Chapter 7Focusing on Customers                        1
Customer and Market Focus      in the Baldrige CriteriaThe Customer and Market Focus category examines how anorganization ...
Process Vs. Customer Listen to the voice                            Listen to the voice  of the customer                  ...
Key Customer Groups• Organization level   –   consumers   –   external customers   –   employees   –   society• Process le...
Internal Customers Conflict• What products or services are produced?• Who uses these products and services?• Who do employ...
Defining QualityThe several dimensions of quality:• People-focused management system• Focus on increasing customer satisfa...
A Quality focus• “Satisfaction is an attitude; loyalty is a behavior”• Loyal customers spend more, are willing to pay  hig...
A Quality Focus    Perceived               Customer    quality                 complaints          Perceived   Customer   ...
The Driver of Customer Satisfaction (1 of 2)Key excellence indicators for customer satisfaction• Service standards derived...
The Driver of Customer Satisfaction (2 of 2) • Proactive management of relationships with   customer • Use of all listenin...
Getting Employee Input• Employee input can be solicited concurrent with  customer research• Identify barriers and solution...
Measuring Customer Satisfaction• Discover customer perceptions of business  effectiveness• Compare company’s performance r...
Difficulties with Customer    Satisfaction Measurement• Poor measurement schemes• Failure to identify appropriate quality ...
The Role Of Marketing And Sales  Marketing and sales are function charged with  gathering customer input but in many firms...
The Sales ProcessTQM become a part of sales and marketingprocesses -- Selling, advertising, promoting,innovating, distribu...
Service Quality And Customer Retention  Service companies measure cost of  customers who will not come back because  pf po...
Customer Retention And Profitability                      Internal Service Quality Employee                               ...
Buyer-Supplier Relationships  Your      Inputs       Your       Outputs      YourSuppliers              Processes         ...
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Tqm ch 07

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Tqm ch 07

  1. 1. Chapter 7Focusing on Customers 1
  2. 2. Customer and Market Focus in the Baldrige CriteriaThe Customer and Market Focus category examines how anorganization determines requirements, expectations, andpreferences of customers and markets; and how it buildsrelationships with customers and determines the key factorsthat 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 2
  3. 3. Process Vs. Customer Listen to the voice Listen to the voice of the customer Of the process Predict customer Predict process behavior behaviorDetermine customer Determine optimum Quality expectations Process outcomes Propose and test Process improvement Three-part customer satisfaction system 1. company processes (operation) I. company employees II. customer expectation 3
  4. 4. Key Customer Groups• Organization level – consumers – external customers – employees – society• Process level – internal customer units or groups• Performer level – individual internal customers 4
  5. 5. Internal Customers Conflict• 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? 5
  6. 6. Defining QualityThe several dimensions of quality:• People-focused management system• Focus on increasing customer satisfaction and reducing costs• A systems approach that integrates organizational functions and the entire supply chain• Stresses learning and adaptation to change• Based on the scientific method 6
  7. 7. A Quality focus• “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.• Marker break points, where improving performance will change customer behavior.• Common theme: integrate the many individual or group efforts that may have their own priority. 7
  8. 8. A Quality Focus Perceived Customer quality complaints Perceived Customer value satisfactionCustomerexpectations Customer loyalty 8
  9. 9. The Driver of Customer Satisfaction (1 of 2)Key excellence indicators for customer satisfaction• Service standards derived from customer requirements• Understanding customer requirement – Thoroughness/objectivity – Customer types – Product/service features• Front-line empowerment (resolution)• Strategic infrastructure support for front-line employees• Attention to hiring, training, attitude, morals for employees• High levels of satisfaction – customer awards 9
  10. 10. The Driver of Customer Satisfaction (2 of 2) • Proactive management of relationships with customer • Use of all listening posts – Surveys – Product/service follow ups – Complaints – Turnover of customers – Employees • Quality requirements of market segments – Survey go beyond current customers – Commitment to customer (trust/confidence/making good on word) 10
  11. 11. Getting Employee Input• Employee input can be solicited concurrent with customer research• Identify barriers and solution to service and product problem• Serving as a customer-company interface Employee surveys can measure (1)TQM effectiveness (2) skill and behaviors improvement (3) effectiveness of team problem- solving process (4) outcomes of training (5) needs of internal customer 11
  12. 12. 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 12
  13. 13. 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 13
  14. 14. The Role Of Marketing And Sales Marketing and sales are function charged with gathering customer input but in many firms the people in these function are unfamiliar with quality improvement. Shortcomings in marketing as identified by critics include:• Partnering arrangement with dealers and distribution channels• Focusing on the physical characteristics of products and overlooking the related services• Losing a sense of customer price sensitivity• Not measuring or certifying suppliers such as advertisers• Failing to perform cost/benefit analyses on promotion costs• Losing markets to generics and house brands 14
  15. 15. The Sales ProcessTQM become a part of sales and marketingprocesses -- Selling, advertising, promoting,innovating, distribution, pricing, andpackaging – as they relate to customersatisfaction. sales a process that lends itselfto analysis and improvement for customersatisfaction. 15
  16. 16. Service Quality And Customer Retention Service companies measure cost of customers who will not come back because pf poor services. These are customer defections and they have a substantial impact on cost and profit. Indeed, it is estimated that customer defections can have a greater impact than economies of scale, market share, or unit cost. Many companies fail to measure defections, determine the cause of defections, and improve the process to reduce defections. 16
  17. 17. Customer Retention And Profitability Internal Service Quality Employee CustomerSatisfaction Employee Retention Retention External Service Quality Profit Customer Satisfaction System Profitability and customer Retention 17
  18. 18. Buyer-Supplier Relationships Your Inputs Your Outputs YourSuppliers Processes Customers Requirements Requirements and feedback and feedback 18
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