observing and researching, he chose to cooperate with two factories in Europe- Turkey and Belgium country.

With higher modern technology and famous experience in producing rugs over the world, these partners could provide quality rugs for Vietnamese customers. Customers’ satisfaction was improved when they can buy Turkey rugs with high quality and suitable prices. Moreover, the sales revenues of this company also improve significantly.

Keywords: Customer relations, Customer relationship management

1. Company overview …………………………………………………………………………………………5

1.1. Nhi Long Joint Stock Company overview ………………………………………………….5

1.2. Organizational structure …………………………………………………………………………..6

2. Symptoms ………………………………………………………………………………………………………7

2.1. Increase in turnover rate…………………………………………………………………………..7

2.2. Increase in sales employees dissatisfaction responses …………………………………9

2.3. Increase in customers unanswered calls …………………………………………………..10

3. Problem Identification…………………………………………………………………………………..10

3.1. Potential problems ………………………………………………………………………………….10

3.1.1. Lack of sales skills …………………………………………………………………………….11

3.1.2. Poor customer relationship management system………………………………..12

3.1.3. Company policies ……………………………………………………………………………..13

3.2. Validating problems………………………………………………………………………………..14

3.2.1. Staffs lack of sales skills …………………………………………………………………….15

3.2.2. Poor customer relationship management system………………………………..15

3.2.3. Company policies ……………………………………………………………………………..17

3.2.4. Managers’ perspective ………………………………………………………………………18

3.2.5. Employees’ perspective……………………………………………………………………..18

3.3. The importance of main problem…………………………………………………………….21

4. Causes Validation …………………………………………………………………………………………22

4.1. Potential causes exploration…………………………………………………………………….22

4.1.1. Ineffective training program ……………………………………………………………..22

4.1.2. CRM tool function limitation …………………………………………………………….23

4.1.3. Functional managers cooperation limitation………………………………………24

4.2. Validating causes…………………………………………………………………………………….26

5. Alternative Solutions …………………………………………………………………………………….28

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6. Action plan……………………………………………………………………………………………………36

7. Supporting Information ………………………………………………………………………………..41

References…………………………………………………………………………………………………………..51

Table of Figures

Figure 1: Organizational structure of Nhi Long Company …………………………………………..6

Figure 2: % employees working in each department …………………………………………………..8

Figure 3 Turnover rate in sales department (%)………………………………………………………….8

Figure 4 : Number of sales employees’ dissatisfaction responses in quarter 4th 2018………9

Figure 5 : Customers’ unanswered calls (%)…………………………………………………………….10

 

Table of Diagrams

Diagram 1 : Initial Cause-Effect map of Nhi Long Company …………………………………….20

Diagram 2: Updated Cause-Effect map of Nhi Long Company ………………………………….25

Diagram 3: Final Cause-Effect map of Nhi Long Company……………………………………….28

1. Company overview

1.1.Nhi Long Joint Stock Company overview

Nhi Long joint stock company (Nhi Long JSC.) is one of small companies in Vietnam. This firm is working in interior field, and now it has imported rugs from Turkey to distribute in Viet Nam market. About company history, Nhi Long JSC stemmed from a small business that first opened in 2005, working in gemstone painting industry, and was established officially in 2013. When it had become strong competition in paintings market, in 2013, director of Nhi Long Company decided to switch over to new products
of rugs and carpets.

In August 2013, the first container of rugs were imported from China by Nhi Long JSC. After selling Chinese rugs in one year, Nhi Long Company had got so many complaints from customers about rug quality. Through this problem, Nhi Long director realized that although partner of Nhi Long company at that time was a biggest factory which produced rugs in China, Chinese rugs were not high quality products as he expected because of producing technology of Chinese itself. So, director of this company tried to find more new suppliers who had better quality products to solve complaint from his customers.

In May 2015, after nearly two years observing and researching, he chose to cooperate with two factories in Europe- Turkey and Belgium country. With higher modern technology and famous experience in producing rugs over the world, these partners could provide quality rugs for Vietnamese customers. Customers’ satisfaction was improved when they can buy Turkey rugs with high quality and suitable prices. Moreover, the sales revenues of this company also improve significantly.
However, it still exists some difficulties for Nhi Long Jsc to maintain customers, open market and get sales revenue increase. There are some limited resources of human,

 

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finance and facilities, especially an increase of high turnover rate in sales department in three recent years, more dissatisfaction for both employees and customers.

1.2.Organizational structure

As a trading company, Nhi Long JSC has organizational structure as following chart:

 

Chairman

 

 

CEO

(General Director)

 

Marketing Team leader

Sales manager 1

Tax accountant

Vice Director

Sales manager 2

 

Marketing staff

4 sales representative working in HCM

Payable and receivable accountant
4 sales representative working in HCM

 

4 sales representative working in Hanoi
Admin and Logistic staff in Hanoi
Admin and Logistic staff in HCM

Figure 1: Organizational structure of Nhi Long Company

With the structure showing in above chart, three groups of sales are working independently with different KPIs for each group. The market is not segmented for each group. Vision of this company is toward to build a lot of small sales groups, with around
5-6 sales persons for each group, to cover Vietnam market and increase revenue, leading

to high increase in profit.

 

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2. Symptoms

2.1. Increase in turnover rate

One of the big attentions for small enterprises which are working in construction or interior business in Vietnam today is about human resources management. At Nhi Long Company, turnover rate increases in three recent years, the figures are showed in the
below table:

Table of employees leave job
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Number of employees quit job in 2016 2 1 0 1 0 0 0 1 0 1 1 0 7
Number of employees quit job in 2017 3 1 0 1 2 0 0 3 0 0 0 1 11
Number of employees quit job in 2018 3 1 2 0 0 1 1 1 2 1 1 2 15
Total 8 3 2 2 2 1 1 5 2 2 2 3 33

Table of employees working
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Number of employees working in 2016 9 11 13 15 15 15 15 16 17 18 17 18 18
Number of employees working in 2017 17 16 18 25 25 25 28 26 28 28 29 28 28
Number of employees working in 2018 26 25 29 29 30 31 32 32 30 32 32 30 30

Table 1: Turnover rate of Nhi Long company
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Turnover rate in 2016 22.22 9.09 0.00 6.67 0.00 0.00 0.00 6.25 0.00 5.56 5.88 0.00 38.89
Turnover rate in 2017 17.65 6.25 0.00 4.00 8.00 0.00 0.00 11.54 0.00 0.00 0.00 3.57 39.29
Turnover rate in 2018 11.54 4.00 6.90 0.00 0.00 3.23 3.13 3.13 6.67 3.13 3.13 6.67 50.00

The table displays total of employees who quit jobs in Nhi Long JSC is rising year by year with the number of 7; 11and 15 employees in 2016; 2017; 2018, respectively. And with an increase in leaving jobs from employees, Nhi Long turnover rate climbs
from 38.89% in 2016 to 39.29% in 2017 and reach 50% in 2018.

Furthermore, the below chart will perform the number of sales employees quit job, together with percentage of turnover rate increased in sales department:

ThS08.148_Poor customer relationship management a case study in Nhi Long JSC

Year 2016 Year 2017 Year 2018

Logistics Sales Accounting

Admin HN Marketing Managers

Figure 2: % employees working in each department
Figure 3 Turnover rate in sales department (%)

Table 2: Turnover rate in sales department
Year 2016 2017 2018
Total sales employees (average) 5 9.5 12.5
Number employees leave jobs 2 5 8
Turnover rate (%) 40 52.63 64

Looking at Figure 2, we can see the structure of human resources in each department at Nhi Long Company, total employees working in sales staff are highest by
40% in total employees. And by data shown in table 2, number of sales employees will be calculated by the average of sales staff at the beginning of each year and at the end of
each year (reference data in supporting information), turnover rate in sales staff are escalating quickly from 40% in 2016 to over 64% in 2018. It is clear that, the turnover rate of sales employee impacts strongly in turnover rate of whole company.

By reviewing on number of rising turnover rate in table 1 and table 2 together with the structure in above pie chart, there is a relation recognized, the turnover rate in sales staff contributed mostly in turnover rate increase of Nhi Long Company.

Moreover, because employee turnover is costly(1), and one of strategies of Nhi Long is create more and more sales team. Managers of this company have to pay attention in the growth of sales employee turnover rate. So, employee turnover can be a symptom
of this company.

ThS08.148_Poor customer relationship management a case study in Nhi Long JSC
2.2. Increase in sales employees dissatisfaction responses

By data of internal system from making survey monthly, the responses of sales employees are almost dissatisfaction with their current job. The number of discontentment responses is increased steadily in three recent months, the percentage in detail is showing
below:

(Form of question paper in survey)

Although this type of survey of Nhi Long company does not have the reason for each answer, and also does not know the name of respondent for each answer, leading managers need to consider this is a signal for your sales staff feedback that need to make
attention to find out the potential problems in their organization.

ThS08.148_Poor customer relationship management a case study in Nhi Long JSC

2.3. Increase in customers unanswered calls

The call center system of Nhi Long Company has a statistic of calling in and out between sales and customers every day. And in three consecutive months, the number of calling that sales employees cannot contact with their customers, are increasing from
20.73% in October to over 31.11% in December 2018. The below chart is shown an upward trend for this situation:

% call-out can not contacted

Linear (% call-out can not contacted)

–
Oct-18 Nov-18 Dec-18

Oct-18 Nov-18 Dec-18
% call-out can not contacted 20.73 25.93 31.11

Figure 5 : Customers’ unanswered calls (%)

It is an unusual action from customers that employees are facing and these number are collected through call center system. Customers play an important role in small business, so employees lose contact with customers is a symptom that company have to explore potential problems that Nhi Long may get in 2019.

3. Problem Identification

3.1. Potential problems

By using method of depth interviews individually with sales staff who are quit job, sales representatives who are working in organization, sales managers and director of this

 

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firm, together with the information which are collected in symptoms part, some potential problems are explored as following:

3.1.1. Lack of sales skills

According to an increase in number of unanswered call when sales conduct a call to customers during last three months in 2018, it can become an upward trend in following months in 2019.
Related to current condition, Mr. Huan – general director, sharing the information that company can face the loss of customers who are not contacted by sales. In the statistic from internal call center system, the number of customers are not willing to
receive the call increase steadily from 21.73% to 31.11% in three months, and they are the highest rate until now. He was also sharing that the problem can stem from the sales
staffs, they lack of some needed skills for calling to customers, and especially when the work in this field change daily, sales man have to upgrade their skills to meet requirements of customers such as communication skill, presentation skill, persuasive skill… Besides that, based on his own view, if sales have good communication skill, they can get customer satisfaction and they can contact with their customers anytime.
At the same situation about customers did not answer calls, Ms. Khuyen- sales manager, stated her view that there is a limitation in employing skills that sales staff have been trained when sales conduct a call to all customers, so in some cases, the customers feel boring, and they have a tendency to ignore the call from sales in next time.
And when discussing with Ms. Mo – sales representative in Ha Noi, she gave a point of view that in order to meet company requirements, all sales have to contact via
call with customer monthly, and company also support for sales to contact with customers via sending message at least two times monthly in order to create interaction with customers. So after a while, customers feel annoyed when they see message or call from sales employees regularly, it makes more and more difficulties for sales employees to communicate with them, sometimes she do not know what is calling purpose to her
customers.

ThS08.148_Poor customer relationship management a case study in Nhi Long JSC
With different jobs in organizations, people have different point of view in the situation of unanswered call raising, however, all views are related to the skills of sales. And for any reason from company or employees, if sales employees have an effective communication skill, it can help to improve this unexpected ratio.
To sum up, the lack of sales communication skills can be seen as a potential problem for organization during this period of time.

3.1.2. Poor CRS system

Nhi Long is a trading company which is clearly aware of the importance of sales employees. It is because they see dissatisfaction of sales man can impact directly on their customers and their profit, from comment of general director. Looking back with an internal survey showing an increase of dissatisfaction employee responses in general about their work in current months, the ratio increases significantly with highest number by 91.67% in December 2018. Managers have to pay attention in this situation.
To understand more about the issue, after discussing with sales manager 2 – Mr. Cuong, he said that in Nhi Long organization, sales representative are more and more getting supports from company such as sales kit, tools, skills training program…especially the CRM systems. With applying CRM systems which are always
latest updated regularly, sales will get more benefits from minimize manual operation, for example create quotation by excel, or thinking and sending email or message for a vast of customers, revenue statistic…With the discontent from sales, for him, it may be related to KPIs achievement. It is so difficult for sales to reach the requirements of company that are measured by KPIs in CRM system.
In fact, related to sales discontentment, opinion from sales representatives- Mrs. Thao working in HCM, and Ms. Linh working in Ha Noi, they offer the recognition about system in management the customer relationship of company. To be specific, Ms. Linh stated that she faced with customer information duplication. It means that, she added
some new customers in last month, and other sales people also add one more new account

with the same of her customers by different number phone and then she lost order

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purchases because she did not know about this duplication. And it is very difficult for her to check, because company have over 4,000 existent customers and she also is limited about access permission in system. The duplication of so many customers make her takes time and efforts to serve these accounts, such as for each account, she had to send quotation, calling every month, visiting customers, answer all enquiries, and then she suffer higher workload but unnecessary. In other view of employee about CRM system, Mrs. Thao, she gives feedback about the information displayed in CRM system, it takes a lot of her time to collect necessary information for using to analyze to make report weekly. For example, on Saturday morning, she has to check each account of customer, and for at least 100 customers she contacted on this week, to find out which customers
arise quotes, which customers comments to contribute their work, which ones not concern information sales man provide…and then analyze and make report. It takes much time because information is located in each different field in system. And she also shared these activities are so boring and make her get more task to do, while she had a lot of more necessary tasks to complete. So, the bad CRM system can lead to workload higher for sales employees, of course, it will make increase in employees’ dissatisfaction.
Therefore, the poor customer relationship system can be a potential problem for

Nhi Long organization at this time.

3.1.3. Company policies

With turnover rate increased in three recent years, especially in sales department, from 40% to 64%, information is collected to find out potential problems for organization through depth interviews with employees who left job and director of company.

Through discussion with Ms. Trang, who left sales job in December 2018, she mentioned that in order to manage sales staff about customers interaction in internal systems, company ban a lot of new policies such as shipping, payment policies, the content of a call to talk with customers,…and these policies were updated every month,
this can make her confused strongly when she tried to remember the latest policies,

ThS08.148_Poor customer relationship management a case study in Nhi Long JSC

especially she was a sales man working in B2B field, so when policies changes, she had to support for all customers to remember new policies, and edited the contract with customers, while she cared for over 300 customers in system. More than that, new policies are accompanied by so many key performance indicators (KPIs) that applied for sales staff. This make sales man as her suffered high stress pressure and could not be happy and worry about the current jobs, although she satisfied with her income monthly. In other case with Mr. Lam, he left his job in October 2018, he had given that he got stress every day when he worked in this job, for instance, he had to call at least 20
customers daily and solved any job if having in order to meet one of KPIs for sales people in a day. Along with this KPI, sales are required to follow KPIs of visiting customers,
with this task, all customer accounts in system that he were hold, are encouraged to visit at least once a year, and a lot of mandatory tasks were needed to complete by sales as
him. With a lot of KPIs that were required to archived, his performance was lower than he expected and also lower to compare with other sales person. So, for him, this is a stressful job with incorrect KPIs.

With general director view point, Mr. Huan stated that some sales employees quit their job because of their individual issues like a job involved in their family, some quit their job because they could not catch up something changes in company. In order to make sure all customers of company are cared well and customers have a good relationship with sales people and company, he and managers had to update quickly policies, and of course the result are measured by new KPIs for sales staff.

So, these policies of company can be a potential problem for Nhi Long Company.

3.2. Validating problems

In order to validate problems, some theories and studies are reviewed, together with comments from managers and employees as below:

 

 

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3.2.1. Staffs lack of sales skills

Based on customers refuse calls from sales are mentioned in part 2, this can be seen as a response of customer dissatisfaction. According to a study, one of eight customers dissatisfaction responses are neglect (2), where can cope with items including little caring or quit caring service provider, do not take note any action and finally let worse relationship happens, this reaction can be called passive response from customers. Plus, Hirschman (3) also stated that to face with dissatisfied situations, some customers choose to be silence and hope better new things will happen. Likewise, these studies mention an action that customers do not accept calls from partners are dissatisfaction response from customers, and that because customers do not care about this firm and complaints are recognized not worthy.
One of the factors can affect to the customers dissatisfaction is the understanding customers and their needs(4). Lack of understanding will lead to customer’s dissatisfactions while high level in communication can get customer satisfaction. Besides that, effective communication skills is very important for sales interaction, sales adaptiveness and sales outcomes (5). Other words, if sales staffs, who have to make a call to customers daily, lack of skill about communication will make customers do not want to answer their calls.
Therefore, lack of effective communication skill via calling to customers can be a problem of this firm.

3.2.2. Poor customer relationship management system

With the number of dissatisfied responses from sales rise from October 2018 to December 2018, that’s really important signal that managers have to make attention. Indeed, according to Farrell (6), complaint from employees is one of five decisions discontent employees choose, it can be seen as constructive response intended to benefit
itself. But it can also be a sign of turnover intention as well.