total quality management - focusing on customers

THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 1

Chapter 4

Focusing on Customers

Dr. John V. Padua

The Management & Control of Quality, 7e


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.


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.

A firm cannot create loyal customers without first creating satisfied customers.


ACSI Model of Customer Satisfaction

Perceivedquality

Customercomplaints

Perceivedvalue

Customer satisfaction

Customerexpectations Customer

loyalty


Customer-Driven Quality Cycle

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


Leading Practices Define and segment key customer groups and

markets Understand the voice of the customer (VOC) Understand linkages between VOC and design,

production, and delivery Develop effective complaint management

processes Measure customer satisfaction for improvement


Key Customer Groups Organization level

consumers external customers employees society

Process level internal customer units or groups

Performer level individual internal customers


Customer SegmentationDemographicsGeographyVolumesProfit potential


Key Dimensions of Manufacturing 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


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


Kano Model of Customer Needs

Dissatisfiers: expected requirements that cause dissatisfaction if not present

Satisfiers: expressed requirementsExciters/delighters: unexpected

features


Key Idea

As customers become familiar with them, exciters/delighters become satisfiers over time. Eventually, satisfiers become dissatisfiers.


Moments of Truth 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


Importance of Complaint ManagementThe average company never hears from

96 percent of its unhappy customersOf the customers who make a

complaint, more than half will do future business if the complaint is resolved

The average customer who has had a problem will tell 9 or 10 others.

Dissatisfied customers increasingly post their feelings on the Web


Measuring Customer Satisfaction

Discover customer perceptions of business effectiveness

Compare company’s performance relative to competitors

Identify areas for improvementTrack trends to determine if changes

result in improvements


Key Idea

An effective customer satisfaction measurement system results in reliable information about customer ratings of specific product and service features and about the relationship between these ratings and the customer’s likely future market behavior.


Survey Design

Identify purposeDetermine who should conduct the

surveySelect the appropriate survey

instrumentDesign questions and response scales

total quality management - focusing on customers

Business