CUSTOMER

FOCUS
CHAPTER 3

GROUP 3
ANTE, MARIA CECILIA F.
DIMAANO, MARIEL K.
HOLGADO, ZEDRICK L.
KATIGBAK, GELLEN MARIERL H.
MAGPANTAY, APRIL JOY N.
RUBIO, JENNYLYN S.

1
 TOPICS:
- Quality Profiles
- Customer Satisfaction and Engagement
- Identifying Customers
- Understanding Customer Needs
- Linking Customer Needs to Design Production and
Service Delivery
- Building a Customer-Focused Organization
- Managing Customer Relationships
- Measuring Customer Satisfaction and Engagement
- Summary of Key points and Terminilogy
- Quality in Practice
CUSTOMER FOCUS - Cases
2
CUSTOMER FOCUS
-might be the most important principle of quality management.
-I s a key requirement of ISO 9000-2000

What is a CUSTOMER?
They are the ultimate judge of the quality of goods and services
and as has been stated, "Without customers, you don't have a
business".
In Japanese:

"okyakusama" means both customer and honorable guest.

3
"If the customer is satisfied with the whole experience with the product, then you
have a quality product."
The key phrase is "the whole experience"

How to meets or exceed customer expectations?

-An organization must fully understand all product and service attributes that contribute to customer
value and lead to satisfaction and loyalty.

To accomplish this task:

-an organization's effort need to extend well beyond merely meeting specifications
- reducing defects and errors and,
-resolving complaints
-They must include both designing new products.
-An organization must know what the customer wants, how the customer uses it's product, and,
4
anticipates needs that the customer may not even be able to express.
 Identify the most important customer groups and markets
KEY CUSTOMER-
FOCUSED Understand both near-term and longer-term customer needs
PRACTICES FOR and expectations
QUALITY Understand the linkages between the voice of the customer
MANAGEMENT and design, production and delivery processes and use the
voice-of-the-customer information

Create an organizational culture and support framework

Manage customer relationships

Measure customer satisfaction, engagement, and
dissatisfaction

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 CUSTOMER SATISFACTION AND

CHAPTER 3:
CUSTOMER
FOCUS
ENGAGEMENT

What is a CUSTOMER SATISFACTION?

-The result of delivering a product or service that meets customer requirements.
- It is vital to keeping customers and growing a business.
-"SATISFACTION is an attitude, LOYALTY is a behavior"

What is a LOYAL CUSTOMER?

-They spend more,
-They are willing to pay higher prices,
_They refer new clients 6

-Less costly to do business with.

 What is CUSTOMER ENGAGEMENT

customer satisfaction and engagement

- refers to customers' investment in or commitment to a
brand and product offerings.
-it is an important outcome of a customer-focused culture
and the organization's listening, learning and performance-
excellence strategy.

Characteristics of Customer Engagement

• customer retention and loyalty.

• customers' willingness to make an effort to do business with the organization
• customers' willingness to actively advocate for and recommend the brand and product
offerings.

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What is AMERICAN CUSTOMER SATISFACTION INDEX
-An economic indicator that measures customer satisfaction at the national level.

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IDENTIFYING CUSTOMERS

CHAPTER 3:
CUSTOMER
FOCUS
THE FIRST STEP IS TO UNDERSTAND WHO YOUR CUSTOMERS ARE

CUSTOMERS
• employees think that customers are those people who ultimately
purchase and use a company's product.
• customers are the end users.

Internal Customer External Customer

• Within an organization, the recipients of another's
output ( which could be a product, service or
information)
• They could be other departments or processes
within the organization or individual workers,
• Those who fall between the organization and the
consumer, but are not part of the organization.
• They have needs and expectations different from
consumers.
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 AT & T CUSTOMER -SUPPLIER
MODEL
The easiest way to identify customers is to think in terms of customer-supplier relationships.
Identifying customer-supplier
relationships begins with
asking some fundamental
questions:
• What goods or services are
produced by my work?
• Who uses these products and
services?
• Who do I call, writeto, or answer
questions for?
• Who supplies the inputs to my
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process?
 CUSTOMER SEGMENTATION
What is Customer Segmentation?
• Customer segmentation is the practice of dividing a company's customers into groups that reflect
similarity among customers in each group.
• Segmentations allows a company to prioritize customer groups, for instance by considering for
each group the benefits of satisfying their requirements and the consequences of failing to satisfy
their requirements.

DIFFERENT WAYS TO APPROACH CUSTOMER SEGMENTATION

• Customer segmentation might be used on geography, demographic factors, ways in which

products are used, volumes, or expected levels of service.
• Another way to segment customers is by world region and sales distribution channel..
• Classifying customers into two main groups: the vital few and deserve special attention on
an individual basis.
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CHAPTER 3 UNDERSTANDING
C U S TO M E R F O C U S
CUSTOMER
NEEDS

Quality Dimensions of Goods and Services

The Kano Model of Customer Requirement

Gathering the Voice of the
Customer
Analyzing Voice of the Customer Data

12
Holgado, Zedrick L.
CHAPTER 3 UNDERSTANDING
C U S TO M E R F O C U S
CUSTOMER
NEEDS

Organizations first need to understand the drivers of

customer satisfaction –

What do customers want or expect from our goods and

services?

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UNDERSTANDING
CUSTOMER
NEEDS DIMENSIONS OF QUALITY PRODUCTS
David A. Garvin

PERFORMANCE.
1 Product’s primary
operating characteristics
RELIABILTY.
3 Probability of product’s
FEATURES.
2 “Bells and whistles” of
the product
CONFORMANCE.
4 Physical & performance
characteristics of product match
pre-established standards.

survival over time

SERVICEABILTY.
6 Speed, courtesy, and
competence of repair of work
DURABILITY.
5 Amount of use one gets from
AESTHETICS.
product before deteriorates
7 How product looks, feels,
sounds, tastes, or smell 14
UNDERSTANDING
CUSTOMER
NEEDS
CUSTOMER PERCEPTIONS OF QUALITY
When it comes to SERVICES

Reliability Tangibles Responsiveness

Provide what was Physical facilities Willingness to
promised, and equipment; help customers
dependably and appearance of and provide
accurately personnel prompt service

A E
R T R
Assurance Empathy
Knowledge and Degree of caring
courtesy of employees; and individual
ability to convey trust attention to 15
and confidence customers
UNDERSTANDING
CUSTOMER
NEEDS
CUSTOMER PERCEPTIONS OF QUALITY
Example 3.1. Classifying Customer Needs on
Dimensions of Service Quality

1. Cleanliness of the rental facility TANGIBLES

2. Courtesy of staff ASSURANCE
RELIABILIT
3. Efficiency of vehicle pick-up/return
Y
4. Cleanliness of vehicle TANGIBLES
5. Professionalism of staff in explaining the contract and
options ASSURANCE

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UNDERSTANDING
CUSTOMER
NEEDS KANO MODEL OF
CUSTOMER
REQUIREMENTS
Noriaki Kano, professor emeritus of Tokyo University of Science, suggested segmenting
customer requirements into three groups:

Dissatisfiers Satisfiers Exciters/delighters

Basic requirements that Requirements that New or innovative
customers expected in a customers expressly features that customers
product or service say they want do not expect or
anticipate

o f ”
h t
s ” o ug
h a ve t s ” r t h
s t an ev e
“ m u “w “n

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UNDERSTANDING
CUSTOMER
NEEDS KANO MODEL OF
CUSTOMER
CUSTOMER
REQUIREMENTS
SATIESFIED
One-dimensional
requirements:
-articulated
-specific
Attractive requirements: -measurable
-not expressed -technical
-customer tailored
-cause delight

REQUIREM
REQUIREMENT
ENT NOT
FULFILLED
FULFILLED Must-have requirements:
-implied
-self-evident
-not expressed
-obvious

CUSTOME
R 18
NOT
UNDERSTANDING
CUSTOMER
NEEDS KANO MODEL OF
CUSTOMER
Important Notes: REQUIREMENTS

1 2
Providing dissatisfiers and To be truly competitive,
satisfiers is often organizations must surprise
considered the minimum and delight customers by
going beyond basic
required to stay in
requirements and express
business. desires.

3 4
In Kano classification
Innovations, however, are
system, dissatisfiers and
not exciters/ delighters for satisfiers are relatively easy
long. to determine through routine
marketing research.
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UNDERSTANDING
CUSTOMER
NEEDS GATHERING THE VOICE
OF THE CUSTOMERS
The effectiveness of this approach
In customer-driven organizations,
depends upon a culture that
top executives commonly visit with
encourages open communication with
customers personally. Direct superiors.
Customer Field
Contact Intelligence
This allows an
A panel of individuals 3 4 organization to learn about
(customers or non-customers) product failures and
who answer questions about
Focus service problems,
Groups Complaints
company’s products and its particularly gaps between
competitors. expectations and
2 APPROACHES 5 performance.
FOR GATHERING
CUSTOMER
Comment INFORMATION Internet
This is easy way to solicit Cards and This approach offers an
and Social
customer information; Formal Media organization a fertile arena
Typically concentrate on Surveys Monitoring for finding out what
measuring customer customers think of their
satisfaction. 1 6 products.
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UNDERSTANDING
CUSTOMER
NEEDS GATHERING THE VOICE
OF THE CUSTOMERS Figure 3.3. Customer Listening Posts at
Nestlé Purina PetCare Company

CUSTOMER LISTENING METHOD PURPOSE

Millward Brown Surveys Determine brand awareness
Nielsen Data Monitor consumer product usage
CONSUMER

Panel Data Monitor consumer behavior

Advertising score Measure TV ad effectiveness
Consumer complaints/feedback Obtain consumer Feedback
Focus groups Get detailed feedback on product
New product testing Evaluate extended usage/feedback

“Top-to-Top” meetings with each key Understand unique goals/strategies and

customer high-level issues/concerns
CUSTOMER

Joint volume planning meetings Align tactical execution

Monthly business meetings with each key
account
Customer Advisory Councils
Meetings with NPPC CGD VP at each key
account
Review tactical execution; make
necessary adjustments
Learn about industry trends
Assess quality of account management &
execution; learn about key strategic issues21
UNDERSTANDING
CUSTOMER
NEEDS ANALYZING THE VOICE
OF THE CUSTOMERS
Because voice of the customer data typically consists of large number of
verbal comments or other textual information, it needs to be sorted and
consolidated into logical groups so that managers can understand the key
issues.

AFFINITY DIAGRAM
It is a tool for organizing large volumes of
information efficiently and identifying
natural patterns or groupings in the
information.
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UNDERSTANDING
CUSTOMER
NEEDS
ANALYZING THE VOICE
OF THE CUSTOMERS Example 3.2. Creating an
A ff i n i t y D i a g r a m f o r
Customer Needs
a l job
ut u
11. M tanding 14. Tim
ely and
d er s 12. Fle accurat
un xibility e status
9. Buyer reports
a lism orientation
essio n
. Pr o f 3. Consistent and n o f
13 f i c a ti o
accurate 5. Noti e s
t ry c h a ng
information indus
2. Reliability
10. D
iversi
progr ty of
8. Modern link ams
between
computers

7. Innovation
1. Expeditious
processes

6. Prior approvals
4. Competitive
rates 23
UNDERSTANDING
CUSTOMER
NEEDS ANALYZING THE VOICE
OF THE CUSTOMERS
Figure 3.4. EFFECTIVE LOAN PRODUCTS
A ff i n i t y D i a g r a m COMMUNICATION
SERVICE
Timely and accurate Reliability Innovation
status reports
Through
AFFINITY Notification of Flexibility of
DIAGRAM, industry changes Flexibility programs
information can be
used better to Consistent and Prior approvals Diversity of programs
design company’s accurate information
products and
services. Mutual job Expeditious Competitive rates
understanding processes

Modem link between Buyer orientation

computers

Professionalism 24
LINKING
CUSTOMER NEEDS
TO DESIGN,
PRODUCTION AND
SERVICE DELIVERY
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 VOC (voice of customer) information must be linked to
design, production, and delivery processes.

Quality dimensions that were important to customers:

• Customer Service Quality: reliability, responsiveness, competence, courtesy,

credibility, access, communication, understanding the customer,
collaboration, and continuous improvement
• Banking Service Product Quality: product variety/diverse features
• Online Systems Quality: content, accuracy, ease of use, timeliness,
aesthetics, and security.
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 Customer needs and expectations
(expected quality)

Identification of customer needs

One way of Translation into product/service specifications

(design quality)
understanding the
linkage of the VOC to
internal process is what Output
is often called the gap (actual quality)
model.
Customer perceptions
(perceived quality)
Measurement and feedback 27
BUILDING A
CUSTOMER-
FOCUSED
ORGANIZATION
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Creating a customer-
focused organization
takes hard work and
discipline. It must be
built on good policies,
good people, and good
processes.

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CUSTOMER-FOCUSED
ORGANIZATIONS FOCUS ON FOUR KEY
PROCESSES

• Making sincere commitments to customers

• Ensuring quality customer contact
• Selecting and developing customer contact employees
• Managing complaints and service recovery 30
CUSTOMER COMMITMENTS
Organizations that truly believe in the quality of their products
make sincere commitments to their customers. Effective
commitments address the principal concerns of customers, are
free from conditions that might weaken customers' trust and
confidence.

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CUSTOMER CONTACT AND INTERACTION
Every interaction between a customer and the organization - whether it be
face-to-face with a salesperson or customer service representative or online
on a website is called a moment of truth.

During moments of truth, customers form perceptions about the quality of the
service by comparing their expectations with the actual outcomes. Thus,
customer satisfaction or dissastisfaction takes place during moments of truth.

Customer contact requirements are measurable performance levels or

expectations that define the quality of customer contact with an
organization.
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SELECTING AND DEVELOPING
CUSTOMER CONTACT EMPLOYEES
Customer-contact employees are particularly important in
creating customer satisfaction as they often are the only means
by which a customer interacts with an organization.

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SERVICE RECOVERY AND
COMPLAINT MANAGEMENT
Despite all efforts to satisfy customers, every business experiences
unhappy customers. Complaints can adversely affect business if not
dealt with effectively.

Customer-focused 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.
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 COMPLAINT MANAGEMENT
PROCESS - CARGILL CORN MILLING

35
To improve products and
processes effectively,
organizations must do more
than simply respond to a
customer's complaint. They
need a systematic process for
collecting and analyzing
complaint data and then using
that information for
improvements.

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 MANAGING CUSTOMER
RELASTIONSHIPS
CHAPTER 3

CHAPTER 3- CUSTOMER FOCUS

37
MANAGING
CUSTOMER
RELATIONSHIPS
• Excellent organizations foster close relationships with customers that
lead to high levels of satisfaction and loyalty.

• Customer relationships can be fostered through strategic

partnerships and alliances and using technology to facilitate better
communication with customers and linkages to internal operations.

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STRATEGIC PARTNERSHIPS AND
ALLIANCES
Organizations focus more on their core competencies so they are looking
outside their organizations for assistance with noncritical support processes.

Customer-supplier partnerships
are long-term relationships
characterized by teamwork and
mutual confidence- represent an
important strategic alliance in
achieving excellence and
business success.

39
Customer-Focused Technology and
Analytics

Customer Relationship Management (CRM) is a software

designed to help organizations increase customer loyalty, target
their most profitable customers, and streamline customer
communication processes.
40
MEASURING CUSTOMER SATISFACTION AND
ENGAGEMENT
An effective customer satisfaction measurement system result in reliable information about customer ratings of
specific product and service features and about the relationship between these ratings and the customer’s likely
future behavior.

• Discover customer perceptions of how well the

organization is doing in meeting customer needs, and
compare performance relative to competitors.
• Identify causes of dissatisfaction and failed
expectations to understand the reasons why
customers are loyal or not loyal to the company.
• Identify internal work process that drive satisfaction
and loyalty and discover areas for improvement in the
design and delivery of products and services, as well
as for training and coaching of employees.
• Track trends to determine whether changes actually
result in improvements.
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DESIGNING SATISFACTION SURVEYS
First Step: Determine its purpose
“What research questions does the organization want to answer?” “ Who is the customer”
Surveys should focus on information that is a “must have,” not simply “nice to have.”

Customer satisfaction measurement should not be confined to external customers. Often the
problems that cause employee dissatisfaction are the same issues that cause dissatisfaction in
external customer.

42
Second Step: Who should conduct the survey

Independent third-party organizations often have more credibility to respondents and can
ensure objectivity in the results.

Third Step: Define the sample frame

The target group from which a sample is chosen.

Fourth Step: Select the appropriate survey instrument.

Written and web surveys have the advantage of low data collections costs, self-
administration, and ease of analysis; when used, they should be kept short and simple.

43
Likert scale is commonly used to
measure response. It allows customers to
express their degree of opinion.

Five-point scales have been shown to

have good reliability and are often
used, although 7- and even 10-point
scales are common.

44
 Good customer satisfaction
measurement identifies processes that
have high impact on satisfaction and
distinguishes between low performing
processes and those that are
performing well.

Many organizations have integrated

customer feedback into their continuous
improvement activities and in redesigning
products and services. 45
 WHY MANY
3 - CUSTOMER FOCUS

CUSTOMER
SATISFACTION
EFFORTS FAIL?
46
47
 • Ne t P ro m o t e r S co re (NP S ) -
Fre d Re ich h e ld , cla im e d to
co rre la t e s t ro n g ly w ith m a rke t
& re ve n u e g ro w th . "Wh a t is th e
like lih o o d ...?"
e g : Te le co m s , Fo o d p a n d a , e t c Measuring
• Cu s t o m e r P e rce ive d Va lu e
(CP V) - a m e a s u re m e n t t h a t
Customer
fo cu s e s m o re o n cu s to m e r Loyalty
lo y a lt y t h a n s a t is fa ctio n . "Wh a t
b e n e fit s a re im p o rt a n t t o
y o u ?"
e g : re s t a u ra n t s , h o t e ls , re s o rt s , e t c
48
 NET
P ROMOTER
SCORE (NP S)

Ne t P ro m o t e r S co re (NP S )
• 9 -10 - Lo y a l cu s t o m e rs o r re p e a t cu s t o m e rs
(P ro m o t e rs )
• 7 -8 - s a t is fie d cu s t o m e rs b u t m a y s w it ch t o
co m p e t it o rs (p a s s ive s )
• 6 a n d b e lo w - u n h a p p y cu s t o m e rs w h o m a y
s p re a d n e g a t ive co m m e n t s (d e ct ra ct o rs )
49
 CUSTOMER
P ERCEIVED
VALUE (CP V)
- m e a s u re s h ow cu s t om e rs
a s s e s s b e n e fit s s u ch a s :
• p rod u ct p e rform a n ce
• e a s e of u s e
• t im e s a vin g s a g a in s t cos t
- a s kin g cu s t om e rs t o p la ce a
p e rce n t a g e va lu e of
im p ort a n ce on e a ch a t t rib u t e
t o t h e t ot a l s core w ou ld b e
10 0 %

50
 QUALITY CASE SAMPLE
• la rge s t fa s t-food cha in bra nd in the Phils .
• 4 3 ye a rs in the bus ine s s
• 1,4 0 0 s tore s a nd 4 com m is s a rie s
• 2 70 inte rna tiona l bra nche s
• ₱18 7.3 billion (FY 2 0 19 ), ₱6 .4 billion ne t in com e
• giving e m ploym e n t to ~17,0 0 0 e m ploye e s
• re cognize d a s top 14 in world' s m os t va lu a ble
hom e grown re s ta ura nt bra nd by Bra nd Fina nce
51

Pa cific
 QUALITY CASE SAMPLE
Food & Se rvice Sca n d a ls
• Ha ir in corp ora te d in Yu m b u rg e r, 2 0 10
• "Ch icke n s a d " in 2 0 14 (ch icke n joy n ot a va ila b le )
• Da ta b re a ch in th e ir jollibe e d e live ry .com 2 0 17
• Worke rs p rote s t a n d b e in g la id off -
re g u la riza tion is s u e 2 0 18
• Jollib e e Ch icke n joy Tow e l s ca n d a l - BGC, 2 0 2 1

52
 QUALITY CASE SAMPLE
With s trict a dhe re nce to th e highe s t s ta nda rds of
food qua lity , s e rvice , a n d cle a nline s s , Jollibe e s e rve s
gre a t-ta s tin g, high-qua lity , a nd a fforda ble food
products .
Jollibe e 's bra nd va lue s a re a nchore d on the following:
Cus tom e r Focus , Spe e d with Exce lle nce , Hum ility to
Lis te n a n d Le a rn, Spirit of Fa m ily a nd Fun, a nd
Inte grity.
53
How d o va riou s d im e n s ion s of QUALITY in trod u ce d in

QUALITY CASE SAMPLE

th is ch a p te r a lig n w ith th e ir q u a lity ch a ra cte ris tics ?
• Qu a lity Dim e n s ion - P e rform a n ce , As s u ra n ce ,
Em p a th y a n d Re s p on s ive n e s s
• Qu ick to g a th e r th e voice of th e ir cu s tom e r
• Cu s tom e r En g a g e m e n t & In te ra ction
• Effe ctive Se rvice Re cove ry a n d Com p la in t Mg t
• Stra te g ic Su p p ly Ch a in P a rtn e rs h ip s

54
CHAPTER 3 - CUSTOME R
55

FOCUS