Partner power

Power plant manufacturer Wartsila is using customer forums for much more than just building confidence

Customer retention policies always follow a golden rule "" have a one-to-one interaction with your customer. This not only builds consumer confidence, but also helps in client confidentiality.

However Wartsila, the manufacturer of captive power plants, bypassed the logic of individual attention. And the result was not a short circuit.

In September 2003, the company launched an initiative called "Partnership Forum" where 20 to 25 customers from a region came under one roof and discussed issues regarding the power plant maintenance and operational efficiency. Nothing unusual about this, except all customers came under one roof.

"It was a risk because you would expose one customer's problem to another and customers could lose confidence in the company," says S P Marathe, head, human resources, Wartsila India.

Three sessions later, (the forum is held every six months) the fear of a customer backlash has faded. Further, the sessions have moved away from merely being problem-solving sessions to become a platform that gives the company ideas to develop new products like a fuel economy kit or launch new services and so on.

Even customer participation is no longer restricted to complaints. The first session, for instance, threw up 400 to 500 individual issues. By the third session (September 2004), Wartsila executives point out that 75 per cent of the forum was dedicated to establishing best practices in operating power plants.

But even as Wartsila provided its customers a platform to voice their opinions, it had to ensure that the session did not degenerate into a forum for bad mouthing the company.

So the company presented the forum as an opportunity where the customer became a partner in the proceedings. As Managing Director Banmali Agrawala puts it, "We worked along with customers and got ideas from them to solve problems."

Adds Rakesh Sarin, head, service, Wartsila, who was the brain behind the forum, "The whole programme required steering the mindset of the customer in the right direction."

Hence the Partnership Forum began with a promise of identifying customer needs and getting feedback on areas for improvement.

Importantly, the company did not get all its 200-odd customers together at the same time. Instead it split the customer base into smaller groups of around 25 customers in each session and ran the forum at nine locations across the country.

The company claims that smaller groups helped in ensuring that all customers got enough attention. And to make customers feel that their voice was being heard, each customer issue was captured and projected on screen.

Then, the company came out with a quarterly bulletin covering the developments at the partnership forums; this newsletter was circulated them to all customers.

It was, however, important to ensure that the proceedings in the forum were not forgotten. So all the general issues that had cropped up were printed in the bulletin along with a deadline for resolving the issue. This was also followed up in the future issues.

"By printing it in the bulletin we had burnt our bridges about forgetting the issue," says Agrawala. The bulletin also became useful in sharing best practices across the nine regions where the forum was held.

But why did Wartsila need a partnership forum? The main reason was to improve "operating issues", says Sarin. And operating efficiency at all times was critical to the captive power plants that Wartsila supplied to varied industries ranging from sugar and cement to glass.

These could not afford a breakdown or stoppage "" in some cases the power plant had to run continuously for a stretch of six or seven months. A failure at the captive plant would mean that customers would have to draw power from the grid, significantly increasing manufacturing costs.

Then, most customers had different efficiency levels. For instance, certain customers managed a high degree of fuel efficiency in their power plants, while others had a low degree of efficiency.

Concentrating on this was important because 80 per cent of the running costs for a power plants is fuel costs. Further, only 42 per cent of the fuel that was used was actually converted into fuel.

The rest was wasted as heat. So Wartsila used the forum to develop a benchmark of efficiency for its customers. The company also associated with customers and developed a fuel economy product.

After testing the product at a customer's site for eight months (from November 2003 to June 2004) the fuel economy product managed to save 68,440 kg of fuel, worth Rs 9 lakh. "This was a co-creation of opportunity," says Sarin.

It has also helped company officials in developing new services as they got a peek into specific customer needs. For instance, customers were willing to pay a little extra to cut down overhauling time. So Wartsila managed to ramp up its overhauling time from 11or 12 days to a week.

The company claims that this resulted in huge savings for customers. In the case of a 6 MW power plant, for instance, customer would save approximately Rs 1 lakh a day.

The forum has also helped customers in ways that go beyond merely focusing on operations and maintenance of the power plant. For instance, Wartsila has a combined installed capacity of 2,800 MW (putting together the installed plants of all its customers).

Even Tata Power has an installed power generation capacity under 2,300 MW (source: Annual report 2003-04). So Wartsila could help its customers in procuring fuel at cheaper rates by negotiating on behalf of all of them.

Also, being the resident expert in running power plants, Wartsila is looking at other initiatives such as monitoring the quality of fuel being delivered to its customers and so on.

The Partnership Forums do not just mean just fewer problems for Wartsila's customers. "We also managed to enhance the domain of the value added business," says Agrawala.

For instance, manufacturing power plants is just half of the company's business. The rest comes from developing value-added products like the fuel optimiser or services like operating and maintaining customers' power plants by Wartsila's employees (nearly 25 per cent of its installed capacity is operated and maintained by Wartsila).

That proves once again, that customer relationships need not just translate to happy customers. They will pay you more too.