Chapter 4

1 THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

Chapter 4Chapter 4

Focusing on Customers


Importance of Customer Satisfaction and Loyalty

• “Satisfaction is an attitude; loyalty is a behavior”

• Loyal customers spend more, are willing to pay higher prices, refer new clients, and are less costly to do business with.

• It costs five times more to find a new customer than to keep an existing one happy.


American Customer Satisfaction Index

• Measures customer satisfaction at national level

• Introduced in 1994 by University of Michigan and American Society for Quality

• Continual decline in index from 1994 through 1998 with a small improvement into 2000 suggests that quality improvements have not kept pace with consumer expectations


ACSI Model of Customer Satisfaction

Perceivedquality

Customercomplaints

Perceivedvalue

Customer satisfaction

Customerexpectations Customer

loyalty


Creating Satisfied Customers• Expected quality

– true customer needs and expectations– what the customer assumes will be received from the

product

• Actual quality– outcome of the production production and what is

delivered to the customer

• Perceived quality– The difference between actual quality and expected

quality causing unexpected satisfaction or dissatisfaction


Customer-Driven Quality Cycle

measurement and feedback

Customer needs and expectations (expected quality)

Identification of customer needs

Translation into product/service specifications (design quality)

Output (actual quality)

Customer perceptions (perceived quality)

PERCEIVED QUALITY = ACTUAL - EXPECTED


Leading Practices (1 of 2)

• Define and segment key customer groups and markets

• Understand the voice of the customer (VOC)

• Understand linkages between VOC and design, production, and delivery


Leading Practices (2 of 2)

• Build relationships through commitments, provide accessibility to people and information, set service standards, and follow-up on transactions

• Effective complaint management processes

• Measure customer satisfaction for improvement


Key Customer Groups• Organization level

– consumers– external customers– employees – society

• Process level– internal customer units or groups

• Performer level– individual internal customers


Identifying Internal Customers• What products or services are produced?

• Who uses these products and services?

• Who do employees call, write to, or answer questions for?

• Who supplies inputs to the process?


AT&T Customer-Supplier Model

Requirementsand feedback

Requirementsand feedback

Your Suppliers

YourProcesses

YourCustomers

Inputs Outputs


Customer Segmentation

• Demographics

• Geography

• Volumes

• Profit potential


Key Dimensions of Quality (1 of 2)

• Performance – primary operating characteristics

• Features – “bells and whistles”

• Reliability – probability of operating for specific time and conditions of use

• Conformance – degree to which characteristics match standards


Key Dimensions of Quality (2 of 2)

• Durability – amount of use before deterioration or replacement

• Serviceability – speed, courtesy, and competence of repair

• Aesthetics – look, feel, sound, taste, smell


Key Dimensions of Service Quality• Reliability – ability to provide what was

promised• Assurance – knowledge and courtesy of

employees and ability to convey trust• Tangibles – physical facilities and

appearance of personnel• Empathy – degree of caring and individual

attention• Responsiveness – willingness to help

customers and provide prompt service


Kano Model of Customer Needs

• Dissatisfiers: expected requirements

• Satisfiers: expressed requirements

• Exciters/delighters: unexpected features


Customer Listening Posts

• Comment cards and formal surveys

• Focus groups

• Direct customer contact

• Field intelligence

• Complaint analysis

• Internet monitoring


Tools for Classifying Customer Requirements

Affinity diagram Tree diagram


Customer Relationship Management

• Accessibility and commitments

• Selecting and developing customer contact employees

• Relevant customer contact requirements

• Effective complaint management

• Strategic partnerships and alliances


Measuring Customer Satisfaction

• Discover customer perceptions of business effectiveness

• Compare company’s performance relative to competitors

• Identify areas for improvement• Track trends to determine if changes

result in improvements


Designing Satisfaction Surveys

• Determine the purpose of the survey

• Who should conduct the survey?

• Define the sample frame

• Select the appropriate survey instrument

• Design the reporting format and the data entry methods


Example: The Olive Garden• The Lobby

– Was the lobby staff friendly and did they welcome you to the restaurant?

– Were you seated in a timely, efficient manner?

• The Table Area– Was your table area clean when you

were seated?

• The Server– Was your server attentive and there

when you needed him/her?– Was your server knowledgeable and

able to answer your questions about our food and beverages?

– How was the pace of your meal?

• The Food– How would you rate the taste of

your food?– Please rate the temperature of your

food, hot food being piping hot.– Please rate your visit on the value

for the money.– Overall, how would you rate your

visit– Would you recommend this Olive

Garden to a close friend or relative?

Scale: 1 = poor ….5 = excellent


Example: The Olive Garden

• Open-ended questions:– What one thing did you like most about your

visit?– What one thing could we do to improve your

experience at The Olive Garden?

• Survey form provides address, 800 number, FAX, and TDD number for hearing impaired


Analyzing and Using Customer Feedback

• Determine trends in satisfaction measures

• Link satisfaction data to internal processes

• Develop improvement plans based on results


Performance-Importance Analysis

Performance

Importance

Low High

Low

High

Who cares? Overkill

Vulnerable Strengths


Difficulties with Customer Satisfaction Measurement

• Poor measurement schemes• Failure to identify appropriate quality

dimensions• Failure to weight dimensions appropriately• Lack of comparison with leading

competitors• Failure to measure potential and former

customers• Confusing loyalty with satisfaction


Customer and Market Focus in the Baldrige Criteria

The Customer and Market Focus category examines how an organization determines requirements, expectations, and preferences of customers and markets; and how it builds relationships with customers and determines the key factors that lead to customer acquisition, satisfaction, and retention, and to business expansion.

3.1 Customer and Market Knowledge3.2 Customer Relationships and Satisfaction

a. Customer Relationshipsb. Customer Satisfaction Determination

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Chapter 4