Ratan Tata, Chairman of the Tata Group, delivers some home truths about what the Tata Group needs to do to keep its customers in the centre of the business frame. In this frank and forthright interview with Christabelle Noronha, he explains and expands on his vision of what Tata companies must do to create a unified brand that is a class apart from the competition. And it all starts with how well the group and its companies are able to keep their customers satisfied.
Has the Tata way of addressing customer needs changed? If so, what is the strategy driving this change?
For many years, India has been in a protected environment. Tata Group companies, in many cases, were in a sellers market, and we were very successful in that sellers market. I think that, broadly, we were perceived as being fair and just to our customers, with our products being backed by a concern for quality. We have been credited with being ahead of the times.
But all of that, in terms of a business framework, no longer holds true. In the 15 years or so since economic reforms started in India, we have had internal liberalisation too. This has resulted in competition between Indian companies, as also from joint ventures established in the country by foreign companies. Now, with the World Trade Organisation and the market opening up from outside, we will face competition from global players. This calls for a new approach to recognising what the marketplace wants, and how to establish not just customer relations but customer loyalty.
Several of our companies operated as individual brands, or variants of a Tata brand. One thing that we have tried to do in the last few years is to unify this and turn it into a common, stronger brand that can be promoted centrally. But the brand by itself does not automatically usher in customer loyalty or strengthen customer relations. That is a human interface, and it embodies courtesy and fairness; it also embodies timely actions in terms of meeting customer needs. It strives at all times for customer loyalty, rather than mere customer satisfaction.
In today's world, what customers are looking for, I believe, are products that suit their purpose best in terms of price, features, quality and appearance. They expect to be treated as kings and to receive sales and service support for products like vehicles and air-conditioners. They expect to receive timely and competent attention, along with a definite solution to their problems from our service people, dealers or channel partners.
Our concern ought to be the interface with our customers. We have to ensure that it is excellent. This would involve training of our channel partners and improving the interface between them and us so that they can give the customer the service he or she wants.
To illustrate, if Tata Engineering is not backing its dealers in, the changing of parts during warranty, for instance, then obviously the dealer is going to haggle with the customer. The customer pays the cost of that in terms of inconvenience. This in turn reflects on the image of the product. Eventually, Tata Engineering pays the cost of customer dissatisfaction.
Some of our policies are framed almost on the basis that everybody abuses, and that a customer has to prove his bona fides. That is what we need to change. Where we have direct dealings with our customers, it is important that, at the middle-management levels, they are shown courtesy, dealt with fairly, and made to feel that they are receiving the attention they deserve. The interface with the customer should be a seamless one. Judging from the number of letters I get complaining about the manner in which people are treated by some of our companies, I would say that we as a group have a lot to change in terms of how we deal with our customers.
I find it difficult to understand why all our managers and officers cannot be courteous at all times to all people. It seems to me that it is part of the Indian psyche to say, "I will treat important people with great courtesy, and I will treat everyone else, not with scorn, but as second-class citizens. I will show my superiority as an individual." I think this is really terrible.
The multinationals coming to India are showing that their customer interface is dramatically different from what we find in major Indian companies. I would have wished that Tata companies would enjoy customer trust and loyalty.
I fear today that in many of our companies, we are not treating our customers well, and we are not showing our shareholders appropriate courtesy. This may not be happening at senior management levels, but it is certainly happening at interface levels.
We should be treating the customer in the same way that we would want to be treated as customers. I think we have a lot to learn on this front and a lot to change.
Is there anything that the group or its companies are doing to address this issue proactively?
I have advocated on several occasions that we should possibly look at formal training programmes. In some cases, at the sales and dealer levels, we have implemented or initiated such programmes. What we need is, perhaps, formal training within our companies to make their interface with customers truly seamless.
Does the customer value a brand just for the brand's sake, or do the Tatas have a brand advantage?
I think we have a tremendous brand advantage.
The Tata Group has this long-term goal of being the biggest household name in the country. How can customer loyalty be built when others are also vying for this position? What should the group do to ensure that the difference remains in the eyes of the customers for years to come?
Being a household name is very much a function of the products you sell. Having said that, a highly respected brand is what I would like to see the Tatas becoming, with consistently high quality, and a constant attempt to refresh and improve our products so that they are at the leading edge, rather than followers of other products. We have to ensure that our products are genuinely appealing to customers and that we service our customers well.
What are some of the challenges companies face with respect to customer acquisition and retention?
I believe a fundamental change of outlook is necessary. In terms of their products or business lines, companies need to create products and strategies that are based on what they believe the market wants. Often we deliver products or work on strategies that are based on what we want.
People sometimes hide behind market surveys. If you introduce a new vehicle, for example, and the management cannot adequately determine what the market wants, the company is in trouble. Theoretically, the top managers of a company should take up the role of that ideal customer: they should be driving their competitors' vehicles, they should be driving the best-of-breed vehicles, and they should be making cost comparisons. They must have an idea of what they, as customers, expect from a Tata vehicle. And they should try to ensure that the product is within the price parameters a customer would pay for.
While a top manager should be the ideal customer, he should also be the greatest critic of his company's products. If the CEO compromises, or is only looking at the margins, then even if he is successful, the company's success will be short-lived. That is because the market will determine whose product works and whose product is successful. That, in turn, will bring everything else into play.
How important is market feedback vis-à-vis internal quality or service parameters?
Market feedback is very important, but it has to be stripped of its colour. You have to be able to strip away the vested interest or the bias that sometimes comes in. You have to view it objectively, not defensively.
How do you sensitise employees to the value of the brand?
Firstly, I don't think you can sensitise employees, in the sense that your product has to be successful, and you have to have pride in that product. You may say that a product cannot be successful unless you create a sense of pride in your employees. I think that there is an issue of involvement: employees at all levels should feel motivated and committed to making a product successful. The shop floor needs to be motivated too. They need to feel that they are part of what the companies do.
What would you like to see done?
I think managers should talk about the new products that they are in the process of launching and give all employees a sense of involvement.
Very often in companies, when you see a new product or a new project, a sense of belonging is created. Employees wear badges, labels on their sleeves, special caps. Tata Steel did it quite effectively with Project Gopalpur. It created a cadre of people who were all excited about the project. Tata Steel tends to do that from project to project, which is good.
In these times of economic change, what advice would you give CEOs to enthuse their employees about creating value for shareholders and customers?
We need to make it our responsibility to expose employees to the company holistically. They need to recognise the need to earn the return for the person who has invested in their company. This kind of awareness can perhaps be built best by moving people into positions where they have to face different constituents.
I often tell some of my colleagues: "You don't have to face the shareholders when you make a loss. I do. Maybe you should stand up one day and face the shareholders for what you've deprived them of." Selectively involving people in shareholder meets, investor conferences and dealer meets will help in exposing them to different situations that they may face. We have been doing that at Tata Engineering. We have been sending plant people to customer-service operations to enable them to see the different kinds of problems people face in the field. Otherwise, it is their production and somebody else's problem. Employees have to believe that they are responsible for the company.
How do you create that culture, that sense of belonging? Is it something that can be done? Does it have to be inbuilt?
I think it is something that has to be created by the CEO of the company. The CEO has to be concerned with all kinds of things, not just the bottom line, production figures or the company's image. A holistic concern should be created.
What attributes should a CEO have in order to be passionate as well as able enough to enthuse his employees, to create that feeling of commitment?
I do not think you can ever teach a CEO to do that. The CEO has to be compassionate, fair, self-critical and humble, and yet have the tremendous drive it takes to make his company the best there is. An ideal CEO is not found everywhere. One way to do this is to benchmark him against his targets and against the best performers in his industry, and hope that this does not demoralise him, but, rather, that it makes him strive to do better.
One very important initiative is the Tata Business Excellence Model and Tata Quality Management Services exercise we have been undertaking, where we have been talking about the quality of products and the quality of the manner in which operations are run and having a scorecard for that. I think this is a process that will yield results over time.
In terms of customer acquisition, with so many competing brands and products available today, what is, or should be, the Tata differentiator?
Very often it is said about several companies that they take a lot of pains to make a sale. However, once they get the order, customers cannot even get anyone to answer their calls. I would like the customer to say that the next product he buys will also be a Tata product because of everything that he experienced. That is really what customer retention is about.
You cannot afford to have a customer say, "I made a mistake. I'll never buy another product from this company." You cannot even afford to have him say he is merely happy with your product. It needs to go further than that. He has to say, "The next product I buy will be a Tata product."
In my own case, any consumer electronic product that I buy will be a Sony, because there are so many things about the company's products that I admire or respect. If somebody introduces a product that Sony does not have, I will probably wait for Sony to bring out that product before I buy it. And Sony is not even contacting me. That is customer retention.