L 6.2 – Business Problem and MR – Example: Service levels are missed

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    Background: Customers can rent a product from the company for $12-$17/month. If the product breaks, the company promises to complete the maintenance within a 5-day service level.
    Management Problem: Current service levels are missed 25% of the time. Also, the business unit that is responsible for the service is under extreme cost pressure:
    – Costs to deliver the service have gone up, especially overtime to meet service levels, and
    – Annual budget is about to be cut by 5-10%.

    Problem Statement: How can we meet customer expectations, keep satisfaction scores stable while saving costs?
    Scope of research:
    – Competitor Insights: Review service levels of competitors
    – Analyze CRM data to understand relationship between customer escalations with regards to service levels and the number of days it took to complete the service
    – Analyze internal MR data and operational Key Performance Indicators in order to correlate service levels with satisfaction scores, along with other variables – regression analysis

    Decision making:
    – The insights from the competitor review showed that service levels vary across the country from 5-20 days.

    – Regression analysis insights: satisfaction is not impacted for service repairs that take up to 9 days. After 10 days satisfaction starts to decline sharply.
    This insight informed a business case that modeled costs and satisfaction score impacts for various service levels. A longer service level allows crews to bundle repairs by geographic area and spend less time traveling. This cuts costs for overtime.

    – CRM Insight: The review of escalations showed that customers complained mostly about the fact that they paid a monthly fee and they complained about having to pay the monthly fee
    o Decision: Customers with a missed service level will automatically be notified the day after their service level is missed and informed that they will receive a credit on their bill worth one full month – a courtesy for their patience.

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