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1. 1 Chapter 4 Focusing on
2. Key IdeaIntroduction 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.
3. 3 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.
4. Key IdeaImportance of customer satisfaction Customer wants and needs drive competitive advantage, and statistics show that growth in market share is strongly correlated with customer satisfaction.
5. 5 American Customer Satisfaction Index Measures customer satisfaction at national level
Introduced in 1994 by University of Michigan and American Society for Quality
Measures national index, seven industrial sectors, 40 industries, 203 companies
Continual decline in index from 1994 through 1998 with a small improvement into 2000 suggests that quality improvements have not kept pace with consumer expectations
6. ACSI Model of Customer Satisfaction Perceived
7. Key IdeaACSI The econometric model used to produce ACSI links customer satisfaction to its determinants: customer expectations, perceived quality, and perceived value. Customer satisfaction, in turn, is linked to customer loyalty, which has an impact on profitability.
8. 8 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
9. Key IdeaCreating Satisfied Customer Many organizations still focus more on processes and products from an internal perspective, rather than taking the perspective of the external customer.
10. 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
11. 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
12. Identifying CustomersKey Customer Groups Organization level
internal customer units or groups
individual internal customers
13. 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?
14. 14 AT&T Customer-Supplier Model
15. Key IdeaIdentifying 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.
16. Customer Segmentation Demographics
Profit potential Vital few & useful many
17. Key IdeaCustomer Segmentation 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.
18. Understanding Customer NeedsKey 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
19. 19 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
20. 20 Kano Model of Customer Needs Dissatisfiers: expected requirements
Satisfiers: expressed requirements
Exciters/delighters: unexpected features
21. Key IdeaUnderstanding Customer Needs As customers become familiar with them, exciters/delighters become satisfiers over time. Eventually, satisfiers become dissatisfiers.
22. Key IdeaGathering Customer Information 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.
23. 23 Gathering Customer Information-- Customer Listening Posts Comment cards and formal surveys
Direct customer contact
24. Tools for Classifying Customer Requirements Affinity diagram Tree diagram
25. Key IdeaCustomer Relationship Management An organization needs to build customer loyalty by
communicating with customers, and
effectively managing the interactions and relationships with customers.
26. Moments of Truth Every instance in which a customer comes in contact with an employee of the company.
Making a reservation
Boarding a flight
Ordering a beverage
Requests a magazine
Picks up baggage
27. 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
28. Key IdeaCustomer Contact Employees Companies must carefully select customer contact employees, train them well, and empower them to meet and exceed customer expectations.
29. Key Idea Effective Complaint Mgmt 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.
30. 30 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
31. Key IdeaMeasuring Customer Satisfaction 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.
32. Survey Design Identify purpose
Determine who should conduct the survey
Select the appropriate survey instrument
Design questions and response scales
33. Key IdeaSurvey Design The types of questions to ask in a survey must be properly worded to achieve actionable results. By actionable, we mean that responses are tied directly to key business processes, so that what needs to be improved is clear; and information can be translated into cost/revenue implications to support the setting of improvement priorities.
34. Key IdeaAnalyzing Customer Feedback Appropriate customer satisfaction measurement identifies processes that have high impact on satisfaction and distinguishes between low performing processes low performance and those that are performing well.
35. Performance-Importance Analysis Performance Importance Low High Low
High Who cares? Overkill Vulnerable Strengths
36. 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
37. Customer Perceived Value CPV measures how customers assess benefits?such as product performance, ease of use, or time savings?against costs, such as purchase price,installation cost or time, and so on,in making purchase decisions.
38. Customer and Market Focus in the Baldrige Criteria The Customer and Market Focus category examines how an organization determines requirements, expectations, and preferences of customers and markets; and how it builds relationships with customers and determines the key factors that lead to customer acquisition, satisfaction, loyalty, and retention, and to business expansion.
3.1 Customer and Market Knowledge
3.2 Customer Relationships and Satisfaction
a. Customer Relationship Building
b. Customer Satisfaction Determination