Chapter 4

Focusing on Customers

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 1

 Importance of Customer
Satisfaction and Loyalty
• “Satisfaction is an attitude; loyalty is a
behavior”
• Loyal customers spend more, are willing ot
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.

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 2

 American Customer
Satisfaction Index
• Measures customer satisfaction at national level
• Introduced in 1994 by University of Michigan
and American Society for Quality
• 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

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 3

 ACSI Model
of Customer Satisfaction
Perceived Customer
quality complaints

Perceived Customer
value satisfaction

Customer
expectations Customer
loyalty

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 4

 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
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 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

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 6

 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

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 7

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

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 8

 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?

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 9

 AT&T Customer-Supplier Model

Your Inputs Your Outputs Your

Suppliers Processes Customers

Requirements Requirements
and feedback and feedback

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 10

 Customer Segmentation

• Demographics
• Geography
• Volumes
• Profit potential

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 Key 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

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 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

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 13

 Kano Model of Customer Needs

• Dissatisfiers: expected requirements

• Satisfiers: expressed requirements
• Exciters/delighters: unexpected
features

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 14

 Customer Listening Posts

• Comment cards and formal surveys

• Focus groups
• Direct customer contact
• Field intelligence
• Complaint analysis
• Internet monitoring

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 15

 Tools for Classifying
Customer Requirements

Affinity diagram Tree diagram

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 Customer Relationship
Management
• Accessibility and commitments
• Selecting and developing customer contact
employees
• Relevant customer contact requirements
• Effective complaint management
• Strategic partnerships and alliances

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 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

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

Scale: 1 = poor ….5 = excellent

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 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

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 Performance-Importance Analysis
Performance
Low High

Low Who cares? Overkill

Importance

High Vulnerable Strengths

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 21

 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
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 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, and retention,
and to business expansion.
3.1 Customer and Market Knowledge
3.2 Customer Relationships and Satisfaction
a. Customer Relationships
b. Customer Satisfaction Determination

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