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A Customer's Definition of Quality
Thomas O. Miller

What's the best way to get "close to the customer"? One company has developed a customer feedback system to drive product design, sales, service, and support functions in order to ensure better customer responsiveness.

Quality

Thomas O. Miller is vicepresident of Marketing and Customer Support at the Norand Corp., Cedar Rapids, Iowa.

is defined by the customer. A technically perfect product that does not meet customer expectations will fail, regardless of its innovation or quality. The challenge is to determine what customers want and whether they are satisfied with the company, its products, and its service. This is where organizations involved in otherwise well-conceived quality programs can stumble badly. Norand Corp., a manufacturer and marketer of portable computerized data collection systems and hand-held radio frequency terminals, with sales in 1991 of $100 million, has long prided itself on staying in touch with its domestic and international customers. It solicited input through customer meetings, periodic surveys, field visits, and sales reports. The results were carefully tabulated and tracked, and trends seemed gratifying: approximately 92% of all customers expressed positive comments. Nevertheless, the costs of servicing customers were increasing and customer satisfaction ratings were decreasing: employees were working harder and the company was spending more, but the efforts were not effectively meeting customer concerns. Norand's plight was not caused by a

lack of effort or data. In the company's early years, Norand had stayed in regular contact with customers, which was easier then because it had a relatively small base of 150 accounts. When occasional complaints were recorded, the appropriate sales and service specialists aggressively addressed the problems and documented the actions to correct them. At regular meetings of equipment users, the company's sales, marketing, and customer service executives probed attendees for feedback on products and field support. In addition, the company accumulated more formal data through annual customer surveys conducted by an independent research firm. As the company researched programs on quality and began developing its own quality process, however, it became apparent that such customer survey methods typically generate positive comments. In fact, the greater than 90% favorable ratings Norand turned up in its surveys were below what other companies were hearing from their customers on similar measures. Closer analysis of the process further demonstrated that such data collection was not thorough, objective, or consistent enough. Company officials began to suspect that they were not hearing from a significant segment of customers and that the data was not received often

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enough to help provide real-time guidance on customer issues. Finally, there were concerns that what data existed was not shared widely enough to benefit all appropriate internal departments. As a result, the data was giving false readings on customer satisfaction, leading company executives to believe that customers were more satisfied with the company's performance than they really were. In January 1990, Norand began to assemble elements of a comprehensive customer feedback system. The system was designed to develop a detailed pool of customer information to help drive product design, service, and support functions toward better customer responsiveness. In addition, this information could be used to augment the data needs of the company's new total quality commitment (TQC) processes. This effort aimed to develop the best, most comprehensive customer feedback system in the industry.

A Formal Feedback System
The company clearly defined the critical elements of this system. The most salient of these is the process of formal customer surveying. In March 1990, the company began using a research firm to conduct monthly in-depth telephone interviews with customers chosen at random. More than 1,000 interviews have been conducted, at a rate that has averaged 40 per month. Approximately 25% of the surveys contact customers who have had installations within the previous three months. Customers are asked to describe their opinions of Norand products and systems, software, personnel, delivery performance, invoicing, service support, and overall company image. Customer comments are evaluated and tabulated into positive and negative comments in several specific categories. The results of the surveys are com-

piled monthly and circulated. Although the report is confidential, it is distributed to a wide range of company executives representing management, engineering, marketing, sales, service, finance, and quality assurance. The report is online on each employee's terminal and specifically cites the customers who were surveyed and reflects their verbatim comments. The original objective for the customer surveys was to develop data that could be helpful in spotting trends. However, Norand discovered that the surveys created an unanticipated challenge. These regular surveys provided an unprecedented opportunity for customers to voice specific concerns (e.g., product malfunctions, billing problems, and software complaints). Once these concerns were communicated to the person conducting the survey, many customers expected that their complaints would be resolved. But in establishing the survey and reporting system, no procedures were "Specific put in place to address specific calls for customer assistance. Weeks could elapse before the comments made to the surveyor complaints found their way to company executives revealed in who were in a position to resolve the interviews complaint. The issue surfaced when an are reported angry customer surprised the company to the by calling to ask why it took so long to respond to the complaint he had made company to the surveyor. within five New procedures now require that days. If the specific customer complaints revealed in complaint is interviews be reported to Norand within critical, the five days. If the complaint is critical, profile is sent the profile is sent to Norand by fax. Company officials track these issues un- to Norand by til they are resolved. As a result, the fax." data collection process of the customer surveys, originally envisioned as a oneway communication channel, has evolved into another opportunity for Norand to respond to its customers. Each quarter, monthly reports are statistically tabulated. This provides the company with a statistical view of trends over time. As these quarterly

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CUSTOMER'S DEFINITION OF QUALITY

"In March 1990, the company began using a research firm to conduct monthly indepth telephone interviews with customers chosen at random."

reports build up, they provide company officials with sound, reliable data on which to base a wide variety of decisions, including hardware and software designs, customer support programs, and quality improvement processes. The result is a data base that helps company officials determine key priority issues. The customer surveys represent only one element of the company's customer data system. A second element is the customer profile data system. Extensive efforts have created a comprehensive data base that reflects customers' vital facts, including details about the customer that run the gamut from company name and address to sales history, service records, and credit information. The profile also shows how Norand rates on timely product shipments and order completions. Another critical element in the customer feedback loop is the call monitoring and management system. This is a method of receiving, recording, and tracking customer complaints registered by telephone. This online, computerized system captures data by company and individual name and lists when and why the call was placed, the last action taken by the firm, and the present status of the issue. This online information is available to Norand customer support specialists and is updated every time the specialists take action. The online nature of this information provides for immediate tracking of customer calls, ready history of a particular complaint, and widespread accessibility to customer data. This information also serves a management role by allowing officials to assess how quickly problems are identified, acted on, and resolved. The company is even assessing customer reactions to its sales presentations. Using the same independent research firm, Norand solicits information from companies to which it has made product presentations. With this feedback, Norand is gaining a better understanding of why contracts were won or lost. This information is also

added to the customer feedback data base for evaluation and trend analysis. Each of these elements exists to provide specific and valuable information vital to the company's overall quality program. In this case, however, the total is more than the sum of the individual parts, because the company compiles the separate data into a comprehensive customer data base that can be shared throughout the organization. As a result, company decision makers have free access to total customer information anywhere in the company. The benefits are many. First, the firm is building a data base that provides a real-time assessment of customer opinion trends on the company, its products, and its services. Month by month, the surveys combine to provide a source of objective, statistically valid data that can be extracted by numerous demographics (e.g., product, industry, customer group, and sales region). Second, the customer surveys help augment contacts by Norand field sales and service representatives to solicit information on product and installation problems. Now that the company has provided for timely identification and tracking of problems presented to telephone surveyors, the customer survey system is serving a dual role in helping ensure customer satisfaction. Third, customers are reacting in an extremely positive way to the surveys. They appreciate being asked for their opinions and seem to view the survey as an objective way of communicating their input back to Norand. A fourth benefit derived from the customer data base is its application for the company's TQC process. TQC focuses on tying together product quality, process improvement, and customer satisfaction. Employee teams are formed to develop improved methods of delivering products and services to customers. One of the key steps taken by the TQC team is gaining an objective and factual understanding of customer concerns. As a result, the data accumulated by the

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customer feedback system is helping to satisfy the information needs of the TQC teams. Norand management has instituted a discipline on the TQC teams that prescribes a seven-step method for identifying, researching, and resolving product and process issues. One of the earliest steps requires the team to construct a current situational analysis based on information from customers. The customer feedback process is developing a rich data base from which TQC teams can draw. As a result, teams can easily extract information that has been carefully and reliably developed. What's more, a single professional organization is responsible for surveying customers, rather than having various issue-specific TQC teams conducting uncontrolled surveys at random. The information generated by these interviews is readily available throughout the organization.

The System's Twin Benefits
The existing data base allows the company to achieve two critical goals. First, it provides the firm with reliable, objective, and concrete information on market and customer trends. Because this information is developed monthly from existing customer lists, the data is current and far superior to data developed from the casual and anecdotal information formerly gathered during sales calls and customer meetings. The information is fresh and stays fresh, because new information is added monthly. The previous annual survey regimen allowed considerable time to pass between formal customer contacts—time too valuable to lose in the fast-changing electronic data collection industry in which Norand competes. The second objective the firm has achieved is equally important. The customer feedback process allows the company to "micromanage" its customers. Trends identified by the customer sur-

veys are extremely valuable. However, tabulation of the survey generally provides a statistical view of Norand customers; such statistics offer little in the way of help for specific customers. The combination of the customer profile data and the call management system gives the firm an online data base that enables company officials to track, understand, and respond to issues that are specific to individual customers. The ability to provide such micromanagement allows the company to be more efficient in addressing problems. As a result, customers may feel closer to the company because considerable information on each customer's product and installation history is readily available to Norand employees. With such information, Norand representatives can provide more tailored responses. The company plans to add other data to its base. A competitor assessment survey will soon be included. The procedures used to survey current customers will be used to interview customers of competitive firms. This research will establish competitive benchmarks against which Norand can compare its performance. Listening to customers requires much more than hosting meetings for product users, analyzing comments in sales reports, or even performing periodic formal surveys. Reliable customer feedback is produced through regular, carefully planned, and systematic effort. In addition, just as photos in a newspaper are created from many individual dots, the picture of customer satisfaction required by the company must be produced from many different sources of information. That's why the firm is taking the time to combine individual "dots" of customer information that exist in the organization and pull the data together to form a picture. It is this picture—one that more clearly defines the customer's view of quality and company responsiveness—that will guide the company's planners as they work to achieve total customer satisfaction. ■

"The customer feedback process allows the company to micromanage' its customers."

THE JOURNAL OF BUSINESS STRATEGY January/February 1992