1 THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
Chapter 4Chapter 4
Focusing on Customers
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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.
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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
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ACSI Model of Customer Satisfaction
Perceivedquality
Customercomplaints
Perceivedvalue
Customer satisfaction
Customerexpectations Customer
loyalty
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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
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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
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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
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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
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Key Customer Groups• Organization level
– consumers– external customers– employees – society
• Process level– internal customer units or groups
• Performer level– individual internal customers
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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?
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AT&T Customer-Supplier Model
Requirementsand feedback
Requirementsand feedback
Your Suppliers
YourProcesses
YourCustomers
Inputs Outputs
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Customer Segmentation
• Demographics
• Geography
• Volumes
• Profit potential
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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
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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
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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
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Kano Model of Customer Needs
• Dissatisfiers: expected requirements
• Satisfiers: expressed requirements
• Exciters/delighters: unexpected features
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Customer Listening Posts
• Comment cards and formal surveys
• Focus groups
• Direct customer contact
• Field intelligence
• Complaint analysis
• Internet monitoring
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Tools for Classifying Customer Requirements
Affinity diagram Tree diagram
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Customer Relationship Management
• Accessibility and commitments
• Selecting and developing customer contact employees
• Relevant customer contact requirements
• Effective complaint management
• Strategic partnerships and alliances
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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
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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
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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
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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
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Analyzing and Using Customer Feedback
• Determine trends in satisfaction measures
• Link satisfaction data to internal processes
• Develop improvement plans based on results
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Performance-Importance Analysis
Performance
Importance
Low High
Low
High
Who cares? Overkill
Vulnerable Strengths
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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
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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