Lecture 2B Focusing

on
Customers,
satisfaction vs. loyalty,
Customers
leading practices, customer groups,
dimensions of quality, tools and
measurement
SJSU Bus. 142 - David Bentley

What is a customer?

Richard Schonberger: The customer

is the next process
Final Customer vs. next customer

The Big C vs. the little c

Who is/are my customer(s)?

Who is/are your customer(s)?

SJSU Bus. 142 - David Bentley

Voice of the Customer

(Foster)

Wants, opinions, desires, or

perceptions by the customer, or
A standardized, disciplined, and
cyclical approach to obtaining and
prioritizing customer preferences

Cyclical vs. continual?

SJSU Bus. 142 - David Bentley

What Do Customers Want?

Quality
Price
Lead-time
Service
Flexibility
Variability
SJSU Bus. 142 - David Bentley

What Do Customers Want?

High
Low
Low
High
High
Low

Quality
Price
Lead-time
Service
Flexibility
Variability
SJSU Bus. 142 - David Bentley

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

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.
SJSU Bus. 142 - David Bentley

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

MOD 02/24/06 DAB

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 1997 with a gradual improvement
into 2004, dip in 2005, record high in 2007
Quality improvements have exceeded pace
consumer expectations during recent years
SJSU Bus. 142 - David Bentley

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

ACSI Model
of Customer Satisfaction
Customer
Perceived
quality

complaints

Perceived
value

Customer
satisfaction

Customer
expectations

Customer
loyalty

SJSU Bus. 142 - David Bentley

J. D. Power & Associates

(jdpower.com)

a global marketing information services firm

that provides clients with relevant and
actionable market research, forecasting,
consulting and training
primary catalyst in bringing the language of
customer satisfaction to numerous industries
Survey customers and provide quality and
customer satisfaction ratings for autos,
boats, finance, travel, telecom, homes,
international
SJSU Bus. 142 - David Bentley

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

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

SJSU Bus. 142 - David Bentley

10

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

Leading Practices - 1

Define and segment key customer

groups and markets
Understand the voice of the
customer (VOC)
Understand linkages between VOC
and design, production, and
delivery
SJSU Bus. 142 - David Bentley

11

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

Leading Practices - 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
SJSU Bus. 142 - David Bentley

12

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

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?
SJSU Bus. 142 - David Bentley

13

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

AT&T Customer-Supplier
Model
Your
Suppliers

Your
Processes

Inputs

Requirements
and feedback

Outputs

Your
Customers

Requirements
and feedback

SJSU Bus. 142 - David Bentley

14

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

Mod. 10/21/02 DAB

Model of Customer Needs

(review)
- Noriaki
Dissatisfiers:
expected
Kano
requirements (usually implied)
Satisfiers: expressed
requirements (usually explicit)
Exciters/delighters: unexpected
features (pleasant surprise)

SJSU Bus. 142 - David Bentley

15

Operations Management, Seventh Edition, by William J. Stevenson

Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

The Kano Model

(review)

Customer
erSatisfaction
Satisfaction
Custom

Kano
KanoModel
Model

Excitement
Excitement
Expected
Expected
Must
MustHave
Have

Customer
CustomerNeeds
Needs
SJSU Bus. 142 - David Bentley

16

Customer Relationship
Management (CRM)

Customer Relationship Management

Complaint Resolution
Feedback
Guarantees
Corrective Action

Dozens of CRM systems, including

Salesforce.com (Salesform.com CRM

Professional)
Oracle (Siebel CRM)
Sage (SageCRM.com and ACT!)
SAP (SAP CRM)
SJSU Bus. 142 - David Bentley

17

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

Customer Listening Posts

Comment cards and formal surveys

Focus groups
Direct customer contact
Field intelligence
Complaint analysis
Internet monitoring
SJSU Bus. 142 - David Bentley

18

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

Mod. 10/21/02 DAB

Tools for Classifying

Customer Requirements
Affinity diagram

Tree diagram

(Kawakita Jiro)

Communication

Effective Service
Communicn

Timely
Reports

Reliability

Notification
Of Indy Stds.

Flexibility

Accurate
Information

Prior
Approvals

Mutual Job
Understanding

Expeditious
Processes

Modem
Link

Buyer
Orientation

Timely
Closings

SJSU Bus. 142 - David Bentley

Effective
Service

Loan
Products

19

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

Customer Relationship
Management

Accessibility and commitments

Selecting and developing customer
contact employees
Relevant customer contact
requirements
Effective complaint management
Strategic partnerships and alliances
SJSU Bus. 142 - David Bentley

20

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

Measuring Customer
Satisfaction

Discover customer perceptions of

business effectiveness
Compare companys performance
relative to competitors
Identify areas for improvement
Track trends to determine if
changes result in improvements
SJSU Bus. 142 - David Bentley

21

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

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

The Food

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?

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

SJSU Bus. 142 - David Bentley

22

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

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
SJSU Bus. 142 - David Bentley

23

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

Performance-Importance
Analysis
Performance
Low

Low

High

Who cares? Overkill

Importance
High

Vulnerable Strengths
SJSU Bus. 142 - David Bentley

24

Total Customer Experience

I believe that HP owes our customers

a superior Total Customer
Experience (TCE) when dealing with
us, and I am personally committed to
improving TCE and making it a
competitive differentiator for HP.

Carly Fiorina
Former President and CEO, Hewlett-Packard

SJSU Bus. 142 - David Bentley

25

Total Customer Experience

Customers are our most important assets

Customers always define their own
desired experience
Need to be close enough to anticipate
their needs and flexible enough to meet
them
Important to develop deeper
relationships with end users

Carly Fiorina
SJSU Bus. 142 - David Bentley

26

Making a TCE
To truly hear
customers be:

To remove barriers To create solutions

from customers be: for customers be:

Attentive

Flexible

Competitive

Aware

Responsive

Cost-effective

Involved

Efficient

Imaginative

Committed

Dependable

Capable

SJSU Bus. 142 - David Bentley

27

The Malcolm Baldrige

National Quality Award

Awarded by US Department of
Commerce
Result of 1987 congressional legislation
Named after Secretary of Commerce
Promotes awareness of performance
excellence
Awarded in business, education,
health care, non-profit sectors
SJSU Bus. 142 - David Bentley

28

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

Customer and Market

Focus
The Customer and Market Focus category examines
the Baldrige
Criteria
how in
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
SJSU Bus. 142 - David Bentley

29