customers satisfaction

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CUSTOMERS SATISFACTION

NOR ASNIDAR BINTI AZIZ (GS18560)

SAFIDA ZALMA BINTI MD PIAH (GS18670)

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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.

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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

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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

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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”

Types of Customers`

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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.

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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

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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.


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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


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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.


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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


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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.


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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

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CREATING SATISFIED CUSTOMERS

Figure 1: Customer-Driven Quality Circle

Customer needs and expectations

(Expected quality)

Identification of customers needs

Translation into product/service specifications(design quality)

Output(actual quality)

Customer perceptions(perceived quality)

Measurement and feedback

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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

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Identifying Customers

Requirementsand feedback

Requirementsand feedback

Your Suppliers

YourProcesses

YourCustomers

Inputs Outputs

ATAT&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

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Customer Segmentation

Demographics Geography Volumes Profit potential

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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

UNDERSTANDING CUSTOMER NEEDS

Table 1 : Quality dimensions of a Manufactured Product and Service

• Quality has many dimensions, which are difficult to satisfy simultaneously

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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

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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.

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Delight!

Base Expectations

Specifications and

Requirements

Level 1Minimum performancelevels always assumed

present(IMPLICIT)

Level 2Options and trade-offs available

for selection by customers(EXPLICIT)

Level 3Value-added characteristics and features

that customers did not expect(LATENT)

UNDERSTANDING CUSTOMER NEEDS

Figure 3: Classes or Levels of Customer Requirements

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Factors Influencing Customer Satisfaction

Product/service qualitySpecific product or service featuresAttributions for service success or failurePerceptions of equity or fairnessOther consumers, family members, and coworkersPricePersonal factors -

the customer’s mood or emotional statesituational factors

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Gathering Customer Information

Comment cards and formal surveysGathering information pertaining to the

customers’ perception of a particular quality dimension (open-ended questions)

Focus groupsPanel of individuals who answer questions about

a company’s product or services (allows for in-depth probing)

Direct customer contactWorkers (CEOs, managers, etc..) contacting

customers

Some of the key approaches to gathering customer information include:

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Study complaintsEvaluating 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 InternetMonitoring discussion forums to obtain valuable

insights

Gathering Customer Information

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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

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Tools for Classifying Customer Requirements

Affinity diagram Tree diagram

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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

Element

Element

Element

Header

Element

Element

Header Summarizes the element in the group

Each element describes one aspect of the problem

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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.

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An example of organizing customer requirements in an affinity diagram for a new digital camera is shown below.

Features

Long Battery life

Large picture Storage capacity

Zoom Lens

Composing Picture

Have a large view finder screen

Have a separate view finder

Size & ergonomics

Easy to hold & carry

Compact, fits in pocket

Picture capabilities

Take action pictures

Take close up picture

Capture picture accurately

Value

Reasonably price

Ease of Use

Easy to use

Easy to select picture modes

Responsiveness

No delay in turning on

No delay in picture taking

Next Generation Digital Camera

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The Tree DiagramThe 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

Satisfied Customer

Good Food

Good Service

Pleasant Surrounding

Quality Ingredient

Good Recipe

Prompt Attention

Professional Waiter

Happy Atmosphere

Good Table presentation

Pleasing Decor

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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

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Customer Relationship ManagementExcellent customer relationship management depends on five aspectsCommitments to customers

Zaring Homes promises that homes will be built on-time, within budget, & within

specification or the home is freeCustomer-focused service standards

Responding to a customer’s call within two hours

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Training and empowerment Job orientation, on-the-job training, & job

certificationEffective complaint management

Employees at Ritz-Carlton can spend up to $2000 to resolve a complaint with no questions asked

Customer Partnership working closely with suppliers that share

common values.

Customer Relationship Management

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Measuring Customer Satisfaction

Measurement of customer satisfaction allow a business to:Discover customer perceptions of business

effectivenessCompare company’s performance relative to

competitors Identify areas for improvementTrack trends to determine if changes result in

improvements

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★ 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;


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★ 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

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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.

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Methods to Collect Customer Satisfaction Data Analysis of Competitor Products

examples: Benchmarking, “War Rooms” or Tear Down Analysis

advantage: “Know thy competitor, know thyself”

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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.

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ACSI Model of Customer Satisfaction

Perceivedquality

Customercomplaints

Perceivedvalue

Customer satisfaction

Customerexpectations Customer

loyalty

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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)(Source: Winning Back Angry Customers, Quality Progress, 1993)

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The customer feedback ‘Iceberg’Of those whose customer experience is below expectation:-

10% make an

official complaint

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.

You can influence the result

It’s unlikely you will know

A problem well solved often creates a delighted customer

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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”

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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.

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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.

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Remember ThisA 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

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