Chapter 7, Customer Focus and Satisfaction

CHAPTER 7CHAPTER 7

CUSTOMER FOCUS CUSTOMER FOCUS AND AND

SATISFACTIONSATISFACTION

TQM in Pakistan

Acknowledgement by the customer in the from of Letter Published in Daily

Dawn on Thursday, September 27, 2007

Amazing experience

I WENT through an amazing experience while dealing with a medical surgery. Unfortunately, I have dealt with surgery cases in my family so many times and every case was a torturous experience full of agony and mental stress.

The timings given for operation are never followed. You never know as to how long will your patient be kept in the ICU after operation.

Lastly, it is never confirmed as to when your patient would be released from hospital.

The attendants are always asking one question or the other regarding different things concerning the patient. Recently one of my sisters was operated upon by Dr Kishwer Nazli in Fatima Hospital in Lahore. The case was handled with amazing professional ethics and efficiency.

Patient and caretakers were told about each and every step in writing. These instructions included each and every question that could come to your mind. Timings for every major event were spelled out well in advance. The punctuality of events was remarkable.

I was just wondering as to how this could happen in Pakistan. All this reduced our worries to almost nothing as we knew well in advance what is the sequence of events and we prepared ourselves accordingly.

Hats off to the professional standards maintained by the respected doctor and the hospital. I wish other hospitals can also follow the same standard.

DILAWAR HUSAINKarachi

The Baldrige Criteria of Customer Satisfaction

7.0 Customer Focus and Satisfaction 300

7.1 Customer expectation: current and future 35

7.2 Customer relationship management 65

7.3 Commitment to customer 15

7.4 Customer satisfaction determination 30

7.5 Customer satisfaction results 85

7.6 Customer satisfaction comparison 70

Who is the customer?

There are two types of customer: External and Internal

External Customer

Direct purchaser Influencer

Internal Customer (Functions supporting each other) Engineering Production Order processing Etc.

Current, prospective, and lost customers

Customer Supplier Chain

Inputs from External

Customers

Internal Customers

OutputsTo

ExternalCustomers

Characteristics of external customerCharacteristics of external customer

An external customer can be defined in many ways, An external customer can be defined in many ways, such as one who uses the product or service, or the such as one who uses the product or service, or the one who influences the sale of product or service.one who influences the sale of product or service.

An external customer exists outside the organization An external customer exists outside the organization and generally falls into three categories:and generally falls into three categories:

1.1. Current customersCurrent customers

2.2. Prospective customers, and Prospective customers, and

3.3. Lost customer Lost customer

Characteristics of external customerCharacteristics of external customer

Every function, whether it be engineering, order processing, or production has an internal customer—each receives a product or service and in exchange, provides a product or service.

Every person in a process is considered customer of the preceding process.

Each worker’s goal is to make sure that the quality meets the expectations of the next person.

When that happens throughout the manufacturing, sales, and distribution chain, the satisfaction of the external customer should be assured.

Why do customers are important for an organization?

The most important asset of any organization is its customers.

An organization’s success depends on:

How many customers it has How much they buy, and How often they buy

Customers that are satisfied will increase in number, buy more, and buy more frequently.

Satisfied customers also pay their bills promptly, which greatly improves cash flow—the life blood of any organization.

Customer Satisfaction: Three Parts SystemCustomer Satisfaction: Three Parts System

Company Operations(Processes)

Customer Satisfaction

Customer Expectations

Human Resource Management

Customer Relationship Management

Customer Care

An organization should revolve around the customer, because customers are the key to any business.

A customer, any customer, should be valued and treated like a friend.

If they are treated with respect customers will simply forgive errors and positively promote the organization.

Henry Ford once said to his employees, “It is not the employer who pays wages—he only handles the money. It is the customer who pays wages.”

Customer Care—Front-Line People Customers are the most valuable assets of any

company and should not be referred to employees who have not been trained to handle their complaints.

Only the best employees are worthy of a company’s customers.

Three things are very important about the front-line employees:

1. Hire the best.

2. Develop the best employees into professionals.

3. Motivate the professionals to stay and excel.

Customer Care—Front-Line People

Why front-line employees important for an enterprise?

Front-line people deal with the customers every day.

They are valuable source of information for the enterprise.

They know better than management what the customers want.

Translating Needs into Requirements: Kano Model

There are three areas of customer needs or requirements of customers:

1. Spoken or expected requirements of customers

2. Innovative products or services requirements.

3. Unstated and unspoken requirements

Kano presented these requirements in a graphical form.

Kano Model

Easily identified

Typically performance related

“Exciters”Quickly become expected

Innovation

Obvious on the casual observerKnown only to the experienced users anddesignersTypically rediscovered during analysisof lessons learned

Unspoken but expectedrequirements

Spoken and expectedrequirements

Customer Satisfied

Customer dissatisfied

Requirements

Not satisfied

Requirements

satisfied

Translating Needs into Requirements: Kano Model

Kano model conceptualizes customer requirements. It represents three major areas of customer satisfaction.

First Area: Spoken or Expected Requirements of Customers

The first area of customer satisfaction represented by diagonal line, represents explicit requirements.

These are easily identified requirements, expected to be met and typically performance related.

Satisfying the customer would be relatively simple.

Translating Needs into Requirements: Kano Model

Second Area: Innovation

This area is represented by a curve line in the upper left corner of the figure.

A customer’s written instructions are purposefully vague to avoid shifting new ideas during conceptualization and product definition.

Because they are unexpected, these creative ideas often excite and delight customer.

These ideas quickly become expected.

Translating Needs into Requirements: Kano Model

Third Area: Unstated and Unspoken Requirements

The third and most significant area of customer satisfaction represents unstated or unspoken requirements.

These are shown in the curve in the lower right corner of the figure.

The customer may indeed be unaware of these requirements, or may assume that such requirements will be automatically supplied.

These implied requirements are the hardest to define but prove very costly if ignored.

Understanding voice of the customer

The voice of customer is important to be heard and incorporated in the product or service.

Customers doesn’t buy specification; customer buys the product or service to fulfill need.

Peter Drucker once said, “Customer don’t buy products, they buy results.”

Customers are loyal to whatever best helps them achieve their desired outcome.

Just meeting customer’s need is not enough; the organization must exceed customers’ needs.

Voice of the customer

Voice of the

customer

Who is the customer?How is the voice of the customer heard?

Who has what responsibilities?How is the voice of the customer evaluated?

IPD Team meetings

Affinity diagrams

QFD

Clarify verbatim

Focus groups

Surveys

NBACustomer reports

Design reviews

Interviews

Site visits

For listening

InternalExternal

For listening

For evaluating

The Driver of Customer SatisfactionThe Driver of Customer Satisfaction

If you cannot measure it, you cannot manage it. If you cannot measure it, you cannot manage it. This time-tested adage certainly applies to the This time-tested adage certainly applies to the management of customer satisfaction and management of customer satisfaction and retention.retention.

Customer retention is directly related to Customer retention is directly related to Customer Satisfaction. And what drives the Customer Satisfaction. And what drives the satisfaction can be known by simply asking the satisfaction can be known by simply asking the customers directly.customers directly.

Customer can be approached by surveys. Customer can be approached by surveys. There, however, are certain pitfalls in the There, however, are certain pitfalls in the methodology:methodology:

Mailed questionnaires lose control over who Mailed questionnaires lose control over who respondrespond

Customers are less likely to respond if they are Customers are less likely to respond if they are dissatisfieddissatisfied

Getting Employee InputGetting Employee Input

Employees Input can be solicited concurrent to Employees Input can be solicited concurrent to customer researchcustomer research

It could help identify barriers and solutions to It could help identify barriers and solutions to service and product problems as well as serving service and product problems as well as serving as a customer-company interface.as a customer-company interface.

In addition to customer related considerations, In addition to customer related considerations, employee surveys can measure:employee surveys can measure:

1.1. TQM effectivenessTQM effectiveness

2.2. Skills and behaviors that need improvementSkills and behaviors that need improvement

3.3. The effectiveness of team problem-solving The effectiveness of team problem-solving processesprocesses

4.4. The outcomes of training programsThe outcomes of training programs

5.5. Needs of internal customersNeeds of internal customers

Measurement of Customer SatisfactionMeasurement of Customer Satisfaction

There are two basic steps in measurement system:There are two basic steps in measurement system:

1.1. Develop key indicators that drive customer satisfactionDevelop key indicators that drive customer satisfaction2.2. Collect data regarding perception of quality received by Collect data regarding perception of quality received by

customerscustomers

Key Indicators for Physical ProductsKey Indicators for Physical Products ReliabilityReliability AestheticsAesthetics AdaptabilityAdaptability UsabilityUsability FunctionalityFunctionality AppropriatenessAppropriateness

Key Indicators for ServicesKey Indicators for Services Friendliness/courteousness of employeesFriendliness/courteousness of employees Safety/risk of serviceSafety/risk of service Billing/invoicing procedureBilling/invoicing procedure Responsiveness to requestsResponsiveness to requests Appearance of physical facilitiesAppearance of physical facilities Approachability of the service providerApproachability of the service provider Willingness to listen to customer Willingness to listen to customer Honesty and an ability to communicate in clear languageHonesty and an ability to communicate in clear language

Service Quality and Customer Service Quality and Customer RetentionRetention

The ultimate outcome of The ultimate outcome of Customer Focus and Satisfaction Customer Focus and Satisfaction is to achieve profit in is to achieve profit in the private sector and productivity in the public or non-profit sector.the private sector and productivity in the public or non-profit sector.

The one thing which is proven as result of various studies is the relationship between The one thing which is proven as result of various studies is the relationship between customer retention and profit.customer retention and profit.

The system for improving customer retention and profitability has following The system for improving customer retention and profitability has following components:components: Internal Service QualityInternal Service Quality, which established and reinforces a climate and organization , which established and reinforces a climate and organization

culture directed towards quality.culture directed towards quality. Employee retentionEmployee retention, which is achieved through good human resources management , which is achieved through good human resources management

practices and organization development methods such as teams, job development, practices and organization development methods such as teams, job development, and empowerment. Employee retention depends on employee satisfaction, which in and empowerment. Employee retention depends on employee satisfaction, which in turn can be related to external services and customer satisfaction.turn can be related to external services and customer satisfaction.

External service qualityExternal service quality, which is delivered through organization's quality , which is delivered through organization's quality infrastructure.infrastructure.

Customer Satisfaction and follow upCustomer Satisfaction and follow up, in order to reduce customer defections and , in order to reduce customer defections and improve retention and profit. improve retention and profit.

System

Customer Retention and ProfitabilityCustomer Retention and Profitability

EmployeeSatisfaction ProfitCustomer

Retention

Customer Satisfaction

ExternalServiceQuality

Employee Retention

InternalServiceQuality

Driver

Buyer Supplier RelationshipBuyer Supplier Relationship

Almost every company purchases products, supplies, or services in Almost every company purchases products, supplies, or services in an amount that frequently equals around 50% of its salesan amount that frequently equals around 50% of its sales

Traditionally many of companies follow “lowest bidder” practices Traditionally many of companies follow “lowest bidder” practices where price is critical criterion.where price is critical criterion.

Now companies are realizing that careful concentration of Now companies are realizing that careful concentration of purchases, together with long term buyer-supplier relationship, will purchases, together with long term buyer-supplier relationship, will reduce costs and improve profits.reduce costs and improve profits.

Deming realizes this and suggested that a long-term relationship Deming realizes this and suggested that a long-term relationship between purchasers and suppliers is necessary for best economy.between purchasers and suppliers is necessary for best economy.

Buyer Supplier RelationshipBuyer Supplier Relationship

Several guideline will help both the supplier and customer benefit from Several guideline will help both the supplier and customer benefit from a long-term partnering relationship:a long-term partnering relationship:

Implementation of TQM by both supplier and customer.Implementation of TQM by both supplier and customer.

Long-term commitment to TQM and to the partnering relationship Long-term commitment to TQM and to the partnering relationship between the parties.between the parties.

Reduction is supplier base.Reduction is supplier base.

Get suppliers involved in the early stages of research, Get suppliers involved in the early stages of research, development, and design.development, and design.

BenchmarkingBenchmarking

END OF END OF CHAPTER 7CHAPTER 7