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Customer Loyalty - Vital For Future Growth Two- Wheeler Industry: The Growth Potential Venu Srinivasan, Chairman and Managing Director, TVS Motor Company Venu Srinivasan hails from an enterprising family, who believes in attaining success in life the hard way. Which is why, despite being the grandson of TVS founder, the legendary TV Sundaram Iyengar, Venu Srinivasan’s induction into the family business started off as a car mechanic at their own TVS garage. This proved to be a solid grounding as he emerged armed with skill sets to run a high quality plant. After excelling in engineering, he completed his MBA from Purdue University (USA) in 1977, and took over as the CEO of Sundaram-Clayton in 1979. TVS Motor Company was born in 1979 and very rapidly grew to be the third largest two-wheeler manufacturing unit in India. Chartering a course towards growth and effectively steering his group through difficult phases, Venu today has proved that an Indian company can manufacture products and adopt a successful work culture that can match the best in the world and even surpass it with persistence, hard work and immense self-belief University of Warwick, United Kingdom recently honoured him with Doctorate in Science. Ever since he took over as the managing director, he has been relentlessly driving his companies towards achieving total quality. This obsession with excellence has borne rich fruit with Sundaram Clayton and TVS Motor Company winning the global quality benchmark - the Deming Application Prize. Venu Srinivasan is also credited with pioneering the TQM (Total Quality Management) concept based on the Japanese model, long before most enterprises in India did. Further laurels followed with Venu Srinivasan being rated as the" Star of Asia" by Business Week International. TVS is today a showpiece for India's R&D skills and resulting world-class two wheelers. The restless vitality and raw energy is still visible today. The aura around him keeps growing. There is no doubting his avowed intent of being one of the top-manufacturing units in the world today. Success on the materialistic front however has not been his only focus. He is deeply committed to the welfare of the community at large and as the Managing Trustee of the Srinivasan Services Trust has now completed 7 years of service to the needy. The causes include Rural Development, education, health, agriculture and building a sustainable environment for a healthy and holistic life. Inspired by this commitment, the Trust is impelled by the belief that there should be an all round and more equitable and sustained development to benefit all sectors of society specially the remote and the rural. It is in this context that the Srinivasan Services Trust has set its goal for developing 100 model villages, which will be completely self-reliant over a period of 20 years wherein 5 lakh people would benefit. The two-wheeler industry has changed from a semi-luxury product in the eighties to a preferred form of personal transport across the socio-economic classes in the recent times. However, the penetration level in India is still at 42 motorcycles per 1,000 commuters, which is significantly lower than that of other Asian countries like Indonesia and Thailand. The growth potential of the industry in India will remain high, considering the boom in services industry, growth in double income families, emergence of families with multi-ownership of vehicles and, most importantly, lack of effective means of public transport. Cheaper and easy availability of financing options will continue to contribute to the growth of the industry. All these factors coupled with wide range of product offerings have not only attracted new customers but also repeat buyers, replacing their bike more frequently, every three to five years. Companies need to constantly improve and innovate to cater to the rapidly changing needs of the customers. When the market gets aggressive in terms of intense competition and pricing, the quality of services and products tend to take a back seat. Those familiar with better understanding of perceptions, preferences and attitudes of their customers, have better chance to tap the growth potential. Some of the reasons for making a first time customer a lifetime buyer apart from strengthening your position in the market are:
Customer satisfaction - the first step Customer satisfaction, as we all know, is a hygiene factor in any form of business. The customers are setting new standards and meeting them in shortest time becomes critical. Increased competition coupled with high input costs erodes the profits. A study conducted by JD Power in 2004 reveals that customers report higher satisfaction if his experience at the dealership is undertaken without any clutter. The study also highlights a strong correlation between overall sales satisfaction and loyalty or recommendation. Customers who are delighted with their sales and service experience at the dealership will recommend to other people only when solicited. On the other hand, a dissatisfied customer will tell at least ten other people not to shop at that dealership. If customer satisfaction is a norm that marketers should strive for, in the long run it can only be based on the trust, which will lead to loyalty. It is just not enough to produce quality products by the manufacturer. The post sales customer experience plays a huge role in gaining the trust. Products being equivalent, one who provides a better experience and relationship with customer is the winner. This is where the trade will have to play a pivotal role in enhancing the customer experience and building the relationship. The age has come for one to differentiate or else die! Creating value through customer loyalty Acquiring a new customer and retaining existing customers are the two channels of building a customer base. In a competitive environment, gaining a customer by one company is an opportunity lost for another. Today, the repeat two-wheeler buyers contribute to nearly 50 per cent of purchases every year, which is huge volume of business for all the players. While customer satisfaction is necessary for any successful business model, there is more to building a loyal customer base. Latest research findings suggest that high level of customer satisfaction does not necessarily translate into repeat purchases or increased sales. About 60 to 70 per cent of them who reported "satisfied" or "very satisfied" have switched. And what happens when you lose those "satisfied" customers? Adding new customers is an expensive process. Therefore, the company should strive to enhance customer experience and relationship right at the beginning. Thus, as we can see, customer satisfaction is only the first step towards building a repeat and referral customer base. That is why building a loyal customer base is important for future growth and expansion of your business. If a marketer requires his products to appeal to this segment of customers, then he has to build impeccable trust and customer service should be of the highest order. This trust built over a period of time, will eventually materialise into customer loyalty. Loyal customers are those who keep coming back, spend more, bring new customers and help in building your brand by talking positive about you. Building and sustaining a long-term relationship with the consumer requires building strong brand. This necessitates:
The companies have to assume the role of a mentor for the dealerships, by stating clear visions and objectives, disseminating market information, providing insights into the future and imparting leadership skills and other business enablers. Running a dealership is no longer a skill passed down from father to son. Changes need to be brought in to eliminate waste and look at growth drivers. So far, the dealers have been riding on the manufacturers for sustained business growth. But now, they have to be competitive both on site as well as outside the dealership. This calls for revamp of the dealerships in terms of quality of people, leadership skills of the dealer owner, robust process, after sales service, adoption of technology, proactively reaching out to customers, etc. The collective bargaining power of the network can be used so as to bring the cost of operation down for the network and increase the value proposition to the customers. The dealer does not sell a vehicle independently. They enable the customers get loan through hire purchase, exchange their old two-wheelers, sometimes, both HP and exchange together and, in the process, understanding the customers well. On account of both sales and after sales association with their buyers, dealers have a greater chance to build closer relationships with them than the manufacturers. Emergence of Information Technology has enabled efficient and smooth process automating and standardising the system across the dealership, thus helping in establishing customer loyalty programmes. IT has also played a huge role in bringing the companies closer to the dealers and customers and this should be adopted to facilitate this relationship in long term. From product push to customer pull, technology has vastly reshaped the business transaction - and in turn, the customer's place in the value chain. Today, managing the customer relationship has become the single most important dimension of enterprise strategy. It is important to look at each individual walking into your showroom as a ‘Lifetime’ customer and it will be the only time before he/she becomes a proud owner of your product and services for life. Now, which would you rather have? A mere satisfied customer or a loyal customer for life! |
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