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Customers
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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.
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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.
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Key Idea
Customer wants and needs drive
competitive advantage, and statistics
show that growth in market share is
strongly correlated with customer
satisfaction.
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ACSI Model of Customer
Satisfaction
Perceived Customer
quality complaints
Perceived Customer
value satisfaction
Customer
expectations Customer
loyalty
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Key Idea
The econometric model used to produce
ACSI links customer satisfaction to its
determinants: customer expectations,
perceived quality, and perceived value.
Customer satisfaction, in turn, is linked to
customer loyalty, which has an impact on
profitability.
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Customer-Driven Quality Cycle
Customer needs and expectations
(expected quality)
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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
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Leading Practices (2 of 2)
Build relationships through commitments,
provide accessibility to people and
information, set service standards, and
follow-up on transactions
Develop effective complaint management
processes
Measure customer satisfaction for
improvement
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Key Customer Groups
Organization level
consumers
external customers
employees
society
Process level
internal customer units or groups
Performer level
individual internal customers
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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?
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AT&T Customer-Supplier Model
Requirements Requirements
and feedback and feedback
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Key Idea
The natural customer-supplier linkages
among individuals, departments, and
functions build up the “chain of
customers” throughout an organization
that connect every individual and function
to the external customers and
consumers, thus characterizing the
organization’s value chain.
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Customer Segmentation
Demographics
Geography
Volumes
Profit potential
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Key Idea
Segmentation allows a company to
prioritize customer groups, for instance
by considering for each group the
benefits of satisfying their requirements
and the consequences of failing to satisfy
their requirements.
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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
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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
18
Kano Model of Customer
Needs
Dissatisfiers: expected requirements
that cause dissatisfaction if not
present
Satisfiers: expressed requirements
Exciters/delighters: unexpected
features
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Key Idea
As customers become familiar with them,
exciters/delighters become satisfiers over
time. Eventually, satisfiers become
dissatisfiers.
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Customer Listening Posts
Comment cards and formal surveys
Focus groups
Direct customer contact
Field intelligence
Complaint analysis
Internet monitoring
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Key Idea
Companies use a variety of methods, or
“listening posts,” to collect information about
customer needs and expectations, their
importance, and customer satisfaction with
the company’s performance on these
measures.
22
Tools for Classifying Customer
Requirements
Affinity diagram Tree diagram
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Using Customer Information
Link customer needs and expectations to design,
production, and service delivery processes
Empower employees to listen and take appropriate
action to meet customer needs
24
Key Idea
An organization builds customer loyalty
by developing trust, communicating with
customers, and effectively managing the
interactions and relationships with
customers through approaches and its
people. Companies must carefully select
customer contact employees, train them
well, and empower them to meet and
exceed customer expectations.
25
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
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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
Exploiting CRM technology
27
Importance of Complaint
Management
The average company never hears from 96 percent
of its unhappy customers
Of 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
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Key Idea
To improve products and processes
effectively, companies must do more than
simply fix the immediate problem. They
need a systematic process for collecting
and analyzing complaint data and then
using that information for improvements.
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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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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.
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Survey Design
Identify purpose
Determine who should conduct the survey
Select the appropriate survey instrument
Design questions and response scales
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Key Idea
The types of questions to ask in a survey
must be properly worded to achieve
actionable results. By actionable, we
mean that responses are tied directly to
key business processes, so that what
needs to be improved is clear; and
information can be translated into
cost/revenue implications to support the
setting of improvement priorities.
33
Analyzing Feedback: Performance -
Importance Analysis
Performance
Low High
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Key Idea
Appropriate customer satisfaction
measurement identifies processes that
have high impact on satisfaction and
distinguishes between low performing
processes low performance and those
that are performing well.
35
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
36
Customer Perceived Value
CPV measures how customers assess
benefits—such as product performance,
ease of use, or time savings—against costs,
such as purchase price,installation cost or
time, and so on,in making purchase
decisions.
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Malaysian
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