Satisfying & Retaining Customers through Independent Service

Representatives

Saman Ahmad : 02

Shailender Singh : 08

Padmindra Patwal : 09

Abhishek Kohli : 17

Introspection

• Ascertain that whether Manufacturer should provide customer service directly by themselves or by Independent Service Representative.

• What is the effect of Distribution Channels, Job Satisfaction, Service Operations on the Customer Services.

Need for the Study

• Outsourcing the Customer Service Function to Independent Service Representatives may lead to owning the Customer by the service provider, in these cases what to do.

• Manufacturers often tries to provide better Customer Service but lack of control over Independent Representatives amy weak there ability to enhance Customer Value & Competitive Advantage.

Constraints & Alternatives to Manufacturers

• Delivery Customer Service through Independent Channels is significant as high as 35-40% through them & in Financial it is 80 % and 90% in Automotive.

• No literature available on the effect of Relationship Quality between Channel Partners with Customer Satisfaction.

• Manufacturer has to rely on Independent Channels to provide Customer Satisfaction.

• How to provide customer service through independent channel.

• Alternative to measure Customer outcome such as satisfaction, retention and compensate Independent Channel member partial on the basis of results, An expensive one.

• Periodically asses representative’s Attitude & Behavoiur. The assessment would provide information about service quality.

Objective

• Estimating the leverage manufacturers have on Customer Satisfaction by supporting & facilitating the efforts of Independent Service representatives.

• Identifying the mechanism through which Service Provider’s Job Satisfaction translates into Customer Satisfaction.

• Assessing the degree of convergence between Service Provider’s self assessment of service performance & Customer perceived Service Quality.

• Providing initial assessment of whether relationship quality between distribution channel partners influences the satisfaction of downstream customers.

Hypothesis

• H1: Perceived manufacturer support is positively related to representatives Job Satisfaction.

• H2: Job Satisfaction is positively related to Self-Perceived Service Performance.

• H3: Service Providers Self Related performance is positively related to Customer Service Quality.

• H4: Representatives Job Satisfaction & Self Related Service Performance will interact with respect to Customer Related Service Quality. The relationship between self rated service performance and customer rated service quality will be stronger for Representatives with High Job Satisfaction then for Representatives with low Job Satisfaction.

Hypothesis

• H5: Customer perceived service quality is positively related to customer satisfaction.

• H6: Customer Satisfaction is positively related to repurchase intention.

Method

• Two Surveys were mailed.• First to measure Perception, Job Satisfaction &

self-perceived service performance of independent representatives constituted sales & service force for a manufacturer in US and Canada.

• Second was conducted 3 months after first measure customer perceived serviced quality, customer satisfaction & repurchase intentions from a large sample of office managers, small business owners who were direct customer of the independent representatives.

Measure Development

• 20 depth interviews by telephone, call lasted for 45 minutes.

• 20 reps selected, represents various geographical area and range of attitudes and perceptions.

• Focus on identifying : Criteria used by reps to evaluate manufacturers support and facilitation of there efforts.

• Critical aspects of Job Satisfaction & service performance.

• Grouped into Sales, support, Product issues, Compensation, incentives, Trust, Representative Orientation.

• 20 Tele Interview of Customers (10 Minutes)

Samples

• Questionnaire mailed to 413 Independent representatives in US & Canada.

• Confidentiality letter was enclosed.• Three lottery prices totaling $700 offered.• Second packets to non respondants after 3

weeks.• 248 (65%) were returned & 8 were incomplete.• Average Age was 50 yrs (SD= 8.5)• Average Position Tenure 15 yrs (SD=8yrs)

Customer Survey

• Sent after 3 months of representative survey.• Selection criteria was Annual Purchase should

be above median.• These customers account for preponderance of

firm revenue (>90%)• 12000 questionnaire were mailed.• 3926 (32.7%) returned.• Response trend analysis indicated no difference

between early and late responders, so non response bias is not a problem.

Measures

• Four Components extracted form 20 items using Factor Analysis accounting for 61% of total variance.

• Sales support (α = 0.86)Consisted of 6 Items. 5Point response Format used (Very Poor – Excellent).

• Product (α=0.76)4 Items used

• Compensation & Incentives (α=0.82)3 Items used

• Representative Orientation (α=0.87)7 Items Included.

Job Satisfaction

• Job Satisfaction measured as satisfaction with the context of work (α=0.70).

4 Items included, 5-point scale used dissatisfied to very satisfied.

Representative Service Performance

• Based on the preliminary depth interview.• Indicates number of service behavoiur as imp.

Aspects for service performance.• Developed 12 measurement items for service

performance.• Exploratory Factor analysis of 12 items

developed.• Self related performance produce 3 factors.

- Reliability (α = .91, Six items)- Building Trust (α =.79, 3 items)-Follow-up after sales (3 items)

Customer Perceived Service Quality

• Depth Interview & evaluating Performance item from SERVQUAL.

• 13, 5-point likert items used to measure• Looked on 3 underlying factors

- Core Service Factor 1 (α =.97) 7 items- Core Service Factor 2 (α =.79) 3 items- Follow-up Factor (α =.84) 3 items

• Customer Satisfaction (α =.95)• Product Attitude (α =.89)• Repurchase Intent (single item, 5 point scale)

Analysis

• Used Partial Least Square that used principal component based estimation approach to test hypothesis.

• Study was primarily intended for casual-predictive analysis.

• PLS requires fewer statistical specification & constraints.

• PLS is robust for small to moderate sample size.• Path coefficients were re-estimated with each

random sample.

Measurement Model

• Inter construct correlation, construct to item correlates α –coefficient, composite reliabilities & any variance extracted for each construct & examined.

• Square Root of average Variance extract were compared with correlations among construct.

• Assed how each item relates to the latent construct.

Hypothesis Test

All Hypothesis were supported.• H1: The path linking manufacturer support to Job

satisfaction was positive & significant.• H2: Job Satisfaction was positively & significantly related

to self rated service performance.• H3: Self rated service performance was positively related

to customer perceived service quality.• H4: Supported by a significant intervention between Job

Satisfaction & Self Related Service Performance w.r.t. Customer perceived service quality.

• H5&H6: Customer perceived service quality was strongly related to customer satisfaction & customer satisfaction in turn relates to repurchase intentions.

Discussion

• The findings suggests that manufacturer needs to promote Job Satisfaction through support & facilitation for the representatives to “Have a Clue” about how customer perceive their service.

• It also implies that dissatisfied representatives will be unable to self-regulate their customer-service efforts.

• The positive relationship between self-rated service performance and customer-perceived service quality for these representatives suggests that ‘Voice of the Customer’ feedback form them contains meaningful information.

Managerial Implications

• It is not advisable for manufacturers to focus merely on Serving Representative’s need.

• It is advisable for manufacturers to initiate their own efforts to collect information about needs, expectations, perceptions and reactions of customers if they are not already gathering such information.

• Results shows that customer feedback that is filtered through independent representatives may often be inaccurate or misleading, potentially leading to bad decisions.

Theoretical Implications

• The results suggests tht the shared perceptions of Service Performance and quality between provider and customer results in customer satisfaction when job satisfaction is high.

• Results suggests that Service Provider’s satisfaction leads to deeper involvement with greater understanding of customers and creation of shared mindset with them.

Limitations

• Data comes form single organization.

• One that sells mostly low involvement, commodity type products through a relatively ‘low touch’ distribution.

• Generalizability of the findings beyond this context cannot be claimed.

Future Research

• Results suggest that exploring the shared mindset model in more detail.

• New process mechanism linking job satisfaction to customer were identified, a more refined research may be undertaken.

Conclusion

• On average manufacturers have only a slight degree of leverage over customer satisfaction.

• Leverage exists only when service providers have a relatively high level of job satisfaction.

• When service provider job satisfaction is high, there is significant correspondence between self rated service performance and customer perceived service quality.