02 focusing on customers

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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly

Focusing on Customers

Quality is a customer determination which is based on the

customers actual experience with the product or service, measured

against his or her requirements--stated or unstated, conscious or

merely sensed, technically operational or entirely subjective--and

always representing a moving target in a competitive market.

Feigenbaum

The materials in this lecture borrows heavily from: The Management

and Control of Quality, Sixth Edition, Evans & Lindsay


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Creating a Customer Focus

Effective organizations talk to customers, translate what

their customers said into appropriate actions, and align

their key business processes to support what their

customers want

Six Sigma organizations achieve a competitive advantageby carefully and constantly analyzing customers needs

and by organizing and operating to meet these needs the

first time and every time


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Example

Consider a product that a customer has purchased that does

not meet your expectations

The product has many "bells and whistles" but does not

meet basic needs or is not user friendly

Will you take the time to complain about the product or

service?

Will you avoid purchasing products from the same

company in the future?


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Customer Behavior (Goodman 1991)

Most customers do not complain if a problem exists(50% encounter a problem but do not complain; 45% complain atthe local level; 5% complain to top management).

On problems with loss of over $100 and where the

complaint has been resolved, only 45% of customers willpurchase again (only 19% if the complaint has not beenresolved)

Word-of-mouth behavior is significant. If a large problemis resolved to the customer's satisfaction, about 8 persons

will be told about the experience; if the customer isdissatisfied with the resolution, 16 other persons will betold


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Satisfied Customers

Organizations need to identify customers needs

Design the production and service systems to meet those

needs

Measure performance as the basis for improvement


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Why bother?

Business environment is extremely competitive

Todays consumers demand quality more than ever before

Consumers are more willing to switch from company to

company and not just to get a better price. They will

switch for better service: reliability, accessibility, courtesy,

and so on

It is significantly cheaper to retain existing customers than

to attract new ones

Our competitors are gaining and its not getting any easier

The Management and Control of Quality, Sixth Edition, Evans & Lindsay


7/34Lecture Notes and Electronic Presentations, 2009 Dr. Kelly

Leading Practices

Define and segment key customer groups and markets

Understand the customer needs and wants (VOC)

Understand linkages between VOC and capabilities

(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



Customer-Driven Quality Cycle(Evans & Lindsay)

measurement and feedback

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 is a comparison of ACTUAL

QUALITY to EXPECTED QUALITY



Who is the customer?

Many traditional organizations focus on internal processes

and products as identified from an internal perspective

Six Sigma organizations take the perspective of the

external customer when identifying projects



Customer Groups

Organization level

consumers

external customers

employees

society

Process level

internal customer units or groups

Performer level

individual internal customers



AT&T Customer-Supplier Model

Requirementsand feedback Requirementsand feedback

YourSuppliers

YourProcesses

YourCustomers

Inputs Outputs



Identifying Customers

Customer-supplier linkages among individuals,

departments, and functions create a chain of customers

and connect every individual and function to the external

customers, thus characterizing the organizations value

chainWhat 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?



Creating a Customer Focus

How will we know what the customer wants?

Ask them.

Companies use a variety of methods to collect information

about customer needs and expectations



Customer Listening Posts

Comment cards and formal surveys

Focus groups

Direct customer contact

Field intelligenceComplaint analysis

Internet monitoring

Moments of Truth - Every instance in which a customercomes in contact with an employee of the company



Customer Surveys

Purpose:

To learn about the customers point of view on service issues,

product/service attributes, and performance

To create a personal experience with individual customers yet

yield information on populationsThe 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.



Survey Design

Identify purpose

Brainstorm to identify list of features and/or problems

Determine who should conduct the survey

Design questions and response scales worded in a positivepoint of view without interjecting bias

Prepare your list of questions and measurement scales

(typically Likert)

Collect a trial dataset using your survey to determine ifyou have designed the survey to meet your objectives

Finalize your survey



Steps to Conduct a Survey

Determine the required sample size

Send out the survey and collect data

Analyze your results

The information from this type of survey can be plotted ina perceptual map (Urban and Hasser, 1980)



Measuring Customer Satisfaction

Discover customer perceptions of business effectiveness

Compare company performance relative to competitors

Identify areas for improvement

Track trends to determine if changes result inimprovements

An effective measurement system are provide reliable

information about the customers likelihood of future

business



Dimensions of Service Quality that are Important toCustomers

Reliabilityability to provide what was promised

Assuranceknowledge and courtesy of employees and

ability to convey trust

Tangiblesphysical facilities and appearance of personnel

Empathydegree of caring and individual attention

Responsivenesswillingness to help customers and

provide prompt service



Dimensions of Product Quality that are Important toCustomers

Performanceprimary operating characteristics

Featuresbells and whistles

Reliabilityprobability of operating for specific time and

conditions of use

Conformancedegree to which characteristics match

standards

Durability - amount of use before deterioration or

replacement

Serviceabilityspeed, courtesy, and competence of repair

Aestheticslook, feel, sound, taste, smell



Satisfaction-Importance Analysis

Satisfaction

Importance

Low High

Low

High

Who cares? Overkill

Vulnerable Strengths



Customer Satisfaction vs.Customer 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

A firm cannot create loyal customers without first creating

satisfied customers


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Customer Loyalty is created by:

Developing trustBeing accessible and honoring commitments

Communicating with customers

Effectively managing the interactions and relationships

throughApproach

People

Selecting and developing customer contact employees

Handling complaints timely and to the customerssatisfaction

Strategic partnerships and alliances


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Difficulties with Customer SatisfactionMeasurement

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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Kano Model of Customer Needs

Kanos model attempts to identify product attributes which

are perceived to be important to customers

Good method to evaluate the relative importance of

customer requirements


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Steps to Conducting a Kano Analysis

Collect customer information through all listening poststo determine customer needs and requirements

List all customer needs and requirements (stated andunstated)

For each listed need, ask the customer to assessHow would they feel if the need was addressed?

How would they feel if the need was notaddressed?

Using a scale of:Id like it

It is normally that way and I expect it

I dont care

I wouldnt like it

Classify each need as Exciter, Satisfier, Dissatisfier


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Like it Expected Dont

Care

Dont Like

it

Like it Exciter Exciter Satisfier

Expected Dissatisfier Dissatisfier

Dont

Care

Dissatisfier

Dont Like

it

How

would the

customer

feel if the

need was

addressed?

How would the customer feel if the need was notaddressed?

Kano Analysis


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Kano Model of Customer Needs

Exciter:Unexpected features or characteristics that increase satisfaction andimpress customers

Occurs when someone recognizes a need that customers are not aware oflinking technologies that no one has thought of applying to that need

As customers become familiar with them, exciters/delighters becomesatisfiers over time

Satisfiers:

Expressed performance requirements, standard characteristics thatincrease or decrease satisfaction (price, ease of use, speed, etc.)

Eventually, satisfiers become dissatisfiers

Dissatisfiers:Expected basic requirements and featuresif not met, customer will beextremely dissatisfied

Often these are unspoken requirements or assumed requirements (e.g. carsshould be sold with tires)


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Kano Analysis

Incorporate information into product or servicedevelopment

Must deal with any dissatisfiers - product or service does not meet

basic needsdoes not matter how well you do on other features or

optionsIf you have exciters, strengthen themif not, incorporate new

features to create them


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Tools to discover

ExcitersFocus groups, innovations, careful watching, breakthroughs

Satisfiers

Surveys (ail, phone, email), face to face interviews, market

research, Competitor ads and marketing efforts

Dissatisfiers

Interviews, industry standards, regulatory requirements, unhappy

customer feedback, complaints, refunds, personal experience


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Customers and Suppliers often speak a differentlanguage

A Six Sigma project requires that we:Understand what is important from the customer perspective

(KPOV)

Be able to measure the KPOVs to recognize improvement

The KPIVs in the Six Sigma Project must be directly related tothe measurable KPOV

This ensures improvement from suppliers perspective is

improvement from customer perspective.


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Relating KPOV with KPIV

Enter the characteristics important to the customer into the KeyProcess Output Variables (KPOV) at the top of the table.

Then numerically rank each KPOV from 1 to 10, the most importantreceiving the highest number and so on. Place these numbers in theCustomer Priority Raking row.

Identify all of the potential cause that can impact the various KPOV's

and list these in the Key Process Input Variables (KPIV) column to theleft of the table.

Next determine the impact of each KPIV on each KPOV bynumerically rating the effect each KPIV has on each KPOV in thebody of the table (use a scale from 1-10, the most important receivingthe highest number).

Look at the KPIV Importance Scores. High KPIV Importance Scores(and corresponding Percentages) have the greatest impact on theidentified KPOV's. By focusing Six Sigma projects around thesevariables, projects will have an impact on what is important to thecustomer.


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KPIV/KPOV Table


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Example KPIV/KPOV Table

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