Digital assignment 1

16BME0537
Rohan Akode
1) Justify your statement that customer retention is more important that
customer satisfaction?
Answer-
Why customer satisfaction is important?

1. A Loyal customer is a treasure you should keep and hide from the world

According to the White House Office of Consumer Affairs, on average, loyal

customers are worth up to 10 times as much as their first purchase. Some
research says that it is 6-7 times more expensive to acquire a new customer than
it is to keep a current one.

Banks or mobile providers know it best, so they don’t have any problem with
going the extra mile for a customer who is not quite satisfied and often offer
him something special. Not only it is more expensive but also much more
difficult to keep existing and loyal clients (let alone keeping them fully satisfied
and happy!) than to gain some new ones.

Take this rule into account while organizing your customer service processes and
do your best to look after them.

2. They can stop being your clients in a heartbeat

Is not rocket science, nowadays clients easily switch their love brands. It is often
caused by terrible customer service. Clients waiting for ages to get feedback or
comment from a brand? Unacceptable! But it still happens. And gaining clients’
trust takes up to 12 positive experiences to make up for one unresolved negative
experience.

“When customers share their story, they’re not just sharing pain points. They’re
actually teaching you how to make your product, service, and business better.
Your customer service organization should be designed to effectively
communicate those issues.” – Kristin Smaby, “Being Human is Good Business”.

You can’t gain customers’ satisfaction forever, you need to look after them all
the time. Try to talk to them, instead of to them. Ask questions, offer constant
support, send personalized messages or offers, use targeted website
surveys, email surveys or any other technique that will help you communicate
with your customers.

Take care of each and every one of your clients’ need and you’ll be rewarded
with their gratitude and loyalty. Sounds like a good deal, doesn’t it? Brands often
take their audience for granted, and they’ve never been so wrong – one
decision, or lack of it, can result in losing a lot of clients and their respect.

That’s why measuring clients’ satisfaction is so important.

3. It’s (all) about the money, too

It shouldn’t be surprising, but customer satisfaction is also reflected in your

revenue. Customers’ opinion and feelings about the brand can affect, in both
positive and negative way, the essential metrics – such as the number mentions
and repeated transactions, and also customer lifetime value or customer churn.

Happy customers won’t look at your competitors offers – they will happily
interact with your brand again, make a purchase and recommend the product
further. If you meet all of their requirements and answer their needs while
delivering the best quality of your services, they will be fully satisfied.

Not to mention your brand will increase sales revenue!

Measuring customer satisfaction should become your daily habit – not

something you do from time to time and only if you’re about to face crisis
management. If you don’t know how to do it right, you can take a look at
our guide to measuring customer satisfaction to make things easier.

4. Customer satisfaction is a factor that helps you stand out of the competition

Kate Zabriskie once said that “Although your customers won’t love you if you
give bad service, your competitors will.” and we couldn’t agree more.

Your competitive rivals are just waiting for you to make a wrong move. What is
more, they can often play the role of an instigator. Being prepared for their
provocations is not enough if you don’t know how to deal with the negative
backlash.

However, if you provide your customers with amazing customer service, you will
gain arguments to convince those uncertain of your services.
5. Great customer experience can take your brand places

The importance of customer satisfaction should never be neglected. You should

consider it especially while planning your marketing and positioning campaigns.
Satisfied customers are more likely to share your content across social media.

They will also more keenly interact with your posts, leaving some delightful and
admirable comments. Later you can use it as the source for case studies and
success stories. Being an example of a company that provides a ravishing
customer satisfaction? Every brand should aim for it.

5 Reasons why Customer Retention is better

1. It’s Cheaper…

Attracting new customers may be rewarding, but it also often involves a lot of
hard work and expense. The good news is that the costs associated with repeat
business are, generally, significantly lower. 70% of companies say it’s cheaper
to retain a customer than acquire one, while others have suggested that the
cost of acquiring a new customer can be as much as seven times more
expensive.

By targeting existing customers — with a demonstrable interest in your

product and willingness to buy it — you’re giving yourself a much stronger
chance of making a sale. Studies have proven that the probability of converting
an existing customer is 60 – 70%, whereas the likelihood of converting a new
prospect is only 5 – 20%.

Marketing to existing customers not only offers a clear reduction in your ad

spend, it also presents a chance to demonstrate your commitment to
rewarding loyalty — a nice brand uplift.

Some simple examples of retention promotions include things like loyalty

programs and birthday offers. They don’t take a great deal of effort, but they
do show the customer that you value their custom and can be valuable tools in
engendering strong, lasting and profitable relationships.

2. It’s Faster…

Again, it’s often much easier to sell to an existing customer than it is to sell to a
new one. This is because all barriers to purchase have already been overcome.
Existing customers may just need a slight nudge to increase your share of their
wallet, and this will speed up your sales process.
After all, existing customers already know you are a trustworthy company with
products or services that are beneficial. You have already offered them a
pleasant business experience previously, and because of this, they are much
more likely to make future purchases and generate more business for you. In
comparison, persuading potential leads into becoming customers sometimes
requires a lot of time and effort, and ultimately, costs more.

The bottom line is, it takes a lot of time and effort to convince leads to convert
into customers, whereas existing customers (should) take very little convincing.
Existing customers simply want a pleasant and consistent experience. In a
nutshell, they just want you to keep your promises. If you focus your efforts on
awesome customer retention, then you’ll find yourself making quicker sales
with easier-to-please customers.

3. It Better Positions Your Business…

One of the best things about high levels of customer retention is that you’re
able to build a more nuanced view of who your customers really are. On one
hand, this data is vital to your customer retention efforts and gives you the
tools to create personalized and targeted promotions to maximize your
chances of success.

But, moreover, this will all assist you in your future acquisition efforts; you will
know exactly what kind of people are most likely to become loyal customers —
who they are, where they hang out online, what motivates them to buy and
what kind of messaging they best respond to.

On the flip side, if you neglect your customers, this represents an incentive for
them to shop with your competitors. Statistics show 61% of consumers take
their business to a competitor when they end a business relationship, which is
why retention is vital to the success and growth of your company.

By implementing the best possible customer retention plan for your business,
you can set yourself apart from your competitors. Let’s be honest: who doesn’t
want the reputation of being a business that takes care of its customers? It’s
impossible to overstate the importance of this kind of brand profile.

Retention = Acquisition

Customer loyalty is priceless, and can even result in further customer

acquisition for your company. After all, word of mouth advertising is not only
free, but possibly one of the most credible forms of advertising. Customers will
always talk, and they will always listen to other customers. It’s because of this
that just a 5% increase in customer retention can increase a company’s
profitability by 75%.

Statistics like the above prove that if you treat existing customers well, you will
consistently reap the benefits. After all, your customer base is a growing
source of referrals for new customers. You can even encourage acquisition
from your retention efforts by giving your existing customers incentives to
refer their family and friends to your company.

Closing Thoughts

Marketers don’t tend to focus on customer retention enough because loyalty

and engagement are often not seen as strictly ‘measurable’, but this doesn’t
mean they aren’t important. Customer acquisition is critical in the early stages
of start-up businesses, but once you’ve built a customer base, as soon as
you’ve got one customer, retention should be on your mind. The more
customers you have, the more important retention is. The key statistic to keep
in your mind is that 80% of your company’s future revenue will come from just
20% of your existing customers.
 2) The 7 wastes are the root of all unprofitable activity within your
organization. Justify and explain in detail about this statement
Answer-Let’s say that we have a bakery(organization)
According to Lean Six Sigma, the 7 Wastes are Inventory, Motion, Over-
Processing, Overproduction, Waiting, Transport, and Defects. We’ll use the
bakery example to demonstrate these wastes in practice.
1. Inventory – Pies, cakes, doughnuts, cupcakes, cookies – so much variety and so
many of each product. Although this bakery display may look impressive, the
more baked goods sitting out, the more space they take up. The more space
they take up, the more electricity is needed to keep the cases cold, and the
longer they are on display, the less appetizing the goodies look. At the end of
the day, leftover inventory may have to be thrown out. What would be some
of the immediate benefits to the bakery if they kept less inventory on hand and
baking and making what is needed based on analyzing historical sales data?
2. Motion – Humans and machines can waste motion. When the baker is trying
to bake a cake and all of his ingredients are not within arm’s reach, he is
wasting motion and energy as he moves from spot to spot. When a baker uses
a large mixer for a small batch of product, the machine is wasting motion,
energy and ultimately money. Part of Lean Six Sigma is ensuring everything a
company and its employees do adds direct value to the product. A wasted
motion will never add value. Streamlining processes and workspaces are part
of the solution to eliminate this kind of waste.
3. Over-Processing – Over-processing occurs when employees are performing
unnecessary processes or using the wrong tool for the job. This can result in
defects. Incorrect measurements could lead to scrap dough for bread and
cakes. The wrong baking surface can lead to burnt or stuck cookies. Putting
time and effort into things that do not add direct value to the product is also
part of overproduction. Leaders, managers, line workers should always ask
themselves if the task at hand is adding direct value to the product. Cake pans
need prepped with butter, flour, and parchment, but cookie sheets need no
prep. You can see that a worker prepping cookie sheets like cake pans, is a
waste of time, money, product, and effort.
4. Overproduction – The aim of lean is to make only what is needed when it is
needed by customers. Making too much too soon creates excessive inventory
and waste. Analyze how much inventory, talent, time, and effort is required to
make the specific number of units the customer ordered. If they ordered two
dozen cookies in the shape of blue socks for a baby shower, do not make three
dozen hoping the rest will be sold.
5. Waiting – Preheating the bakery’s commercial ovens takes time. Waiting
equals wasted time and wasted time equals less profit. When one department
has to wait on another for a part, a price, or a process to be completed,
production and/or service stops. Anytime processes are not synchronized
according to a set of best practices waiting occurs. Waiting disrupts flow and
becomes a serious impediment to the effective elimination of waste.
6. Transport – Eliminating transport waste can facilitate savings in multiple areas
across business processes. Coordinating deliveries according to location, cake
size, and delivery time could cut the bakery’s transport waste. Sometimes just
moving the product from where it was baked to where it should be cooled and
then finished can be an example of an internal transport waste.
7. Defects – Anytime a baker makes a batch of product that doesn’t come out
correctly, time, money, resources, and effort are wasted. Many times, a
customer is the first to notice a problem. This is not an ideal scenario! Making
smaller batches of a product gives one a better chance to recognize and
correct defects as soon as they occur.
 3) Explain in details how quality statements are usually formed? Give
examples of quality statements for your start-up company if you are CEO

Answer-

The Quality Policy should be the Goal of the Organization

If the policy is a reflection of the goals of the organization it can be used as a

filter for business decisions. If your policy is to “consistently deliver superior
widgets while continually improving our processes and productivity,” then a
manager can look at how they are applying resources and ask, “Will making
this resource allocation decision work toward meeting our commitments to
superior widgets and improvement?” In cases where the answer is no, the
decision should be to not continue with the project and find another that
better leads to the goals of the company.
Start with Customer Requirements
The key to starting any Quality Management System is to make sure you
understand the requirements of your customers. If you are to successfully
drive your QMS toward improving customer satisfaction, it is critical to make
sure you understand all the requirements you need to meet to attain this.
These requirements may come directly from customer specification, through
industry standards, or even through legal requirements regarding your
products or services. You may need to meet tight customer on-time delivery
requirements, have industry standard levels of cleanliness in food preparation,
or even legal requirements on what materials can be used in your processes
(thus limiting them). Ensuring that you have all these necessary inputs will help
to make sure your Quality Policy focuses on the important elements to attain
customer satisfaction.
Collect Inputs of Internal Parties
The Quality Policy is intended to be the main focus for the Quality
Management System, and is intended to be usable by all employees as a focus
for their job. If this is the case, it is important to gather input from all areas of
the company to ensure that the Quality Policy is applicable to all those areas.
In order to do this, it is important to get the input of people in the areas who
will need to apply the policy. If people can’t see how the Quality Policy relates
to their job, then it becomes just a slogan on the wall. But if they can see how
it is relevant to their job, such as meeting on-time deliveries to customers
whom the employees can have direct influence on, it can be a filter for any
business decisions.
Include Required Information of ISO 9001
The standard does impose some requirements on the Quality Policy that are
important to note. The Quality Policy needs to show the commitment of the
company to comply with requirements and to improve the effectiveness of the
QMS. Since a commitment to Customer Satisfaction and Improvement are key
elements in the decision to implement a Quality Management System, it
makes sense that the guiding policy of the system should include this
commitment. This can be done by stating this as a fact, such as “improving our
commitment to deliver to customers on time,” but it needs to be backed up
with plans to implement these improvements. An additional requirement,
although it should go without saying, is that the Quality Policy is to be
appropriate to the purpose or the organization. If you make automotive parts,
the policy should speak about this and not some other service that could be
provided.
Write and Communicate the Quality Policy
With all of this information in mind, you need to draft a policy that can guide
the organization and provide direction to create quality objectives. (For more
details on quality objectives, see How to Write Good Quality Objectives) It is
said that a good Quality Policy is simple, concise, and easily remembered when
under pressure. It is important that all employees not just know the policy, but
understand what it means and how their job supports meeting the Quality
Policy.
Focusing the actions of all areas of the company toward the goals of meeting
customer requirements and improvement will only help the company grow –
and this is what a Quality Management System is for in the first place.
4) Name and describe the various problem solving techniques
Answer- there are many problem solving technique they are namely-
 Eight disciplines (8Ds) problem solving
Eight disciplines (8Ds) problem solving is a method developed at Ford
Motor Company used to approach and to resolve problems, typically
employed by engineers or other professionals. Focused on product and
process improvement, its purpose is to identify, correct, and eliminate
recurring problems. It establishes a permanent corrective action based on
statistical analysis of the problem and on the origin of the problem by
determining the root causes. Although it originally comprised eight stages,
or 'disciplines', it was later augmented by an initial planning stage. 8D
follows the logic of the PDCA cycle. The disciplines are:
D0: Preparation and Emergency Response Actions: Plan for solving the
problem and determine the prerequisites. Provide Emergency response
Actions
D1: Use a Team: Establish a team of people with product/process
knowledge.
D2: Describe the Problem: Specify the problem by identifying in
quantifiable terms the who, what, where, when, why, how, and how
many (5W2H) for the problem.
D3: Develop Interim Containment Plan: Define and implement
containment actions to isolate the problem from any customer.
D4: Determine and Verify Root Causes and Escape Points: Identify all
applicable causes that could explain why the problem has occurred. Also
identify why the problem was not noticed at the time it occurred. All
causes shall be verified or proved. One can use five whys or Ishikawa
diagrams to map causes against the effect or problem identified.
D5: Verify Permanent Corrections (PCs) for Problem will resolve
problem for the customer: Using pre-production programs,
quantitatively confirm that the selected correction will resolve the
problem. (Verify that the correction will actually solve the problem.)
D6: Define and Implement Corrective Actions: Define and Implement
the best corrective actions.
D7: Prevent Recurrence / System Problems: Modify the management
systems, operation systems, practices, and procedures to prevent
recurrence of this and similar problems.
D8: Congratulate the Main Contributors to your Team: Recognize the
collective efforts of the team. The team needs to be formally thanked by
the organization.
 8Ds has become a standard in the automotive, assembly, and other industries
that require a thorough structured problem-solving process using a team
approach.

 How to Solve It
How to Solve It (1945) is a small volume by mathematician George
Pólya describing methods of problem solving.
How to Solve It suggests the following steps when solving a mathematical
problem:
1. First, you have to understand the problem.
2. After understanding, make a plan.
3. Carry out the plan.
4. Look back on your work. How could it be better?

If this technique fails, Pólya advises: "If you can't solve a problem, then there is
an easier problem you can solve: find it." Or: "If you cannot solve the proposed
problem, try to solve first some related problem. Could you imagine a more
accessible related problem?"

 OODA loop
The OODA loop is the cycle observe–orient–decide–act, developed
by military strategist and United States Air Force Colonel John Boyd. Boyd
applied the concept to the combat operations process, often at the
operational level during military campaigns. It is now also often applied to
understand commercial operations and learning processes. The approach
explains how agility can overcome raw power in dealing with human
opponents. It is especially applicable to cyber security and cyberwarfare

 PDCA (plan–do–check–act or plan–do–check–adjust)

PDCA (plan–do–check–act or plan–do–check–adjust) is an iterative four-
step management method used in business for the control and continuous
improvement of processes and products. It is also known as
the Deming circle/cycle/wheel, the Shewhart cycle, the control
circle/cycle, or plan–do–study–act (PDSA). Another version of this PDCA
cycle is OPDCA. The added "O" stands for observation or as some versions
say: "Observe the current condition." This emphasis on observation and
current condition has currency with the literature on lean
manufacturing and the Toyota Production System. The PDCA cycle, with
 Ishikawa’s changes, can be traced back to S. Mizuno of the Tokyo Institute
of Technology in 1959.
Plan Establish objectives and processes required to deliver the desired
results.
Do
The do phase allows the plan from the previous step to be done. Small changes
are usually tested, and data is gathered to see how effective the change is.

Check
During the check phase, the data and results gathered from the do phase are
evaluated. Data are compared to the expected outcomes to see any similarities
and differences. The testing process is also evaluated to see if there were any
changes from the original test created during the planning phase. If the data is
placed in a chart it can make it easier to see any trends if the PDCA cycle is
conducted multiple times. This helps to see what changes work better than
others, and if said changes can be improved as well. Example: Gap analysis,
or Appraisals.

Act
Also called "Adjust", this act phase is where a process is improved. Records
from the "do" and "check" phases help identify issues with the process. These
issues may include problems, non-conformities, opportunities for
improvement, inefficiencies and other issues that result in outcomes that are
evidently less-than-optimal. Root causes of such issues are investigated, found
and eliminated by modifying the process. Risk is re-evaluated. At the end of
the actions in this phase, the process has better instructions, standards or
goals. Planning for the next cycle can proceed with a better base-line. Work in
the next do phase should not create recurrence of the identified issues; if it
does, then the action was not effective.

 Root cause analysis

In science and engineering, root cause analysis (RCA) is a method of problem
solving used for identifying the root causes of faults or problems. It is widely
used in IT operations, telecommunications, industrial process control, accident
analysis (e.g., in aviation, rail transport, or nuclear
plants), medicine (for medical diagnosis), healthcare industry (e.g.,
for epidemiology), etc.
RCA can be decomposed into four steps:

 Identify and describe clearly the problem.

 Establish a timeline from the normal situation up to the time the problem
occurred.
 Distinguish between the root cause and other causal factors (e.g., using event
correlation).
 Establish a causal graph between the root cause and the problem.

RCA generally serves as input to a remediation process whereby corrective

actions are taken to prevent the problem from reoccurring. The name of this
process varies from one application domain to another.