Introduction

Caterpillar Corporation is a robust company of over 65,000 employees that produce and support Caterpillar machines and engines that make progress possible around the world – every day. It provides a wide range of products that are used in many different industries. Despite the fact that caterpillar is largely a product firm, the company offers several services that complement its product. Largely these service consist of several services that refurbish used machine and engine component into “ like new” condition, financial and insurance services for equipment owners, equipment rental, logistics services.

In accordance to their Vision 2020 initiatives, they decided to implement a more customer centric approach by providing customers integrated business solutions termed Customer Service Agreements.

Unless it was their mining division or clientele was a key account, Caterpillar’s customer relationship strategies were inconsistent and negligible.

The dealers and salespeople were not required to sell the CSAs since they got no particular incentives doing the same. The customers were least aware of the CSAs and often would let their agreements expire. They failed to realize the benefits that caterpillar provided.

A major problem was that the buyer of the products was not the user of the products or sometimes not the user in direct contact with the product and therefore was perhaps not aware of the benefits that were provided to the clients with their heavy equipment.

Discussion Questions:

1. What else do you need to learn in the Listening Gap (Gap 1) about customer needs and expectations? LACD had general information from the customer value surveys, but this information did not tell them what service features customers expected in the CSAs. What were they and how could they find out? In particular, how could they find out what they needed to know to establish standards in the Design and Standards Gap (Gap 2)?

Caterpillar requires knowing the needs expectations of the service required by the users of the machines. To know this, Caterpillar could establish programs were salespeople could interact with those people face to face and ask of them what they require. They could provide reminders of the service date and what all extra benefits can be acquired or gained, remind them regularly of the benefits to sustain the life of the machine, and how it will extend a customer’s profitability in their business.

Should they offer different CSAs to the different segments of general construction? What would that imply for research, standards, and implementation?

Yes because caterpillar, product lines was so diverse, its customer varied greatly in sizes and requirement. For its very largest customer – typically those who purchased mining and construction equipment – dealers provides customized and full service, CSA for these customer could be highly customized in content, length, cost and demonstrated significant benefits regarding the risks and costs of unplanned machine downtime and resulted in high level of customer loyalty.

For the smaller customer company provide Preventive maintenance agreement ( PM CSAs).

What standards and measures should be set in the Design and Standards Gap (Gap 2) to deliver to customer expectations? How formal should they be? How should LACD create and design the new CSAs? How should they get everyone in the dealerships to learn about them and get on board to deliver them?

Currently very few CSAs were created, branded , positioned, and marketed based upon the timing, piece of mind risk reduction relationship , or convenience they provide to the customer. Secondly CSAs were created in an ad hoc manner, they varied across the dealerships and often across customer within dealership. With this variability, it was never quite clear what had been promised to customer and expectation often were not met. Thirdly while machine salesperson felt very comfortable selling the attribute and benefits of the heavy equipment, they were unsure about what to offer and promise in thee CSAs,