1. CUSTOMERS SATISFACTION
NOR ASNIDAR BINTI AZIZ
(GS18560)
SAFIDA ZALMA BINTI MD PIAH
(GS18670)

2. Objectives of Unit: to understand the importance of customer focus,
to understand what it take to create satisfied customers,
to identify customers,
to understand customer needs,
to gather customer information,
to know what constitute an excellent customer relationship management, and
to know how to measure customer satisfaction.

3. CUSTOMERS SATISFACTION
“ THERE IS ONLY ONE BOSS – THE CUSTOMER”
And he or she can fire everybody in the company from the chairman down, by spending his or her money somewhere else”
Sam Walton

4. What is Customer Satisfaction?
Satisfaction is the end result the customer experiences when we have done all that is necessary to meet and exceed their expectations in a timely, responsible fashion, on a consistent basis. It is ultimately the experience our customer has, that defines their level of satisfaction
Speaking simply, customer satisfaction is a measure of expectations being exceeded, met, or not met. That’s it. When thinking of customer satisfaction measurement, we want to know that we are meeting or exceeding customer expectations

5. Types of Customers` External - outside the organization
Internal - people within your organization who receive your work
In many situations, producers have multiple customers and therefore find it useful to identify “core customers”

6. THE IMPORTANCE OF CUSTOMER FOCUS
Not just a quality issue- business practice.
The strategic management literature defines competitive advantage as a firm's ability to achieve market superiority over its competitors.
A strong competitive advantage is characteristically driven by customer wants and needs.
Focusing on customers is not just a quality issue; it is sound business practice. The strategic management literature defines competitive advantage as a firm's ability to achieve market superiority over its competitors. A strong competitive advantage is characteristically driven by customer wants and needs. A company's customer-driven focus actually addresses all stakeholders: customers, employees, suppliers, stockholders, the public, and the community.
Any business has four key goals:
1. To satisfy its customers
2. To achieve higher customer satisfaction than its competitors
3. To retain customers in the long run
4. To gain market share

7. THE IMPORTANCE OF CUSTOMER FOCUS
Any business has four key goals:
1. To satisfy its customers
2. To achieve higher customer satisfaction than its competitors
3. To retain customers in the long run
4. To gain market share

8. THE IMPORTANCE OF CUSTOMER FOCUS
Benefits of Satisfaction ·
- insulate your customers from competition
- can create a sustainable advantage
- reduce failure costs
- encourage repeat patronage and loyalty
- enhance and promote positive word-of-mouth
- lower the costs of attracting new customers, and
- can have a significant positive effect on profitability.

9. THE IMPORTANCE OF CUSTOMER FOCUS
deliver ever-improving value to its customers.
Value, is quality related to price-
Consumers no longer buy solely on the basis of price but compare the total package of products and services that a business offers (sometimes called the consumer benefit package) with the price and with competitive offerings.
The consumer benefit package influences the perception of quality and includes the physical product and its quality dimensions
To achieve these goals, a business must deliver ever-improving value to its customers. Value, is quality related to price. Consumers no longer buy solely on the basis of price. They compare the total package of products and services that a business offers (sometimes called the consumer benefit package) with the price and with competitive offerings. The consumer benefit package influences the perception of quality and includes the physical product and its quality dimensions; pre-sale support, such as ease of ordering; rapid, on-time, and accurate delivery; and post-sale support, such as field service, warranties, and technical support. If competitors offer better choices for a similar price, consumers will naturally select the package with the highest perceived quality. Thus, understanding exactly what consumers want is absolutely crucial to competitive success. If a competitor offers the same package of goods and services at a lower price, customers make the choice. However, lower prices require lower costs if the firm is to continue to be profitable. Quality improvements in operations reduce costs. Therefore, businesses must focus on both

10. THE IMPORTANCE OF CUSTOMER FOCUS
SO ..If competitors offer
better choices for a similar price?
the same package of goods and services at a lower price?
Lower prices require lower costs if the firm is to continue to be profitable - Quality improvements in operations to reduce costs.
Businesses must focus on both - continually improving product quality and reducing costs.
To achieve these goals, a business must deliver ever-improving value to its customers. Value, is quality related to price. Consumers no longer buy solely on the basis of price. They compare the total package of products and services that a business offers (sometimes called the consumer benefit package) with the price and with competitive offerings. The consumer benefit package influences the perception of quality and includes the physical product and its quality dimensions; pre-sale support, such as ease of ordering; rapid, on-time, and accurate delivery; and post-sale support, such as field service, warranties, and technical support. If competitors offer better choices for a similar price, consumers will naturally select the package with the highest perceived quality. Thus, understanding exactly what consumers want is absolutely crucial to competitive success. If a competitor offers the same package of goods and services at a lower price, customers make the choice. However, lower prices require lower costs if the firm is to continue to be profitable. Quality improvements in operations reduce costs. Therefore, businesses must focus on both

11. THE IMPORTANCE OF CUSTOMER FOCUS
Customer satisfaction occurs when:
- products and services respond to customers needs; that is, when products and services meet or exceed customer expectations our principal definition of quality.
Customer satisfaction translates directly into increased profits because:
- Loyal customers spend more than new clients - less costly to do business with.
On the other hand, Poor quality products and services, lead to customer dissatisfaction
in the form of: -

12. THE IMPORTANCE OF CUSTOMER FOCUS
Customer dissatisfaction - One study found that
customers are five times more likely to switch because of perceived service problems than for price concerns or product quality issues.
Problems result from unkept promises, failure to provide full service, service not provided when needed, incorrectly or incompletely performed service, or failure to convey the correct information
dissatisfied customers tell at least twice as many friends about bad experiences than they tell about good ones.
complaints, returns, and unfavorable word /mouth publicity or purchase from competitors.
in the form of:
- complaints, returns, and unfavorable word - of mouth publicity.
- purchase from competitors.

13. CREATING SATISFIED CUSTOMERS
Customer satisfaction results from providing goods and services that meet or exceed customers' needs.
Perceived Quality = actual quality – expected quality
Actual quality - the outcome of the production/ service process and what is delivered to the customer
Expected quality - What the customer assumes will be received
Unexpected satisfaction - occurs when actual quality exceeds expected quality

14. CREATING SATISFIED CUSTOMERS
Actual quality is the outcome of the production process and what is delivered to the customer. Actual quality may differ considerably from expected quality. This difference happens when information gets lost or is misinterpreted from one step to the next. For instance, ineffective market research efforts may incorrectly assess the true customer needs and expectations. Designers of products and services may develop specifications that inadequately reflect these needs. Manufacturing operations or customer-contact personnel may not deliver according to the specifications. A further complication comes from the customer who sees and believes the quality of the product (perceived quality) as considerably different from what he or she actually receives (actual quality). Because perceived quality drives consumer behavior, this area is where producers should really center their concerns.
Figure 1: Customer-Driven Quality Circle

15. Identifying Customers
To understand customers needs, a company must know who their customer are.
Identifying customers begins with asking questions:
What products or services are produced?
Who uses these products and services?
Who do employees call, write to, or answer questions for?
Who supplies the inputs to the process

16. Identifying Customers
AT&T Customer Supplier Model
- This model suggests that suppliers must be considered as a customer
- Every process receives inputs from suppliers and creates outputs for customers
Requirements
and feedback
Your
Suppliers
Processes
Customers
Inputs
Outputs 6

17. Customer Segmentation
Demographics
Geography
Volumes
Profit potential

18. UNDERSTANDING CUSTOMER NEEDS
Quality has many dimensions, which are difficult to satisfy simultaneously
Quality
Dimension
Manufactured Product
(Stereo Amplifier)
Service Product
(Checking Account)
Performance
Signal-to-noise ratio; power
Time to process customer requests
Features
Remote control
Automatic bill paying
Conformance
Workmanship
Accuracy
Reliability
Mean time to failure
Variability of time to process requests
Durability
Useful life
Keeping pace with industry trends
Serviceability
Ease of repair
Resolution of errors
Aesthetics
Oak cabinet
Appearance of Bank Lobby
Table 1 : Quality dimensions of a Manufactured Product and Service

19. UNDERSTANDING CUSTOMER NEEDS
Five key dimensions of service quality contribute to Customer perception: Reliability - Ability to provide what was promised, dependably and accurately
Assurance – The knowledge and courtesy of employees, and their ability to convey trust & confidence
Tangibles – The physical facilities, equipment, & appearance of personnel
Empathy – The degree of caring and individual attention provided to customers.
Responsiveness - willingness to help customers & provide prompt service

20. UNDERSTANDING CUSTOMER NEEDS
Kano Model of Customer Needs- suggested three classes of customer requirements
Dissatisfers: requirements that are expected. If these features are not present, the customer is dissatisfied. (clean hotel room)
Satisfiers: requirements that customers say they want. (want sunroof in car)
Exciters/delighters: new or innovative features that customers do not expect. Leads ti high perceptions of quality.

21. Figure 3: Classes or Levels of Customer Requirements
UNDERSTANDING CUSTOMER NEEDS
Figure 3: Classes or Levels of Customer Requirements 8

22. Factors Influencing Customer Satisfaction
Product/service quality
Specific product or service features
Attributions for service success or failure
Perceptions of equity or fairness
Other consumers, family members, and coworkers
Price
Personal factors -
the customer’s mood or emotional state
situational factors
Attribution - customers take at least partial responsibility for the success or failure of the service outcome
a commercial weight loss program. Results of the study confirmed that customers do distinguish between satisfaction with the service outcome (in this case pounds lost) and satisfaction with the services provided by the firm. Further, the study found that satisfaction with the provider was a better predictor of customer loyalty than was satisfaction with the number of pounds lost.
The results also suggest that customers appreciate the contributions they make, and thus attribute success or failure in part to their own actions. When they did better than expected, they were likely to take significant personal credit, but also gave credit to the weight loss program. When the weight loss outcome was worse than expected, they tended to blame situational factors rather than themselves or the weight loss program.
Perception of equity or fairness
When a firm uses higher consumer demand to its own advantage by increasing prices, consumers will feel being exploited and
hence perceive the prices as unfair. For example, one study showed that 82 percent of the respondents judged a price
increase for snow shovels the morning after a snowstorm to be unfair,
For example, when buyers feel that they have to buy a product and must bear whatever the price is, they may be concerned that potentially they could be exploited by the seller regardless whether the seller actually performs such actions.
Price - car buyers indeed consider price an important factor in their purchase decisions. Specifically,consumers tend to consider the relative relationship between price and their expectations about the performance of the product they want to purchase (Voss et al., 1998). Hence, an
initial price quote from the seller may be compared with a buyer’s previous experience or an expectation of an acceptable
or fair price for the product. If buyers’ perceptions of performance or quality of the car exceed their expectations and the car represents good value for money, then their perceptions of the quoted or listed price should be favorable

23. Gathering Customer Information
Some of the key approaches to gathering customer information include:
Comment cards and formal surveys
Gathering information pertaining to the customers’ perception of a particular quality dimension (open-ended questions)
Focus groups
Panel of individuals who answer questions about a company’s product or services (allows for in-depth probing)
Direct customer contact
Workers (CEOs, managers, etc..) contacting customers
Comment cards – generally very few customers would response. They survey would ask the customer what they want from a supplier and covers areas of service, price, delivery, quantity & technology
Focus group – Key ques ask include – what do U like about the product/service, what pleases or delight you, what do you dislike, what problem have U encountered?, & how U change the product or service.
Focus group offer a subtantial advantage by providing direct voice of the customer to the organization.
Direct customer contact - Top executives visit the customer personally to hear issues and compalints.

24. Gathering Customer Information
Study complaints
Evaluating complaints to learn about product failures or service problems
Field intelligence
Gathering information using employees who have direct contact with the customer (repair technician)
Approximately one out of 25 customers complains!!
Monitor the Internet
Monitoring discussion forums to obtain valuable insights
Study complaints – this allow organizations to learn about product failures and service problems, particularly the gaps between expectation and performance.
Field intelligence – information can be obtained by simply engaging in conversation and listening to the customer

25. Tools for Classifying Customer Requirements
Affinity diagram
Used to organize large numbers of ideas or facts into natural patterns or groupings
Tree diagram
Shows hierarchical structure of facts and ideas
Used in designing implementation plans for projects
This is among the 2nd quality tools – designed for more qualitative problems.

26. Tools for Classifying Customer Requirements
Affinity diagram Tree diagram

27. Affinity Diagram (KJ Diagram)
A diagram that is used as a method of sorting qualitative data, which usually comes in the form of short phrases or setences (eg.`customers are unhappy with delivery delays’). It is often done with Post-it Notes, although the original method used 3” x 5” cards.
Header
Header
Header Summarizes
the element in the group
Element
Element
Element
Element
Each element describes
one aspect of the problem
Element

28. Affinity Diagram (KJ Diagram)
When to use it
~ Use it to bring order to fragmented and uncertain information and where there is no clear structure
~ Use it when information is subjective and emotive, to gain consensus whilst avoiding verbal argument
~ Use it when current opinions, typically about existing system, obscure potential new solution
~ Use it, rather than a Relations Diagram, When the situation calls more for creative organization than for logical organization.

29. Next Generation Digital Camera
An example of organizing customer requirements in an affinity diagram for a new digital camera is shown below.
Next Generation Digital Camera
Features
Composing
Picture
Size &
ergonomics
Picture
capabilities
Long Battery life
Have a large
view finder screen
Easy to hold & carry
Take action pictures
Large picture
Storage capacity
Have a separate
view finder
Compact, fits
in pocket
Take close
up picture
Zoom Lens
Capture picture
accurately
Ease of Use
Responsiveness
Value
Easy to use
No delay in turning on
Easy to select
picture modes
No delay in
picture taking
Reasonably price

30. The Tree Diagram
The Tree Diagram is a deceptively simple tool that can be used in many analysis situation. It can be used to find problem causes in the same way as a cause-effect Diagram or be used to find an appropriate solution
Quality Ingredient
Good Food
Good Recipe
Prompt Attention
Good Service
Satisfied Customer
Professional Waiter
Happy Atmosphere
Pleasant
Surrounding
Good Table
presentation
Pleasing Decor

31. The Tree Diagram When to use it
~ Use it when planning, to break down task into manageable and assignable units
~ Use it when investigating a problem, to discover the detailed component parts of any complex topic
~ Use it only when the problem can be broken down in hierarchical manner
~ Use it, rather than a Relations Diagram, to break down a problem when the problem is hierarchical in nature

32. Customer Relationship Management
Excellent customer relationship management depends on five aspects
Commitments to customers
Zaring Homes promises that homes will be built on-time, within budget, & within specification or the home is free
Customer-focused service standards
Responding to a customer’s call within two hours
Commitment – a) address the principal concerns of customer
b) free frm. Conditions that might weaken customer’s trust and confident
c) are communicated clearly and simply to customers
- explicit guarantees and warranties.
Customer-focused service standard: measureable performance levels or expectations that define the quality of customer contact. Might include technical standards such as response time… 11

33. Customer Relationship Management
Training and empowerment
Job orientation, on-the-job training, & job certification
Effective complaint management
Employees at Ritz-Carlton can spend up to $2000 to resolve a complaint with no questions asked
Training
Many companies begin with the recruiting process, selecting those employees who show the ability and desire to develop good customer relationships. Customer relationship training includes every person who comes in contact with customers. While empowerment enable employees to make decision on their own to satisfy the customer.
Complaint Management
Effective resolution of complaints increases customer loyalty and retention. World class organization make it easy for the customer to complain. Quick effort is taken to resolve problem quickly. Company need a systematic process for collecting, analyzing and used the info for improvement.
Customer partnership
Customer-supplier partnership represent a strategic alliance in achieving excellence and business success so both benefitted in terms of access to technology, shared risk in new business venture .
Customer Partnership
working closely with suppliers that share common values.

34. Measuring Customer Satisfaction
Measurement of customer satisfaction allow a business to:
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

35. Measuring Customer Satisfaction
★ Accurately identify customers’requirements and their relative importance;
★ Understand how customers perceive your organization & whether your performance meets their requirements;
★ Identify PFIs – areas where improvements in performance will produce the greatest gain in customer satisfaction;

36. Measuring Customer Satisfaction
★ Pinpoint `understanding gaps’ where your own staff have a misunderstanding of customers’priorities or their ability to meet customers needs;
★ Set goals for service improvement and monitor progress against a customer satisfaction index;
★ Increase profits through improved customer loyalty and retention

37. Methods to Collect Customer Satisfaction Data
Negative Feedback Analysis
customer complaints, warranty claims, repair records - focus on problems
concern: many dissatisfied customers do not complain (1/20 complain).
Proactive Feedback (ask customers for their opinions)
examples: customer surveys, focus groups, “employees” as customers.
advantage: identify key product features and assess levels of performance.

38. Methods to Collect Customer Satisfaction Data
Analysis of Competitor Products
examples: Benchmarking, “War Rooms” or Tear Down Analysis
advantage: “Know thy competitor, know thyself”
a room in the building of a military, political, or business organization equipped with the technical means to gather information, plan strategy, direct activities, etc., esp. for a military or political campaign
A teardown refers to a process in which a real estate company or individual buys an existing home and then demolishes and replaces it with a new one. Frequently, the new building is larger than the previous one, in an attempt to increase the appeal of the property to prospective buyers or take advantage of rising property values [1]. The process is often especially common in older suburbs, where people wish to have larger homes and yet don't want to move to far-out exurbs or new developments.

39. American Customer Satisfaction Index
Measures customer satisfaction at national level
Introduced in 1994 by University of Michigan and American Society for Quality
The American Customer Satisfaction Index (ACSI) covers 10 economic sectors, 41 industries and more than 200 companies and federal or local government agencies.
Roughly emulates the Swedish Customer Satisfaction Barometer. Develop by Professor Claes Fornell of Uni. Of Michigan.
The survey is done yearly and its goal is to provide an understanding of the impact quality to the GNP, national competitiveness & US standard of living

40. ACSI Model of Customer Satisfaction
complaints
Perceived
quality
Perceived
value
Customer
satisfaction
The American Customer Satisfaction Index is based on a model that link customer expectations, perceived quality, and perceived value to customer satisfaction. In return, customer satisfaction is then linked to customer complaints and customer loyalty.
Customer expectations, from a customer’s perspective, is defined by how well the product or service will perform. Perceived quality asks the question, are the customer’s needs met by the product or service? Perceived value is measured by price vs. quality and quality vs. price. Customer complaints describe, within a time frame, the percentage of customer complaints over the product or service. Customer retention is based on the question, will the customer purchase a product or service at different price levels? This indicator is key for an organization and its financial performance. For most companies, repeat customers are a major contributor to profit.
Customer
expectations
Customer
loyalty

41. Some Data on Customer Attitudes and Loyalty
An average customer with a complaint tells 9-10 people; if it is resolved he/she only tells 5 people.
For every complaint received, there are twenty others that are not reported.
It costs 5-10 times more in resources to replace a customer than it does to retain one.
Companies spend 95% of service time redressing problems and only 5% trying to figure out what made the customer angry.
(Source: Winning Back Angry Customers, Quality Progress, 1993)

42. The customer feedback ‘Iceberg’
Of those whose customer experience is below expectation:-
You can influence the result
10% make an
official complaint
It’s unlikely you will know
25% mention the problem to an employee
65% don’t talk to anyone in the organization
may take their business elsewhere,
but tell lots of other people.
A problem well solved often creates a delighted customer

43. TQM’s Customer Approach
“the customer defines quality.”
“the customer is always right.”
“the customer always comes first.”
“the customer is king.”
“quality begins and ends with the customer”

44. Conclusion
‘Customer satisfaction’ is “customers’ perception of the degree to which the customer’s requirements have been fulfilled.
Customer complaints are a common indicator of low customer satisfaction but their absence does not necessarily imply high customer satisfaction.
Your organization’s performance may be outstanding but if your customers feel that it is poor – or even no better than the competition – they may report that their satisfaction is low.
  .

45. Remember This
Remember, customer satisfaction is from the customer point of view, not your organization’s point of view. Also, an organization cannot be great on all things.  Focus on those things that bring value to your customers.

46. Remember This
A customer is the most important visitor on our premises. He is not dependent on us; we are dependent on him. He is not an interruption in our work; he is the purpose of it. He is not an outsider in our business; he is a part of it. We are not doing him a favor by serving him; he is doing us the favor by giving us an opportunity to do so.
Mahatma Gandhi

47. THANK YOU Customer satisfaction and service quality are not the same.
Customer satisfaction is a broader concept and is influenced by perceptions of service quality, product quality, price and other factors
such as situational and personal factors.
Service quality focuses on dimensions of services (reliability, responsiveness, assurance, empathy and tangibles).