ENTREPRENEURSHIP Lecture No: 28 Resource Person: Malik Jawad Saboor Assistant Professor Department of Management Sciences COMSATS Institute of Information Technology Islamabad.

Previous Lecture Review History and Importance of Quality Defining Quality Principles & Practices, Quality

OBJECTIVES Focusing on Customers Importance of Customer Satisfaction & Loyalty Creating Satisfied Customers Gathering and Analyzing Customer Information Production and Service Delivery CRM

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.

5 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.

Key Idea Customer wants and needs drive competitive advantage, and statistics show that growth in market share is strongly correlated with customer satisfaction.

7 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

Key Idea Many organizations still focus more on processes and products from an internal perspective, rather than taking the perspective of the external customer.

Leading Practices (1 of 2) Define and segment key customer groups and markets Understand the voice of the customer (VOC) Understand linkages between VOC and design, production, and delivery

Leading Practices (2 of 2) 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

Key Customer Groups Organization level – consumers – external customers – employees – society Process level – internal customer units or groups Performer level – individual internal customers

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?

13 AT&T Customer-Supplier Model Requirements and feedback Requirements and feedback Your Suppliers Your Processes Your Customers InputsOutputs

Key Idea The natural customer-supplier linkages among individuals, departments, and functions build up the “chain of customers” throughout an organization that connect every individual and function to the external customers and consumers, thus characterizing the organization’s value chain.

Customer Segmentation Demographics Geography Volumes Profit potential

Key Idea Segmentation allows a company to prioritize customer groups, for instance by considering for each group the benefits of satisfying their requirements and the consequences of failing to satisfy their requirements.

Key Dimensions of 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

18 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

19 Kano Model of Customer Needs Dissatisfiers: expected requirements Satisfiers: expressed requirements Exciters/delighters: unexpected features

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

21 Customer Listening Posts Comment cards and formal surveys Focus groups Direct customer contact Field intelligence Complaint analysis Internet monitoring

Key Idea Companies use a variety of methods, or “listening posts,” to collect information about customer needs and expectations, their importance, and customer satisfaction with the company’s performance on these measures.

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

Customer Relationship Management Accessibility and commitments Selecting and developing customer contact employees Relevant customer contact requirements Effective complaint management Strategic partnerships and alliances Exploiting CRM technology

Key Idea To improve products and processes effectively, companies must do more than simply fix the immediate problem. They need a systematic process for collecting and analyzing complaint data and then using that information for improvements.

Lecture Review 26 Focusing on Customers Importance of Customer Satisfaction & Loyalty Creating Satisfied Customers Gathering and Analyzing Customer Information Production and Service Delivery CRM Reference: Evans, James R. et. al, The Management and Control of Quality, 8 th edition