Note 6: Customer engagement

Customer engagement

End–users and customers regularly ask for products and solutions that will make their business more sustainable. In many cases, we work closely with them so we can deliver breakthrough solutions that provide downstream sustainability benefits while delivering economic value to all parties in the value chain. These collaborations can range from smart product choices and logistics solutions, to complete long-term innovation programs involving academic partners and government institutes.

We are continuing to integrate Planet Possible conversations with customers into our sales and marketing learning and development curricula. Within our Decorative Paints business, the Planet Possible marketing toolkit for both professional and consumer brands is actively used. In Specialty Chemicals, a dedicated sustainability training module has been introduced and 80 percent of front line sales employees have been exposed to this.

Engagement starts with better understanding, so gathering information about customers and consumers is central to our business processes. Customer information gathering goes across value chain participants, all the way to our end-user segments. This includes consumers in our Decorative Paints business, customers of our customers in Specialty Chemicals, and influencers (such as architects and technical advisors) in Performance Coatings.

Customer relationship management (CRM) has also been integrated into our Commercial excellence program. Internal reviews have shown that focusing on customer surveys as a measure of satisfaction is not giving a complete enough picture. We therefore need to supplement this with continuous satisfaction data – particularly as we have many customers who make complex and regular repeat orders. The result has been a company-wide approach to monitoring customer satisfaction which has been based on the following four measures:

1. Customer satisfaction with the service that we provide
   The majority of our customers are making regular repeat orders to sustain their business and we have built up long-term relationships. Failure to deliver to requirements can lead to a breakdown in the customer’s own process and lead to rapid loss of revenues. Therefore, the primary cause of satisfaction for our customers is to receive their orders in a timely manner and in perfect condition. This is monitored by our performance in terms of delivery accuracy, which is measured as the level of on-time in-full deliveries (OTIF is an established measure of the percentage of orders dispatched on time and complete). These data are gathered daily or weekly at production sites and deviations trigger corrective actions by local management. Overall figures are reviewed monthly at a company level. Performance is generally in the 90 to 100 percent range in our business. The vision for the company is to have overall service levels at more than 95 percent. In 2016, global visibility continued at the very high level of 99 percent of all deliveries/customers and service performance was 96 percent, as measured by our Delivery Efficiency Index.
   
   
2. Customer satisfaction with the way we deal with their complaints and queries
   Dealing with customer complaints in a systematic and satisfactory way is a basic expectation of our customers and an integral part of the quality system for all our operations. An important measure for dealing with complaints is response times. Local management teams review this measure. They ensure that investigations into root causes are carried out and that corrective action is taken when causality has been established. Independent reviews and customer audits are common practice. In our Decorative Paints business, we also use real-time social media to interact with customer/consumer complaints.
   
   
3. Customer satisfaction through independent surveys, understanding customers’ expectations and concerns, and improving products and services as a result
   Business change is driven by a deeper understanding of customer needs and this is obtained through market research, customer discussions, consumer focus groups and specifically targeted customer surveys.
   
   These results are reviewed at multiple levels and suitable strategic and operational action plans are undertaken. At a company level, we are monitoring the coverage achieved in the two-to-three-year cycle and are reviewing target levels. For example, in Specialty Chemicals, an extensive cross-business customer survey was conducted in 2014 which will be repeated at the beginning of 2017. A pilot of a customer 360 approach – including internal data – has resulted in key design input for our new CRM system. In Decorative Paints, a brand health survey introduced in 2015 has been repeated, while at corporate level, the AkzoNobel brand survey has been updated and now includes strong input from customers.
   
   
4. Evaluating customer satisfaction through customer loyalty
   Customers who order regularly always have the ability to move to alternative suppliers. Their loyalty over many years demonstrates a high level of satisfaction. The customer retention rate for our major customers is determined to be greater than 98 percent (<2 percent of major customers lost in 2015). This does not mean there are no changes within the group; some accounts grew, while others declined. During 2016, the company deepened its tracking of retained accounts to a more complete win/loss analysis, also looking at gained and lost opportunities.

One of our observations is that overall customer portfolio health needs both high customer retention in the larger accounts as described above, and a healthy rotation in the smaller to mid-size accounts, especially when dealing with newer products or applications. For these smaller customer groups, we are developing differentiated go-to-market models, for example in Performance Coatings.

External communication of all four measures is made on a customer by customer basis (specifically where there is an agreement to review this information on a regular basis).