CUSTOMER SATISFACTIONMaaz KhanSEM IV – Total Quality Management

•Introduction

•Customer Satisfaction

•TQM relation to Customer Satisfaction

Agenda

Introduction

• Quality Quality is excellence that is better than a minimum standard. It is conformance to

standards and ‘fitness of purpose’ ISO 9000:2000 definition of quality - It is the degree to which a set of inherent

characteristics fulfills or exceeds requirements(customer expectations).

• Total Quality Management TQM is the management approach of an organization, centered on quality, based on

the participation of all its members and aiming at long term success through customer satisfaction and benefits to all members of the organization and society.

TQM is the integration of all functions and processes within an organization in order to achieve continuous improvement of the quality of goods and services. The goal is customer satisfaction.

Integrated Management approach towards quality

• Customer Satisfaction Customer satisfaction is a measure of how products and services supplied by a

company meet or surpass customer expectation. Customer define satisfaction in terms of their overall experience with the company. Key performance indicator within business – directly linked to revenue and profitability Not an objective statistics but more of a feeling or attitude. Is not limited to the product alone, service connected with the product such as

packaging, timely-accurate shipping, ability to meet deadline matters is also important

Customer Satisfaction

• Who is the Customer

• Customer Expectations

• Customer Perception of Quality – Perceived Overall Quality

• Customer Perceived Value – Perceived Value

• Customer Complaints – Care/Feedback

• Customer Loyalty – Retention

• Measuring Customer Satisfaction – ACSI Score

• Customer Satisfaction in Service Industry

Customer Satisfaction

Customer Perceived Quality is opinion of a product or brand’s ability to fulfill his or her

expectations

Customer Expectation on the product’s Good Quality, Pricing, Functionality, Customer Service, Company reputation.

Customer Perceived Value is The consumer's perceived value of a good or service affects the price that he or she is

willing to pay for it

Customer Care/Service and Complaint mechanism form part of

Feedback

Customer satisfaction should lead to customer loyalty and customer retention.

Customer Satisfaction

• Who is the CustomerWho is the final user of the productCustomer dictates the market trends and direction – Is the Boss/King. Employers don’t pay wages but it is the customer who pays the wages! So take good care of your customers.The entire organization must in effect revolve around the customer – whether the customer is being well served and if he is really pleased, contented and satisfied with the product/service you have to offer.

• Customer ExpectationsGood Quality, Pricing, Functionality, Customer Service, Company reputation. Customer expectations keep changing along with demands

• Customer Perception of Quality – Perceived Overall Quality Customer’s opinion of a product or brand’s ability to fulfill his or her expectations. It may have little or nothing to do with the actual excellence of the product, and is based on the firm's (or brand's) current image, or past consumer's experience with the firm's other products, and the influence of the opinion leader’s, consumer's peer group, and others

• Customer Perceived Value – Perceived ValueThe worth that a product or service has in the mind of the consumer. The consumer's perceived value of a good or service affects the price that he or she is willing to pay for it. For the most part, consumers are unaware of the true cost of production for the products they buy. Instead, they simply have an internal feeling for how much certain products are worth to them. Thus, in order to obtain a higher price for their products, producers may pursue marketing strategies to create a higher perceived value for their products.

Customer Satisfaction

• Customer Complaints – Care/FeedbackFeedback should be continuously sought and monitored - not one-time onlyPro-active approach should be adoptedKeep promises to customers, return customer calls promptly and professionallySearch for customer-related improvements continuouslyGive every customer complete and personal attention.Review and implement customer feedback and suggestions into current procedures when needed

Performance comparison with competitors can be knownCustomers needs can be identifiedRelative priorities of quality can be obtained from the horses’ mouth!Areas for improvement can be noted.Training and education to enhance job performance and commitment to customer care can be planned

Feedback methodsComment cards enclosed with warranty card when product is purchased.Customer survey and questionnaireCustomer visitsCustomer focus groupsQuarterly reportsToll-free phonesE-mail, Feedback section on website, newsgroups, discussion forumsEmployee feedbackMass communication

Customer Satisfaction

• Customer Loyalty – RetentionThis is the acid test for the bottom line- when the customer repeatedly comes back to you for repeat orders and to purchase new products by you. (In spite of stiff competition and multiple Suppliers

Customer satisfaction will lead to customer loyalty and customer retention.

Firm orders received or cash payments registered , market share, customer referrals and customer retention are an indication of your customer success and penetration .

It costs a company six times more to sell a product to a new customer than to sell to an existing one.

Loyal customers generate more revenue and are also cheaper to maintain.

Customer loyalty facilitates cross selling/ up selling of a company’s other products and services and also acts as an effective barrier to the entry of competition.

• Measuring Customer Satisfaction - ACSI

ACSI stands for American Customer Satisfaction Index Score

Customer Satisfaction in Service1) OrganizationIdentify each market segmentWrite down the requirementsCommunicate the requirementsOrganize processesOrganize physical spaces

3) CommunicationOptimize the trade-off between time and personal attentionMinimize the number of contact pointsProvide pleasant, knowledgable and enthusiastic employeesWrite documents in customer-friendly language

5) LeadershipLead by exampleListen to the front-line peopleStrive for continuous process improvement

2) Customer CareMeet the customer’s expectationsGet the customer’s point of viewDeliver what is promisedMake the customer feel valuedRespond to all complaintsOver-respond to the customerProvide a clean and comfortable customer reception area.

4) Front-line peopleHire people who like peopleChallenge them to develop better methodsGive them the authority to solve problemsServe them as internal customersBe sure they are adequately trainedRecognize and reward performance

TQM relation to Customer Satisfaction

• TQM Principles

• TQM Principles alignment to Customer Satisfaction

• TQM Advantages with respect to Customer Satisfaction

• Measuring Customer Satisfaction

• Indicators of Customer Satisfaction in TQM

• Practical Example of TQM application – Kano Model

TQM principles

Focus on process rather than functionManufacturing and Service processes

TQM means satisfying customers first time, every time. TQM is a whole style of working. Do it right the first timeThere is more than one route towards TQM.Organize by process not by function

Customer at the centerQuality productQuality service

Play role modelImplement TQMCommunicate Remove road blocks

Motivated employeesTeam workEmployee empowerment

Process, Suppliers, Customers, Employees, Continuous Improvement

Culture of continuous improvement at all levelsDefect prevention

Establish performance measuresData and analysis

Suppliers as stakeholdersImprove input qualities through suppliers

Alignment of TQM to Customer SatisfactionTQM Principle Resulting

Dependent Variable

Resulting Corelation

Customer focus Cost of the product

Customer Satisfaction

Top management commitment – Leadership

Quality of product Customer Satisfaction

Employee participation

Customer satisfaction

Process Approach Quality of service Customer Satisfaction

Systems Approach/Training

Variety of product/Product Differentiation

Customer Satisfaction

Continuous improvement

Competitiveness Quality of product

Supplier relationship Quality of inputs Quality of product

Team work Performance Quality of product

TQM Advantages w.r.t Customer Satisfaction

• Enabling your employees to solve problems

• Enables employees to eliminate waste.

• Results in good management.

• Maintains customer focus consistently

• Meets customer expectations by focusing on Quality

• Defect Prevention leading to Defect reduction

• Process for managing unsatisfied customers, make needed corrections

• Motivate the workforce, happier employees automatically means happier

customers

• Reduced service calls

• Greater productivity

• Reduced cost of production and service

• Creates innovation

• When corporations start improving their own quality, they also expect better

performance from their suppliers.

• All of the above increases customer satisfaction

Measuring Customer Satisfaction

• Steps

Develop key indicators that drive customer satisfaction.

Collect data regarding perception of quality received by customers

• Key Indicators

For Physical Products

ReliabilityAestheticsAdaptabilityUsabilityFunctionalityAppropriateness

For Services

Friendliness/courteousness of employeesSafety/risk of serviceBilling/invoicing procedureResponsiveness to requestsAppearance of physical facilitiesApproachability of the service providerWillingness to listen to customerHonesty and an ability to communicate in clear language

Indicators of Customer Satisfaction

• Understanding customer requirements

• Commitment to customers

• Frontline empowerment

• Excellent hiring, training, attitude and morale for front line

employees

• Proactive customer service system

• Proactive management of relationship with customers

• Use of all listening posts – touch points with customers

• Quality requirements of market segment

• Service standards meeting customers requirements

• Greater customer loyalty

• Market share improvement

• Higher stock prices

Kano ModelX axis – How well is the customer satisfied

Y Axis – How well is the need executed

Types of Customer Needs(Expectation)1) Performance needs2) Basic needs3) Excitement needs

Improving Quality in these needs will appropriately increase Customer Satisfaction(ACSI)

Not improving quality in these needs will dissatisfy the customer but improving will not increase customer satisfaction

Wow – Delightful – Company USPs only increases Customer Satisfaction

Thank You

Q&A