Focusing on Customers

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
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Focusing on Customers Chapter4FocusingonCustomers 1KeyIdeaTocreatesatisfiedcustomers,theorganizationneedstoidentifycustomers’needs,designtheproductionandservicesystemstomeetthoseneeds,andmeasuretheresultsasthebasisforimprovement.ImportanceofCustomerSatisfactionandLoyalty “Satisfactionisanattitude;loyaltyisa behavior” Loyalcustomersspendmore,arewillingto payhigherprices,refernewclients,andare lesscostlytodobusinesswith. Itcostsfivetimesmoretofindanew customerthantokeepanexistingone happy. Afirmcannotcreateloyalcustomerswithout firstcreatingsatisfiedcustomers. 3KeyIdeaCustomerwantsandneedsdrivecompetitiveadvantage,andstatisticsshowthatgrowthinmarketshareisstronglycorrelatedwithcustomersatisfaction.AmericanCustomerSatisfactionIndex Measurescustomersatisfactionatnational level Introducedin1994byUniversityof MichiganandAmericanSocietyforQuality Continualdeclineinindexfrom1994 through1998withasmallimprovementinto 2000suggeststhatqualityimprovements havenotkeptpacewithconsumer expectations 5ACSIModelofCustomerSatisfaction Perceived Customer quality complaints Perceived Customer value satisfaction Customer expectations Customer loyaltyKeyIdeaTheeconometricmodelusedtoproduceACSIlinkscustomersatisfactiontoitsdeterminants:customerexpectations,perceivedquality,andperceivedvalue.Customersatisfaction,inturn,islinkedtocustomerloyalty,whichhasanimpactonprofitability.CustomerDrivenQualityCycle 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 is a comparison of ACTUAL 8 QUALITY to EXPECTED QUALITYKeyIdeaManyorganizationsstillfocusmoreonprocessesandproductsfromaninternalperspective,ratherthantakingtheperspectiveoftheexternalcustomer.LeadingPractices(1of2) Defineandsegmentkeycustomer groupsandmarkets Understandthevoiceofthecustomer (VOC) UnderstandlinkagesbetweenVOCand design,production,anddeliveryLeadingPractices(2of2) Buildrelationshipsthrough commitments,provideaccessibilityto peopleandinformation,setservice standards,andfollowupon transactions Effectivecomplaintmanagement processes Measurecustomersatisfactionfor improvementKeyCustomerGroups Organizationlevel – consumers – externalcustomers – employees – society Processlevel – internalcustomerunitsorgroups Performerlevel – individualinternalcustomersIdentifyingInternalCustomers Whatproductsorservicesare produced? Whousestheseproductsandservices? Whodoemployeescall,writeto,or answerquestionsfor? Whosuppliesinputstotheprocess?AT&TCustomerSupplierModel Your Inputs Your Outputs Your Suppliers Processes Customers Requirements Requirements and feedback and feedback 14KeyIdeaThenaturalcustomersupplierlinkagesamongindividuals,departments,andfunctionsbuildupthe“chainofcustomers”throughoutanorganizationthatconnecteveryindividualandfunctiontotheexternalcustomersandconsumers,thuscharacterizingtheorganization’svaluechain.CustomerSegmentation Demographics Geography Volumes ProfitpotentialKeyIdeaSegmentationallowsacompanytoprioritizecustomergroups,forinstancebyconsideringforeachgroupthebenefitsofsatisfyingtheirrequirementsandtheconsequencesoffailingtosatisfytheirrequirements.KeyDimensionsofQuality Performance–primaryoperatingcharacteristics Features–“bellsandwhistles” Reliability–probabilityofoperatingforspecific timeandconditionsofuse Conformance–degreetowhichcharacteristics matchstandards Durability amountofusebeforedeteriorationor replacement Serviceability–speed,courtesy,and competenceofrepair Aesthetics–look,feel,sound,taste,smellKeyDimensionsofServiceQuality Reliability–abilitytoprovidewhatwas promised Assurance–knowledgeandcourtesyof employeesandabilitytoconveytrust Tangibles–physicalfacilitiesand appearanceofpersonnel Empathy–degreeofcaringandindividual attention Responsiveness–willingnesstohelp customersandprovidepromptservice 19KanoModelofCustomerNeeds Dissatisfiers:expected requirements Satisfiers:expressed requirements Exciters/delighters:unexpected features 20 ...