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1
Customer and Market Focus in the Baldrige Criteria
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 Relationship Building
b. Customer Satisfaction Determination
2
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.
3
Characteristics of Satisfied Customers (1 of 2)
A happy and satisfied customer would tell
five other people about the company; many
of them would become customers of the
business.
50% to 75% of the customers who complain
and have their problems resolved would
again do business with the company.
4
Characteristics of Satisfied Customers (2 of 2)
If the complaints are resolved quickly, 95%
would return to do business with the
company.
How a customer is treated and how rapidly
customer complaints are resolved is one of
the most powerful tools shaping customers’
perception of overall quality.
5
Characteristics of Dissatisfied Customers
The average “unhappy” customer tell nine other people about the poor service he/she received.
The cost of losing a customer is equal to five times the annual value of that customer’s account.
Most (over 90%) of a company’s dissatisfied customers never complain. Most of them just stop doing business with the company.
6
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 = 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 (i.e., tell a
consistent and compelling story)
8
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
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Key Customer Groups
Organization level
• consumers (end-users)
• external customers (direct, partners, suppliers)
• employees
• society Process level
• internal customer units or groups Performer level
• individual internal customers
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Customer Segmentation
Products
Demographics
Geography
Volumes
Profit potential
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Performance-Importance Analysis
Performance
Importance
Low High
Low
High
Who cares? Overkill
Vulnerable Strengths
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Kano Model of Customer Needs
Dissatisfiers (Basic): expected requirements
Satisfiers (Performance): expressed
requirements
Exciters/delighters: unexpected features
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Customer Satisfaction vs. Degree of Achievement (1 of 2)
Basic (expected) Features
• Customers are dissatisfied if they are
missing.
Performance Features
• Customers tell you what they want, and are
happier if you can do a better job for them
14
Customer Satisfaction vs. Degree of Achievement (2 of 2)
Exciting Features
• Customers don’t know about them, but
will be delighted when the features are
offered.
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Methods for Getting Customer Feedback (Listening Posts) (1 of 2)
Satisfaction Surveys (Telephone, Mail, Web)
Focus Group Studies
Customer Visits
Transaction-Based Response Cards
Hot lines - 800 numbers, Fax, Web, E-mail
Roundtable Discussions with Customers
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Methods for Getting Customer Feedback (2 of 2)
Employee Surveys
Discussions with Front-Line Staff
Complaint Tracking (Informal & Formal)
“Mystery Shopper”
Thank-you Calls or Notes
Lost-Sales Follow-Up
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Customer Satisfaction Survey Process (1 of 2)
Determine target customer group
Establish survey objectives
Identify customer needs
Determine survey method and resource
requirements
Design survey instrument
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Customer Satisfaction Survey Process (2 of 2)
Conduct trial survey and revise instrument Notify and train customers Conduct survey Analyze results Report results to customers Establish and implement follow-up
procedures
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Consideration of Response Cards
Are the survey cards visible to customers?
Is the card easy to fill out and submit?
How are the cards collected, reviewed and
responded?
Is there enough space for comments?
Will the cards be able to capture source of
satisfaction/dissatisfaction?
20
Example: The Olive Garden
The Lobby
• Was the lobby staff friendly and did they welcome you to the restaurant?
• Were you seated in a timely, efficient manner?
The Table Area
• Was your table area clean when you were seated?
The Server
• Was your server attentive and there when you needed him/her?
• Was your server knowledgeable and able to answer your questions about our food and beverages?
• How was the pace of your meal? The Food
• How would you rate the taste of your food?
• Please rate the temperature of your food, hot food being piping hot.
• Please rate your visit on the value for the money.
• Overall, how would you rate your visit
• Would you recommend this Olive Garden to a close friend or relative?
Scale: 1 = poor ….5 = excellent
21
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
22
Customer Relationship Management
Commitments to customers Relevant customer-focused service standards Training and empowerment of front-line staff Effective complaint management Identifying and creating new customer values Establishing strategic partnerships and
alliances
23
Purpose of Measuring and Tracking 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
24
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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