Collin MacGibson President of Ontime Technology Products rec

Collin, MacGibson, President of On-time Technology Products, recently returned from a Manufacturing Technology Conference in downtown Chicago. As a result of talking with leaders of other companies, he is now considering establishing a tiered service system, an idea he shared with Mar Graeff.
As a CSR, What is your initial reaction to this new-tiered service plan by Mr. MacGibson and what would be some advantages/disadvantages of going to a tiered service approach at On-Time Technology Products? Would there be a risk of losing some of your smaller clients by using the approach?

Whether or not OTTP decides on a tiered service plan, Mr. Mac Gibson believes they need more information from their customers. Based on the readings from Unit 4, suggest feedback tools they can use to be able to analyze customer services concerns before they escalate into bigger problems. How would you go about servicing small clients in an economical way using technology?
In order to be successful, make sure to address all the items on this checklist in your essay using a Microsoft Word document.
Proposed Tiered Service Plan:
Mr. MacGibson’s basic thought is to reward their B2B customers who give onetime technology Products $100.000 worth of business, an end-of –year “thank you payment” that reflects a 5 percent discount on all yearly purchases. In addition, those customers would receive a commitment to next-day turnaround time on the resolution of all customer service problems. Moreover, the customers who purchase $500,000 or more annually would receive a 10 percent discount and free delivery. The average B2B sale is $25,000.

Current Service Plan at OTTP:
Provide all customers, regardless of the amount of their purchase, frequency of purchase or dollar amount spent per year, the same special attention. Our theory at OTTP is that a customer who makes a small purchase today might make a large purchase tomorrow. All our customers receive the same price, convenience and service.

Checklist:
1. Analyze opportunities and problems of changing to a tiered service plan.
2. Examine what impact the proposed changes would have on the majority of current customers who buy less than $100,000.00 worth of product each year.
3. Discuss how the proposed change would impact OTTP’s level of commitment to customers who purchase less than $100,000.00 worth of product each year. Remembering the old philosophy of providing all customers, regardless of amount purchased with the same level of attention.
4. Compare and contrast the components of OTTP’s old customer service plan with the proposed plan.

Solution

Ans:

With the consideration of Mr. Graeff’s idea, I can say, it would be a good approach for better coverage of B2B customers where we can provide our customized On-Time Technology Products (OTTP) services at different levels. Though, there are many advantages of this process; one is attractive discounts options for regular customers like; $1,00,000 and $5,00,000 worth of business will get 5% and 10% discount respectively. However, there is a disadvantage which can be seen through average number of B2B sales i.e. only $25,000 means most of the customers are not in the slot of $1,00,000 and $5,00,000 i.e. come in small purchase range slots. Hence, there is a chance of losing customers count because of their less requirements.

Above suggestion by Mr. Graeff’s is not bad for large clients but for small clients, Company has to think other B2B business opportunities in order to keep them too with reasonable discount offers on pro-data basis i.e. through pro-data analysis. Company with nominal discounts; can hold small customers whom has less than 5% of total B2B transaction.

For effectively using the opportunity of the Tiered Service Plan, Company has to analyze the problem and find a solution for the issues with considerable benefits by applying a tiered service plan at different levels of B2B business. Therefore, here, I am sharing five steps for solving the coming problem and steps for applying new-tiered service plan are as follows, Bruce R. Barringer & R. Duane Ireland (2011):

1.Describe the number of small and large customers.

2.Decide the different levels for customers and build a strong plan for different levels of B2B customers’ business spending.

3.Apply the discount mechanism that should be pro-data basis.

4.Eliminate possible solutions which are not feasible, unethical, unprofitable and/or not in-line with company’s policy or goals.

   If there would be pro-data base analysis and applicable discount then small customers will also be happy with Company’s new-tiered service plan and there will be minimal negative impact to those customers because they can continuously use their own plans until their needs will increase. Now with the pro-data base approach, Customers belong to any level of purchase, will definitely get benefit however, large customers will get big discounts as compare to small customers whom purchases less, Bruce R. Barringer & R. Duane Ireland (2011).

Pro-data base discount technique assistance, Rouskas, G.N. (2009). :-

If we thought about earlier OTTP customer plan that was simple and same for every type of customers, there was no option for customized discount for different levels of customers but through this tiered-service plan, Company can expect more business as well as can see, customers interest in purchasing more for discounts that will assist them to raise their business and such factors ultimately benefits to Company through increased selling of B2B products. Hence, it would be better to effectively apply new and innovative tiered-service plan, Rouskas, G.N. (2009).