1. Module 4
Focusing on Customers

2. Quiz What is the difference between explicit and tacit knowledge?
Deming’s 14 Points: Which ones can you name/remember?

3. Deming’s 14 Points (Abridged) (1 of 2)
1. Create and publish a company mission
statement and commit to it.
2. Learn the new philosophy.
3. Understand the purpose of inspection.
4. End business practices driven by price alone.
5. Constantly improve system of production
and service.
6. Institute training.
7. Teach and institute leadership.
8. Drive out fear and create trust.

4. Deming’s 14 Points (2 of 2) 9. Optimize team and individual efforts.
10. Eliminate exhortations for work force.
11. Eliminate numerical quotas and M.B.O.
Focus on improvement.
12. Remove barriers that rob people of pride
of workmanship.
13. Encourage education and self-improvement.
14. Take action to accomplish the transformation.

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 between five-ten times more to
find a new customer than to keep an
existing one happy.

6. Importance of Customer Satisfaction and Loyalty
Johnson Controls
91% contract renewals from satisfied or very satisfied customers
1% point increase in overall satisfaction = $13 million in service contract renewals annually
Research in 2008 revealed that companies with a 98% customer retention rate were twice as profitable than those with 94%.

7. American Customer Satisfaction Index

8. ACSI Model of Customer Satisfaction
Perceived
quality
Customer
complaints
Perceived
value
Customer
satisfaction
Customer
expectations
Customer
loyalty

9. Customer-Driven Quality Cycle
Customer needs and expectations
(expected quality)
Identification of customer needs
Translation into product/service specifications
(design quality)
Output (actual quality)
Customer perceptions (perceived quality)
measurement and feedback
PERCEIVED QUALITY = ACTUAL - EXPECTED

10. Leading Practices (1 of 2)
Define and segment key customer groups and markets
Understand the voice of the customer (VOC)

11. Leading Practices (2 of 2)
Understand linkages between VOC and 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

12. Experiment
Have one of your classmates time you while you wait for varying amounts of time between 2 to 4 minutes. Try not to count the seconds! Estimate the amount of time you waited.
What does this experiment mean for organizations that are trying to set service standards?

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

14. 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?

15. AT&T Customer-Supplier Model
Requirements
and feedback
Your
Suppliers
Processes
Customers
Inputs
Outputs

16. Customer Segmentation
Demographics
Geography
Volumes
Profit potential

17. Key Dimensions of Quality
Performance – primary operating characteristics
Features – “bells and whistles”
Reliability – probability of operating for specific time under 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
Can you think of a product that is reliable but contains low durability?

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 (rendering authenticity)
Responsiveness – willingness to help customers and provide prompt service

19. Service Quality

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

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

22. Tools for Classifying Customer Requirements
Affinity diagram

23. Tools for Classifying Customer Requirements (Cont.)
Tree diagram

24. Customer Relationship Management
Accessibility and commitments
Selecting and developing customer contact employees
Relevant customer contact requirements
Effective complaint management
Strategic partnerships and alliances
Customer Integration*

25. Measuring Customer Satisfaction
Discover customer perceptions of business effectiveness
Compare company’s performance relative to competitors
Identify areas for improvement
Track trends to determine if changes result in improvements

26. Measuring Customer Satisfaction
Effective customer satisfaction measurement systems result in?
Reliable Information
About?
Customer Ratings
Future Behavior

27. Example: The Olive Garden
The Lobby
Was the lobby staff friendly and did they welcome you to the restaurant?
Were you seated in a timely, efficient manner?
The Table Area
Was your table area clean when you were seated?
The Server
Was your server attentive and there when you needed him/her?
Was your server knowledgeable and able to answer your questions about our food and beverages?
How was the pace of your meal?
The Food
How would you rate the taste of your food?
Please rate the temperature of your food, hot food being piping hot.
Please rate your visit on the value for the money.
Overall, how would you rate your visit
Would you recommend this Olive Garden to a close friend or relative?
Scale: 1 = poor ….5 = excellent

28. Example: The Olive Garden
Open-ended questions:
What one thing did you like most about your visit?
What one thing could we do to improve your experience at The Olive Garden?
Survey form provides address, 800 number, FAX, and TDD number for hearing impaired
Travel Websites / Applications

29. Performance-Importance Analysis
Low High
Vulnerable
Strengths
High
Low
Importance
Who Cares?
Overkill

30. Difficulties with Customer Satisfaction Measurement
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