ENTREPRENEURSHIP

Lecture No: 28Resource Person:

Malik Jawad SaboorAssistant Professor

Department of Management SciencesCOMSATS Institute of Information Technology

Islamabad.

Previous Lecture Review

• History and Importance of Quality

• Defining Quality

• Principles & Practices, Quality

OBJECTIVES

Focusing on Customers• Importance of Customer Satisfaction & Loyalty

• Creating Satisfied Customers

• Gathering and Analyzing Customer Information

• Production and Service Delivery

• CRM

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.

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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.

Key Idea

Customer wants and needs drive competitive advantage, and statistics show that growth in market share is strongly correlated with customer satisfaction.

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Customer-Driven Quality Cycle

measurement and feedback

Customer needs and expectations (expected quality)

Identification of customer needs

Translation into product/service specifications (design quality)

Output (actual quality)

Customer perceptions (perceived quality)

PERCEIVED QUALITY is a comparison of ACTUAL QUALITY to EXPECTED QUALITY

Key Idea

Many organizations still focus more on processes and products from an internal perspective, rather than taking the perspective of the external customer.

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

Leading Practices (2 of 2)

• Build relationships through commitments, provide accessibility to people and information, set service standards, and follow-up on transactions

• Effective complaint management processes• Measure customer satisfaction for

improvement

Key Customer Groups

• Organization level– consumers– external customers– employees – society

• Process level– internal customer units or groups

• Performer level– individual internal customers

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?

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AT&T Customer-Supplier Model

Requirementsand feedback

Requirementsand feedback

Your Suppliers

YourProcesses

YourCustomers

Inputs Outputs

Key Idea

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.

Customer Segmentation

• Demographics• Geography• Volumes• Profit potential

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.

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

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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

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Kano Model of Customer Needs

• Dissatisfiers: expected requirements• Satisfiers: expressed requirements• Exciters/delighters: unexpected features

Key Idea

As customers become familiar with them, exciters/delighters become satisfiers over time. Eventually, satisfiers become dissatisfiers.

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Customer Listening Posts

• Comment cards and formal surveys• Focus groups• Direct customer contact• Field intelligence• Complaint analysis• Internet monitoring

Key Idea

Companies use a variety of methods, or “listening posts,” to collect information about customer needs and expectations, their importance, and customer satisfaction with the company’s performance on these measures.

Moments of Truth

• Every instance in which a customer comes in contact with an employee of the company.

• Example (airline)– Making a reservation– Purchasing tickets– Checking baggage– Boarding a flight– Ordering a beverage– Requests a magazine– Deplanes– Picks up baggage

Customer Relationship Management • Accessibility and commitments• Selecting and developing customer contact

employees• Relevant customer contact requirements• Effective complaint management• Strategic partnerships and alliances• Exploiting CRM technology

Key Idea

To improve products and processes effectively, companies must do more than simply fix the immediate problem. They need a systematic process for collecting and analyzing complaint data and then using that information for improvements.

Lecture Review

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Focusing on Customers• Importance of Customer Satisfaction & Loyalty

• Creating Satisfied Customers

• Gathering and Analyzing Customer Information

• Production and Service Delivery

• CRM

Reference: Evans, James R. et. al, The Management and Control of Quality, 8th edition