Chapter 3

Focusing on Customers

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

 “without customer, you
don’t have a business”

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Importance of Customer Satisfaction and
Loyalty
“Satisfaction is an attitude; loyalty is a
behavior”
Loyal customers spend more, are willing
ot pay higher prices, refer new clients,
and are less costly to do business with.
It costs five times more to find a new
customer than to keep an existing one
happy.

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Customer Engagement
refers to customer’s investment in or
commitment to a brand and product
offerings.

An important outcome of a customer-

focused culture and organization the
organization’s listening , learning and
performance-excellence strategy.
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Customer engagement was introduced
in 2009-2010 Baldridge Criteria for
Performance Excellence as a recognition
of its increasing importance to
organizations that compete in a global
marketplace and in competitive local
markets.
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
American Customer Satisfaction Index
Measures customer satisfaction at national
level
Introduced in 1994 by University of Michigan
and American Society for Quality
Continual decline in index from 1994 through
1998 with a small improvement into 2000
suggests that quality improvements have not
kept pace with consumer expectations

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 ACSI Model
of Customer Satisfaction
Perceived Customer
quality complaints

Perceived Customer
value satisfaction

Customer Customer
expectations loyalty
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Customer-Driven Quality Cycle
Customer needs and expectations
(expected quality)

Identification of customer needs

Translation into product/service specifications

(design quality)

Output (actual quality)

Customer perceptions (perceived quality)

measurement and feedback

PERCEIVED QUALITY = ACTUAL - EXPECTED
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Leading Practices (1 of 2)
Define and segment key customer
groups and markets
Understand the voice of the customer
(VOC)
Understand linkages between VOC
and design, production, and delivery

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Leading Practices (2 of 2)
Build relationships through commitments,
provide accessibility to people and
information, set service standards, and follow-
up on transactions
Effective complaint management processes
Measure customer satisfaction for
improvement

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Key Customer Groups
Organization level
consumers
external customers
employees
society
Process level
internal customer units or groups
Performer level
individual internal customers

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
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?

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 AT&T Customer-Supplier Model

Your Inputs Your Outputs Your

Suppliers Processes Customers

Requirements Requirements
and feedback and feedback

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Customer Segmentation
Demographics
Geography
Volumes
Profit potential

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Key Dimensions of 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
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 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

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and provide prompt service
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 According to D. H. Stamatis
Customer service attributes
“COMFORT”

C – Caring
O-Observant
M-Mindful
F-Friendly
O-Obliging
R-Responsible
T-Tactful
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Customer Attrition
“if a product is good then
customer will come back; if not,
the product will comeback
(returned)”

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Kano Model of Customer Needs
Dissatisfiers: “must haves” (expected
requirements)
Satisfiers: “wants” (expressed
requirements)
Exciters/delighters: “never thought of”
(unexpected features)

Noriaki Kano
Professor,
Tokyo University of Science
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Customer Listening Posts
Comment cards and formal surveys
Focus groups
Direct customer contact
Field intelligence
Complaint analysis
Internet monitoring

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Tools for Classifying
Customer Requirements

Affinity diagram Tree diagram

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Customer Relationship Management
Accessibility and commitments
Selecting and developing customer
contact employees
Relevant customer contact
requirements
Effective complaint management
Strategic partnerships and alliances

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Measuring Customer Satisfaction
Discover customer perceptions of
business effectiveness
Compare company’s performance
relative to competitors
Identify areas for improvement
Track trends to determine if changes
result in improvements
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Example: The Olive Garden
 The Lobby  How was the pace of your meal?
 Was the lobby staff friendly and did they  The Food
welcome you to the restaurant?
 How would you rate the taste of your
 Were you seated in a timely, efficient
manner? food?
 Please rate the temperature of your
 The Table Area
 Was your table area clean when you
food, hot food being piping hot.
were seated?  Please rate your visit on the value for

 The Server the money.

 Overall, how would you rate your visit
 Was your server attentive and there
when you needed him/her?  Would you recommend this Olive
 Was your server knowledgeable and able Garden to a close friend or relative?
to answer your questions about our food
and beverages?

Scale: 1 = poor ….5 = excellent

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Example: The Olive Garden
Open-ended questions:
What one thing did you like most about your
visit?
What one thing could we do to improve your
experience at The Olive Garden?
Survey form provides address, 800 number,
FAX, and TDD number for hearing impaired

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Performance-Importance Analysis
Performance
Low High

Low Who cares? Overkill

Importance

High Vulnerable Strengths

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Difficulties with Customer Satisfaction
Measurement
Poor measurement schemes
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

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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Customer and Market Focus
in the Baldrige Criteria
The Customer and Market Focus category examines how an
organization determines requirements, expectations, and
preferences of customers and markets; and how it builds
relationships with customers and determines the key factors that
lead to customer acquisition, satisfaction, and retention, and to
business expansion.
3.1 Customer and Market Knowledge
3.2 Customer Relationships and Satisfaction
a. Customer Relationships
b. Customer Satisfaction Determination
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
 Thank you…

GOD bless …
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM