Transcript Chapter 1

Module 4
Focusing on Customers
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Quiz
• What is the difference between explicit and
tacit knowledge?
• Deming’s 14 Points: Which ones can you
name/remember?
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Deming’s 14 Points (Abridged) (1 of 2)
1. Create and publish a company mission
statement and commit to it.
2. Learn the new philosophy.
3. Understand the purpose of inspection.
4. End business practices driven by price alone.
5. Constantly improve system of production
and service.
6. Institute training.
7. Teach and institute leadership.
8. Drive out fear and create trust.
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Deming’s 14 Points (2 of 2)
9. Optimize team and individual efforts.
10. Eliminate exhortations for work force.
11. Eliminate numerical quotas and M.B.O.
Focus on improvement.
12. Remove barriers that rob people of pride
of workmanship.
13. Encourage education and self-improvement.
14. Take action to accomplish the transformation.
www.deming.org
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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 between five-ten times more to
find a new customer than to keep an
existing one happy.
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Importance of Customer Satisfaction and
Loyalty
• Johnson Controls
• 91% contract renewals from satisfied or very
satisfied customers
• 1% point increase in overall satisfaction = $13
million in service contract renewals annually
• Research in 2008 revealed that companies
with a 98% customer retention rate were
twice as profitable than those with 94%.
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American Customer
Satisfaction Index
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ACSI Model
of Customer Satisfaction
Perceived
quality
Customer
complaints
Perceived
value
Customer
expectations
Customer
satisfaction
Customer
loyalty
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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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Leading Practices (1 of 2)
• Define and segment key customer groups
and markets
• Understand the voice of the customer
(VOC)
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Leading Practices (2 of 2)
• Understand linkages between VOC and
design, production, and delivery
• 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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Experiment
• Have one of your classmates time you while
you wait for varying amounts of time
between 2 to 4 minutes. Try not to count
the seconds! Estimate the amount of time
you waited.
• What does this experiment mean for
organizations that are trying to set service
standards?
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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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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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AT&T Customer-Supplier Model
Your
Suppliers
Inputs
Requirements
and feedback
Your
Processes
Outputs
Your
Customers
Requirements
and feedback
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Customer Segmentation
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•
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Demographics
Geography
Volumes
Profit potential
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Key Dimensions of Quality
• Performance – primary operating characteristics
• Features – “bells and whistles”
• Reliability – probability of operating for specific time
under 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
Can you think of a product that is reliable but contains low
durability?
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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 (rendering authenticity)
• Responsiveness – willingness to help customers
and provide prompt service
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Service Quality
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Kano Model of Customer Needs
• Dissatisfiers: expected requirements
• Satisfiers: expressed requirements
• Exciters/delighters: unexpected features
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Customer Listening Posts
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Comment cards and formal surveys
Focus groups
Direct customer contact
Field intelligence
Complaint analysis
Internet monitoring
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Tools for Classifying
Customer Requirements
Affinity diagram
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Tools for Classifying
Customer Requirements (Cont.)
Tree diagram
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Customer Relationship Management
• Accessibility and commitments
• Selecting and developing customer contact
employees
• Relevant customer contact requirements
• Effective complaint management
• Strategic partnerships and alliances
• Customer Integration*
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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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Measuring Customer Satisfaction
Effective customer satisfaction measurement
systems result in?
• Reliable Information
– About?
• Customer Ratings
• Future Behavior
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Example: The Olive Garden
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– How was the pace of your meal?
The Lobby
– Was the lobby staff friendly and did they
welcome you to the restaurant?
– Were you seated in a timely, efficient
manner?
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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?
• 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?
Scale: 1 = poor ….5 = excellent
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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
• Travel Websites / Applications
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Performance-Importance Analysis
Performance
High
Low
High
Vulnerable
Strengths
Who Cares?
Overkill
Importance
Low
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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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