• TQM is a business management strategy
aimed at embedding awareness of Quality
in all organizational processes.
• Attainment of Total Quality Through
Everyone’s Commitment on a Daily Basis
When used together as a phrase, the three words in
this expression have the following meanings:
Involving the entire organization, supply chain, and/or
product life cycle
With its usual definitions, with all its complexities
The system of managing with steps like
Plan, Organize, Control, Lead ,Staff, provisioning
The TQM philosophy
derives from one
everything must be geared
satisfaction, the engine
which drives the company
and on which its future
Earlier approach TQM approach
Pleasing “internal” customers is fundamental
to satisfying the final “external” customer.
Continuous Satisfaction of Customer
• ISO 9000:
"Degree to which a set of inherent characteristics
fulfills requirements." The standard defines
requirement as need or expectation.
• Six Sigma:
"Number of defects per million opportunities.
Satisfaction is basically a psychological state, care
should be taken in the effort of quantitative
measurement, although a large quantity of research
in this area has recently been developed.
The Research gives ten domains of
Ease of Access,
Front line Service Behaviors,
Commitment to the Customer & Innovation.
• The Most important Asset of any
Organization is its Customers.
• Satisfied Customers ---the
Lifeblood of any Organization .
The Customer is the Ultimate Judge of Value
TQM is driven by long-term growth goals
and flexibility, focusing on
“bringing the customer in”.
• Improve each and everyday,
Do not focus on problem, focus on
• IF YOU’RE NOT PART OF THE SOLUTION,
YOU’RE PART OF THE PROBLEM.
Products must go through continuous improvement
• Customers are not interested in excuses, they’re
interested in results.
• We must Be proactive - because if we don’t, someone
• Ishikawa Says:
“The organization which does not make a
change in the 06 months is a dead
TQM and having satisfied
relations, will end in
attaining the common goal
of organization and
suppliers---to satisfy end
There is a deliberate need of
and innovation to have
updated Quality products
---to have retained, loyal
customers till the end.
Process Vs. Customer
Three-part customer satisfaction system
1. company processes (operation)
I. company employees
II. customer expectation
Listen to the voice
of the customer
Listen to the voice
Of the process
Propose and test
Key Customer Groups
• Organization level
– external customers
• Process level
– internal customer units or groups
• Performer level
– individual internal customers
Internal Customers Conflict
• What products or services are produced?
• Who uses these products and services?
• Who do employees call, write to, or answer
• Who supplies inputs to the process?
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
• Stresses learning and adaptation to change
• Based on the scientific method
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.
A Quality Focus
The Driver of Customer Satisfaction (1 of 2)
Key excellence indicators for customer satisfaction
• Service standards derived from customer requirements
• Understanding customer requirement
– Customer types
– Product/service features
• Front-line empowerment (resolution)
• Strategic infrastructure support for front-line employees
• Attention to hiring, training, attitude, morals for
• High levels of satisfaction – customer awards
The Driver of Customer Satisfaction (2 of 2)
• Proactive management of relationships with
• Use of all listening posts
– Product/service follow ups
– Turnover of customers
• Quality requirements of market segments
– Survey go beyond current customers
– Commitment to customer
(trust/confidence/making good on word)
Getting Employee Input
• Employee input can be solicited concurrent with
• Identify barriers and solution to service and product
• 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
Measuring Customer Satisfaction
• Discover customer perceptions of business
• Compare company’s performance relative
• Identify areas for improvement
• Track trends to determine if changes result
Difficulties with Customer
• Poor measurement schemes
• Failure to identify appropriate quality
• Failure to weight dimensions appropriately
• Lack of comparison with leading competitors
• Failure to measure potential and former
• Confusing loyalty with satisfaction
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
The Sales Process
TQM become a part of sales and marketing
processes -- Selling, advertising, promoting,
innovating, distribution, pricing, and
packaging – as they relate to customer
satisfaction. sales a process that lends itself
to analysis and improvement for customer
Total Quality Management
Total quality management is continual
improvement and responding to customer needs
Marketer’s role in delivering Quality
to target customers
1. Identify customer needs and requirements
2. Communicate customer expectation
3. Fill customer order on time
4. Check that customer know the use of product
5. Stay with customer after selling
6. Gather information for further improvements
Service Quality And Customer Retention
Service companies measure cost of customers
who will not come back because of 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.
Customer Retention And Profitability
Internal Service Quality
External Service Quality
Profitability and customer Retention
Customer Feedback is essential for the
organization nowadays to beat the sharp
competition and to retain their customers.
It enables us to know:
About their satisfaction level
Priorities of qualities
Performance and competition
Opportunities for improvement.
۞ HAVING COMMENT CARDS AND
A BOX TO PUT THEM IN.
۞ COMMENT CARDS ENCLOSED WITH
EACH ORDER .
۞ CUSTOMER QUESTIONNAIRE..
۞ FOCUS GROUP
۞ REPORT CARD
۞ HIRING A TELEMARKETING FIRM TO CALL
CUSTOMERS FOR FEEDBACK
۞ PUBLISIZING ( toll-free number) .
۞ ASKING CUSTOMERS TO STAY ON PHONE
AND COMPLETE A SHORT SURVEY AFTER
THEY FINISH PLACING AN ORDER
۞ WEB BASED SURVEYS VIA E-MAILS TO
CUSTOMERS WITHIN A SHORT PERIOD OF
TIME AFTER THEIR PURCHASE
۞ USE GOOGLE ALERTS TO TRACK
MENTIONS OF UR BUSINESS ON THE
INTERNET AND IN THE BLOGOSPHERE.
۞ MANAGERS AND OWNER CONTACT
CUSTOMERS TO GET DIRECT REPORT
۞ CUSTOMER VISITS(MEETING THEM AT
۞ EMPLOYEE’S FEEDBACK
۞ PUTTING WEBSITE URL ON CUSTOMER
RECEIPTS AND ASKING CUSTOMERS TO GO
THERE TO DELIVER FEEDBACK FOR
THE FEEDBACK OBTAINED IN ALL ABOVE CASES
CUSTOMER COMPLAINT IS REACTIVE BUT VERY
BY TAKING THE POSITIVE APPROACH TO THE
COMPLAINTS IT IS POSSIBLE TO IMPROVE THE
IN FACT COMPLAINTS GIVE THE
ORGANIZATION A SECOND CHANCE
GOOD CUSTOMER SERVICES &
RETENTION OF CUSTOMERS
Good Customer Service is all about bringing customers back.
And about sending them away happy…
---HAPPY enough to pass Positive Feedback about your
business along to others,
who may then try the product or service you offer for
themselves and in their turn become Repeat Customers/
Building Customer value, Satisfaction
The level of priority the customer
gives to a product.
When the customer perceive
expected value from the product is called customer
The totality of feelings or attitudes
that would incline a customer to consider the re-purchase of
a particular product, service or brand or re-visit a particular
company, shop or website.
Image benefit Psychological cost
Personal benefit Energy cost
Product benefit Monetary cost
Total customer benefit Total customer cost
Determinants of Customer
Customer Value Analysis Steps
1. Identify the major attributes and benefits that
2. Assess the quantitative importance of the
different attributes and benefits
3. Assess the company’s and competitor’s
performances on the different customer values
against their rated importance
4. Examine how customers in a specific segment
rate the company’s performance against a
specific major competitor on an individual
attribute or benefit basis
5. Monitor customer values over time
Total Customer Satisfaction:
satisfaction depends on the offer’s performance that
meets customer expectation.
1.If the performance matches the expectations, the
customer is satisfied.
2. If the performance exceeds the expectations , the
customer is highly satisfied or delighted.
Satisfaction is a person’s feeling of pleasure or
disappointment that result from comparing a product’s
perceived performance to their expectations.
How do Buyers form their
Expectations result from past buying experience;
friends’ and associates’ advice and marketers’
and competitors’ information and promises.
1.If marketers raise expectations too high, the
buyer is likely to be disappointed.
2.If the company sets expectations too low, it
won’t attract enough buyers.
Companies should measure systematically that how well
they treat with the customers, identifying the factors shaping
satisfaction, and making changes in their operations and
marketing as a result.
Monitoring satisfaction is very important because one key to
Customer Retention is Customer Satisfaction.
A highly satisfied customer generally stays loyal longer,
buys more as the company introduces new products and
upgrades existing products, talks favorably to others about
the company and its products, pay less attention to
competing brands and is less sensitive to price, offers
products or service ideas to the company, and costs less to
serve than new customers.
High customer satisfaction has also been linked to higher
returns and lower risk in the stock market.
Rated Customer Satisfaction on
Scale from One to Five
1. At a level one, customers are likely to
abandon the company and even bad-of-
2. At level two to four, customers are fairly
satisfied but still find it easy to switch when a
better offer comes along.
3. At level five, the customers is very likely to
repurchase and even spread good word of
mouth about the company
Periodic Surveys is way to measure the customer
Customer loss rate also tells about the customer
Questionnaire from customers who have stopped
buying or who have switched to another supplier
to find out Why?
Finally, companies can hire mystery shoppers to
pose as potential buyers and report on strong and
weak points experienced in buying the company’s
and competitors’ products.
Impact of Quality
1. Quality is the key to value creation and customer
2. High level of quality means high satisfaction of customer
which support high prices and (often) low cost.
3. There is a high correlation between relative product
quality and company profitability.
CLV is the net present value of the cash flows
attributed to the relationship with a customer.
The well known 20-80 rule says that the top 20 of
customers often generates 80% or more of the
The least profitable 10% to 20% of customers , on the
other hand, can actually reduce profits between 50%
and 200% per account, with the middle 60% to 70%
Cultivating Customer Relationships
Maximizing customer value means cultivating long-term
Customer Relationship Marketing:
CRM is the process of
carefully managing detailed information about individual
customers and all customer “touch points” to maximize
• A customer “touch point” is any occasion on which a
customer encounters the brand and product—from actual
experience to personal or mass communications to
• Customer relationship management enables companies
to provide excellent real-time customer service through
the effective use of individual account information.
Cultivating Customer Relationship
One To One Marketing
One-to-one marketing is a customer relationship
management (CRM) strategy emphasizing
personalized interaction with customers.
Four Step framework for one to one marketing
• Identify your prospects and customers
• Differentiate customers in terms of their needs and their value to
• Interact with individual customers to improve your knowledge about
their individual needs and to build stronger relationships
• Customize products, service and messages to each customers.
Cultivating Customer Relationship
1. Reducing the rate of customer defection
2. Increasing the longevity of the customer
3. Enhancing the growth potential of each
customer through “share-of- wallet”, cross-
selling and up-selling
4. Making low profit customers more profitable
or terminating them
Reduce Customer Defection
– Define and measure retention rate
– Distinguish causes of customer attrition
– Estimate profit loss associated with loss of
– Assess cost to reduce customer defection
– Gather customer feedback
• Create superior products, services and experiences for the
• Get cross departmental participation in planning and
managing the customer satisfaction and retention process.
• Integrate the “Voice of the Customer” to capture their stated
and unstated needs or requirements in all business decisions.
• Organize and make accessible a database of information on
individual customer needs, preferences, contacts, purchase
frequency and satisfaction.
• Make it easy for customers to reach appropriate
company personnel and express their needs,
perceptions, and complaints.
• Assess the potential of frequency programs and club
• Run award programs recognize outstanding
A customer database is an organized
collection of comprehensive information about individual
customers or prospects that is current, accessible, and
actionable for such marketing purposes as lead
generation, lead qualification, sale of a product or
service, or maintenance of customer relationships.
Data base marketing is the process
of building, maintaining and using customer databases and
other data bases to contact, transact, and build customer
Where marketers can
capture, query, and analyze it to draw
inferences about an individual customer’s
needs and responses.
Through data mining marketing
statisticians can extract useful information
about individual trends, and segments from
the mass of data.
Use of Database
1. To identify prospects
2. To decide which customer should receive a
3. To deepen customer loyalty
4. To reactive customer purchase
5. To avoid serious customer mistakes
Four problem that prevent a firm
effectively using CRM
• Large Investment
• Difficulty in getting every one
• Not all customers want an ongoing
Acquiring the right
Crafting the right
Instituting the best
Learning to retain
You Get It When…
•Have identified most
share of their wallet for
•Have studied what
•Have surveyed what
•Have spotted what
•Have researched the
best way to deliver
need to strike, tech
need to invest, and
that need to be
developed or acquired
•Know what tools our
employees need to
use to foster customer
•Have identified HR
systems needed to
boost employee loyalty
•Have learned why
customers defect and
how to win them back
•Have analyzed what
competitors do to win
your high value
CRM Technology Can Help…
revenue & cost data to
identify current and
future high value
•Develop new pricing
•Provide better info to
the front line
•Manage logistic and
supply chain more
•Align incentives and
defection and retention
Source: Darrel K., Reichheld F., and Schefter P., “Avoid the Four Perils of CRM” Harvard Business Review (Feb, 2002) pg. 106
THE BENEFITS OF CUSTOMER
• Profits derived from sales
– Reducing defections by 5% can boost profits 25%
• Profits from reduced operation costs
– It is 3 to 5 times cheaper to keep a customer than
to recruit a new one
• Profits from referrals
• Maintain the proper perspective
• Build trusting relationships
• Protect confidential information
• Tell customers the truth
• Provide full information (pros and cons)
• Be dependable, courteous, and considerate
• Be actively involved in community affairs
CUSTOMER RETENTION TACTICS
CUSTOMER RETENTION TACTICS
• Monitor the service delivery process
• Properly install products and train
• Be there when you are needed the most
• Provide discretionary effort
IS IT ALWAYS WORTHWHILE
TO KEEP A CUSTOMER? (disadvantages
• The account is no longer profitable
• Contract conditions are no longer being met
• Customers demands are beyond reasonable
• Customer is abusive to the point that it
lowers employee morale
• Customer’s reputation is so poor that it
tarnishes the reputation of the selling firm
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