Enhancement of Toyota Customer Retention through the Improvement of Customer Database Management / Cher Elise Gran Mercado

Year : 2011

Number of Pages : 47 leaves

Adviser : Prof. Edison D. Cruz

Executive Summary

Toyota (TMP) has been a strong market leader in the automotive industry since it began local operations 23 years ago. But through the years, competition grew more intense with new players coming in and old players stepping up. Furthermore, recent occurrences of unfortunate natural disasters greatly impeded the growth of vehicle sales due to insufficient parts supply. With this, Toyota seeks to develop their competitive advantage by ending their reliance to vehicle sales and looking at customer service to contribute to revenues. To do this, Toyota are to implement Customer Retention (CR) activities which aim to strengthen the value chain by building relationships with customers and improving Customer Satisfaction (CS) throughout their ownership cycle. To execute this effectively, it is crucial for dealers ensure regular contact to the customer to reinforce brand loyalty. Actual Overall Customer Retention Rate (CRR) for 2010 shows less than perfect picture of customers' behaviour reflecting how frequent they avail of services from Toyota dealers. Looking at the Overall CRR per Vehicle Age, it is evident that as vehicle ages, customers are not likely to return to Toyota dealers for Service, especially after the warranty period of 3 years. As for CRR per Repair Type, data shows that Periodic Maintenance (PM) has the least CRR of all three repair types. Digging deeper, data revealed that 1K and 5K PM CRR are low and PM CRR continues to decline as mileage increases. 1K and 5K PM are the most crucial PM series as these are the first two contact to the customer that may provide opportunities to build customer's confidence with Toyota Customer Service. It was also shown in previous studies that increasing 1K and 5K CRR will consequentially increase succeeding PM series. Therefore, to increase Overall CRR, programs to increase 1K and 5K PM CRR should be implemented. A survey was conducted to identify weak areas that contribute to low 1K PM CRR. Customers were contacted and were asked reasons why they didn't come in for 1K PM. According to the results of the survey, 67 percent of the sample were unsuccessful calls, with 46 percent of them due to inaccurate customer database including wrong number, cannot be reached and number not yet in service. With this, the dealer-customer contact was immediately cut at the very start of the Customer-for-Life cycle. So current customer database management practices were reviewed and some issues and problems were identified which are as follows : 1) Non-submission of dealers due to internet connection problems or system errors 2) Unconsolidated customer database for the Toyota network 3) Manual and time-consuming validation of customer information 4) Lack of feedback mechanism to prompt dealer management on current customer database accuracy 5) Disregard in correcting invalid and incomplete customer data and 6) Lack of KPI or measure of compliance in correcting invalid or incomplete customer data. This project was launched to address these problems. It is composed of 5 phases guided by the Plan-Do-Check-Action (PDCA) cycle. Phase 1 includes assessment of the current situation, where interviews with key process owners were conducted as well as go and see activities and review of the current customer database management practices to identify issues and problems. Phase 2 includes development of countermeasures (Plan) which aimed to propose and analyze appropriate solutions to the problems and issues identified in Phase 1. Best practices from other Toyota distributors in the region were also considered. Phase 3 includes implementation of countermeasures (Do) in which a web-based program was created and implemented to automate, consolidate, validate and prompt actions needed to process customer information. The project used 2 platforms : 1) a web application thru Toyota Partners Online (TPO) and 2) Internet Explorer (IE) for browser. All customer data were stored in SQL Server 2000.

Phase 4 includes evaluation of the new system (Check) wherein a pilot run to five dealers was done in parallel to the current system. Discrepancies between the two systems were monitored. In addition to that, sample sizes of 30 validated data per dealer were contacted by a third-party surveying company to determine effectiveness of the validation process. Lastly, Phase 5 includes adjustments on the new system (Action). This is set out to further improve areas in the new system. Results after implementation showed an average of 5 percent improvement in data accuracy and a 6 percent increase in dealer compliance. This indicates the effectivity of the said project that tapped into dealer management's consciousness of the importance of an accurate customer information database. Lead time was also shortened by a third of the old system. With this, it is recommended that this program be implemented in all 28 Toyota dealers. Moreover, there are a lot of potential projects in the future that can be studied and undertaken to further improve the current database accuracy.