Some Thoughts on Understanding Customer Values Sam Tomas

Customer Quality Features David Garvin (Managing Quality: The Strategic and Competitive Edge, 1988) described product quality in terms of seven quality features that customers look for: Performance – primary operating characteristics Reliability – probability of a malfunction or failure Conformance – the degree established standards are met Durability – a measure of product life Serviceability – ease, speed, courtesy, and competence of repairs Aesthetics – how a product looks, feels, sounds, smells, tastes… Perceived Quality – a person’s perception of quality

How Do Customers Determine Value? They review products to identify CTQ (critical to quality) features such as style and technology. They select those features they feel will provide personal benefits. They estimate the value of those benefits by comparing them to the price of the product. They then decide if the features are worth the price? NOTE: A properly designed product will have taken all of these into consideration when developing the product concept.

Customer Value Example Desired Product: Used Automobile Quality Features: Performance – primary operating characteristics Reliability – probability of a malfunction or failure Conformance – the degree established standards are met Durability – a measure of product life Serviceability – ease, speed, courtesy, of repairs Aesthetics – how a product looks, feels, sounds, smells, etc. Style, technology and performance (STP) Car mileage – how many miles on the car Miles per gallon – economy Other “bells and whistles” Benefits: Selected quality features Determine Price: Sales price of the car Sales tax, insurance, etc. Operating costs Tires replacement? Determine Value Benefits Selected Price

Identifying Customer Desired Values Is Not Always Easy! Listening to the VOC (Voice of the Customer) is a starting point, but is that enough? How will you know when you are satisfying those key customer values? How do you measure what customers think it received in the way of value? How do you measure what customers think it cost them? If companies can answer those questions they’re probably way ahead of they’re competitors.

To Complicate Matters, Not All Customer Stated Benefits Are Of Equal Importance! Customers themselves rate their selected benefits three ways: Some are: Must have Must have a car with a GPS navigation system Some are: Would like to have, if they can afford it Would like to have a Bose sound system in the car with a 6- disk changer, 12 speakers, and 500 W of audio power but can’t afford the $3,000 cost. The rest are: Nice to have if they can get them cheap Don’t much care for a car’s moon roof but I’ll take one if it doesn’t cost much.

Should Customer Requested New Products Always be Developed? Because a customer says he wants a new product doesn’t mean a company should develop it. The starting point for new product development is new product position analysis which includes: What the estimated market demand and profitability for the new product is, and at what selling price? How well the new product fits in with the company’s current products and can be promoted. How the new product can be differentiated from competitor products?, etc. If it’s determined that the product won’t be popular with other customers, it should not be developed.

How Do You Provide Customer Desired Values? (Where Does Lean Fit In?) For Garvin’s list of product quality features: Use Product Design & Development tools mostly to design the values in. For low prices and reduced lead times: Design it in for new products. For existing products, use Lean to eliminate or reduce process wastes and improve process efficiencies. For quality improvement– minimum defects: Use Six Sigma’s variability reduction DMAIC process to reduce out-of-spec defects.