Customer Satisfaction

Customer Satisfaction

Chapter Three

Introduction

• Customers- the most important asset

• Organization’s success depends upon:

--how many customers it has

--how much they buy

--how often they buy

• Satisfied customers will increase in number, buy more and buy more frequently

• Customer satisfaction organizational diagram.

Introduction

• Customer satisfaction is one the greatest purpose of any QMS.

• Quality products/ services at a reasonable price customers

• To achieve this state, QMS should be continually examined to see if its responsive to ever-changing needs of customers.

• Customer satisfaction should be the primary goal instead of profit seeking.

Introduction

• Dr. Deming added that quality also means anticipating the future needs of the customer.

• Teboul model (Customer satisfaction model)

• Customer satisfaction is subjective( more like a feeling or attitude), so its hard to measure.

• Teboul model flaws

• When surveying customers, views about competitors product can be beneficial to see the customer loyalty.

Who is the customer?• Two distinct types– internal and external

• An external customer can be defined in many ways:

--the one who uses the product/ service

--the one who purchases the product/ service

--the one who influences the sale of product/ service e.g. McDonald's happy meal.

• Three categories- current, prospect and lost customers

• Internal customers

Customer- Supplier chains

Inputs from

external

suppliers

Internal

customers

Outputs to

external

customers

•What do you need from me?

•What do you do with my output?

•Are there any gaps between what you need and what you get?

Customer Satisfaction

Customers’ perception of quality

Customers’ perception of quality

• ASQ survey on end user perceptions of important factors that influenced purchase decision:

• Performance

• Features

• Service

• warranty

• Price

• reputation

Performance

• Fitness for use- the product and service is ready for customer’s use at the time of sale. Other considerations are:

• Availability—the product will operate when needed

• Reliability—the quality of being dependable

• Maintainability—ease of keeping the product operable

Features

• Features are secondary attributes of the product

• E.g. car-stereo system

• Remote control

Service

• Customer service is an intangible

• Intangible characteristics are not quantifiable yet contribute greatly to customer satisfaction.

• Providing excellent customer service is different from and difficult to achieve than excellent product quality.

• E.g. hospital, telecommunication sector, hotel

Warranty

• Difference between guarantee and warranty

• The warranty encourages customer to buy a service by reducing the risk of the purchase decision.

• E.g. Mobile warranties, t.v

Benefits of warranty• It forces the organization to focus on the

customer’s definition of product and service quality.

• Warranty generates feedback by providing information on product and service quality.

• It forces an organization to develop a corrective action system.

• The warranty encourages customers to buy a product or service by reducing the risk of purchase decision

• It generates more sales from existing customers by enhancing loyalty.

Price

• Today’s customer is willing to pay a higher price to obtain value.

• An amount, as of goods, services, or money, considered to be a fair and suitable equivalent for something else; a fair price or return.

• Customers seek who provides the greatest value.

• Concept of value varies from person to person.

Reputation

• We rate organizations by our over all experience with them

• Total customer satisfaction is based on the entire experience not just product.

• Good experiences are repeated to six 6 people and bad experiences are repeated to 15 people.

Feedback

The voice of the customer

Benefits of Feedback

• It enables the organization to:

• Discover customer dissatisfaction

• Discover relative priorities of quality

• Compare performance with competitors

• Identify customers

• Determine opportunities for improvement

Information collecting Tools and techniques

• Comment cards

• Customer questionnaire

• Focus groups

• Toll-free numbers

• Customer visits

• Report card

• Internet and computers

• Employee feedback

• Mass customization

Comment cards

• Low- cost method

• Can be attached to warranty card and included with the product

• The intent is to have simple information

• Generally people report back to the company if something very bad or extra-ordinary happened.

• Hotels, restaurants, petrol pumps etc

Customer questionnaire

• Costly and time consuming

• Administered by mail or telephone

• Typical 1-5 or 1-10 scale approach

• 1-5 scale approach flaws

Mail administered surveys• Its best to remember eight points:

• Clients and customers aren’t the same.

• Surveys raise customer expectations

• How you ask question will determine how the question is answered.

• The more specific the question, the better the answer.

Mail administered surveys

• You have only one chance and only 15 minutes

• The more time you spend in survey development, the less time you will spend in data analysis and interpretation.

• Who you ask is as important as what you ask.

• Before the data is collected, you should know how you want to analyze and use the data.

Telephone administered surveys

• Rapidly changing telecommunications

• Gallup 800 survey—automated and voice gathering polling service.

• Organizations can now effectively reach large populations, analyze the results quickly and determine what their customer are thinking on a nearly real-time basis

Focus Groups

Focus groups

• Very expensive

• Very effective for gathering information on customer expectations and requirements

• Customers are asked structured questions by a skill moderator.

• Meetings are designed to focus on current, proposed and future products and services

• Imprint analysis—to analyze the intrinsic feelings of a customer—e.g. ice cream company

Toll-free numbers (800/888)

• Organization can respond faster and cheaply to the complaints.

• Implementation of toll- free numbers have grown tremendously

• E.g Cadillac division of general motors have 24 toll-free numbers for 24 hours road service

Customer visits

• Usually in a B-2-B environment

• Senior managers should visit the customers and shouldn’t delegate the visits to any one else.

• Taking operational personal with senior managers however is an effective way.

• E-g U.S steel and Ford motors

Report cards

• Usually sent to each customer on a quarterly basis

• The data is analyzed to determine areas for improvement.

• e.g. university of California using report cards for its campus business services like bookstore

Internet and computers

• Timely, cost minimal and source of creative ideas

• Monitoring the discussions of customers on internet

• Management shouldn’t intervene

• Some third-party web sites (www.planetfeedback.com)

• Organizational websites (e-mails)

Employee feedback

• Timely and cost-effective than customer surveys

• Brainstorming sessions to find out solutions to the complaints

• E.g. Chrysler motors

Mass customization

• Giving customers exactly what they want.

• Way to provide variety at an affordable cost.

• Direct result of advances in manufacturing such as flexible manufacturing technologies, JIT and cycle-time reduction.

• E.g Levi Strauss jeans, dell computers

Using customer complaints

How to handle customer complaints?

How to handle customer complaints?

• Investigate customer experiences by actively soliciting feedback, both +ve and –ve and then acting on it promptly.

• Develop procedures for complaint resolution that include empowering front-line people.

• Analyze complaints but understand that complaints don’t always fit into neat categories.

• Work to identify process and material variations and then eliminate the root cause. “More inspection” is not corrective action.

• When a survey response is received, a senior manager should contact the customer to resolve the issue

How to handle customer complaints?

• Establish customer satisfaction measures and constantly monitor them

• Communicate complaint information as well as results to all personnel

• Provide a monthly complaint report to the quality council

• Identify customer’s expectations before the complaints rather than after complaint analysis.

Service Quality

Customer service

• Customer service is the set of activities uses to win or retain customer satisfaction. It can be provides before, during and after the sale of the product.

• Elements of customer service are: organization, customer care, communication, front-line people and leadership.

Organization

• Identify each market segment

• Write down the requirements

• Communicate the requirements

• Organize processes

• Organize physical spaces

Customer care• Meet the customers expectations

• Get the customer’s point of view

• Deliver what is promised

• Make the customer feel valued

• Respond to all complaints

• Over-respond to the customer

• Provide a clean and comfortable customer reception area

Communication

• Optimize the trade-off between time and personal attention

• Minimize the number of contact points

• Provide pleasant, knowledgeable and enthusiastic employees

• Write documents in a customer-friendly language

Front-line people

• Hire the people who like people

• Challenge them to develop better methods

• Give them the authority to solve problems

• Serve them as internal customers

• Be sure they are adequately trained

• Recognize and reward performance

Leadership

• Lead by example

• Listen to the front-line people

• Strive for continuous process improvement

Customer Retention

Customer retention

• Customer retention is more powerful and effective than customer satisfaction.

• Customer satisfaction surveys, questionnaire, interviews, focus groups etc show what customers think of the product or service.

• What people say and think is often different from what they actually do.

Customer retention

• Customer satisfaction should also be measured by cash register receipts, market share, level of customer retention and number of referrals from customer.

• Customer satisfaction is the connection between customer satisfaction and the bottom line---net income is informally called bottom line

• Employee retention