I.3 Customer Focus

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UNIT I
Principles of Quality
MSTM 6033 QUALITY SYSTEMS MANAGEMENT
Quality Systems Management
UNIT I
I.3 CUSTOMER FOCUS

BASED ON
MANAGING FOR QUALITY AND PERFORMANCE
EXCELLENCE 9TH ED
MSTM 6033 QUALITY SYSTEMS
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Importance of Customers
Customer wants and needs drive competitive advantage,
C t t d d di titi d t
and statistics show that growth in market share is strongly
correlated with customer satisfaction.
MSTM 6033 QUALITY SYSTEMS
Key Customer‐Focused Practices for Performance
Excellence (1 of 2)
1. Identify the most important customer groups and markets, considering

competitors and other potential customers, and segment the customer
base to better meet differing needs.
2. Understand both near-term and longer-term customer needs and
expectations (the “voice of the customer”) and employ systematic
processes for listening and learning from customers, potential
customers, and customers of competitors to obtain actionable
information about products and customer support.
3. Understand the linkages between the voice of the customer and design,
production and delivery processes; and use voice-of-the-customer
production,
information to identify and innovate product offerings and customer
support processes to meet and exceed customer requirements and
expectations, to expand relationships, and to identify and attract new
customers and markets.
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Key Customer‐Focused Practices for Performance
Excellence (2 of 2)
4. Create an organizational culture and manage customer relationships to
ensure a consistently positive customer experience that contributes to
customer engagement, the ability to meet and exceed their expectations,
and the ability to acquire new customers.
5. Develop effective complaint management processes that ensure that
customers receive prompt resolution of their concerns and that lead to
recovery of their confidence, and enhance their satisfaction and
engagement, and that enable aggregation and analysis of complaints to
facilitate improvement.
6. Measure customer satisfaction, engagement, and dissatisfaction; compare
the results relative to competitors and industry benchmarks; and use the
information to evaluate and improve organizational processes.
Customer Satisfaction and the Bottom Line
 It costs five times more to find a new customer than to keep an
existing one happy.
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 Loyal customers spend more, are willing to pay higher prices,
refer new clients, and are less costly to do business with.
 Dissatisfied customers tell more people about their experiences
than satisfied customers.
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Customer Engagement
Refers to the commitment of a costumer to purchase a
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product or a service from a specific brand.
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Customer Satisfaction
Is achieved when the expectations of the customers

are met or exceeded and deliver higher value that
competitors.
American Index of Costumer satisfaction
 Measures customer satisfaction at a national level
 Introduced in 1994 by University of Michigan and American
Society for Quality
 Based on results of telephone interviews conducted in a national
sample of 46,000 consumers who recently bought or used a
company’s product or service.
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Model for Customer Satisfaction
Perceived Customer
quality
lit complaints
Perceived Customer
value satisfaction
Customer
expectations Customer
loyalty
Different Kinds of Customers
 Organization level
Organization level
• consumers
• external customers
• employees
• society
 Process level
• internal customer units or groups
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?
Customer Segmentation
 Demographics
 Geography
G h
 Volumes
 “Vital few” and “useful many”
 Profit potential
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Quality Dimension of a Manufactured Good
 Performance – primary operating characteristics
 Features
Features – “bells
bells and whistles
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
Serviceability speed courtesy and competence of repair
 Aesthetics – look, feel, sound, taste, smell
Quality Dimension of a Manufactured Good
 Reliability – ability to provide what was promised
 Assurance
Assurance – knowledge and courtesy of employees and ability to
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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The Kano Model for Understanding Customer Needs
 Dissatisfiers: expected requirements that cause
dissatisfaction if not present
dissatisfaction if not present
 Satisfiers: expressed requirements
 Exciters/delighters: unexpected features
Listening to Customers
 Comment cards and formal surveys
 Focus groups
Focus groups
 Direct customer contact
 Field intelligence
 Complaint analysis
 Internet monitoring
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Tools for Classifying Customer Requirements
Affinity diagram
Tools for Classifying Customer Requirements
Critical to Quality (CQT)Tree Diagram
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Customer Driven Quality Cycle
PERCEIVED QUALITY is a
comparison of ACTUAL QUALITY
to EXPECTED QUALITY
Manage Customer Relation
MOMENT OF TRUTH
 Customer satisfaction or dissatisfaction takes place during
Customer satisfaction or dissatisfaction takes place during
moments of truth—every interaction between a customer and
the organization.
 Example (airline)
 Making a reservation
 Purchasing tickets
 Checking baggage
 Boarding a flight
 Ordering a beverage
 Requests a magazine
 Deplanes
 Picks up baggage
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Manage Customer Relation
“Customer Satisfaction is the degree to which the customer
believes that the expectations are met or exceeded by the benefits
believes that the expectations are met or exceeded by the benefits
received. Satisfaction depends on many factors but it is
recommended firms concentrate on the “moments of truth”. Or
the moment when the costumer comes in contact with a company
or its products and thereby forms a positive or negative
impression”. (Juran, 1999:18.11)
Building a Customer‐Focused Culture
 Commitments and customer support
 Selecting and developing customer contact employees
Selecting and developing customer contact employees
 Customer contact requirements
 Complaint management and service recovery
 Strategic partnerships and alliances
 Customer‐focused technology
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Customer Relationship Management (CRM) Software
 Segment markets based on demographic and behavioral
characteristics.
 Track sales trends and advertising effectiveness by customer and
market segment.
 Identify which customers should be the focus of targeted marketing
initiatives with predicted high customer response rates.
 Forecast customer retention (and defection) rates and providing
feedback as to why customers leave a company
feedback as to why customers leave a company.
 Study which goods and services are purchased together, leading to
good ways to bundle them
 Study and predict which Web characteristics are most attractive to
customers and how the website might be improved
Measuring Customer Engagement
1. Discover customer perceptions of how well the organization is
doing in meeting customer needs and compare performance
doing in meeting customer needs, and compare performance
relative to competitors.
2. Identify causes of dissatisfaction and failed expectations as well
as drivers of delight to understand the reasons why customers
are loyal or not loyal to the company.
3. Identify internal work process that drive satisfaction and loyalty
and discover areas for improvement in the design and delivery of
and discover areas for improvement in the design and delivery of
products and services, as well as for training and coaching of
employees.
4. Track trends to determine whether changes actually result in
improvements.
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Survey Design
 Identify purpose
 Determine who should conduct the survey
 Select the appropriate survey instrument
 Design questions and response scales
Performance‐Importance Analysis
Performance
Low High
Low Who cares? Overkill
High
Vulnerable Strengths
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Difficulties with Customer Satisfaction Measurement
 Poor measurement schemes
 Failure to identify appropriate quality dimensions
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
Customer Perceived Value
CPV measures how customers assess benefits—such as
product performance ease of use or time savings—
product performance, ease of use, or time savings
against costs, such as purchase price, installation cost or
time, and so on, in making purchase decisions.
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Customer Focus in Quality Management
“Customer Focus is a Fundamental concept of quality
management Building Customer loyalty is becoming a
management . Building Customer loyalty is becoming a
bedrock of corporate strategic planning and process
management”.
More and more companies are finding that keeping
customers (reducing the churn) is far more profitable than
acquiring new ones”.
q g
(Juran, 1999:14.6)
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I.3 Customer Focus

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4/7/2011

I.3 CUSTOMER FOCUS

MSTM 6033 QUALITY SYSTEMS

MSTM 6033 QUALITY SYSTEMS

1. Identify the most important customer groups and markets, considering

Is achieved when the expectations of the customers

Quality Dimension of a Manufactured Good

Quality Dimension of a Manufactured Good

Low Who cares? Overkill

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