Customer satisfaction

Gunjan Soni
Lecture 2
Total Quality Management
Introduction
 Most important asset of any organization is customer
 A success of an organization depends on
 How many customers it has
 How much they buy
 How often they buy
 Most manufacturing and service organization are using
customer satisfaction as the measure of quality (MBNQA)
accounts for 30% of the point)
 TQM implies an organization’s obsession with meeting or
exceeding customer expectations
 An organization must give its customer a quality product or
service that meet their needs at a reasonable price, which
includes on-time delivery and outstanding service
 Customer satisfaction and not profit should be primary goal of
organization
Introduction – contd..
 Teboul model
Company
offer
Customer
needs

 Total satisfaction is achieved when the offer meets need

 Part of the square that lies within circle is perceived by
customer to be satisfying
 Part of the square outside the circle is unnecessary
 Customer satisfaction seems simple enough and yet it is far
from simple
 Customer satisfaction is not an objective statistic, but more of a
feeling or attitude
 It is subjective in nature and hence difficult to measure
 So many facets of customer experience with product / service
has to be measured to get accurate picture of customer
satisfaction
Feedback
 Customers continually change (a) their minds, (b) their
expectations, (c) their suppliers
 Feedback is ongoing and active probing of the customer mind
 It enables the organization to
 Discover customer dissatisfaction
 Discover relative priorities of quality
 Compare performance with the competition
 Identify customer needs
 Determine opportunities for improvement
 It applies even to service industry – to identify and analyse
errors, take corrective action and make enhancements
 Listening to customer voice can be accomplished by numerous
information collecting tools
 They are comment cards, surveys, focus groups, toll-free
telephone lines, customer visit and internet
Feedback – contd..
 Comment card
 Low cost method of getting feedback
 It is usually attached with warranty card and is included with product at
the time of purchase
 Intent is to get small personal information and what made that customer
buy the product
 It may not provide true measure of feelings
 Survey
 Is a popular tool for obtaining opinion and perceptions about product and
services
 They are costly and time consuming
 Can be administered through mail or phone
 Generally in the form of questionnaires and customer is asked to furnish
answers relating to the quality of products based on 1 to 5 scale
 The result may not represent the normal population and they may be
biased as those who feels strongly about the subject
Feedback – contd..
 Survey (Eight points to be remembered)
 Clients and customers are not the same
 Surveys raise customer’s expectations
 How you ask a question will determine how the question is answered
 You have only one chance and only 30 mins.
 More time you spend on survey development, less time you will spend
on data analysis and interpretation
 Whom you ask is important on what you ask
 Before data are collected, you should know how you want to analyse it
 Survey is different from public opinion poll, as in later
customer tend to be anonymous
 Question are off different types
 Information on customer feelings or attitudes
 Information on customer behaviour
 Information on customer knowledge
Feedback – contd..
 Questions should be carefully crafted, so that it does not get
contaminated and hence the answers
 Customer also send back a survey should be thanked for
spending their time
 More multiple answer questions can be answered in given time
than open ended questions
 Survey analysis should be proper and it should not only
identify problems and opportunities but also the magnitude of
customer base at risk. It should yield specific course of action
 Focus groups
 Most popular and too expensive, but effective way of gathering
information on expectation and requirement
 Group of customers, who have the same profile as the customers that
organization want to attack is chosen
 They are asked questions (carefully prepared) by moderator, who knows
what information he wants
 An incentive is given to these people for their time
Feedback – contd..
 Toll-free telephone numbers
 Effective technique for receiving complaint feedback
 Organization can respond faster and more cheaply to the complaint
 Customer visit
 Provides organization to proactively monitor its products performance
when it is in use and identify specific problems
 Senior managers should be involved and not delegated to some one
 Internet
 Manager can monitor discussion about what take place on internet to find
out what customer say about products
 Newsgroups, electronic bulletin boards and mailing lists are scanned for
keywords, if it is of interest to some group
 Message like comparing a company product with that of competitors can
be uncovered
 Less costly method
Using customer complaints
 Previous activities (feedback) are proactive methods
 Complaints are reactive, but one of the most important information
gathering tool
 A dissatisfied customer can easily become lost customer
 Many organization will use customer dissatisfaction as the primary
measure to assess process improvement efforts
 About 80% of people never do complaints and hence organization
may perceive that customers are satisfied
 Mostly they switch to a competitor and hence every complaints
should be accepted, analysed and solved, as it represents the tip of
iceberg
 Small organization has a tremendous advantage, as top ranking
personnel having contact with customers and hence provide fast
response, but its not the case of large organization
 Another study reveals that more than half of dissatisfied customers
will buy again, if they believe that their complaints has been heard
and resolved
 Complaints may fail to reach top management, but it reaches
potential customers
Translating needs into requirements
Kano’s model
Diagram
Conceptualizes customer requirements
3 major area of customer satisfaction
1st area given by diagonal line
Explicit requirements
Easily identified and expected to be met (performance related)
2nd area is “innovation”
Customer ideas are vague and hence new idea comes out during
conceptualization
Some idea may excite and delight the customer
3rd area is un-stated and unspoken requirements
Most significant area
Customer may be unaware of them or may assume that
requirements will be automatically met
Implied requirements are hardest to define and proves costly if
ignored
Customer retention
 More powerful and effective than customer satisfaction
 Represent those activities that produce customer satisfaction and
creates customer loyalty which improves bottom line
 Customer satisfaction survey, focus group, interviews help to
identify what customer think and what he does may be different
 Customer satisfaction should also be measured by market share, cash
register receipts, no. of referrals from other customer etc.
 Can be done by having employee retention, which has an impact on
customers
 Notes
 Improved service always carries cost and organization must determine its
return of service investment by determining those elements that really
involve revenue and market share
 Benchmarking can be used to assess organization against competitor and
hence set realistic goals
 Organization must continuously improve the methods of obtaining
information concerning customer needs and expectations
 Maximize customer retention and satisfaction, financial reward will follow
automatically
 In the market economy, “the customer is the king” is well
known and never failing in its veracity.

 TQM purpose is the customer satisfaction to the degree

that his/ her expectations are to be not only met but also
exceeded.

Customers are the people but the consumer are the

statistics.

13 TQM
 Who are your Customer
The customer is a generic word for the receiver of the goods
or services.
Customer concept is both strategic and tactical.

 Strategic deals with designing the products to satisfy customer and create
process to deliver to their needs.

 But tactical focus is vital to really satisfy the customer.

14 TQM
 Categories of customer
A customer is most important person in our business.

A person who comes to us with his needs and wants.

A person with feelings who deserves to be treated with

respect.
A person who is purpose of our work and existence in
business.
A person deserves attention and curtesy.

A person who want quality, cost, safety, and delivery with

moral orientation.
He can be internal or external to the system.

15 TQM
 Internal customer supply chain
As an organisation seeks to satisfy the external customer,
same concept applies to internal departments.
Each individual becomes customer and supplier along the
business process flow.

External External
supplier Material Process Process Sales
Customer

Internal customer Internal customer

& supplier & supplier

16 TQM
 External Suppliers

This concept has rapidly developed in large

organisations in the west as they now have their
own quality standards which supplier must satisfy
to be favoured one.
Small and medium business also needs to develop a
strategy treating themselves as a customer to their
own external suppliers.

A policing attitude towards suppliers where visits

and inspection are undertaken with little or no prior
warning may reveal their mistakes and poor quality.

17 TQM
Some formal measures must be established between the
customer and supplier, otherwise the relationship may
become uncomfortable.

These could include:

Accurate measurable customer requirements

Periodic customer supplier quality reviews

Examination of supplier quality policy

Creation of customer supplier improvement teams

18 TQM
 Understanding Customer Requirements
Who is the customer
What he wants?
Typical Indian Customer
Subtle, Polite, Diplomatic
May not come out openly !

19 TQM
 Kano’s Model
Proposed by Prof Noriaki Kano
The model is based on the concepts of
customer quality and provides a simple
ranking scheme which distinguishes between
essential and differentiating attributes.
The model is a powerful way of visualizing
product characteristics and stimulating debate
within the design team

20 TQM
 Observations..
Kano,postulated that organizations, like
people, have needs and wants.
These needs and wants can and should be
segmented into a hierarchy.
This hierarchy provides a logical pathway to
meeting and exceeding customer needs on
the important elements of relationship
between an organization and customer.

21 TQM
 Attributes..
Basic/Threshold attributes
One dimensional attributes
Attractive attributes

22 TQM
 Threshold / Basic/Expected
Attributes..
Attributes which must be present in order for the
product to be successful, can be viewed as a
'price of entry'. However, the customer will
remain neutral towards the product even with
improved execution of these aspects.

23 TQM
 One Dimensional /Normal Attributes
(Performance / Linear)
These characteristics are directly correlated to
customer satisfaction. Increased functionality or
quality of execution will result in increased
customer satisfaction. Conversely, decreased
functionality results in greater dissatisfaction.
Product price is often related to these
attributes.

24 TQM
 Attractive/Delightful Attributes
(Exciters / Delighters)
Customers get great satisfaction from a
feature - and are willing to pay a price
premium. However, satisfaction will not
decrease (below neutral) if the product lacks
the feature.
These features are often unexpected by
customers and they can be difficult to
establish as needs up front. Sometimes
called unknown or latent needs

25 TQM
 Customer
Satisfaction Normal
Latent
Degree of fulfillment

Kano’s model of customer

satisfaction as a function
of need fulfillment
Expected

26 TQM
 Customer requirements…
Expected
 Expected requirements are those that are so obvious to
the customer that they do not state requirements overtly.
They are normally very obviously essential to the
customer that stating these requirements is a bit silly.
When these requirements are not met, the customer says
nothing, and probably doesn't even notice. When these
features or services are not present, the customer
complaints. Continually improving on meeting these
kinds of needs will not elicit customer loyalty or delight.
 Example: Telephone dialtone. If it is slow in coming or missing,
customers are not happy. When it is present, the customer does not
notice, much less become loyal to the provider.

27 TQM
 Customer requirements…
Normal
Sometimes referred to as "fundamental" quality.
Customers overtly state these needs and are quite
cognizant of them. When these needs are met,
customers are satisfied, when they are not met,
customers are dissatisfied. For many types of
requirements in this category, it is possible to
deliver more than customer requirements and
generate additional perceived benefit.
Example: Price, performance, delivery.

28 TQM
 Customer requirements…
Delightful
Customers have needs that they are not aware of. These
are referred to as "latent" needs. They are real, but not yet
in the customers' awareness. If these needs are not met by
a provider, there is no customer response. They are not
dissatisfied, because the need is unknown to them. If a
provider understands such a need and fulfills it, the
customer is rapidly delighted. It is also described as
having "attractive" quality. It delights and excites
customers and inspires loyalty.

29 TQM
30 TQM
 Observations..
 Product differentiation can either be gained by a
high level of execution of the linear attributes or
the inclusion of one or more 'delighter' features.
 But, it should be remembered that customer
expectations change over time, and a cup holder
in a car may be today's delighter, but tomorrow it
will be expected.
 Some users of Kano also suggest that an
additional set of attributes can be classified as
'enragers' - features which enrage either through
their absence or inclusion.

31 TQM
 Methodology..
 1. Determine main features, which need to be classified
Firstly, the features of interest need to be
determined
 2. Devise questionnaire
The questionnaire aims to understand how
potential customers would feel if a feature was
either present or not present. This is achieved by
asking two questions for each feature - a
functional question (i.e. - the feature is present)
and a dys-functional question (i.e. the feature is
not present),
 3. Sum responses
As with any interview method, sufficient
responses must be sought. An average response
32
should be calculated. TQM
 Methodology..
 4. Identify classification
Based upon the responses, the type of feature can
be determined Indifferent responses: these are
attributes to which the customer pays no
attention "If they are present, it is nice. If they are
not present, it does not matter"
 Questionable responses and reversals: responses
which contradict each other.
 5. Plot features onto the Kano graph
Ideally, the features should be mapped onto the
graph to provide a visual guide to the relative
importance from a user perspective of different
aspects of functionality.
33 TQM
 Applications…
Kano's Model of Quality to
investigate quality features in the
web environment.
Results suggest that Kano's Model
provides a framework to control for
website quality,
not all features are considered of equal
importance in web environments and
web users in different domains rank
important

34 TQM
 Figure 1: Banking Example

35 BITS PILANI TQM

 Application to a Hotel..
Must-Be Needs
 Must-be's are those needs and wants that have to be met for a
customer to even begin to have a positive relationship with your
company. Many customers believe their must-be needs are so
basic they don't even think of discussing these unless they have
been disappointed. Must-be needs for a typical hotel customer,
for example, would include an accurate reservation in the
system, a clean bathroom and a non-smoking room preference.
Customers of major hotel chains fully expect lower level needs
to be met, and simply assume the hotel knows what these needs
are.
One-Dimensional Needs
 One-dimensional needs are the needs a customer will discuss
and are typified by a "win-lose" negotiation. An example might
be the price of a hotel room. If asked how the hotel might make a
guest more satisfied, a majority might request a lower room rate.
But while each Rupee of discount provided to the guest makes
them that much happier, the same Rupee of discount makes
36 hotel management that much unhappier. TQM
 Application..
Delighters
Delighters are when wants or needs are met
when a customer is not expecting it. During a
recent vacation, I received a beautiful fruit and
cheese tray when I checked into a well known
hotel. Unfortunately they had assigned me to
a smoking room. The delighter did not have
the desired effect. In fact, it backfired because
my must-be need for a non-smoking room
was not met. When a bellman arrived to move
me to a non-smoking room, I requested he
remove the cheese tray because it smelled of
smoke.
37 TQM
 Implications…
We must be nearly flawless on meeting
customers' must-be needs and we should
focus our time, effort and quality teams on
these needs.
We should acknowledge the one-dimensional
needs of our customers but quickly move the
discussion to the next level to focus on
delighters.
We must focus concentrated effort on the
delighters -- those differentiators that provide
extraordinary benefit to the customer without
increasing a supplier's cost.
38 TQM
 Customer Protection
The following points justify the need for customer protection:
 Customer do not have adequate product knowledge.

 They are ignorant of their right.

 They are in a weak bargaining position.

 Manufactures and suppliers have the expertise which they don’t have.
 Often products are forced on customers through publicity, eye catching
packaging and advertisements.
 Fake and spurious products are flooding the markets and deceiving the
customers.
 Let the buyer be aware is not realistic in complex and mass produced
goods or services.

39 TQM
Quality awards and customer satisfaction
Thee are quality awards aiming for customer satisfaction:
Malcolm Baldrige National Quality Award
ISO 9000: though it does not fully address but the inherent
assumption is that customer requirements are known and fulfilled
The European quality award
The Deming prize for quality
The Golden Peacock National Quality Award

40 TQM
 Customer Complaint and Feed back system
This is vital for any industry to survive in the market for
long.
A typical management system may have these points for
its effective working:
Complaints must be collected from all sources.
Data should be collected in a defined format.
Complaints must be resolved quickly.
Customer must have quick response.
Local issues must be solved locally.
All others should be solved at central coordinator.
Data must be analysed on regular basis.
Performance measures should be identified.
Manager must monitor and promote use of entire process and
should extend it to customers.

41 TQM
 Customer Satisfaction Survey

An organisation can undertake a number of different kinds of

surveys.

These could be:

 Post purchase survey

 Post installation survey

 Customer satisfaction survey

42 TQM
 Customer Satisfaction Performance measures
 Product reliability  After sales service
 Ease of use  System integration and
 Availability of dealers
compatibility
and retailers  Functionality and
 Documentation
performance
 Customer complaints
 Price and costs of
and feedback
ownership
 Environment friendly
products

43 TQM
END of Lecture