Focusing on Customers

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Focusing on Customers

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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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  1. Chapter 4 Focusing on  Customers   1
  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.
  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.   3
  4. Key Idea Customer wants and needs drive  competitive advantage, and statistics  show that growth in market share is  strongly correlated with customer  satisfaction.
  5. 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 1998 with a small improvement into  2000 suggests that quality improvements  have not kept pace with consumer  expectations   5
  6. ACSI Model of Customer  Satisfaction Perceived Customer quality complaints Perceived Customer value satisfaction Customer expectations Customer loyalty
  7. 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.
  8. Customer­Driven 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 is a comparison of ACTUAL   8 QUALITY to EXPECTED QUALITY
  9. Key Idea Many organizations still focus more on  processes and products from an internal  perspective, rather than taking the  perspective of the external customer.
  10. 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
  11. Leading Practices (2 of 2)  Build relationships through  commitments, provide accessibility to  people and information, set service  standards, and follow­up on  transactions  Effective complaint management  processes  Measure customer satisfaction for  improvement
  12. Key Customer Groups  Organization level – consumers – external customers – employees  – society  Process level – internal customer units or groups  Performer level – individual internal customers
  13. 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?
  14. AT&T Customer­Supplier  Model Your Inputs Your Outputs Your Suppliers Processes Customers Requirements Requirements and feedback and feedback   14
  15. Key Idea The natural customer­supplier 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.
  16. Customer Segmentation  Demographics  Geography  Volumes  Profit potential
  17. 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.
  18. Key Dimensions of 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
  19. 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   19
  20. Kano Model of Customer  Needs  Dissatisfiers: expected  requirements  Satisfiers: expressed  requirements  Exciters/delighters: unexpected  features   20
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