Customer Focus & Satisfaction

1. Customer Focus & Satisfaction

2. Chapter Outline • Customer focus and orientation • Customer satisfaction Model • Who is the Customer? • Customer Perception of Quality • Feedback • Using Customer Complaints • Service Quality • Translating Needs into Requirements • Customer Retention

3. Introduction • The customers are the valuable assets for any organization. • An organizations success depends on: • How many satisfied customers it has • How much they buy • How often they buy • The success of an organization depends on the satisfied customer. The satisfied customer tends to purchase frequently and more. • Customers that are satisfied will increase in number - Buy more and buy more frequently • Identifying the customer expectation is the key to satisfy the customer.

4. Customer focus and orientation • The orientation of an organization toward serving its   clients' needs is known as customer focus. • Having a customer focus is usually a strong contributor to the overall success of a business and involves ensuring that all aspects of the company put its customers' satisfaction first. • Also, having a customer focus usually includes maintaining an effective customer relations and service program.

5. Customer orientation • A customer-oriented organization places customer satisfaction at the core of each of its business decisions. • Customer orientation is defined as an approach to sales and customer-relations in which staff focus on helping customers to meet their long-term needs and wants.

6. Customer Satisfaction Organizational Diagram • Manufactures and service organizations use customer satisfaction as the measure of quality. • A successful TQM program begins by Defining quality from the customers perspective. • Customers seek for: • A quality product • A reasonable price • On time delivery • Outstanding service CUSTOMERS Front-line Staff Functional Department Staff Senior Managers CEO

7. Customer satisfaction Model: (Teboul Model) Company offer (product or service) Customer needs Customer satisfaction Needs not fulfilled Total satisfaction is achieved when offer matches the need i.e. circle is superimposed on the square

8. Customer and types • Customer is defined as one who purchases or patronizes for purpose of receiving goods or services • Internal Customer: • An internal customer who exists within the organization. Every function, whether it is engineering, order processing, or production, has an internal customer , each receives a product or service, in exchange, provides a product or service. • Every person in a process is considered a customer of the preceding operation. • External Customer: • An external customer who exists outside the organization. An external customer can be defined in many ways, such as • The one who use the product or service. • The one who purchases the product or service. • The one who influences the sale of the product or service.

9. Customer/supplier chain Eg: - Black Thunder’s determined the customer to be the children when they introduced their theme park. The children never paid for their enjoyment but the children influenced the sale. They fall into 3 categories : • current • prospective • lost customers • TQM is commitment to customer-focus - internal and external customers. Outputs To External Customers Inputs from External Customers Internal Customer Fig: Customer/supplier chain

10. Internal customer/Supplier relationships • Questions asked by people to their internal customers • What do you need from me? • What do you do with my output? • Are there any gaps between what you need and what you get? • Good team-work and inter-Departmental harmony is required. • Also the leaders role in supervising the internal customer-supplier chain.

11. TQM and customer quality percepts • TQM is quality management and management of quality – there is no full stop and no break in the chain! • Continuous process (quality) improvement is all its about. • Why? One important reason is the customer quality level is not static and his expectations keep changing and his demands too! • Also plant process dynamics- how to achieve maximum efficiency , optimizing cost and performance in the process operations, minimizing waste etc. • There is no acceptable quality level because the customer’s: • Needs • Values • Expectations are constantly changing and becoming more demanding.

12. Customer perceptions of quality • Before customer’s purchase a major product they check the ratings quality about the product. Customer’s check for: • Performance (fitness for use) • Features(primary function) • Service(customer -added value) • Warranty(promise and guarantee of product) • Price(higher price to obtain value) • Reputation(overall experience)

13. PERFORMANCE • Fitness for use- ready for customer’s use at the time of sale. • Availability- operate when needed • Reliability- freedom from failure overtime • Maintainability- product can be kept operable FEATURES • Identifiable features or attributes of product or service are psychological, time- oriented, ethical, and technological. • Are secondary characteristics of the product or service.

14. SERVICE • greatly emerging as a method for business organizations to give customer added value. • Intangible benefits that contribute greatly to customer satisfaction WARRANTY • represents a business organization’s public promise of quality product backed up by guarantee of customer satisfaction. • gives feedback • motivates customer to buy • generates more sales

15. PRICE • present customers are willing to spend higher price to obtain value. • customer’s concept of value is continually changing. REPUTATION • total customer satisfaction is based on the entire experience with the business organization, not just the product. • willing to pay a premium for a known or trusted brand name and often become customer for life.

16. Customer Retention • It means “retaining the customer” to support the business. It is more powerful and effective than customer satisfaction. • For Customer Retention, we need to have both “Customer satisfaction &Customer loyalty” • Feedback enables the organization to: 1. Discover customer dissatisfaction 2. Discover relative priorities of quality 3. Compare performance with the competition 4. Identify customers’ needs 5. Determine opportunities for improvement

17. The following steps are important for customer retention • Top management commitment to the customer satisfaction. • Identify and understand the customers what they like and dislike about the organization. • Develop standards of quality service and performance. • Recruit, train and reward good staff. • Always stay in touch with customer. • Work towards continuous improvement of customer service and customer retention. • Reward service accomplishments by the front-line staff. • Customer Retention moves customer satisfaction to the next level by determining what is truly important to the customers. • Customer satisfaction is the connection between customer satisfaction and bottom line. • Customer may be satisfied with high priced product but end up in equivalent superior product. • Customer Retention is possible only when company truly understands what the customer expects from product and the company. • The satisfaction level results in customer retention with improve loyalty of customer towards product and bring profit by bringing new customers

18. Customer feedback methods • Comment cards enclosed with warranty card when product is purchased. • Customer survey and questionnaire • Customer visits • Customer focus groups • Quarterly reports • Toll-free phones • e-mail, Internet newsgroups,discussion forums • Employee feedback • Mass customization.

19. COMMENT CARD: • Low cost method of obtaining feedbacks from customers. • Purpose is to get basic information: name, sex, age, address, occupation, monthly income, and what influenced the customer’s decision to buy the product. Customer Questionnaire or SURVEY • Common techniques or tool for gathering opinions about a business organization and its product and services. • Costly and time consuming • Administered through mail or phone

22. FOCUS GROUPS • Method used to determine what the customers are thinking. • Gather in a meeting room to answer several questions • Meetings are designed to focus on current, proposed and future products or services. TOLL- FREE TELEPHONE NUMBERS • Are good technique for receiving complaint feedback • Business organizations can respond faster and cheaper to the complaint.

23. CUSTOMER VISITS • Managers should be evolved in these visits and should not be delegated to just anybody. • Nice to bring along skillful/ knowledgeable employee REPORT CARD • Normally it is sent to every customer on a quarterly basis. • The data shall be analyzed to determine areas of improvement

24. Other feedback methods Internet and computers -Internet forums and discussions Employee feedback -insight to conditions that lead to service quality -Customer feedback –whats happening -Employee feedback -why is it happening Mass customization: -ultimate in customer satisfaction providing what they what

25. Using customer complaints • Actions to handle complaints: • Investigate customers’ experiences by actively soliciting feedback both positive and • Develop procedures for complaint resolution • Analyze complaints • Identify and eliminate the root cause • Establish customer satisfaction measures and constantly monitor them • Communicate complaint information • Provide a report for evaluation • Identify customers’ expectations beforehand

26. Service Quality • Customer service is the set of activities an organization uses to win and retain customers satisfaction. • It can be provided before, during, or after of the sale of the product or exist on its own. • Elements of service quality: • Leadership • Organization and system • Customer care • Communications • Front-line: training and training

27. Service Quality: Organization • To ensure the same level of quality for all customers, the organization must: • Identify each market segment • Write down the requirements • Communicate the requirements • Organize processes • Organize physical spaces

28. Service Quality: Customer Care • An organization should revolve around the customer, because the customers are the key to any business. Customer Care should: • Meet the customer’s expectations • Get the customer’s point of view • Deliver what is promised • Make the customer feel valued • Respond to all complaints

29. Service Quality: Communication • An organization’s communication to its customers must be consistent with its level of service quality. • Communication should: • Minimize the number of contact points • Provide pleasant, knowledge, and enthusiastic employees • Write documents in customer friendly language

30. Service Quality: Front-line people • Customers are the most valuable asset of any company. Only the best employees are worthy of a company’s customers. • Its best to remember the following about front-line people: • Challenge them to develop better methods • Give them the authority to solve problems • Be sure they are adequately trained

31. Service Quality: Leadership • No quality improvement can succeed without management’s involvement. • Leaders should: • Lead by example • Listen to the front-line people • Strive for continuous process improvement

32. Service Quality • An essential part of customer satisfaction occurs after the sale :

33. Translating Needs into Requirements Kano Model: (Dr.Nariaki Kano) • Conceptualizes the customer requirements • Kano modeldistinguishes between three types of product or service requirements which influence customer satisfaction in different ways when met.

34. Kano Model Requirement satisfied Known only to experienced designers or discovered late

35. Translating Needs into Requirements • 3 major areas of customer satisfaction: 1. Explicit requirements • Include written and verbal requirements and are easily identified • Expected to be met and typically performance related 2. Innovations • Unexpected so the creative ideas often excite and delight the customer 3. Unstated or unspoken requirements • Customer may unaware of these requirement or assume it will be automatically supplied • Hardest to define but prove very costly if ignored

36. Translating Needs into Requirements

37. Customer Retention • Represent the activities that produce the necessary customer satisfaction that creates customer loyalty • Customer retention moves customer satisfaction to the next level by: ◦ determining what is truly important to the customers ◦ making sure that the customer satisfaction system focuses valuable resources on things that really matter to the customer • High employee retention has a significant impact on high customer retention • One way companies can manage customer retention is to pay attention to their present employees and to who they are hiring. [Goodman,J et al.,1996]

38. Significance of customer retention: • 60% of organizations future revenue will come from exiting customers • 2% increase in customer retention has 10% decrease in operating cost. • 96% of unhappy customers do not complain but 3 times likely to convey to other customers about their bad experience. • 91% of unhappy customers never purchase goods and services from you. • It costs 5 times more to attract the customer than retaining the existing customer. • Customer retention creates customer loyalty and moves customer satisfaction to a next level called customer delight.