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THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 1
Chapter 4
Focusing on Customers
Dr. John V. Padua
The Management & Control of Quality, 7e
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 2
Key Idea
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.
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 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.
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 4
ACSI Model of Customer Satisfaction
Perceivedquality
Customercomplaints
Perceivedvalue
Customer satisfaction
Customerexpectations Customer
loyalty
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 5
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
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 6
Leading Practices Define and segment key customer groups and
markets Understand the voice of the customer (VOC) Understand linkages between VOC and design,
production, and delivery Develop effective complaint management
processes Measure customer satisfaction for improvement
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 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 & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 8
Customer SegmentationDemographicsGeographyVolumesProfit potential
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 9
Key Dimensions of Manufacturing 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
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 10
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 & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 11
Kano Model of Customer Needs
Dissatisfiers: expected requirements that cause dissatisfaction if not present
Satisfiers: expressed requirementsExciters/delighters: unexpected
features
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 12
Key Idea
As customers become familiar with them, exciters/delighters become satisfiers over time. Eventually, satisfiers become dissatisfiers.
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 13
Moments of Truth Every instance in which a customer comes in
contact with an employee of the company. Example (airline)
Making a reservation Purchasing tickets Checking baggage Boarding a flight Ordering a beverage Requests a magazine Deplanes Picks up baggage
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 14
Importance of Complaint ManagementThe average company never hears from
96 percent of its unhappy customersOf the customers who make a
complaint, more than half will do future business if the complaint is resolved
The average customer who has had a problem will tell 9 or 10 others.
Dissatisfied customers increasingly post their feelings on the Web
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 15
Measuring Customer Satisfaction
Discover customer perceptions of business effectiveness
Compare company’s performance relative to competitors
Identify areas for improvementTrack trends to determine if changes
result in improvements
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 16
Key Idea
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.
THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 17
Survey Design
Identify purposeDetermine who should conduct the
surveySelect the appropriate survey
instrumentDesign questions and response scales