1. Focusing on Customers

2. 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.

3. Importance of Customer Satisfaction and Loyalty
“Satisfaction is an attitude; loyalty is a behavior”
Loyal customers spend more, are willing to 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.

4. Key Idea
Customer wants and needs drive competitive advantage, and statistics show that growth in market share is strongly correlated with customer satisfaction.

5. American Customer Satisfaction Index
Measures customer satisfaction at national level (1994 by University of Michigan and American Society for Quality)
Continual decline in index from 1994 through 1998 with a small improvement into 2000.
European Customer Satisfaction Index (April 2000)

6. ACSI Model of Customer Satisfaction
Perceived
quality
Perceived
value
Customer
complaints
Customer
satisfaction
Customer
expectations
Customer
loyalty

7. 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)
PERCEIVED QUALITY = ACTUAL - EXPECTED

8. 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

9. 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

10. Key Customer Groups Organization level Process level Performer level
consumers
external customers
employees
society
Process level
internal customer units or groups
Performer level
individual internal customers

11. 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?

12. AT&T Customer-Supplier Model
Requirements
and feedback
Your
Suppliers
Processes
Customers
Inputs
Outputs

13. Key Idea
The natural customer-supplier linkages among individuals, departments, and functions build up the “chain of customers” throughout an organization that connect every individual and function to the external customers and consumers, thus characterizing the organization’s value chain.

14. Customer Segmentation
Demographics
Geography
Volumes
Profit potential

15. Key Idea
Segmentation 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.

16. 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

17. 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

18. Kano Model of Customer Needs
Dissatisfiers: requirements that are expected in a product or a service. In an automobile, a radio, heater, required safety features are examples, which are generally not stated by customer but assumed as given.
Satisfiers: expressed requirements. Customers say they want. Many car buyers want a sunroof...
Exciters/delighters: unexpected features.new or innovative features that customers do not expert.

19. Customer Listening Posts
Comment cards and formal surveys
Focus groups
Direct customer contact
Field intelligence
Complaint analysis
Internet monitoring

20. Moments of Truth (Jan Carlzon, SAS)
Every instance in which a customer comes in contact with an employee of the company.
Example (airline)
Making a reservation
Purchasing tickets
Checking baggage
Boarding a flight
Ordering a beverage
Requests a magazine
Deplanes
Picks up baggage

21. Key Idea
An organization builds customer loyalty by developing trust, communicating with customers, and effectively managing the interactions and relationships with customers through approaches and its people. Companies must carefully select customer contact employees, train them well, and empower them to meet and exceed customer expectations.

22. Customer Relationship Management
Accessibility and commitments
Selecting and developing customer contact employees
Relevant customer contact requirements
Effective complaint management
Strategic partnerships and alliances

23. 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

24. Survey Design Identify purpose Determine who should conduct the survey
Select the appropriate survey instrument
Design questions and response scales

25. Key Idea
The types of questions to ask in a survey must be properly worded to achieve actionable results. By actionable, we mean that responses are tied directly to key business processes, so that what needs to be improved is clear; and information can be translated into cost/revenue implications to support the setting of improvement priorities.

26. Example: The Olive Garden
The Lobby
Was the lobby staff friendly and did they welcome you to the restaurant?
Were you seated in a timely, efficient manner?
The Table Area
Was your table area clean when you were seated?
The Server
Was your server attentive and there when you needed him/her?
Was your server knowledgeable and able to answer your questions about our food and beverages?

27. Scale: 1 = poor ….5 = excellent
The Food
How would you rate the taste of your food?
Please rate the temperature of your food, hot food being piping hot.
Please rate your visit on the value for the money.
Overall, how would you rate your visit
Would you recommend this Olive Garden to a close friend or relative?

28. 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

29. 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

30. 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