Customer focus:

How big companies identify their customers

Nur Aini Masruroh

http://aini.staff.ugm.ac.id/ ; Email: aini@ugm.ac.id; n_masruroh@yahoo.com

Models of excellence
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Xeroxs business products and systems

` One of two Xerox corporation business
` Makes more than 250 types of document-processing equipment
` Employs nearly 35,000 people
IBM Rochester
` Manufactures intermediate computer systems, nearly a half-million of
which have been installed world wide
` Employs 7,000 people
Staples
` An office products chain, provides office supplies, computers,
printing, electronic, furniture, etc
` Employs more than 7,000 people and has 200 stores

What they said

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The new business management model is customer driven

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In the past, all we did was monitor customer satisfaction, but now
customer satisfaction drives all we do (IBM Rochester)
The better you understand your customers, the more likely you are to
satisfy their requirements (The Louisville Redbirds)
We are always trying to understand what our customers want,
measuring their response to Staples initiatives. We know what
marketing contacts, what merchandise, what price levels, what services
our customers care most about and are most responsive to (Staples)
Our goal is to find the best synergy between where the customers
have problems and where Xeroxs competence lies (Xerox)

Getting close to customers, talking and listening, checking,

verifying, testing the dialog is endless and priceless. There is
no other way to know your customers

Determining customer requirements:

IBM Rochester
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Setting up the organization to gather customer information is

hard work, but your business changes so fast you could be out
of business before you realize customer satisfaction has gone
in the ditch

What IBM do:

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Surveys its customers quarterly customer satisfaction

Product specific survey; talking to customers of a particular product
after anywhere from 90 days to a year after purchase
Call all its US customers 90 120 days after installing its product
different from customers on product specific survey
Has a closed-loop process for responding to customer complaints,
feeding the complaint information into its customer management data
base

Determining customer requirements:

IBM Rochester (contd)
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What IBM do (contd)

` The marketing team conducts a win/lose analysis for every
competitive bid
` Hold customer roundtables, bringing in present and potential
customers to discuss their requirements. The roundtables are held
annually for worldwide customers and every 3 or 4 months for
regional focus group
` Has a competitive analysis team that buys, uses, and studies
competitors products
` It validates all its customer information with independent surveys
and double-blind surveys conducted by its marketing department

Determining customer requirements:

Xerox
`

Xerox collects customer information from a variety of

sources, including:
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40,000 customer surveys every month

Regular focus groups in which Xerox is NOT identified as the
sponsor
Ongoing customer panels with which the company shares idea
and asks for input
Roundtables with salespeople to determine problems and
solutions
Market research focused on potential product opportunities
Collaborative development with customers in which Xerox
installs prototypes at a few customer locations to see how the
prototypes meet their needs

Determining customer requirements:

Xerox (contd)
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Xerox collects customer information from a variety of

sources (contd)
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Competitive analysis
Discussions with industry experts
Conjoint analysis with customers of specific product and
service features
Problems and usage in real time by 30,000 copiers linked by
phone lines to Xeroxs service offices
Collaboration with co-suppliers (such as computer hardware
and software developers)

Determining customer requirements:

Staples
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Uses independent research firm to survey 5,000 customers and

non-customers each year, asking them who they buy from and why
Customer orders, either of the 5,500 items carried in its
superstores or the 25,000 catalog items, indicate what types of
products customers are currently buying.
Staples distributes the data within the company weekly
Maintains constant communication with its store managers, who are
encouraged to talk to customers daily
Staples uses database to identify sites for new superstores by
determining what kind of people are likely to buy at a Staples store
The data are also used to set up the new stores, analyzing key data
to anticipate buying trends and type of services that will appeal to
potential customers in the area

Using customer satisfaction to drive business:

Xerox
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Aggregate all the customer information it gathers in a database that

is then used to generate customer satisfaction (CS) level and trends
updated weekly and reviewed during the regular management
meetings
The CS data are used to identify gaps and develop action plans that
address them
The levels and trends are also communicated to employees
Control charts for overall CS and the supporting internal process
measures are prominently displayed on walls and in work area
throughout organization

Using customer satisfaction to drive business:

Xerox (contd)
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Results:
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Xeroxs overall CS has improved more than 40% from 1985 to

1993
In the category of low-volume copiers Xerox improved 33%
compared to a 16% for its competitors
In the category of both mid-and high-volume copiers, Xerox is
the leader

Using customer satisfaction to drive business:

IBM
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Track CS in 6 general categories (customer satisfiers):

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Administration
Marketing/sales offerings
Technical solutions
Delivery
Maintenance and service support
Image

It is not the business of making computers or servicing

computers or selling solutions; it is in the business of
satisfying customers better than anyone else

Concluding remarks
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In the new management model, business begins with a

customer focus and ends with customer satisfaction,
which are two sides of the same coin
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The customer requirements that you focus your business on

are the same requirements you measure satisfaction on

Changes in customer satisfaction or requirements trigger

changes on how you do business, which affect customer
satisfaction