Low performing customer service staff in lazmall channel of lazada vietnam

In a word, the thesis investigate the central problem in Lazmall team of Lazada, the main cause of that problem and the proposed solution, in order to improve the customer satisfaction s

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

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HO HOANG VIET LINH

LOW PERFORMING CUSTOMER SERVICE STAFF IN LAZMALL

CHANNEL OF LAZADA VIETNAM

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2020

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

HO HOANG VIET LINH

LOW PERFORMING CUSTOMER SERVICE STAFF IN LAZMALL

CHANNEL OF LAZADA VIETNAM

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: Assoc.Prof.Dr NGUYEN THI MAI TRANG

Ho Chi Minh City – Year 2020

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Contents

ACKNOWLEDGEMENT 3

EXECUTIVE SUMMARY 4

LIST OF ABBREVIATIONS: 5

LIST OF TABLES 6

LIST OF FIGURES 6

1 Company background 8

2 Symptoms 11

3 Problem identification 15

3.1 Potential problems 16

3.1.1 The first possible problem: Low performing Customer Service staff 17

3.1.2 The second possible problem: Complicated process 23

3.1.3 The third possible problem: Competitive market with increase in customer demand 25

3.1.4 Bad experience with product quality and delivery service 28

3.2 Problem validation 32

3.2.1 Eliminating complicated process as main problem 32

3.2.2 Eliminating competitive market with increase in customer demand as main problem 32

3.2.3 Eliminating Bad experience with Product quality and Delivery service as main problem 33

3.2.4 Identify Low performing CS staff as the main problem 35

4 Justify the importance of Low performing CS staff 35

5 Potential causes 38

5.1 Potential cause 1: Stress at work 38

5.1.1 Potential sub-cause 1: Lack of headcount due to wrong forecast 38

5.1.2 Potential sub-cause 2: Too much distracting noise 40

5.2 Potential cause 2: Poor work engagement 41

5.2.1 Potential sub-cause 1: Lack of bonding in team 42

5.2.2 Potential sub-cause 2: Unpleasant task 44

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5.2.3 Potential sub-cause 3: Limited praise and recognition 45

5.3 Potential cause 3: Robotic staff 46

5.3.1 Potential sub-cause 1: Lack of soft skill agent 46

5.3.2 Potential sub-cause 2: Limited learning and development opportunity 48 5.4 Cause validation 49

6 Alternative Solutions 51

6.1 Alternative solution 1: Design a set of team building activities 52

6.2 Alternative solution 2: Organize a buddy program 54

6.3 Alternative solution 3: Change in appraisal scheme to motivate agents 56

6.4 Solution justification 58

7 Change plan design 60

7.1 Objectives 60

7.2 Expected outcomes 60

7.3 Plan implementation 61

8 Conclusion 66

9 Supporting information 66

9.1 Methodology: 66

9.2 Interview guide 66

9.3 Transcript 69

REFERENCES 83

APPENDIX 89

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ACKNOWLEDGEMENT

First of all, I would like to deliver my gratitude to ISB for giving me such valuable opportunity to apply all knowledge I have learned during my master of business administration course I have been inspired a lot by enthusiastic and experienced professors and lecturers during my academic years

Specifically, I would like to sincerely thank my thesis supervisor - Assoc.Prof.Dr Nguyen Thi Mai Trang for her careful and clear guidance I cannot have completed this thesis without her advice and support She is the one who is delivering me the very first knowledge about problem solving in organization with all her passion

In addition, I would like to express my appreciation to all people who have co-operated very well with me for my in-depth interviews and are very willing to spend their precious time to share valuable information for me to add in my thesis

Last but not least, I want to show my grateful attitude to my family members for the sympathy

as they are always stand by me during my master thesis period

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EXECUTIVE SUMMARY

Customer satisfaction is a term that many companies are trying to achieve in this modern economy, as customer is the base for any enterprise to survive However, in recent report of Lazada, Lazmall team has been achieved lower customer satisfaction than target, which goes against expectation of the management team in the company Lazmall team has been founded

in 2018 with the purpose to bring out the extraordinary experience for customers who buy authorized products on this platform

Therefore, in-depth interviews were conducted and data were collected to analysis the situation of Lazmall team With the strong support of literature, the research comes up with some potential problems: Low performing customer service staff, complicated process, competitive market with increase in customer demand and bad experience with product and delivery service After validation, the main problem as low performing customer service staff has been revealed Further analyzing, the research shows some potential causes for the main problems, which are: Stress at work, no work engagement and robotic staff

After that, the main cause was identified as lack of work engagement, and some alternative solutions for the main cause were designed The best solution to solve the main cause has been chosen basing on its feasibility and the adaption with company‘s situation

In a word, the thesis investigate the central problem in Lazmall team of Lazada, the main cause of that problem and the proposed solution, in order to improve the customer satisfaction score in Lazmall channel

KPI: Key Performance Indicator

SLA: Service Level Agreement

Backlog: Ticket of customer that is not resolved within SLA

NPS: Net Promoter Score

SKU: Stock keeping unit

SOP: Standard operation process

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LIST OF TABLES

Table 1 CSAT monthly of Lazada in 2019

Table 2 Ticket related to process of Lazmall in 2019

Table 3 E-commerce usage habit in Vietnam

Table 4 Order beyond promised date divided by delivery method

Table 5 Problem with Lazmall products received in 2019

Table 6 Call productivity of agents in campaign 11.11.2019

Table 7 Employee satisfaction toward company‘s physical working environment

Table 8 Employee satisfaction of Lazada in 2019

Table 9 Quality scorecard result divided by criteria

Table 10 Educational background of customer service employees in Lazada

Table 11 Years of experience in same industry prior to Lazada

Table 12 Cost for alternative solution 1

Table 13 Cost for alternative solution 2

Table 14 Cost for alternative solution 3

Table 15 Cost for selected solution

Table 16 Action plan implementation

LIST OF FIGURES

Figure 1 Company structure of Lazada – Dec 2019

Figure 2 Lazmall customers by age – 2019

Figure 3 Lazmall customers by gender – 2019

Figure 4 Lazada customers‘ income by channel

Figure 5 Lazada Customer service structure

Figure 6 Lazmall CSAT and DSAT monthly

Figure 7 CSAT Lazmall break down by agent‘s tenure

Figure 8 Lazmall functional structure

Figure 9 Lazmall DSAT root cause

Figure 10 Potential problem diagram

Figure 11 Lazada CS monthly quality score 2019

Figure 12 Quality score by tenure of Lazmall agent

Figure 13 Lazada monthly backlog per headcount 2019

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Figure 14 Lazmall DSAT deep dive

Figure 15 CS mistake contribution to DSAT in 2019

Figure 16 Process of handling transaction

Figure 17 Traffic of users in Vietnamese Ecommerce

Figure 18 Criteria cared by customer during shopping

Figure 19 DSAT counts by contact reason

Figure 20 Shipping and delivery issues contribution in Lazmall

Figure 21 Net promotion score between Ecommerce site

Figure 22 Potential causes

Figure 23 Process of transaction handling in Lazada

Figure 24 Updated cause effect map

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1 Company background

Founded in 2012, Lazada Vietnam is a part of Lazada group – a Southeast Asia‘s leading commerce platform presenting in six countries Lazada Group is majority owned by Alibaba Group Holding Limited

E-Lazada Vietnam is one of the pioneers in E-commerce industry, with its vision is to change Vietnamese consumer behavior, from traditional market to an online platform On that platform, sellers can provide products from various categories like: Fashion and accessories, Health and Beauty, Groceries, Electronic products, Sport and toys, while shoppers can easily look for a product they want In a word, Lazada‘s mission is to deliver an ―Effortless shopping experience‖ to buyers, by offering them a huge marketplace whereby they can approach online to millions of products from thousands of sellers Focused on delivering an excellent customer experience, Lazada Vietnam offers multiple payment methods including cash-on-delivery, comprehensive customer care and hassle-free returns through its own first- and last-mile delivery arm supported by different logistics partners

Organizational structure:

James Dong is the Chief Executive Officer of Lazada Vietnam and Lazada Thailand James joined Lazada in June 2018 as the CEO of Lazada Thailand and was appointed CEO of Lazada Vietnam one year later, in addition to his existing role Prior to joining Lazada, he was the Head of Alibaba Group Globalization Corporate Development and Business Assistant to Group Chief Executive Officer, Daniel Zhang Under the CEO, there are six different departments, of which Customer Service belong to Customer care department

Figure 1: Company structure of Lazada – Dec 2019 (Source: Internal Lazada report 2019)

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LazMall

Launched on the Lazada platform in August 2018, LazMall connects shoppers to over 1,500 leading authorized brand distributors Lazmall is the flagship stores of Lazada, with the mission is to provide genuine and trusted along with reliable service and quality assurance It

is to say that Lazmall is a virtual mall, which allows Lazada to set a new higher standard in retail Shoppers can check out with the assurance of 100% authenticity, 15-day hassle-free returns, and next-day delivery All Lazmall products are distributed by the top famous brand like Apple, Samsung, Xiaomi, Laneige, Vichy, Za, Huggies, Pamper, Moony For brands and sellers, LazMall offers an opportunity to create a customized experience for their customers Lazada, hence, decided to build a special team to take care of consumers for this mall, called Lazmall customer service agent (Lazmall CS) The requirements for those agents to be recruited to this channel is very high, in order to deliver the wow experience for customers It has been a big honor for those employees who were chosen to serve customers in this special channel

According to an internal survey of Lazada Customer Care, Lazmall buyers‘ background is illustrated in the following figure:

First of all, the customers‘ age in 2019 is shown below:

Figure 2: Lazmall customers by age – 2019 (Source: Internal Lazada report 2019)

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According to Figure 2, the participants who are from 25 to 35 years old accounted for the greatest portion with 41%, and the second majority are group between 36 to 45 years old Meanwhile, the group of under 25 and over 45 account for the smallest part, which are at 16% and 13% respectively

Below is the gender structure of the customer database in 2019:

Figure 3: Lazmall customers by gender – 2019 (Source: Internal Lazada report 2019)

For online shopping on Lazada, it is witnessed that women and men population account for almost equal part, which are 55% and 45% respectively However, the proportion of female buyers is still higher than the percentage of male consumers in general

Next is the monthly income structure of purchasers on Lazmall compared to non-Lazmall channel in 2019:

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Figure 4: Lazada customers‟ income by channel (Source: Internal Lazada report 2019)

At a glance, figure 4 shows that Lazmall customers have the major population (35%) with

income varies between 16-20 million VND, while non-Lazmall customers‘ monthly income

mostly under 15 million VND (33% at 10-15 million dong and 31% under 10 million dong)

It is obvious that Lazmall customers‘ earnings tend to be higher than non-Lazmall‘s

2 Symptoms

In recent months, from October 2019, it is observed that Lazmall channel have the lowest

customer satisfaction score (CSAT) among other channels, and the score seems to decrease by

time and even under target For lots of enterprises, controlling customer dissatisfaction

(DSAT) is extremely essential to maintain a stable and profitable growth (1) In the condition

of growing markets and under intense competitive pressures, many companies are spending

their efforts on retaining a loyal customer base Loyal consumers help on saving to service,

are willing to spend more their time and money with the service & products, and open up a

potential source for further business opportunities (1)

The below graph the target set by Customer care department for the customer satisfaction

score (CSAT) This target is set by regional Lazada team, all over six countries where Lazada

is operated in, basing on the average CSAT score of history

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Figure 5: Lazada Customer service structure (Source: Internal Lazada report 2019)

The formula to measure CSAT is: % CSAT =

The way Lazada calculate the score of CSAT is through customer response after they are being served by Customer service team For every issue raised by customers, agent will create

a ticket on system, after the ticket is resolved, system will automatically sent out a survey to get feedback from customers, whether they are satisfied with the solutions provided or not Eight in-depth interviews with key persons of Lazada Customer service department, the Lazmall CS agent and Lazmall customers have been conducted to find out the possible problems Mr Thien - Customer Service manager also provided his idea that:

„CSAT score of Lazmall team has been a crisis in the last quarter of 2019 that draws concern from not only Lazada Vietnam‟s CEO but also the regional management team This reflects the fact that all the customers‟ attitude toward Lazmall team has been gone against our expectation of giving customers a better online shopping experience‟ (Pham Hoang Thien, Customer Service manager, 38 years old)

Mr Thien raised a big concern about the drop in CSAT score of Lazmall and emphasized that this problem brings a lot of attention from management team with the purpose of driving Lazmall team to the right track

The CSAT score record is reflected in the table below:

Total CSAT

Total CSAT + DSAT

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Table 1: CSAT monthly of Lazada in 2019 Unit: %

Channel Target Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19

CS non-Lazmall 88 89,60 89,28 90,98 90.54 90,94 89,94 90,83

CS Lazmall 90 91,55 91.65 91.13 90,85 88,89 88.69 88,76

(Source: Internal Lazada report 2019)

The CSAT score of CS non-Lazmall has been always above target, while the figure for CS Lazmall was unstable and became under target in the last quarter of 2019 Prior October 2019, the percentage of customer satisfied with Lazmall varied around 91% of survey respondents Nevertheless, right after that, the score declined to 88.89% and stayed lower than 90% in the whole quarter This is a threat to Lazada Vietnam, as Lazmall CS team was built with the purpose to provide customer exclusive experience at the first priority compared to others products channel In three continuous months, the CSAT score for Lazmall CS was even lower than non-Lazmall agents, by up to 2% in the month of December

According to the sharing from Ms Tu – Team leader of Lazmall:

„The CSAT of Lazmall team had been always retained over target of 90% since the first day we started However, recently, that number becomes the most serious concern for all

of us There are too many customers raise DSAT every day that it becomes more difficult for us to increase the overall score.‟ (Nguyen Thi Cam Tu, Lazmall Team leader, 29 years old)

As mentioned by Ms Tu, the CSAT score of Lazmall decreases in recent time and she claimed for the accretion of DSAT number raised by customers The trend of CSAT/DSAT number among channels is shown in Figure 6:

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Figure 6: Lazmall CSAT and DSAT monthly (source: Internal Lazada report 2019)

Have a glance at the DSAT number in green has the fluctuated trend in the first half of 2019 and the number always stayed smaller than 40 during this period Meanwhile, in the second half, it observed the common trend of DSAT count, which was increase from 46 in July to 85

in December Consequently, the %CSAT score also dropped from 91.65% to 88.76% in same period, which can prove for what Ms Tu was sharing

The CSAT score broken down by tenure of Lazmall agents is shown in below figure:

Figure 7: CSAT Lazmall break down by agent‟s tenure (source: Internal Lazada report 2019)

Target

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Figure 7 shows that, the group of agents under three months of experience in Lazmall are always under target of CSAT, and this group is also the most fluctuated in CSAT score over the year

Functional structure of CS Lazmall:

Figure 8: Lazmall functional structure (Source: Internal Lazada report 2019)

Within Lazmall customer service team, there are three main departments, which are Training, Quality assurance (QA) and Operation department Training team is responsible for onboarding and qualifying new CS agent, while QA team‘s duty is to make sure agents perform well in quality metric Operation team is in charge of productivity, CSAT score and headcount arrangement, to maintain the service level of Lazmall channel

3 Problem identification

With the DSAT data analysis collected from Quality team, ones can observe the factors leading to the decision of raising a DSAT from customer in below figure:

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Figure 9: Lazmall DSAT root-cause (source: Internal Lazada report 2019)

According to Figure 9, four main internal factors that are considered to bring the major impact

to customer dissatisfaction in Lazmall team are: logistics (30.3%), process (24.24%), CS staff mistake (20.45%) and product (19.7%)

3.1 Potential problems

Through in-depth interview with key people in the company, the initial cause-effect map is found with some potential problems for low customer satisfaction of Lazmall CS team:

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Figure 10: Potential problem diagram (source: Author synthesis)

Three symptoms were found including: the number of customers‘ complain increases, more tickets are reopen because customers disagree with resolution of Lazmall CS agent and the decrease of customer satisfaction score Problems leading to the inflation of customer complaints are competitive market with increase in customer demand and the bad experience

of buyers with Lazmall product quality and delivery service Besides, the problems lead to more reopen tickets are complicated process of Lazmall and low performing Customer service staff

3.1.1 The first possible problem: Low performing Customer Service staff

In the interview with Mr Khoa – Head of Customer care department, he stated that at the first stage, Lazmall team was built to represent for the whole Lazada and to increase the experience for Lazada customer

„This was our baby project for a long time and so far, Lazmall remains our first concern for any of our decision We would like to build a strong and effective Lazmall team, in order to pull up the experience for Lazada buyers, by providing them a special care that they have never got before.‟ (Tran Dang Khoa, Head of customer care of Lazada, 35 years old)

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It was proven by prior research that customer service has positive impact in increasing customer satisfaction, from there the purchase intentions is developed through word-of-mouth recommendations (2) In customer service, the employees play the main role to define the success in terms of bringing customer‘s experience There exists an interdependence between customers and service employees and the activities or behaviors of one could mutually impact those of the other (3)

At the beginning of the Lazmall project, Mr Khoa will directly interview in the final round to pick up every CS agent who had enough skills and experience It was such a big honor for the selected agents to work in Lazmall In addition to that, they were undergone an additional in-depth soft-skill training to be able to handle tough complain However, after more than a year

of running project, the tittle Lazmall CS is no longer fancy in agents‘ mind as it used to be

„I was forced to join Lazmall CS team I used to work in non-Lazmall team, and I was quite comfortable with that However, since I was picked to Lazmall, my performance tends to decrease.‟ (Duong Thi Suong, Lazmall CS, 22 years old)

According to the sharing from agents, recently, there was no interviewed conducted to select

CS for Lazmall team and they were picked up from other channels More importantly, some

of them were forced to move to Lazmall rather than being willing to join This is because of the fact that, there is a rule Lazada has set up for this team that Lazmall agents should be top performing CS In case the agents no more perform well, he will be removed and replaced by other CS from non-Lazmall team However, the overall KPI of the team continues to drop down with the above strategy Mr Thien said that:

„The KPI of Lazmall team is a crisis problem in these months, while all the numbers of transaction quality, response speed are falling, and the number of backlogs increases more and more This is unacceptable due to the fact that we have selected the best performed agent to work here‟ (Pham Hoang Thien, Customer Service manager of Lazada, 38 years old)

In Lazada, each CS agent is evaluated by monthly KPI scores, including:

- Response speed: counted by the percentage of transaction in which CS can first response customer within 30 seconds

- Transaction quality, measured by a scorecard monitored by quality assurance specialists

- Backlog (ticket which is not resolved within 48hours)

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It is observed that from second half of 2019, those KPI scores of those criteria have been fluctuated and even gone below target:

Figure 11: Lazada CS monthly quality score 2019 (source: Internal Lazada report 2019)

The quality score break down by different group of is illustrated in below figure:

Figure 12: Quality score by tenure of Lazmall agent (source: Internal Lazada report 2019)

It is observed that tenured agents have stable quality score in all calls, while new joins‘ quality usually fluctuates The quality is mostly decided by how well each agent provides appropriate solution for customers, basing on the process of Lazada All newbies of Lazmall were recruited from non-Lazmall channel and the selected candidates must have excellent

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performance previously However, when coming to Lazmall, their quality performance seems down significantly

Figure 13: Lazada monthly backlog per headcount (source: Internal Lazada report 2019)

Figure 11 and 13 showed that, quality scores of agents in Lazmall team are lower than Lazmall one over most the months in 2019, while the backlog per agent is higher This indicates that, both quality and productivity of Lazmall team are not as good as target of Lazada

non-More importantly, from the observation of Quality team, the DSAT made by CS mistake has the increasing trend in Lazmall department throughout the last quarter of 2019, while the figure for non-Lazmall agent remain unchanged:

Figure 14: Lazmall DSAT deep dive (source: Internal Lazada report 2019)

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In previous part, from the income data, ones can see that Lazmall customers are usually of premium level and they were promised by Lazada to be served in a special channel, at premium class However, according to a sharing from– Lazmall customers, there is no much difference between the Lazmall and non-Lazmall CS agent in terms of handling customer complain

„Lazada advertises a lot of benefit for customers buying Lazmall products, however, when I have problem with the item received, the way that a Lazmall CS handle my issue is similar

to the time I bought a normal product and contacted to non-Lazmall agents I did not see any special priority regarding the post-purchase support here‟ (Ms Hoang Minh Anh, customer of Lazmall, 30 years old)

From what Ms Minh Anh said, there is no different in the way a Lazmall and non-Lazmall agent handle the call from customers Meanwhile, in the term and condition of Lazada, customers were promised to enjoy a specific service ever, which is a trade-off for them to buy Lazmall – more expensive products on Lazada This is the most disappointing part because Lazada is not delivering what buyers desire

CS Lazmall staff is the only ones directly dealing with customers and in other word, they are the representative for Lazmall brand image in clients‘ eye Customer services staff plays a vital role in building customer‘ interest for a particular service provider (4) One of the critical factors that lead to the customer satisfaction when using a service provider is employee behavior, comprises of friendliness, responsiveness and the promptness of the employee The data Lazmall DSAT root-cause showed that customer service staff mistakes accounted for 20.45 percent of total factors that lead to dissatisfaction among consumers That number tended to increase month over month The CS mistakes include: lack of communication skill, courtesy, knowledge and transaction handling skill Bellow figure shows the CS mistake contribution in total DSAT in 2019, data annalyzed by Quality team

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Figure 15: CS mistake contribution to DSAT in 2019 (source: Internal Lazada report 2019)

As cited by Wu (5), Arthur and Bennett emphasized that customer service agents who own good communication skill including listening well to others and expressing their ideas clearly could result in a better understanding of customers‘ demands and help to build a trustworthy relationship with them Communication mistake is counted when a CS agent does not show empathy to customers, ignore customers‘ questions or concern and answer them in a robotic way According to Wieseke et al as cited by Bahadur et al (6), empathy is illustrated as ―a person‘s ability to sense another‘s thoughts, feelings, and experiences, to share other‘s emotional experience, and to react to the observed experiences of another person‖ It has an important role in customer service that in Lazada, especially Lazmall, empathizing becomes a mandatory requirement for any CS agent This is because of the fact that empathy is a powerful tool for adequate human intercommunication and in the service industry and a key factor for successful interactions between clients and frontline employees (7) Customers can feel that they are understood, from there turning into positive emotions and attitude toward the service brand (6)

Courtesy mistake is when the agents show bad attitude with customers, and for this fault, those will be terminated right away Listeners could be able to sense the inadequate manner of

CS employees through their tone of voice, words use and the rhythm of response For example, the staff who intensely argue with customers, intentionally leave a long dead air to avoid answering queries, or jumping into clients‘ mouth while they are talking According to Bienstock et al as cited by Beatson et al (8), the serving behaviors and attitudes of front-line employees are essential for the positive reaction of services by clients

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Lack of knowledge and transaction handling skill means the agents does not meet target quality to handle a standard call or chat received from buyers With this weakness, the CS staff can provide wrong information and wrong resolution for customers or they escalate to inappropriate departments, which leads to longer waiting time Those mistakes are frequently checked by quality specialists and it was recorded that mistake by lack of knowledge accounted for 27.85% and 15.07% of agents are short of transaction handling skill As cited

by Wu et al., Boshoff and Allen stated that (5) employees who lack the required workplace competencies may fail to meet customers' needs or provide satisfactory service quality This is because when an employee deliver the agreed service dependably and accurately, the consumers more likely to believe that the enterprises possess high-quality service, and thereby perceive better satisfaction to the service (5)

3.1.2 The second possible problem: Complicated process

First to mention is the call- transfer process for Lazmall When customers contact to CS agents to raise specific issues, all their need is to have a quick answer straight to the point However, due to the routing system of Lazada, it is still indefinite that a Lazmall customer can directly connect to a Lazmall CS agent There is a process for those cases:

Figure 16: Process of handling transaction (source: Internal training process)

Ones can see that for Lazmall customers, the process to handle is more complicated due to the issue of system In case Lazmall customers first contact to a non-Lazmall agent, their problems are not solved right after they explain, but they have to wait another time to be

The thing that makes customers disappointed is they have to wait longer time to actually meet Lazmall CS, and more frustratingly is they have to pay for those minutes of waiting via phone channel When purchasers are complaining, they do not really care about who is solving their problem, but rather how long their problem will be solved, according to the sharing of Mr Nguyen Duc Hung Compared this to non-Lazmall channels, the buyers are always supported right away whenever they can reach to a CS, because the transfer process does not apply for this channel The evolving of customers´ satisfaction is counted a lot on the effectiveness of

an appropriate method, the speed of processing and their result, along with timely and specialized communication with customer (9) In other word, when customers contact to CS agents to raise specific issues, all their need is to have a quick answer straight to the point However, as mentioned earlier, the process of transaction handling for a Lazmall customer is more complicated than non-Lazmall ones, which causes longer waiting time

According to figure 15, 24.24% of DSAT from Lazmall team in 2019 were caused by process The top complains for process are: Long waiting time of Return & refund, order tracking and transaction handling process The table below refers to the contribution of above processes that buyers often complain:

Table 2 Ticket related to process of Lazmall in 2019

Process Number of ticket Percentage Return & Refund 11534 43.19%

Transaction handling 6098 22.84%

(source: Internal Lazada report 2019)

About the refund & return process, Lazmall products have the policy to return to Lazada, while non-Lazmall products can return directly to Sellers Because of the fact that Lazada

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does not sell those products, so the time for quality checking (QC) is often longer than when customers contact straight away to merchants The total time that Lazmall consumers have to wait until their product is refunded since requesting an online return form is 20 days, while the number remain only 15 days for non-Lazmall products The bad experience of waiting not only influences customers‘ perceptions of service quality but also cause impatience, which is

of the top root cause for dissatisfaction (5)

For an order tracking, it depends quite much on third party logistic (3PL), so for any late order, customers have to wait 2 more days before Lazmall CS can escalate to transport department As cited by Wu et al (5), Davis and Vollmann also proved that in service experiences, waiting time became more crucial than quality of service in concern with customer satisfaction Moreover, the experience of customers will become worse if they have

to continue waiting while Lazada cannot meet delivery promised date

3.1.3 The third possible problem: Competitive market with increase in customer

From what Mr Khoa mentioned, in the modern marketplace where customers have more choices of shopping, it is very serious if customers are not happy with the service, as they can easily find a similar vendor elsewhere In addition, acknowledging that Shopee Mall, Tiki Trading and SenMall were also built and promoted to be special project in respective platform, Lazmall is not the unique and competitive brand anymore

Toward the actual feedback from customers, CS Lazmall agents answered the interview that:

„When customers complain to us, they always compare that why Shopee and Tiki agents provide solution for them in this way but Lazada agents answer in other way They also compare the policy, the products and the price with other platforms They should be

Below data is the trend of traffic use in top 4 top Ecommerce guys in Vietnamese market:

Figure 17: Traffic of users in Vietnamese Ecommerce (source: Iprice 2019)

Within 1 year, from quarter 3 of 2018 to quarter 4 of 2019, Lazada has dropped its position in terms of traffic uses, from 2nd position to 4th position This also means, customers are turning their habit to visit other sites, with number one belong to Shopee This is a disadvantage for Lazmall team because with this trend, customers can have their own proof to complain more while making a comparison with service in ShopeeMall, Tiki Trading and SenMall

In one hand, the ecommerce market in Vietnam is considered to be a fierce competition between many big guys The biggest competitors of e-commerce startups have been not only Shopee, Tiki or Sendo but also a social network (social commerce) (10) With such many choices of user, customers are now able to compare the service between different platform

% using of vendor most

% using the vendor

% using of vendor most

(Source: Asia Plus Inc (Tokyo, Japan), Vietnam EC Market Survey)

Table 3 showed that in the year 2018 and 2019, Shopee has been the leading ecommerce platform used by online shoppers (75% of online consumers use Shopee) Meanwhile, Lazada‘s popularity has been declined 8% of users and the percentage of loyalty customers decreased from 20% in 2018 to 11% in 2019 Other competitors like Tiki also on the good trend of increasing its coverage among e-commerce buyers, which make the market more competitive

On the other hand, Lazmall products are at more expensive price so the consumers for this channel are observed to be at higher level-income People whose function in higher status occupations have characteristic personalities, motives and values that set them apart from those in less prestigious positions (11) Tronvoll reported from previous research that there is

a significant relationship between occupation and complaint behavior and people who have managerial and professional occupational status are complainers (12) Therefore, for Lazmall service, the expectation from customer is much higher, which means more effort is needed to win customers satisfaction here Consumer satisfaction takes place if products and services meet their threshold of expectation (13) With the globalization and liberalization of services, there is a critical requirement for ecommerce industry to build and retain consumer relationships The reason behind is because buyers can turn their back on a service when they perceive a better offer elsewhere which meets their requirements and expectation among other companies providing similar products or services (14) Moreover, for online buyers, the virtually prompt access to the offers of other service and can make them more easily change to other competitors (15) That is when a higher level of commitment to the consumers must be provided by the e-business with the purpose to maintain customer satisfaction and increase loyalty

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3.1.4 Bad experience with product quality and delivery service

According to a research by Younet Media, Product quality and Delivery service are top two concern of customers after buying products Customer satisfaction and purchasing decision often have positively associated with each other

Figure 18: Criteria cared by customer during shopping (source: Younet 2019)

Lazmall products have to type: the first one is Retail item – means the products sold by Lazada, and the second type is Marketplace item – sold by Merchant (Seller)

For Retail items, Ms Quyen – Lazmall agent shared that

„In Lazmall, more than 50% of the contact reason for complain is about “Problem with items received” and “where is my order” The Lazmall products fulfilled by Lazada often miss freebies and this issue once happens, it will always happen systematically‟ (Do Mai Quyen, Lazmall CS agent, 21 years old)

Lazada itself is just an online platform where buyers and connect with sellers, and the products are delivered by a third party partner Therefore, like Ms Quyen stated, most issues

of customers are related to product quality and delivery service- which is difficult for Lazada themselves to control According to Ms Tu, the most common issue with product is missing freebies This is because of the systematic issues from technical team when SKU of products

is not attached with SKU of free gifts appropriately That will leads to the consequence that the warehouse staff do not receive the information of free gifts SKU and therefore all orders for that products have same issue of missing items

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For Marketplace products, since Lazada is a platform that allow sellers to post their all products for sell, there is not any pre-check process from Lazada‘s side to make sure those products pass the quality check In addition to that, from early 2019, Lazada has stop allowing customer to mutual check products with shippers This increases the bad experience with products quality, hence, reduce customers‘ trust and satisfaction

Ms Thuc Hien – a Lazmall customers complained that:

„When I purchased on Lazmall, the item still got problems like wrong delivered, broken or missing freebies This really got me lose hope about Lazmall products in general, because

I know that I had to pay more, but the quality still not too outstanding and worthy.‟ (Nguyen Thuc Hien, Lazmall customer, 27 years old)

After interviewing with buyers of Lazmall, they shared that actual quality of Lazmall products still make them dissatisfied They do compare and know that Lazmall products have higher price than non-Lazmall ones, because customers can enjoy a genuine quality However, they still have to return because of ones of the problem: wrong items, not as advertise, defective products, etc The next thing they have to do afterward is returning the item, which takes about 15-20 working days of process and definitely is not within customers‘ expectation When getting the ideas from customers, Ms Hoang Minh Anh said that:

„I chose Lazmall product because Lazada guarantee genuine quality and an express delivery Last time, I bought a Lazmall purse for my friend‟s birthday, but they did not deliver on time and it ruined my plan Such a terrible experience‟ (Hoang Minh Anh, Lazmall customer, 25 years old)

For delivery, Lazada has not owned any logistic department All delivery service is handled

by third party logistic, which is still depending a lot on the contract between the partner The express delivery of Lazada is within 24 hours, while Shopee offers 4 hours fast deliver, Tiki promises an express delivery within 2 hours, and Sendo within 3 hours Tiki even owns a team of logistic, which can support them to prioritize orders themselves

The Express delivery service (same day delivery) is not always as Lazada commit with customer, and even when 3PLs do not fulfill their promise, CS agents have no right to escalate or push them to delivery faster Agent Suong shared that:

„We really understand with customer that when they choose the Express service means they are willing to pay more for delivery with the demand of getting the goods for urgent

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purpose, otherwise, customer should have chosen Standard or Economy method Most customer complain with us about the “Same day delivery”, because it‟s already beyond they date that logistic partner commits It‟s not our fault and the irrational thing is we cannot push 3PL‟ (Duong Thi Suong, Lazmall CS agent, 22 years old)

Figure 19: DSAT counts by contact reason (source: Internal Lazada report 2019)

Shipping and delivery related are the most frequent concern from customers, causing 33.56%

of total DSAT According to Moth as cited by Cao et al (16) The research of UPS and ComScore showed that shipping and delivery are proven to be dominant factor affects to shopper satisfaction in e-business It was also found that the top concern of online consumers are related to shipping, including: free or discounted shipping fee, on-time delivery, flexibility

of shipping, and return service (16) Meanwhile, for Lazmall, the top complains about delivery are:

Figure 20: Shipping and delivery issues contribution in Lazmall (Source: Internal Lazada

report 2019)

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According to figure 20, late delivered is the most considerable issue from Lazmall buyers As cited by Cao et al (16), Reibstein stated that timely delivery is equally significant to predicting the level of buyer‘s satisfaction in comparison with price, which is often pointed out by various e-commerce researchers Especially when the ―Same-day deliver‖ is only applied for Lazmall products, 65% of complains are about this shipping method (see in table 4) Same-day delivery is usually very costly that most customers are not willing to pay the extra price, though it provides instant fulfillment (16) It means when customer they decide to use, apparently expect the minimum of late delivery However, according to table 4 below, the express delivery causes the top complain regarding late orders Like Yun et al stated (as cited by Raquel et al.), when buyers‘ expectations and perceptions of a service and its quality fail to match, complain and dissatisfaction happens (17)

Table 4: Order beyond promised date divided by delivery method

Shipping method % complain

Express delivery 65%

Standard delivery 25%

Economy delivery 10%

(Source: Internal Lazada report 2019)

From Figure 19, the contact reason related to ―Problem with product received‖ account for the second rank, which is 22.15% of total DSAT tickets As mentioned earlier, Lazmall products

is guaranteed by Lazada about the authenticity and easy return policy In addition to that, because Lazmall sellers are charged 3-5% higher commission fees compared to non-Lazmall sellers, leading to the fact that Lazmall products have respectively higher price than non-Lazmall one With the guarantee from Lazada and such more expensive price, customer expectation about products therefore has been set at greater level According to Grönroos as cited by Xu et al (18) there is not a clear criteria to evaluate product quality because it is more about the perception of customer In details, it is defined as the difference between the product expectation and the product perception (in case the product perception is not as high as the product expectation, product quality perception by the customer is poor)

In general, from in-depth interview and literature, four potential problems are identified Low performing customer service staff and complicated process are the causes for long average handling time of a transaction, hence customers have to wait longer time or even have to re-contact many times to get the issues solved The rest potential problems are competitive

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market with increase in customer demand and bad experience with product quality & delivery service For these points, the consequence is consumers can easily compare and increasingly demand a better service, therefore, more bad complains are delivered All of these result in low customer satisfaction score for Lazmall department In the next part, the author will deeply validate the potential problems using literature to eventually identify the main problem that give the most impacts on customer satisfaction in Lazmall

3.2 Problem validation

Four possible problems identified from previous part includes: low performing customer service staff, complicated process, competitive market with increase in customer demand and bad experience with products and delivery service To clarify the major problem among the above, validating each problem is necessary

3.2.1 Eliminating complicated process as main problem

According to sharing from Mr Khoa, the process of Lazada is not only decided by customer care department, but also monitored by other internal and external department The reason behind is Lazada and especially Lazmall does not earn profit from buyers only, but from sellers also Lazmall sellers are charged 0.5% to 12% additional commission fee compared to non-Lazmall seller, and advertising or marketing activities are more focused on this type of seller (19) Therefore, the long and complicated process for refund & return is difficult to be changed, because it depends on Seller also Mr Khoa emphasized that, any change or update from the process needs to have agreement from all parties, Customer care department cannot make the decision themselves

Furthermore, there is just some minor adjusts related to the process since the time Lazmall started operating until present, and as data shown in table 1, the CSAT score of Lazmall used

to be very high (above target of 90%) in the first half of the year This means the process is not the main impact on the decline of customer satisfaction

3.2.2 Eliminating competitive market with increase in customer demand as main

problem

For many company, complain is a gift because if managing and utilizing its well, business can achieve stability and profitable growth (1)

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Meanwhile, when customers decided to exit, they will stop purchasing from this company and switch their buying habit to the competitor In this case, those customer rarely give complains(17) According to that, if buyers keep comparing with Lazada‘s competitors and raising DSAT to Lazmall, means they hardly turning their back on Lazada for other site like Tiki, Shopee, Sendo,etc

From that, competitive market with increase in customer demand is not the main problem, because it does not impact most to the repurchase intention of customers and therefore, not impact to the revenue of company as a whole

There are 2 typical ways of reaction when consumers are dissatisfied with a product or service: to voice and to exit, which present the complainers and non-complainers (20) When customers choose to voice, means they still give the company chance to improve and complainers are re-purchaser (17) When complainers receive courteous and empathetic responses to their complaints, they are more likely to be satisfied Empirical studies have shown that attentiveness exerts significant positive effects on complainer satisfaction and repurchase intentions (20)

3.2.3 Eliminating Bad experience with Product quality and Delivery service as main problem

When purchasing goods from online platform, the product itself represents what customers want to fulfill their desires, while services represent how the desires are fulfilled Both are significant in terms of determining customer satisfaction, however, the research of Sun indicates that product quality only leaves an indirect impact on how customer feel to the e-business (20) In fact, Lazmall products has up to 15 days easy return with Lazada for any problem with item received Therefore, if buyers face any issues related to the goods, they will get the money back if they contact to Lazada within 15 days Consumers who experienced a failure, complained, and then received a satisfactory recovery, were more willing to repurchase 1.130 times more than those who did not experience a service problem (4) That is the reason why bad experience with product cannot be the main problem for the dissatisfaction of Lazmall consummers Moreover, the related issues with items is shown in bellow table:

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Table 5: Problem with Lazmall products received in 2019

Problem with product received Percentage

(Source: Internal Lazada report 2019)

As see in table 5, missing freebie and missing accessory are top two reason for products issue For those two reasons, Mr Khoa acknowledged that it was difficult to resolved because the root cause behind is the unexpected bug from technology team, which prevent warehouse to receive information about the freebies and accessory SKUs

For delivery service, Ms Tu shared that:

„Right now, all our shipment providers are our partners, not our subsidiaries (even Lazada express – Lex) We have a separate contract between Lazada and the third party logistic, however, we acknowledge that they do serve other business, like Shopee, Tiki, etc Because

of that, in the high season of sales with high volumes of orders in all e-commerce sites, problem with delivery happens the most often.‟ (Ms Nguyen Thi Cam Tu, Lazmall Team leader, 29 years old)

From what Ms Tu stated, the issue with delivery service is a seasonal issues, when the logistic partner are overwhelmed with orders from several vendors The sales season is usually in the last 2 months of the year (11.11 and 12.12), when the number of orders can be triple compared to normal days Furthermore, making any improvement on the service of delivery is not within customer care department‘s capacity, as it affects to the process and benefit other department also Hence, both product quality and delivery service are not chosen

to be the major problem to solve in current situation

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3.2.4 Identify Low performing CS staff as the main problem

Customer Services plays a vital role in forming customer satisfaction for any service provider because one of the main factors affecting the feeling of customer towards a service is the way employee behave, including friendliness, responsiveness and the promptness during the transaction handling process (6) Moreover, studies of Bahadur have emphasized the role of first-line staff in guiding customers‘ service assessments, specifically satisfaction and loyalty due to the employee–customer direct contact in service process (6) Ms Tu also admitted that, the performance of CS Lazmall agents has been fluctuated and gone down lower than ever before within the last 3 months The CS performance are defined by: Response speed, Transaction quality, Backlog (ticket which is not resolved within 48hours)

Mr Thien infirmed that for CS Lazmall agents, he has been directly interviewing and picking one by one to Lazmall team, in order to make sure their quality meets his expectation at first This is the reason why during the operation period of Lazmall, he hardly involved in the performance of staff In fact, there are many variables impacting the performance of staff, including: workplace environment, job related factors and employees themselves related factors (21) The management team of Lazmall only considers the employees related factors

to be the foundation of all agents‘ performance so far, leading to the consequence that this problem has not been resolved properly Hence, the author would like to choose the Low performing staff as main problem to be further analyzed

4 Justify the importance of Low performing CS staff

Customer service includes the staff working in a set of procedure in order to creates a satisfying experience for customers (22) For any company, this department is a key to

maintain, nurture and develop the resource of customers According to Domegan and

Donaldson as cited by McGuinn (22), the advantage of customer service is to enhance the customer satisfaction and profitability, resulting in improving business image

In the research of Ekmekci (23), with the company's frontline employees through multiple transactions, customer service represents the holistic experience with the business In reality, for any service environment, frontline staff is the one representing the company in order to directly communicate with customers From this specific perspective, in the opinion of Cadwallader et al., cited by Ekmekci (23), it is critical to develop better connection between

Furthermore, according to Yang et al cited by Utin (24), performance is always dependent on various factors, including: employee work satisfaction, the level of recognition given, and influenced by personal skills, abilities, and traits

In order to consolidate the problem, the paper will propose the importance of low performing Customer service staff

Firstly, basing on the interview and data from Lazada Vietnam, the percentage of customer dissatisfied with Lazmall CS agents increased over the last year Therefore, they are losing their trust on what Lazada promised to Lazmall customers and potentially turning their back

on this service This is because of the fact that customer choice is significantly influenced by the customer satisfaction with the service provider (6) The consequence is proven by data in table 3, that Shopee and Tiki witnessed the increase in loyal user portion, while the figure of Lazada has decreased from 20% in 2018 to 11% in 2019

Secondly, one of the consequences can be reflected by the low of Net Promoter Score (NPS) This is a measurement for customer experience, and it was proven that customer satisfaction and customer loyalty had a strong relationship with each other (25) The way to calculate NPS is: Subtracting the percentage of Detractors from the percentage of Promoters With this calculation, the NPS index ranges between -100 and 100 It not only evaluates the customer satisfaction but it can also be used as a management system which can impact the organization performance (26) In Lazada, the NPS survey is sent out to every customer who has purchased at least one time The detail of that survey is illustrated in the Appendix There

is a specific survey for Lazmall buyers, in which customers are also asked about their attitude toward other competitors, like ShoppeMall, Senmall, Adayroi and Tiki Trading The summary of NPS is estimated below:

Lastly, the three major significant groups of stakeholders in a company are customers, staff and leaders, and all of them do not stand against one another but are able to build a coefficient cooperation effect which leads to success of the whole firm (26) The employees are the base

to the develop of customer resource, and business leaders cannot grow the company without the employees who are able to get the job done(26) Improving staff performance is critical to the overall success of the company Therefore, improve the performance of CS staff is

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extremely important in bringing customer satisfaction, from that Lazmall in specific can maintain and attract more loyal customers and the company can maintain a sufficient business structure

5 Potential causes

From the above analysis, the main problem of has been found as low performing customer service staff More interviews were conducted to explore the possible causes of low performing customer service staff, which support to define three potential causes: stress at work, no work engagement and robotic staff

Figure 22: Potential causes (source: Author synthesis)

5.1 Potential cause 1: Stress at work

Stress is one factor that can negatively affect to employee‘s performance (27) The indicators that lead to stress in Lazmall team includes: Lack of headcount due to wrong forecast and too much distracting noise

5.1.1 Potential sub-cause 1: Lack of headcount due to wrong forecast

Firstly, due to the wrong forecast, the current agents cannot handle higher-than-planned volume of calls Ms Tu mentioned in the interview:

`In recent months, every day we received exceed numbers of actual calls coming in comparing to forecast For example, the forecast of customer volume in December is 1000 calls/day, however actually we have to take 1500 calls In case we drop the call, service level target will be impacted`(Nguyen Thi Cam Tu, Lazmall Team leader, 29 years old)