Chapter 3

Customer Driven
Quality

POORNIMA M CHARANTIMATH Copyright © 2022 Pearson India Education Services Pvt. Ltd. All Rights Reserved
Learning Objectives
1. Explain Customer Focus
2. Understand Customer Relationship Management (CRM)
3. Explain Quality Circle and Suggestion System
4. Explain the Classification of Services
5. Define the Measure of Service Quality
6. Discuss Service Quality Models

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Customer-Centric Model

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Customer Satisfaction

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Customer Requirements
a. Basic Requirements

b. Performance Requirements

c. Delight Requirements

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Customer Requirements- Kano Model

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Customer Perceptions of Quality
1. Performance
2. Features
3. Service
4. Warranty
5. Price
6. Reputation

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Customer Relationship Management (CRM)
•CRM is a comprehensive strategy and process of acquiring, retaining, and
partnering with selective customers to create superior value for the company
and the customer.
•CRM involves the integration of marketing, sales, customer service, and the
supply-chain functions of the organization
•The purpose of CRM is to achieve greater efficiencies and effectiveness in
delivering customer value.

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Schools of Thought on CRM
1. The Anglo-Australian Approach
2. The Nordic Approach, and
3. The North American Approach
4. The Asian (Guanxi) Approach

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Types of CRM
1. Strategic CRM
2. Operational CRM
3. Analytical CRM
4. Collaborative CRM

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Ladder of Loyalty

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Levels for Bonding Customer Relationship
1. Financial Bonds
2. Social Bonds
3. Customization Bonds
4. Structural Bonds

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Customer Defections
•A Defection Occurs Whenever A Customer Switches To A Competitor.
•Customer Defection Is The Rate At Which Customers Defect Or Stop The Usage
Of Products Of A Company.
•Businesses With High Defection Rates Would Be Losing Their Existing Customers
• Zero Defection Aims At Eliminating Customer Attrition.

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Types of Defectors
1. Price Defectors
2. Product Defectors
3. Service Defectors
4. Market Defectors
5. Technology Defectors
6. Organisational Defectors
7. Physical Defectors

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Customer Retention Programmes
Step 1 Review Mission Statement
Step 2 Research your customer base
Step 3 Measure customer defection rates
Step 4 Stay in front of customers
Step 5 Take the extra mileage
Step 6 Create a proprietary way of communicating or servicing customers

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Customer Life Time Value (CLTV)

Customer Lifetime Value = Customer Value – Cost (acquisition, retention,

service)

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 Customer Portfolio Analysis
High

Current Margin

Low

Low High
Future Potential

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Customer Value Management Cycle
1. Right customers (acquisition)
2. Right relationship (development)
3. Right retention (keeping valuable customers)

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Customer Segmentation
1. Apostles
2. Terrorists/Defectors
3. Mercenaries
4. Hostages

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Customer Classification
1. Butterflies
2. Strangers
3. Barnacles
4. True Friends

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Customer Lifecycle Management
1. Contact Phase

2. Acquisition Phase

3. Retention Phase

4. Loyalty Phase

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CRM Strategy
1. Switching

2. Satisfaction

3. Trust

4. Commitment

5. Loyalty

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CRM Models
1. The Identify, Differentiate, Interact, Customize (IDIC) Model
2. The Value Discipline Mode
3. The Gartner Competency Model
4. The QCi Model
5. Payne’s Five-Process Model
6. The Francis Buttle Model

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CRM in B2B and B2C

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CRM Score Cards
1. Customer outcomes,
2. Internal business processes,
3. Financial objectives
4. Learning and growth

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Tools Used for Determining Customer Expectations

1. Customer Satisfaction Survey

2. Employee Feedback
3. Focus Groups
4. Toll-Free Telephone Numbers
5. Report Card
6. Internet

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e-CRM
e-CRM is defined as activities designed to manage customer
relationships by using the Internet, web browsers or other
electronic touch points. The levels of e-CRM are:

1. Foundational services
2. Customer-centered services
3. Value added services.

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 CRM Benefits
1. Develop better communication channels

2. Collect customer related data

3. Create detailed profiles of individual customers

4. Increased customer satisfaction

5. Access to customer account history, order information and customer information at all touch points

6. Identify new selling opportunities

7. Increased market share and profit margin and revenues

8. Reduced costs of buying and using product and services

9. Better stand against global competition

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Quality Control Circles (QCC)

•QCC is a small team of people usually from the same work area
who voluntarily meet on a regular basis to identify, investigate,
analyse and solve their work-related problems.
• QCC adopt a democratic process and introduce a participative
management culture in the organization.

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 Characteristics of Quality Circles
1. A small group of people (6-8) who do similar work led by their supervisor trained as a
facilitator
2. The membership in a circle is voluntary and meet regularly according to an agreed
schedule
3. The members are trained in the techniques of problem solving
4. The circle identify their own problems in their own work area
5. The problems are analysed and solutions are presented to management
6. The solutions are implemented on approval of management by the members
7. The members are recognized for their contribution

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Role of Quality Circle

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Objectives of Quality Circles
1.Identify And Analyze Problems
2.Work Towards The Development And Improvement Of The Organization
3.Utilize And Enhance Human Resources
4.Improve The Quality Of Products
5.Reduce Costs And Enhance Productivity
6.Solve Problems Specific To A Product Or Service
7.Improve Conflict And Inter-personal Resolution
8.Utilize Innovative And Imaginative Skills Of An Individual
9.Developing Work Interest

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Objectives of Quality Circles
1.Job Involvement
2.Enhance Problem-solving Abilities
3.Improve Communication
4.Promote Leadership Skills
5.Promote Personal Development
6.Reduce Errors
7.Promote Cost Reduction
8.Participation In The Management Process

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 Role of Quality Circle Members

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 QCC Operation Cycle

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The Suggestion System
Suggestion Systems Give Employees A Voice And A Role In Determining
Company Policies And Operating Procedures.
Employee Suggestions Can Help Increase Efficiency, Eliminate Waste, Improve
Safety, And Improve The Quality of A Company's Products And Services
Encouraging Employees To Submit Helpful Ideas For New Products, Identify
Potential Improvements To The Workplace
Suggestions may be received through Suggestion Box, Attitude Survey, Exit
Interview, Quality Circle, etc.
Call Attention To Any Problems or Difficulties They May Be Experiencing.

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Benefits of Employee Suggestion Program
1. Improve Employee Morale
2. Increase Job Satisfaction
3. Create Ownership & Engagement
4. Build Team Spirit
5. Reduce Costs – Increase Profitability
6. Increase Revenue
7. Improve Customer Satisfaction

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Quality in Service Industry
1. “Quality” in a service organization is a measure of the extent to which the
service delivered meets the customer’s expectations.
2. One primary difference is that products are tangible and services are
intangible.
3. Another difference is that the manufacturing system is relatively closed,
whereas the service system is relatively open.

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Classification of Services

The Service Process Matrix

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SERVQUAL Model

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Service Personal Values (SERPVAL) Scale

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How to Improve the Service Quality
1. Listening
2. Reliability
3. Basic Service
4. Service Design
5. Recovery
6. Fair Play
7. Teamwork
8. Employee Research
9. Servant Leaddership

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Prerequisites for Achieving Service Quality
1. Visionary Leader
2. Setting High Performance Standards
3. Management’s Commitment and Support
4. Preparing the Employee
5. System for Addressing Customer Complaints
6. System for Monitoring Service Quality
7. Get Reviews and Ratings

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Copyright © 2022 Pearson India Education Services Pvt. Ltd.

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ISBN 978-93-544-9120-7

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