Data Services at Armistead
Autor: Jannisthomas • June 20, 2018 • 2,811 Words (12 Pages) • 519 Views
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However, frequent visits allow staff to interact with its customers face to face helping to build and develop positive working relationships. Also, since Data services system can be used in many ways, such as calculating labour costs or recording sales more efficiently for the fast food industry, knowing how your customers use it, not only increases personal knowledge but also helps serve customers better.
Although, in order to serve the needs of the customers staff will have to travel to perform such functions and so each year $1,200,000 is spent to cover transportation fees. This means on average $2,200,000 is spent to provide such a thorough service. To reduce this cost Data Service Incorporated’s service agents could decrease the number of visits they make. But if the service agents visit less the customers may feel like they are being treated unfairly and that the company only cares about earning a profit and nothing else, tarnishing their customer service reputation. A recent article stated that “When customers perceive that they are receiving better quality service for their money, they believe they are receiving “good value”, which increases their loyalty to the service provider” (Bolton et al., 2000).
Table 2
1.5 months/visit
($000’s)
2 months/visit
($000’s)
3 months/visit
($000’s)
Sales
8,000
8,000
8,000
Expenses
Computer
2,000
2,000
2,000
Service Agents
1,000
1,000
1,000
Sell and General management
694
541
388
Data control
600
600
600
Programming
520
520
520
Data
400
400
400
Data Entry
2,000
2,000
2,000
Travel
967
851
734
Forms
400
400
400
General and Admin
480
480
480
Rent and depreciation
360
360
360
Profit/(loss)
(1421)
(1152)
(882)
To continue offering quality customer service whilst lowering costs and therefore increasing profits or in this case reducing a loss, rather than visiting once a month, each service agent could visit once every one and a half months, two months or every three months. The table above illustrates the effects of executing these three options. If we continue to visit each customer once a month, then the annual costs total $2,200,000 in contrast to $1,388,236 if we visit every 2 months which is an improvement of approximately 37%. But if only 4 visits are made each year, then the overall cost decreases even more to $1,122,352. Out of these options, reducing the number of visits to 3 months seems the best option. This is re-emphasised shown by the comparative income statement for each scenario above.
Table 3 shows that if less visits are made, the loss figure improves. For example, if visits are made every one and a half month it makes a loss of $1421 in comparison to a smaller loss of $882, if it makes 4 visits a year. However, if less visits are made specifically to analyse the system, then staff will have to be more efficient. As a result additional costs may be incurred associated with training staff so they become highly skilled, and therefore more efficient. It does however, remain one option for Data services to implement in order to become more profitable and therefore increase its chances of staying open.
Alternative 2: Shut down Data Services
Table 3
Continue Data Service Incorporated ($000’s)
Delete Data Service Incorporated ($000’s)
Sales
8,000
0
Less Variable Expenses
(8,800)
0
Contribution Margin
(800)
0
Less fixed expenses
Computer
(1,600)
(1,600)
Rent, Depreciation of office equipment
(360)
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