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UNIT - 3

Customer Satisfaction and Customer Involvement:

Customer Satisfaction :
customer and customer perception of quality, feedback,
using customer complaints, service quality, translating
needs into requirements, customer retention,
Case studies.
Employee Involvement
Motivation, employee surveys, empowerment,
teams, suggestion system, recognition and reward, gain
sharing, performance appraisal, unions and employee
involvement, case studies. 07 Hours
ment and its Culture?

The TQM
philosophy derives
from one
The Prime Directive of Total Quality Manage

foundational idea:
everything must be
geared towards
customer satisfaction,
the engine which
drives the company
and on which its
future survival
depends.
CUSTOMER SATISFACTION
The most important asset of any organization is its
customers
Satisfied customers pay their bills promptly which
greatly improves cash flow the lifeblood of any
organization
Success of an organization depends on the number
of regular customers it has, quantity of goods they
buy and frequency of buying . And of course this
depending on the product.
ORGANIZATIONAL HIERARCHIAL
DIAGRAMS

Earlier approach TQM


approach CUSTOMERS

CEO FRONT LINE


REPREENTATIVES
SENIOR
MANAGER
FUNCTIONAL
FUNCTIONAL OPERATIONAL
OPERATIONAL AREAS
AREAS
SENIOR
MANAGER
FRONT LINE
REPREENTATIVES CEO

CUSTOMERS
ORGANIZATIONAL HIERARCHIAL DIAGRAMS

The Fig. represents the organizational diagram


earlier and tqm approach.
It can be observed from the fig that customer
is placed at the topmost position in the
organization than others .
Every ones focus will be on customer and
his/her satisfaction
Customer satisfaction is one of the major
purposes of quality management system.
TYPES OF CUSTOMER

A customer can be defined as One who purchases product or


services According to TQM perspective There are two
types of customers
External Customer
Internal Customer
External Customer:
customer who exists outside the organization and buys the
organizations product or service or one uses the product or
service one who influences the sale of product or service is
an external product
External customer generally fall into three categories
1.Current customer 2. Prospective customer
3. Lost customer
Each of the above three categories provides valuable
information about the customer satisfaction.
Performance must be continually improved in order to
retain the current and to attract new ones.
An organization should try to to find out the reason for the
lost customer.
INTERNAL CUSTOMER:
Every person in process is considered a customer of the
preceding operation. Each internal customer receives a
product or service and in exchange provides a product or
service. Each workers goal should be to ensure that his role
meets the quality of the next in the process.
Pleasing internal customers is fundamental to
satisfying the final external customer.
Customer Satisfaction
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,Interdepartmental team
work,Frontline service behavior, commitment to the
customer innovation.
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.
WHAT THEWHAT THE CUSTOMER SWHAT THE CUSTOMER SEEKS IN ANY PRODUCT??EEKS IN ANY
[Customer Perception of Quality]
PRODUCT?? CUSTOMER SEEKS IN ANY PRODUCT??
An American society of quality (ASQ) Survey
on the end user perceptions of important
factors that influence purchases, are as
following:
Performance
Features
Services
Warranty
Price
Reputation
Customer Perception of Quality
1. Performance is how well the product function when
used.Other consideration are
a.Availablity : That is the probability of a product will
function when needed.
b.Reliabity: That is the product function well with in a
given period with out any problem
c. Maintainability: keeping the product functionable
without or with little maintenance
2. Features: Additional features added to the product in
addition to its basic function. Features are the
secondary characteristics of the product or the service
3. Service: Service after sales is very important factor for any organization
to give customer added value .Customer service is intangible and is
made op of many small things which has high influence on customer
perception. Intangible characteristics cannot be quantified but
greatly Influence the customer satisfaction. Providing an excellent
product is more easier than providing excellent customer service.
4. Warranty:
The product warranty represents an organizations public promise of a quality product
backed up by a guarantee of customer satisfaction. Ideally, it also represents a
public commitment to guarantee a level of service sufficient to satisfy the
customer. A warranty forces the organization to focus on the customers definition
of product and service quality. An organization has to identify the characteristics of
the product and service quality and the importance the customer attaches to each
of those characteristics. A warranty generates feedback by providing information
on the product and service . It also forces the organization to develop corrective
action.
Finally, a warranty builds marketing muscle. The warranty encouragrs customers to
buy a a service by reducing the risk of the purchase decision, and it generates more
sales from existing customer by enhancing the loyalty.
Customer Perception of Quality

PRICE: Today's customer is willing to pay a higher price to obtain value.


Customers are constantly one organizations products and services against those
of its competitors to determine who provides the greatest value. However ,in our
highly competitive environment, each customers concept of value is continually
changing. Ongoing efforts must be made by everyone having contact with
customers to identify, verify and update each customers perception of value in
relation to each product and service.
REPUTATION: Most of us find ourselves rating organizations by overall
experience with them. Total customer satisfaction is based on the entire
experience with the organization ,not just product.
Good experiences are repeated to six people and bad experiences are repeated to 15
people; therefore it is more difficult to create a favorable reputation
Customers are willing to pay a premium for a trusted brand and often becomes
customers for life. Because it costs five times as much to win a new customer as
it does to keep an existing one, customer retention is an important economic
strategy of any organization..
An effective marketing retention strategy is achieved through using feedback from
information collecting tools.
FEEDBACK
Customer feedback must be continually solicited and monitored.
Customers continually change. They change their minds, their
expectations and their suppliers. Customer feedback is not
one- time effort; it is an ongoing and active probing of the
customers mind. Feedback enables the organization to
Discover customer dissatisfaction
Discover relative priorities of quality
Compare performance with the competition
Identify customer needs
Determine opportunities for improvement
Listening to the voice of the customer can be accomplished by
numerous information collecting tools.
Information Collecting Tools
Listening to the voice of the customer can be accomplished by numerous
information collecting tools.
Comment Card.
Customer Questionnaire.
Focus Groups.
Toll Free Telephone No.
Customer Visits.
Report Card.
Internet & Computer.
Employee Feedback.
Customer complaints
Comment Card
A low cost method of obtaining feedback from customer
involves a comment card , which can be attached to the
warranty card and included with the product at the time of
purchase. The intent of card is to get simple information,
such as name, address, age, occupation and influenced the
customers decision to buy the product.
USED IN HOSPITALITY INDUSTRY(HOTELS, RESTAURANTS)
Comment Card
CUSTOMER QUESTIONNAIRE
POPULAR TOOL FOR OBTAINING OPINION & PERCEPTIONS ABOUT
AN ORG./PRODUCT/SVS
COSTLY & TIME CONSUMING
MOST SURVEYS ASK THE CUSTOMER TO GRADE THE QUESTION ON
A 1-5 OR 1-10 LIKERT SCALE
TEACHING METHODOLOGY OF MUHAMAD ASIF

HIGHLY HIGHLY
PARAMETER NEUTRAL
SATISFIED DISSATIS

COMMUNICATION SKILLS 5 4 3
2 1

GRIP ON THE SUBJECT 5 4 3


2 1

ANSWER TO THE QUESTIONS 5 4 3


2 1

WHOLE CLASS PARTICIPATION 5 4 3


2 1

DO U FEEL ANY VALUE ADDITION 5 4 3


2 1
AFTER HIS CLASS

DO U GO HOME SATISFIED AFTER 5 4 3


2 1
DOES NOT TELL ABOUT THE IMPORTANCE OF INDIVIDUAL QUESTION
RELATIVE TO OTHERS
NOR DOES IT TELL WHAT CUSTOMERS EXPECT FROM ORGANIZATION
RESULTS ARE NOT REPRESENTATIVE OF THE NORMAL POPULATION
THOSE WHO FEEL VERY GOOD OR VERY BAD RESPOND ONLY
TO MAKE SURVEY MORE USEFUL REMEMBER
1. CLIENTS & CUSTOMERS ARE NOT SAME
2. SURVEY RAISE CUSTOMER EXPECTATION
3. HOW U ASK A QUESTION WILL
DETERMINE HOW THE QUAESTION IS
ANSWERED
4. THE MORE SPECIFIC THE QUESTION,
THE BETTER THE ANSWER
TO MAKE SURVEY MORE USEFUL REMEMBER

5. U HAVE ONLY ONE CHANCE & 15 MIN.( max.


time a customer will give to respond a survey)
6. MORE TIME U SPEND IN SURVEY
DEVELOPMENT, LESS TIME U GET IN DATA
ANALYSIS & INTERPRETATION
7. WHOME U ASK IS AS IMPORTANT AS WHAT
U ASK
8. BEFORE DATA ARE COLLECTED , U SHOULD
KNOW HOW U WANT TO ANALYSE & USE
THE DATA
FOCUS GROUPS
POPULAR WAY TO OBTAIN FEEDBACK
SURVEYING A FOCUS GROUP IS A RESEARCH METHOD
USED TO FIND OUT WHAT CUSTOMERS ARE REALLY
EXPECTING
GROUP OF CUSTOMERS IS ASSSEMBLED IN THE
MEETING ROOM TO COLLECT INFORMATION
CAREFULLY PREPARED ANSWERS R ASKED BY SKILLED
MODEARTOR
WHO PROBES INTO PARTICIPANTS IDEAS, THOUGHTS
PERCEPTIONS & COMMENTS
PEOPLE SELECTED HAVE THE SAME PROFILE AS THE
EXPECTED CUSTOMER
FOCUS GROUPS R SOMETIMES USED WITHIN TE
ORGANIZATION TO ADDRESS INTERNAL ISSUES
FOCUS GROUPS (IMPRINT ANALYSIS)

WORD ASSOCIATION, DISCUSSIONS &


RELAXATION TECHNIQUES CAN
IDENTIFY A CUSTOMERS EMERGING
NEEDS
IMPRINT ANALYSIS HELPS TO
UNDERSTAND THE HUMAN EMOTIONS
INVOLVED IN THE PURCHASE
DECISION
TOLL FREE PHONE NO.
TOLL FREE (1800/1600) TELEPHONE NUMBERS ARE AN
EFFECTIVE TECHNIQUE FOR RECEIVING COMPLAINT
FEEDBACK
ORGANIZATION CAN RESPOND FASTER & CHEAPLY TO
THE COMPLAINTS
IMPLIMENTATION OF TOLL FRE NUMBERS HAS
INCREASED TREMENDOUSLY IN INDIA AND MANY OTHERS
DEVELOPING COUNTRIES,THANKS TO THE REVOLUTION
IN TELECOMMUNICATION THAT WAS TRIGGERED AFTER
THE APPOINTMENT OF DR SAM PITRODA AS A ADVISOR TO
PM RAJIV GANDHI IN 1987
TODAY MOBILE NETWORKS ARE EXTENSIVELY USED FOR
MARKETING PURPOSES AND MASS COMMUNICATION
CUSTOMER VISITS

VISIT TO A CUSTOMERS PLACE OF


BUSINESS IS AN EFFECTIVE WAY TO
GATHER INFORMATION
ACCURATE INFORMATION OBTAINED
PEOPLE CAN SEE FIRST HAND HOW
THE PRODUCT IS PERFORMING
REPORT CARD
ANOTHER VERY EFFECTIVE
INFORMATION GATHERING
TOOL IS THE REPORT CARD .IT
IS USUALLY SENT TO EACH
CUSTOMER ON A QUARTERLY
BASIS.
THE DATA ARE ANALYZED TO
DETERMINE AREAS FOR
IMPROVEMENT.
THE INTERNET & THE COMPUTER
EMPLOYEE FEEDBACK
EMPLOYEES R UNTAPPED SOURCE OF
INFORMATIONS
CONVENTIONALLY COMPANIES LISTEN MORE
TO THE EXTERNAL CUSTOMERS & LESS TO THE
INTERNAL CUSTOMER
EMPLOYEES USUALLY PROVIDE DEEPER
INSIGHT INTO CONDITIOINS
EMPLOYEES FEEDBACK
CUSTOMERS RESAERCH REVEALS
WHAT IS HAPPENING
EMLOYEES REASEARCH REVEALS WHY
IT IS HAPPENING
IT SHOULD BE REGULARLY SOLICITED
RATHER THAN CHECKING THE
WOODEN BOX ANNUALLY
USING CUSTOMER COMPLAINTS
THE FEEDBACK OBTAINED IN ALL ABOVE
CASES IS PROACTIVE
CUSTOMER COMPLAINT IS REACTIVE BUT
VERY USEFUL
ASQ SURVEY REVEALS THAT ABOUT
1. 1.5% COMPLAINTS REACH TOP
MANAGEMENT
2. 20% TO FRONT LINE PERSONNEL
3. 80% DONT REPORT
IT INDICATES THAT IT IS EASY FOR
THE TOP MANGMNT TO PERCEIVE
THAT EVERY THING IS OK
WHEN SATISFIED CUSTOMERS R
INCLUDED IN THE DATA, NO. OF
COMPLAINTS TO MANGMNT IS
LOWER THAN 1.5%
FREQUENTLY DISSATISFIED
CUSTOMERS DONT SAY ANYTHING
& QUIETLY SWITCH OVER TO
COMPETITOR
THOSE WHO DONT COMPLAIN R THE
ONE WHO SHOULD WORRY THE
ORGANIZATION MOST

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
ONCE U HAVE IDENTIFIED THE
COMPLAINTS/ PROBLEMS

NOW TURN TO ELIMINATION.


INCORPORATE CUSTOMER VOICE
INTO PRODUCT/ SERVICE
Mass Customization

GIVE CUSTOMER EXACTLY WHAT


CUSTOMER WANTS
Mass customization
IN THE OUTSET, PRICE TAG ON SUCH
PRODUCTS WAS PROHIBITIVE, BUT M.C
PROVIDES THIS AT AFFORDABLE PRICE
M.C IS RESULT OF FLEXIBLE
MANUFACTURING SYSTEM(FMS),JIT,&
CYCLE TIME REDUCTION
Mass customization
IN AUTOMOBILES IT IS SINCE MANY
YEARS
CUSTOMER MAY DETERMINE WHAT
TYPE OF SEAT COVERINGS, COLOUR &
STEREO SYSYTEM THEY WANT
COMPUTER MFRs & ASSEMBLERS DO IT
Mass customization

Modular design

Delayed differentiation
MODULAR DESIGN
Is a form of standardization in which component
parts are subdivided into modules that are easily
replaced or interchanged. It allows:

Easier diagnosis and remedy of failures


Easier repair and replacement
Simplification of manufacturing and
assembly
DISADVANTAGE:
Variety Decreases
DELAYED DIFFERENTIATION

Delayed differentiation is a postponement


tactic
Producing but not quite completing a product
or service until customer preferences or
specifications are known
DELAYED DIFFERENTIATION
Over the Wall Approach

New
Product

Mf Desig
g n
SERVICE QUALITY
Customer service is the set of activities an organization uses to win
and retain customers satisfaction.
Service can be provided before, during or after the sale of product
or exist on its own.
Elements of customer service are
Organization, Customer care,Communication,Frontline people,
Leadership
ORGANIZATION:
1.Identify each market segment,2. Write down the requirement 3.Communicate the
requirement, 4.Organize the process,5.Organizephysical spaces.
CUSTOMER CARE:
6.Meet the customer expectations, 7.Get the customer point of view ,8 Deliver what
is promised,9.Make the customer feel valued,10. Respond to all complaints,
11.Over respond to the customer, 12. Provide a clean and comfortable customer
area.
SERVICE QUALITY
COMMUNICATION
13.Optimize the trade off between time and personal attention,14.Minimize the
number of contact points, 15. provide pleasant, knowledgeable and enthusiastic
employees , 16.Write documents in customer friendly language
FRONT LINE PEOPLE
17.Hire people who like people, 18.Challenge them to develop better
methods,19.Give them the authority to solve problems, 20.Serve them as the
internal customers, 21.Be sure that they are adequately trained ,22.Recognize and
reward performance
LEADERSHIP:
23.Lead by example, 24.Listen to the front line people ,25.Strive for continuous
improvement
Characteristics and Expectations
CHARACTERISTIC EXPECTATION

Delivery Delivered on schedule in undamaged condition

Installation Proper instruction on setup, or technicians


supplied for complicated products

Use Clearly written training manuals or instructions


provided on proper use

Field repair Properly trained technicians to promptly make


quality repair
Customer Service Friendly service representatives to
answer questions
Warranty Clearly stated
TRANSLATING NEEDS INTO REQUIREMENTS
NORMAL REQUIREMENTS Are typically what one
gets by just asking customers what they want.
EXPECTED REQUIREMENTS Are the obvious /
compulsory requirements. For example, if meal is
served hot, customers barely notice it. If it's cold or too
hot, dissatisfaction occurs. Expected requirements must
be fulfilled.
EXCITING REQUIREMENTS
Beyond the customer's expectations.
If provided , customer would be excited
If not ,they would hardly complain
IN OTHER WORDS
NORMAL REQUIREMENTS
MORE IS BETTER
EXPECTED REQUIREMENTS
MUST BE
EXCITING REQUIREMENTS
DELIGHTENING,EXCITING, WOW FACTOR
KANOS MODEL

If the requirement is absent Satisfaction MORE IS


it does not cause + BETTER
dissatisfaction, but it will The more requirements
delight clients if present - are met the more one is
"camera options" satisfied
EXCITERS
Service
Service
Fully
Dysfunctions - +
Functions

Must Be
Less satisfied when the
product or service is less
functional, but cannot
- increase satisfaction
Dissatisfaction substantially if operational
- "up-time"
KANO MODEL
The Kano model which is shown, conceptualizes customer requirements. The model represents
three major areas of customer satisfaction .
The First area of customer satisfaction, represented by the diagonal line, represents explicit
requirements, these includes written or verbal requirements and are easily identified,
expected to be met, and typically performance related. Satisfying the customer would be
simple if these were only requirements
The second area of customer satisfaction represents innovations, as shown by the curved
line in the upper left corner of the figure. A customer s written instructions are often
purposefully vague to avoid stifling new ideas during conceptualization and product
definition. Because they are unexpected, these creative ideas often excite and delight the
customer. These ideas quickly become expected
The third and most significant area of customer satisfaction represents unstated or unspoken
requirements as shown by the curve in the lower right corner of the curve. The customer
may indeed be unaware of these requirements, or they may assume that such requirements
will be automatically supplied. Basic specifications often fail to take real world
manufacturing requirements into account; many merely are based on industry standards or
past practices. These implied requirements are the hardest to define but prove very costly if
ignored. They may be rediscovered during an after the fact analysis of lesson learned.
Customer Retention
Conventionally, customer retention is defined as:
Customer retention is the number of customers doing business with a firm at the
end of a financial year, expressed as percentage of those who were active
customers at the beginning of the year.
How a Modern Database
Works

Customer
Transaction Marketing
s Campaign Marketing
s Staff
Analytic & -Access
Campaign By Web
Inputs from retail, Marketing Software
phone, web Database

Modeling &
Data Cleaning
Analytics
Standardization
Appended
Website Data
Why retention is important: long
term loyal customers
Buy more per year
Buy higher priced options
Buy more often
Are less price sensitive
Are less costly to serve
Are more loyal
Have a higher lifetime value
How to retain them
Recruit the right customers to begin
with
Once you have them, segment them
by lifetime value
Communicate with them to build
loyalty
What proves that
communications
work?

Manufacturer of indoor lighting products


Catalog sent to 45,000 contractors
Previous policy: wait for the orders
Test: pick 1,200 customers, split into test
of 600 and control of 600
Two person pilot program build relationship
with test customers to see the results
Communications work!
Building a relationship with
customers can be highly profitable
Using a database to recreate the
old family grocer is a winning
strategy
Relationship marketing is the way
to go
But, with millions of
customers
Which ones should you spend
resources on?
If you communicate with everyone,
you will not have enough resources
to retain the very best.
To select the best, you need to
compute customer lifetime value
Employee Involvement
Motivation, employee surveys, empowerment,
teams, suggestion system, recognition and
reward, gain sharing, performance appraisal,
unions and employee involvement, case
studies.
Motivate and inspire everyone to be on the same page
Employee involvement is a process for empowering employees to participate in
managerial decision-making and improvement activities appropriate to their
levels in the organization. Since McGregors Theory Y first brought to
managers the idea of a participative management style, employee
involvement has taken many forms, including the job design approaches and
special activities such as quality of work life (QWL) programs.
Empowerment means that all employees feel that they have the responsibility
and
authority to participate in decision making and problem solving in their
appropriate operating levels. Its obvious that a whole company of skilled and
capable problem solvers will have a distinct competitive advantage over an
organization with only a few keys contributors and an army of drones.
Empowerment is a word coined in 1849 to refer to the gaining of power. In
the context of TQM, empower means to enable, to endow, to give permission
to, or to give the ability of power to. Empowerment is the authority to act
independently to meet expectations. This authority is given by management
for the purpose of developing a human connection with the decision making
process, which sustains improvements through the TQM program.
Employees Needs and Wants (Maslows Hierarchy)

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