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Chapter 5

Chapter 5. Focusing on Customers. Slide 5.1. Session Overview. Importance of Customer Satisfaction Creating Satisfied Customers Practices of Successful Companies Key Dimensions of Service Quality Customer Relationship Management Measurement of Customer Satisfaction.

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Chapter 5

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  1. Chapter 5 Focusing on Customers Slide 5.1

  2. Session Overview • Importance of Customer Satisfaction • Creating Satisfied Customers • Practices of Successful Companies • Key Dimensions of Service Quality • Customer Relationship Management • Measurement of Customer Satisfaction

  3. Session Overview cont… • The learner should be able to: • Describe the importance of customer satisfaction • Name the U.S. index used for measuring customer satisfaction • Identify one dimension of service quality • Name two ways to gather customer information

  4. Importance of Customer Satisfaction Four key goals of any business: • to satisfy its customers • to achieve higher customer satisfaction than its competitors • to retain customers in the long run (Ron Glastetter – Jim Wade/Jarvis Motors) • to gain market share Slide 5.2

  5. American Customer Satisfaction Index • Measures customer satisfaction at national level • Introduced in 1994 by University of Michigan and American Society for Quality Control • The index is based on a large national sample of consumers • Data is collected by telephone interviews from 46,000 consumers who recently purchased a product/service Slide 5.3

  6. American Customer Satisfaction Index cont… • ACSI is designed to indicate national trends as well as industry trends • Is based on a model linked to customer loyalty • Continual decline in index from 1994 through 1997 suggest that quality improvements are not keeping pace with consumer expectations Slide 5.4

  7. Creating Satisfied Customers • Customer satisfaction results from meeting and exceeding customers’ needs Perceived Quality = actual quality – expected quality • Actual quality - the outcome of the production/service process and what is delivered to the customer • Expected quality - What the customer assumes will be received • Unexpected satisfaction - occurs when actual quality exceeds expected quality Slide 5.5

  8. Practices of Successful Companies • They understand the voice of the customer (VOC) • Cadillac – uses customer councils (current vehicle owners and engineers to discuss areas for improvement) • They understand linkages between VOC and design, production, and delivery • Ames Rubber Corp. uses closed-loop communication system to create a product brief (technical material, & operational requirements) • They promote trust and confidence • Eastman Chemical Company has a no-fault return policy • They have effective customer relationship management processes • GTE Directories handle customer complaints on the first call • They measure customer satisfaction • FedEx uses a 10 component Service Quality Indicator to determine their performance view by customers Slide 5.6

  9. Identifying Customers • To understand customers needs, a company must know who their customer are. • Identifying customers begins with asking questions: • What products or services are produced? • Who uses these products and services? • Who do employees call, write to, or answer questions for? • Who supplies the inputs to the process? Slide 5.7

  10. Your Suppliers Your Processes Your Customers Inputs Outputs Requirements and feedback Requirements and feedback Identifying Customers cont… • AT&T Customer Supplier Model • This model suggests that suppliers must be considered as a customer • Every process receives inputs from suppliers and creates outputs for customers Slide 5.8

  11. Key Dimensions of Service Quality Five key dimensions of service quality contribute to perception: • Reliability - Ability to accurately & dependability provide a customer with what was promised • Assurance - Ability of employees to convey trust & confidence • Tangibles - physical facility, equipment, & appearance of personnel • Empathy - degree of caring • Responsiveness - willingness to help customers & provide prompt service Slide 5.9

  12. Kano Model of Customer Needs Three classes of customer requirements: • Dissatisfiers: requirements that are expected (clean hotel room) • Satisfiers: requirements that customers express (want sunroof in car) • Exciters/delighters: new or innovative features that customers do not expect (On-Star by GM) Slide 5.10

  13. Gathering Customer Information • Comment cards and formal surveys • Gathering information pertaining to the customers’ perception of a particular quality dimension (open-ended questions) • Focus groups • Panel of individuals who answer questions about a company’s product or services (allows for in-depth probing) • Direct customer contact • Workers (CEOs, managers, etc..) contacting customers • Field intelligence • Gathering information using employees who have direct contact with the customer (repair technician) • Study complaints • Evaluating complaints to learn about product failures or service problems • Approximately one out of 25 customers complains!! • Monitor the Internet • Monitoring discussion forums to obtain valuable insights Slide 5.11

  14. Tools for Classifying Customer Requirements • Affinity diagram (p.191) • Used to organize large numbers of ideas or facts into natural patterns or groupings • Tree diagram (p. 192) • Shows hierarchical structure of facts and ideas • Used in designing implementation plans for projects Slide 5.12

  15. Affinity diagram Tree diagram Tools for Classifying Customer Requirements cont… Slide 5.13

  16. Customer Relationship Management • Excellent customer relationship management depends on four aspects • Commitments to customers • Zaring Homes promises that homes will be built on-time, within budget, & within specification or the home is free • Customer-focused service standards • Responding to a customer’s call within two hours • Training and empowerment • Job orientation, on-the-job training, & job certification • Effective complaint management • Employees at Ritz-Carlton can spend up to $2000 to resolve a complaint with no questions asked Slide 5.14

  17. Measuring Customer Satisfaction • Measurement of customer satisfaction allow a business to: • 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 Slide 5.15

  18. Importance Who cares? Overkill Low High Strength Vulnerable Low High Performance Performance-Importance Comparison Slide 5.16

  19. Transfer of Learning Questions Describe the importance of customer satisfaction Answer - to satisfy its customers, achieve higher customer satisfaction than its competitors, retain customers in the long run, & to gain market share Name the U.S. index used for measuring customer satisfaction Answer – American Customer Satisfaction Index (ACSI)

  20. Transfer of Learning Questions cont… Identify one dimension of service quality Answer – Reliability, Tangible, Empathy, Responsiveness Name two ways to gather customer information Answer – comment cards, focus groups, direct customer contact, field intelligence, study complaints, internet monitoring

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