Fotof Company Strategy

Context
You are a team of interns at a consulting company. The company has been engaged by
Fotof to improve their business operations. A business analyst has prepared the
following detailed report on the existing process for handling customer orders, and
your manager has outlined the tasks you are to complete. As an intern this is your
opportunity to put into practice some of the BPM principles you are currently studying.
About Fotof
Fotof provides photography services in the fields of family photography, personal
event photography (e.g. weddings and party photography) and commercial
photography (mainly corporate events photography). With a portfolio of 25 photo
studios, Fotof Studio is the largest chain of photo studios in Northern Europe. Fotof's
2018 turnover was 17.6 Million euros, out of which 25% from sales to corporate
customers and the rest from private customers. One of core process of Fotof is its
order handling process, which goes all the way from the moment a customer makes a
booking for a photo shooting session, through the order placement, and up to the
moment the customer pays and obtains the ordered pictures. In 2018, Fotof received
10K orders from corporate customers, and 80K orders from private customers.
Order Handling Process at Fotof
The process starts when a customer makes a booking for a shooting session at a photo
studio. A booking can be done via phone or via e-mail addressed directly to a specific
photo studio. The request is handled by a customer service representative at the photo
studio. Each studio employs two customer service representatives: a senior one, who is
also manager of the studio, and a junior one. The customer service representative
enters the details of the booking into the photo studio information system. The
entered data includes: Customer data (full name, phone number, e-mail, and if
applicable company name, company address and company registration number for
invoicing purposes); Booking data (start of the session, duration); Shooting type
(family, personal event, or corporate event); Shooting location, either in-studio or on-
location (i.e. a specific place outside the studio); Special equipment required (e.g.
lighting equipment).
The booking is assigned to one of the photographers of the studio (there are on
average 3.5 photographers per studio). On average, an in-studio session lasts 45
minutes, while an on-location session lasts 3.5 hours (including transportation time).
20% of private customer shootings and 100% of corporate customer shootings are on-
location. After a photo shooting session, the photographer uploads the pictures to a
file server. Eventually, a technician (2 technicians per studio on average) cleans up the
pictures by deleting duplicates and failed shots. Later, the technician edits the
remaining shots and arranges them into a photo gallery using a dedicated photo studio

software tool. Once the gallery is completed, the customer is notified by e-mail. The
notification includes an URL where the customer can find the pictures. Customers can
view the gallery; select the pictures they wish to order in print (and how many copies);
and those they wish to get in digital copy (full resolution). Customers can also annotate
a selected picture in order to ask for additional editing (special requests). When placing
their order, customers can specify whether they will pick-up the printed copies at the
studio or have them delivered by post. In the latter case, a shipment fee is added to
the order. Customers can also enter a discount code when placing their order. Fotof
offers discounts of between 10% and 20%. Around 10% of orders are placed with a
discount, and the average discount is 15%. Once the customer has placed an order, a
technician performs additional editing (if required by the customer). In the case of
special requests, the technician may need to communicate with the customer by e-
mails or phone to clarify the request and to determine how to fulfill it, and whether
the special request will entail an additional fee and how much. If printouts are
required, the technician prints them out, puts them in an envelope and drops them in
the studio's counter. Digital copies are placed on a Dropbox folder with the order
number (but the link is only shared with the customer after payment). Once the
pictures are ready, a customer service representative determines the amount to be
invoiced (including additional fees for special requests, and discounts), produces the
invoice and sends it to the customer. The customers can pay their invoice by bank
transfer or directly at the studio, for example when they come to pick up printed
copies. When a customer service representative detects that the payment has arrived
by bank transfer, they mark the corresponding order as paid. If required they pack and
send any printouts orders for postal delivery and, if applicable, they send the Dropbox
link with digital copies to the customer. Pictures from a shooting session are kept in
the corresponding gallery for up to 30 days (a reminder is sent to the customer 5 days
before the expiry date). If a customer has not placed an order past this period, an
invoice is sent for the minimum billing amount (see below). Invoices are payable within
7 days of their issue. A customer service representative sends a reminder in case they
detect an overdue invoice. Similarly, a customer service representative sends a
reminder if they detect a customer has not collected printouts more than 7 days after
these have been ready for pickup.
Bookings or order cancellations can occur in three ways: (i) prior to the shooting
session (booking cancellation); in case of no-show (the customer did not show up to
the shooting session and did not re-schedule it); or (iii) after the shooting, if the
customer does not order any pictures within 30 days. Cancellations prior to the photo
shooting session do not incur a fee. Cancellations due to no-shows do not attract a fee
if they are in-studio; they attract a fee of EUR 50 if they are "on location". In case of a
no-show, the customer may re-schedule the booking to a later day but the no-show
fee for on-location shootings is charged to the customer in any case. If a customer
does not order any picture after a shooting session, the customer is invoiced a photo
shooting fee of EUR 120 for in-studio sessions (EUR 160 for on-location one).

Stakeholder analysis
Customer viewpoint.
In 2018, customer satisfaction stood at 80% (declining from 85% in 2017) and net
promoter score at 70% (declining from 80% in 2017). Common customer complaints
exist in regards to: (i) turnaround times between the photo shooting session and the
availability of pictures for review, as well as the turnaround times for delivery of digital
copies and printouts; (ii) turnaround times for resolving customer complaints
particularly with regards to perceived defects in the delivered digital and printed
copies; (iii) mishandled or forgotten orders or special requests. Customers often make
changes to their orders or additional special requests via phone or e-mail and these
changes/requests are sometimes not recorded (or recorded incorrectly) in the order
management system. Changes to orders are currently handled manually.
Staff viewpoint.
Staff satisfaction with the current process is low. Over 60% of customer service staff
consider that their job is stressful. The staff turnover rate overall is at an all-times high:
20% of staff involved in the process as of 1 January 2018 had resigned by 31 December
2018, up from 10% the year before, with more than 80% of the resignations coming
from customer service staff and the remaining from photographers and technicians.
The average Cost-To-Company (CTC) of a photographer at a Fotof studio is 41K per
year (35K for technicians and 37K for customer service staff). The CTC at Fotof is
generally in line with industry averages. The company additionally employs 20 staff at
the company headquarters at an average CTC of 46K.
Interviews with staff have highlighted the following issues in the process:
– Customer service staff perceives that appointment management is too much
time-consuming. Customers sometimes call or e-mail multiple times to find a suitable
appointment time. Customers also call frequently to change their appointments for
shooting sessions or to cancel their session. About 1% of corporate orders result in a
cancellation prior to the shooting, while 5% of private orders are cancelled prior to the
shooting.
– The late-show and no-show rates for appointments are rather high: 10% late-
shows for in-studio sessions, 2% for on-location sessions, 3% of no-shows for in-studio
sessions, and 1% for on-location.
– There are numerous customer enquiries via phone and e-mail (on average 3
per order, in addition to booking-related calls or e-mails), be it to enquire about the
status of orders or deliveries, to make changes to the order, to discuss special
requests, pricing questions, as well as to report complains with received pictures.
There are also numerous inquiries regarding shipment and delivery (shipment via
traditional postal service is a cumbersome process and the delays it causes are a visible
source of inquiries and complaints).

Management viewpoint.
Fotof company strategy for the years 2019-2021 is focused on revenue growth. The
company seeks to achieve a revenue increase of 50% by end of 2020 relative to 2019.
This growth should be achieved organically, meaning via growth of the existing
business, without company acquisitions and without opening additional retail outlets.
To achieve this goal, Fotof's management is receptive to ideas to improve customer
service and to expand the range of added-value services, such as offering slideshows to
customers of personal events, creating customized artistic galleries, allowing
customers to easily order reprints of photos, etc. Fotof's management perceives that
additional revenue could come in great part from wedding photos, parties and
ceremonies and targeting kindergarten and school events. At present only the
customer who initiates the booking can place orders. But in the case of personal
events and if the customer consents, there is an opportunity to sell to other event
participants. Fotof's management also perceives that faster cycle times could also help
to enhance sales. Sending more frequent reminders to customers to place their order,
or re-organizing work to reduce cycle time are options that could be considered. In any
case, the manager is very sensitive to ideas on how to create capacity to create or
enhance existing revenue streams, while making sure that the existing revenue
streams remain strong. Avoiding customer churn is a major concern as well given that
the Cost Acquisition Cost (CAC) for brand new customers is in the order of 50 euros,
versus a customer lifetime value (CLV) of 250 euros. Improving retention rate and, if
possible, reducing CAC are key strategic drivers. Fofot’s management believes that
cross-selling and up-selling are crucial to achieving the company’s objectives.

 

 

 

 

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