customer as tqm tool 3

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customer as tqm tool 3

  1. 1. Group Members 1. Tabaro Oscar 2. Bwete Evelyn 3. Muwanguzi Elizabeth 4. Ssentongo Robert
  2. 2. GOOD CUSTOMER Relationship AS A TQM TOOL
  3. 3. • 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
  4. 4. Definition When used together as a phrase, the three words in this expression have the following meanings: Total Involving the entire organization, supply chain, and/or product life cycle Quality With its usual definitions, with all its complexities Management The system of managing with steps like Plan, Organize, Control, Lead ,Staff, provisioning and organizing
  5. 5. The TQM philosophy derives from one foundational idea: everything must be geared towards customer satisfaction, the engine which drives the company and on which its future survival depends.
  6. 6. ORGANIZATIONAL HIERARCHIAL DIAGRAMS Earlier approach TQM approach CEO SENIOR MANAGER FUNCTIONAL OPERATIONAL AREAS FRONT LINE REPREENTATIVES CUSTOMERS CUSTOMERS FRONT LINE REPREENTATIVES FUNCTIONAL OPERATIONAL AREAS SENIOR MANAGER CEO •
  7. 7. ۞Customer Focus ۞Leadership & Constancy of Purpose ۞ Employee involvement ۞ Results Orientation ۞ Performance Measures. ۞ Management by Processes & Facts ۞ Continuous Learning, Innovation & Improvement ۞ Supplier Partnership Development
  8. 8. External Customer Internal Customer Pleasing “internal” customers is fundamental to satisfying the final “external” customer.
  9. 9. Continuous Satisfaction of Customer Requirements. • 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.
  10. 10. 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 satisfaction include:  Quality,  Value,  Timeliness,  Efficiency,  Ease of Access,  Environment,  Inter-departmental Teamwork,  Front line Service Behaviors,  Commitment to the Customer & Innovation.
  11. 11. • The Most important Asset of any Organization is its Customers. • Satisfied Customers  ---the Lifeblood of any Organization .
  12. 12. The Customer is the Ultimate Judge of Value Quality. TQM is driven by long-term growth goals and flexibility, focusing on “bringing the customer in”.
  13. 13. • Improve each and everyday, Do not focus on problem, focus on improvements. • IF YOU’RE NOT PART OF THE SOLUTION, YOU’RE PART OF THE PROBLEM.
  14. 14. 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 else will.. • Ishikawa Says: “The organization which does not make a change in the 06 months is a dead organizations”.
  15. 15. • TQM and having satisfied long-term supplier relations, will end in attaining the common goal of organization and suppliers---to satisfy end user. There is a deliberate need of continuous improvement and innovation to have updated Quality products ---to have retained, loyal customers till the end. 
  16. 16. 17 Focusing on Customers
  17. 17. 18 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 Predict customer behavior Determine customer Quality expectations Listen to the voice Of the process Predict process behavior Determine optimum Process outcomes Propose and test Process improvement
  18. 18. 19 Key Customer Groups • Organization level – consumers – external customers – employees – society • Process level – internal customer units or groups • Performer level – individual internal customers
  19. 19. 20 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?
  20. 20. 21 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
  21. 21. 22 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.
  22. 22. 23 A Quality Focus Perceived quality Customer complaints Perceived value Customer satisfaction Customer expectations Customer loyalty
  23. 23. 24 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
  24. 24. 25 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)
  25. 25. 26 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
  26. 26. 27 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
  27. 27. 28 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
  28. 28. 29 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
  29. 29. 30 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 satisfaction.
  30. 30. Total Quality Management Total quality management is continual improvement and responding to customer needs and expectations. 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
  31. 31. 32 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.
  32. 32. 33 Customer Retention And Profitability Internal Service Quality Employee Retention External Service Quality Customer Satisfaction Profitability and customer Retention Employee Satisfaction Customer Retention Profit System
  33. 33. 34 Buyer-Supplier Relationships Requirements and feedback Requirements and feedback Your Suppliers Your Processes Your Customers Inputs Outputs
  34. 34. 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.
  35. 35. ۞ 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
  36. 36. ۞ 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.
  37. 37. ۞ MANAGERS AND OWNER CONTACT CUSTOMERS TO GET DIRECT REPORT ۞ CUSTOMER VISITS(MEETING THEM AT LUNCH ۞ EMPLOYEE’S FEEDBACK ۞ PUTTING WEBSITE URL ON CUSTOMER RECEIPTS AND ASKING CUSTOMERS TO GO THERE TO DELIVER FEEDBACK FOR WINNING PRIZES.
  38. 38. CUSTOMER COMPLAINTS  THE FEEDBACK OBTAINED IN ALL ABOVE CASES IS PROACTIVE  CUSTOMER COMPLAINT IS REACTIVE BUT VERY USEFUL.  BY TAKING THE POSITIVE APPROACH TO THE COMPLAINTS IT IS POSSIBLE TO IMPROVE THE PRODUCTS/SERVICES  IN FACT COMPLAINTS GIVE THE ORGANIZATION A SECOND CHANCE TO WIN!!
  39. 39. 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/ (loyal customers).
  40. 40. Building Customer value, Satisfaction and loyalty Customer Value: The level of priority the customer gives to a product. Customer Satisfaction: When the customer perceive expected value from the product is called customer satisfaction. Customer Loyalty: 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.
  41. 41. Image benefit Psychological cost Personal benefit Energy cost Time cost Product benefit Monetary cost Total customer benefit Total customer cost Determinants of Customer Perceived Value
  42. 42. Customer Value Analysis Steps 1. Identify the major attributes and benefits that customers value 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
  43. 43. Total Customer Satisfaction: Customer 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.
  44. 44. How do Buyers form their Expectations 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.
  45. 45. Monitoring Satisfaction  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.
  46. 46. Rated Customer Satisfaction on a Scale from One to Five 1. At a level one, customers are likely to abandon the company and even bad-of- mouth. 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
  47. 47. Measurement Techniques  Periodic Surveys is way to measure the customer satisfaction.  Customer loss rate also tells about the customer satisfaction.  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.
  48. 48. Impact of Quality 1. Quality is the key to value creation and customer satisfaction. 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.
  49. 49. Maximizing Customer Life-Time Value 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 company’s profit. 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% breaking even.
  50. 50. Cultivating Customer Relationships Maximizing customer value means cultivating long-term customer relationships. Customer Relationship Marketing: CRM is the process of carefully managing detailed information about individual customers and all customer “touch points” to maximize customer loyalty. • 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 casual observation. • Customer relationship management enables companies to provide excellent real-time customer service through the effective use of individual account information.
  51. 51. 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 your company • 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.
  52. 52. Cultivating Customer Relationship 1. Reducing the rate of customer defection 2. Increasing the longevity of the customer relationship 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
  53. 53. Reduce Customer Defection – Define and measure retention rate – Distinguish causes of customer attrition – Estimate profit loss associated with loss of customer – Assess cost to reduce customer defection – Gather customer feedback Cultivating Customer lationship
  54. 54. Building Loyalty • Create superior products, services and experiences for the target market. • 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.
  55. 55. • 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 marketing programs. • Run award programs recognize outstanding employees Building Loyalty
  56. 56. Customer Database: 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. Database Marketing: Data base marketing is the process of building, maintaining and using customer databases and other data bases to contact, transact, and build customer relationship.
  57. 57. Data Warehouse: Where marketers can capture, query, and analyze it to draw inferences about an individual customer’s needs and responses. Data Mining: Through data mining marketing statisticians can extract useful information about individual trends, and segments from the mass of data.
  58. 58. Use of Database 1. To identify prospects 2. To decide which customer should receive a particular offer 3. To deepen customer loyalty 4. To reactive customer purchase 5. To avoid serious customer mistakes
  59. 59. Four problem that prevent a firm effectively using CRM • Large Investment • Difficulty in getting every one customer oriented • Not all customers want an ongoing relationship
  60. 60. Comprises Acquiring the right customer Crafting the right value proposition Instituting the best processes Motivating employees Learning to retain customer CRM Imperative You Get It When… •Have identified most valuable customers •Have calculated share of their wallet for goods/services •Have studied what products/services customers need today, tomorrow •Have surveyed what competitors offer today, tomorrow •Have spotted what products/services we should offer •Have researched the best way to deliver products/services to customers •Including alliance need to strike, tech need to invest, and services capabilities that need to be developed or acquired •Know what tools our employees need to use to foster customer relationships •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 customers •Senior management monitors customer defection metrics CRM Technology Can Help… •Analyze customer revenue & cost data to identify current and future high value customers •Target direct- marketing efforts better •Capture relevant product/service behavior data •Create new distribution channels •Develop new pricing models •Build communities •Process transaction faster •Provide better info to the front line •Manage logistic and supply chain more efficiently •Catalyze collaborative commerce •Align incentives and metrics •Deploy knowledge management systems •Track customer defection and retention levels •Track customer service satisfaction levels Source: Darrel K., Reichheld F., and Schefter P., “Avoid the Four Perils of CRM” Harvard Business Review (Feb, 2002) pg. 106
  61. 61. THE BENEFITS OF CUSTOMER RETENTION • Profits derived from sales – Reducing defections by 5% can boost profits 25% to 85% • 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
  62. 62. • 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
  63. 63. CUSTOMER RETENTION TACTICS • Monitor the service delivery process • Properly install products and train customers • Be there when you are needed the most • Provide discretionary effort
  64. 64. IS IT ALWAYS WORTHWHILE TO KEEP A CUSTOMER? (disadvantages and challenges) • 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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