FOCUSING ON CUSTOMERS

Identifying Customers
Types of Customers
• External Customers – who may fall between the organization and the
consumer and who have distinct needs and expectations.
• Internal Customers – who contribute to the company’s mission and
depend on the department’s or function’s products or services to
ultimately serve consumers and external customers.
Customer Satisfaction vs. Loyalty
The Importance of Customer Satisfaction and
Loyalty
• Satisfaction is an attitude, loyalty is a behavior
• Customer satisfaction occurs when products and services meet or
exceed customer expectations
• Loyal customers spend more, are willing to pay higher prices, refer
new clients, and are less costly to do business with
• Satisfaction and loyalty are influence greatly by service quality,
integrity, and the relationships that organizations build with
customers
Creating Satisfied Customers
• Expected Quality – is what the customer assumes will be received
from the product.
• Actual Quality – is the outcome of the production process and what is
delivered to the customer.
Leading Practices
• They clearly define key customer groups and markets, considering
competitors and other potential customers, and segment their
customers accordingly.
• They understand both near-term or longer-term customer needs and
expectations (“the voice of the customer”) and use systematic
processes for listening and learning from customers.
• They understand the linkages between the voice of the customer and
design, production, and delivery process.
Leading Practices
• They build relationships with customers through commitments that
promote trust; provide easy accessibility to people and information;
set effective service standards; train customer-contact employees;
and effectively follow-up on products, services, and transactions.
• They have effective complaint management processes by which
customers can easily comment, complain, and receive prompt
resolution of their concerns.
• They measure customer satisfaction, compare the results relative to
competitors, and use the information to evaluate and improve
internal processes.
Dimensions of Product Quality
• Performance: A product’s primary operating characteristics
• Features: The “bells and whistles” of a product
• Reliability: The probability of a product’s surviving over a specified
period under stated conditions of use
• Conformance: The degree to which physical and performance
characteristics of a product match pre-established standards
• Durability: The amount of use one gets from a product before it
physically deteriorates or until replacement is preferable
• Serviceability: The speed, courtesy, and competence of repair work
• Aesthetics: How a product looks, feels, sounds, tastes, or smells
Dimensions of Service Quality
• Reliability: The ability to provide what was promised, dependably and
accurately
• Assurance: The knowledge and courtesy of employees and their
ability to convey trust and confidence
• Tangibles: The physical facilities and equipment, and the appearance
of personnel
• Empathy: The degree of caring and individual attention provided to
customers
• Responsiveness: The willingness to help customers and provide
prompt service
Quality dimensions of a manufactured product
and service
Quality Dimension Manufactured Product Service Product
Performance Signal-to-noise ratio; power Time to process customer requests
Features Remote control Automatic bill paying
Conformance Workmanship Accuracy
Reliability Mean time to failure Variability of time to process
requests
Durability Useful life Keeping pace with industry trends
Serviceability Ease of repair Resolution of errors
Aesthetics Oak cabinet Appearance of bank lobby
Customer Relationship Management
Excellent customer relationship management depends on five aspects:
• Accessibility and commitments
• Selecting and developing customer-contact employees
• Relevant customer-contact requirements
• Effective complaint management
• Strategic partnerships and alliances
Accessibility and commitments
• Customer-focused organizations provide customers easy access to
their employees.
• Companies that truly believe in the quality of their products make
strong commitments to their customers. Effective commitments
address the principal concerns of customers, are free from conditions
that might weaken customers’ trust and confidence, and are
communicated clearly and simply to customers.
Selecting and developing customer-contact
employees
• Customer-contact employees are particularly important. They are the
people whose main responsibilities bring them into regular contact
with customers – in person, by telephone, or through other means.
• Companies committed to customer relationship management ensure
that customer-contact employees understand the products and
services well enough to answer any question, develop good listening
and problem recovery skills, and feel able to handle problems.
Effective training not only increases employees’ knowledge, but
improves their self-esteem and loyalty to the organization.
Relevant customer-contact requirements
• Customer-contact requirements are measurable performance levels
or expectations that define the quality of customer contact with
representatives of an organization. These expectations might include
technical requirements such as response time (answering the
telephone within two rings), or behavioral requirements(using a
customer’s name whenever possible).
Effective complaint management
• Leading organizations consider complaints as opportunities for
improvement. Encouraging customers to complain, making it easy for
them to do so, and effectively resolving complaints increases
customer loyalty and retention.
• Companies involved in customer relationship management train
customer-contact personnel to deal with angry customers. Customer
service personnel need to listen carefully to determine the customer’s
feelings and then respond sympathetically, ensuring that the
complaint is understood.
Strategic partnerships and alliances
• Customer-supplier partnerships – long term relationships
characterized by teamwork and mutual confidence – represent an
important strategic alliance in achieving excellence and business
success. Benefits of such partnerships include access to technology
or distribution channels not available internally, shared risks in new
investments and product development, improved products through
early design recommendations based on supplier capabilities, and
reduced operations costs through better communications.
Assignment
Provide a scenario through role-playing of six leading practices of
customer-focused quality.