Focusing on

Customers

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Importance of Customers
The only value your company will ever create is the
value that comes from customers—the ones you have
now and the ones you will have in the future.
Businesses succeed by getting, keeping, and growing
customers. Customers are the only reason you build
factories, hire employees, schedule meetings, lay fiber-
optic lines, or engage in any business activity. Without
customers, you don’t have a business.
- Don Peppers and Martha Rogers, “Customers Don’t Grow on Trees,” Fast
Company magazine, July 2005

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Key Idea
To create satisfied customers, the
organization needs to identify customers’
needs, design the production and service
systems to meet those needs, and
measure the results as the basis for
improvement.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Key Customer-Focused Practices for
Performance Excellence
Identify the most important customer groups and markets,
considering competitors and other potential customers,
and segment the customer base to better meet differing
needs.
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.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Key Customer-Focused Practices for
Performance Excellence
 Understand the linkages between the voice of the customer and
design, production, and delivery processes; and use voice-of-the-
customer 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.
 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.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Key Customer-Focused Practices for
Performance Excellence
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.
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.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Customer Satisfaction and the
Bottom Line
It costs five times more to find a new
customer than to keep an existing one
happy.
Loyal customers spend more, are willing to
pay higher prices than new clients, and are
less costly to do business with.
Dissatisfied customers tell more people
about their experiences than satisfied
customers.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Key Idea
Customer engagement refers to
customers’ investment in or commitment
to a brand and product offerings.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Characteristics of Customer
Engagement
Customer retention and loyalty
Customers’ willingness to make an effort to do
business with the organization, and
Customers’ willingness to actively advocate for
and recommend the brand and product
offerings

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Key Idea
Customer satisfaction results from an
organization’s ability to meet and exceed
expectations and deliver higher value
than competitors.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Key Customer Groups
Organization level
consumers
external customers
employees
society
Process level
internal customer units or groups
Performer level
individual internal customers

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 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?

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Key Dimensions of
Manufacturing Quality
Performance – primary operating characteristics
Features – “bells 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
Aesthetics – look, feel, sound, taste, smell

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Key Dimensions of Service
Quality
Reliability – ability to provide what was promised
Assurance – 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

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Kano Model of Customer
Needs
Dissatisfiers: expected requirements
that cause dissatisfaction if not
present
Satisfiers: expressed requirements
Exciters/delighters: unexpected
features

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Key Idea
As customers become familiar with them,
exciters/delighters become satisfiers over
time. Eventually, satisfiers become
dissatisfiers.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Customer-Driven Quality Cycle

PERCEIVED QUALITY is a
comparison of ACTUAL
QUALITY to EXPECTED
QUALITY

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 Moments of Truth
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
Picks up baggage

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Building a Customer-Focused
Culture
Commitments and customer support
Customer-contact Employees
Complaint management and service recovery
Customer-focused technology

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 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
Study which goods and services are purchased together,
leading to good ways to bundle them

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Difficulties with Customer
Satisfaction Measurement
Poor measurement schemes
Failure to identify appropriate quality
dimensions
Lack of comparison with leading competitors
Failure to measure potential and former
customers

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Customer Perceived Value
CPV measures how customers assess
benefits—such as 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.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Thank you for listening!

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.