Xerox Corp. The Customer Satisfaction Program Case Solution

1. Problem Statement

Xerox was the pioneer in copier machines. However, when it sold licenses to other companies, competition grew. Due to the monopolistic culture prevalent throughout the organization, the company failed in the competition. The other companies offered low prices and high-quality machines, and Xerox’s market share began to decline. The company got restructured, and customer service (CS) became the top priority. This focus brought the company to a point that it could give a guarantee to its customers for its products and services. The management faced a decision regarding the type of guarantee to offer with the competition also offering guarantees.

2. Analysis

The restructuring of the company began in 1980 when the management realized that the industry had low growth and high competition. Xerox’s market share was declining because other products were capturing it quickly by offering superior products at a low price. The company started focusing on quality. The company’s operations were made more efficient to decrease the defects in the products. It established its focus on customer service as well. The customer service (CS) was previously considered as a cost center. The change to a profit center increased its efficiency as investments could be made in training these employees and hiring more to fulfill the CS requirements.

The product warranty given on Xerox products is also related to the problem at hand. Xerox offered a 3-years warranty of its 50 series which resulted in the product selling more than the other variants. The guarantee must, therefore, be such that includes the time factor. This example shows that the customers are impacted by time. The mid and low segments were those which had low-priced products. Therefore a guarantee that ensures that the customer derives more value than the price paid should be considered.

3. Strategic Alternatives

There are three alternatives available to the company. The response time guarantee, the performance guarantee, and a money-back guarantee.

The first alternative is a response time guarantee in which it would be guaranteed that a service person would come to the site within a specified time. The advantage of this is that the focus on time deduction would be reinforced through the organization. The results of the survey showed that the company’s reputation impacted the credibility of the guarantee offered. In this case, Xerox had a better reputation as compared to Pitney Bowes, the one company offering response-time.

The cons of this were that this guarantee was only restricted to the customer services and not the operations and production functions of the company. The other concern was that the company did not have the capability to guarantee on time. This would mean that the guarantee is not truthful and could hurt the reputation of the company. Also, the areas were distributed which meant the high cost of traveling, and greater response time for some areas making it complex.

The other alternative was a performance guarantee. This was the one that involved all functions of the company including production, operations, and customer service. The reason is that this guarantee is not defined. It is based on customer satisfaction that is based on all the functions of the company. The guarantee had the decision centered on the customer that made it more value-added.