Chapter 4

Focusing on Customers

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

Importance of Customer Satisfaction and Loyalty

Satisfaction is an attitude; loyalty is a behavior Loyal customers spend more, are willing ot 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.
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, 2002 South-Western/Thomson LearningTM

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

ACSI Model of Customer Satisfaction

Perceived quality
Perceived value Customer expectations Customer complaints

Customer satisfaction Customer loyalty

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

Customer-Driven Quality Cycle

Customer needs and expectations (expected quality) Identification of customer needs Translation into product/service specifications (design quality) Output (actual quality) Customer perceptions (perceived quality)
measurement and feedback

PERCEIVED QUALITY = ACTUAL - EXPECTED

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

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

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

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

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

Key Customer Groups

Organization level
consumers external customers employees society

Process level
internal customer units or groups

Performer level
individual internal customers
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, 2002 South-Western/Thomson LearningTM

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?

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

AT&T Customer-Supplier Model

Your Suppliers

Inputs

Your Processes

Outputs

Your Customers

Requirements and feedback

Requirements and feedback

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

10

Customer Segmentation
Demographics Geography Volumes Profit potential

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

11

Key Dimensions of Quality

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 Durability - amount of use before deterioration or replacement Serviceability speed, courtesy, and competence of repair Aesthetics look, feel, sound, taste, smell
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, 2002 South-Western/Thomson LearningTM

12

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

13

Kano Model of Customer Needs

Dissatisfiers: expected requirements Satisfiers: expressed requirements Exciters/delighters: unexpected features

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

14

Customer Listening Posts

Gathering Customer Information

Comment cards and formal surveys Focus groups Direct customer contact Field intelligence Complaint analysis Internet monitoring

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

15

Tools for Classifying Customer Requirements

Affinity diagram Tree diagram

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

16

Customer Relationship Management

Accessibility and commitments Selecting and developing customer contact employees Relevant customer contact requirements Effective complaint management Strategic partnerships and alliances

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

17

Measuring Customer Satisfaction

Discover customer perceptions of business effectiveness Compare companys performance relative to competitors Identify areas for improvement Track trends to determine if changes result in improvements

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

18

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?

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?

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?

Scale: 1 = poor .5 = excellent

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

19

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

20

Performance-Importance Analysis
Performance
Low High

Low

Who cares? Vulnerable

Overkill Strengths

Importance
High

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

21

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

22

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 Knowledge 3.2 Customer Relationships and Satisfaction a. Customer Relationships b. Customer Satisfaction Determination

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

23

Customer Focus on ISO 9000:2000

Management Responsibility section (senior leadership) Product Realization section (feedback) Measurement, Analysis and Improvement section (customer satisfaction)

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

24

Customer Focus of Six Sigma

Identification of critical to quality (CTQ) characteristics Develop a better measurement and control system Provide necessary monitoring and control Improve the design and delivery of CTQs identified through voice of the customer processes
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, 2002 South-Western/Thomson LearningTM

25