CUSTOMER RELATIONS

MANAGEMENT
Submitted to:

PROF: S GARIMELLA

ANALYSIS OF THE CRM STRATEGY OF

TOWNGAS
“Achieving competitive advantage through CRM”

SUBMITTED BY;

BUA VICTOR LEKU 10XPGDM05

ELENA KOLYADA 10XPGDM06

RANJITH ARUMUGAM 10XPGDM28

BRIJESH PANDEY 09/11PGDM14

OCTOBER, 2010
Company Background

A Hong Kong and China Gas Company Limited also called Towngas is considered as the main
piped gas distributor of Hong Kong and China. It is also considered as the oldest public utility in
Hong Kong and the first gas utility in the Far East.

The company was founded during 1862. As of now, it has more than 3,000 km of network of
pipeline, with an average of 85% of its economic reach. It supplies over 1.5 customers in the said
territory as at 2004. The main business of the company focuses on its production as well as
distribution of gas, together with the marketing of gas and other related appliances.

Aside from that, the company is also offering complete after-sales services. As part of the
corporate social responsibility of the company, it has diversified its services regarding the green
businesses such as the LPG filling stations as well as the operation of the landfill gas.

It has three Customer groups i.e. Residential, Commercial and Industrial Customers contributing
45%, 35% and 03% respectively of the company’s turnover and 17% is contributed by
equipment sales and other sources

The company has a well developed internal framework for effective management of the
customers, that is through a well sanctioned marketing Departments:-
- Retail Marketing managed by domestic house hold customers
- Commercial and Industrial marketing serviced restaurants, hotels and supermarkets
- Industrial and Project markets was responsible for residential project building and
accounts servicing for real estate development projects.

The company embarked on a wide range of growth and business strategies right from the 1990s
due to increasing competitions and the dire need to strengthen its relationship with the
customers.

Underlying reasons for a CRM Strategy

- Increase customers’ satisfaction

- Maximizing values through improving quality and or service and reducing costs and lead
times.

- Continuous quality improvement and enjoying competitive advantage

- Establishing Customer loyalty and ensuring their life time value.

- Transit from traditional utility company mindset to a market and customer focus
 - With better information at finger tips and best practices codified into business policies,
Towngas wants to optimize service for its customers and maximize revenue.

The CRM Strategies

- Total Quality Management (TQM)

- Business Process Re-engineering

- Superior Quality Management (1992) (A superior quality service group was formed,
quality service committee established for each department with diverse representation,
the team had the responsibility of identifying opportunities for constant growth

- Continuing Transformation (1996). (A top down approach, a continous improvement

group responsible for corporate wide re-engineering and restructuring was set up to
further the customer-oriented culture of the company).

CRM Approach

1. Market Survey (call centres to handle telephone calls)

2. Customer Database and Data Mining (customer profiling with detail specific
requirements of each customer, continuous update of data)

3. Internal Alignment

4. Customer services (24 hours customers’ service hotline in 5 languages, provided

opportunity to collect immediate feedback, the launching of the Customer Focus Team
(CFT) program allow instant interactions and immediate feedback, the customer centres,
and internets were also used to interact with customers. Monthly telephone survey was
conducted to gauge the level of customer satisfaction.

5. Internal Alignment. Shift from engineering focus to customer and market focus through a
corporate wide culture change. An Executive Committee was established to put in place
an effective management system

The Towngas shared value that addresses the needs of customers, shareholders and
employees were instituted as part of its internal strategy.

The Customer Value Formula also developed for employees to follow aimed at
maximizing these values through improving quality and or service and reducing costs and
lead times ( Customer Value = Quality x Service)

Lead time x Cost

 6. Product and service refinement – diversifying from distribution and sale of gas to selling
of contemporary gas appliances and other kitchen and bathroom accessories, and the
restaurant.

7. Sales and Marketing Strategies (targets the sophisticated segment of the customers- the
Towngas avenue is developed)- Focus on lifestyle marketing

8. The concept of Towngas Avenue

Mia Cucina (Kitchens by Towngas). Recently launched in its Tsim Sha Tsui shop.
- This new business concept offers exclusive kitchen layouts planned by professional
consultants specially brought together by Towngas.
- Mia Cucina’s services include design, supply and manufacture of high-quality cabinets,
as well as associated kitchen hardware and appliances. Riding on Towngas’ heritage of
cooking expertise and customer care, Mia Cucina provides a one-stop service tailored to
specific needs and personal lifestyles.

A relaxing oasis in which to enjoy delicious food and premium beverages.

- In addition to these wonderful eateries, Towngas Avenue also offers a DIY-cooking area,
ideal for holding parties where patrons can demonstrate their talent and share the fun
of flame cooking with friends and relatives. These innovations are just some ways
Towngas fulfills its mission to bring the concept of flame cooking to a wider audience.
 1.) Imaginative Chefs – We bring enthusiasm to all we cook
With constantly changing menus, Flame aims to provide a wide variety of cuisines for our
discerning customers. Signature dishes include a savory flame series, home-made organic pasta
and grilled items.

2.) Great Food and Service – We're here to indulge you

With contemporary dining spaces to enjoy quality food in a western-style setting, our restaurants
offer a relaxing ambiance to share with friends or intimate dining for that special occasion.

3.) Perfection and Passion – We're all about freshness and quality food
The best ingredients from different countries make for delicious flame-cooked food. An exciting
innovation is home-made pasta, the perfect complement for Mediterranean-inspired seafood and
meat prepared by chefs with attitude.

Impact of the CRM Strategies of Towngas

1. The development of customer value focus resulted in the alignment of corporate culture
and value, shifting from a traditional utility company mindset to a market and customer
focus and thus a more competitive organizations

2. Growth in residential customer base by 4.5% in 2002. Overall there is a 0.3% combined
growth (commercial and industrial customers inclusive) despite the changing
Government policies on housing.
 3. The overall turnover, gas sales and profitability showed a steady growth despite the
economic slow down and fierce competition (Exhibit 6 shown increase of HK$ Millions
458, 814, 274, 787, 157, 415, 809, 206 and 21 from 1993 to 2002).

4. Number of complementary letters increased to 1,334 in 2002 from 286 in 1999

representing a more than 5 times increase. Customers’ complaints dropped from 48 to 34
within the same period too.

5. The recognition of the CRM Efforts by Hong Kong Retail Management Association is
also one key success of the strategy. Towngas got a Customer Service Award in 2002.

6. Increased customer satisfaction rating and Employee productivity increased steadily over
the years from 1998 to 2002

Towngas’ future growth Strategies and Implications

1. Up gradation of the customer information system (CIS) into part of the larger operational
system to support the whole company

2. Ability to withstand pressure from any competitor. These strategies makes it very hard
for a new company planning to start implementing any CRM in a similar undertaking
since it is well entrenched and has build its system overtime and has a well documented
best practices to engineer its processes.

3. Whether a similar system is put in place by any of its competitors the differentiating
factor is life time relationship it has established with its clients and the corporate culture
in place.

4. The Shared Value Model shall form the basis for its future growth due to the holistic
approach enshrined in its design.