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7/31/2019 02 Focusing on Customers
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Focusing on Customers
Quality is a customer determination which is based on the
customers actual experience with the product or service, measured
against his or her requirements--stated or unstated, conscious or
merely sensed, technically operational or entirely subjective--and
always representing a moving target in a competitive market.
Feigenbaum
The materials in this lecture borrows heavily from: The Management
and Control of Quality, Sixth Edition, Evans & Lindsay
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Creating a Customer Focus
Effective organizations talk to customers, translate what
their customers said into appropriate actions, and align
their key business processes to support what their
customers want
Six Sigma organizations achieve a competitive advantageby carefully and constantly analyzing customers needs
and by organizing and operating to meet these needs the
first time and every time
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Example
Consider a product that a customer has purchased that does
not meet your expectations
The product has many "bells and whistles" but does not
meet basic needs or is not user friendly
Will you take the time to complain about the product or
service?
Will you avoid purchasing products from the same
company in the future?
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Customer Behavior (Goodman 1991)
Most customers do not complain if a problem exists(50% encounter a problem but do not complain; 45% complain atthe local level; 5% complain to top management).
On problems with loss of over $100 and where the
complaint has been resolved, only 45% of customers willpurchase again (only 19% if the complaint has not beenresolved)
Word-of-mouth behavior is significant. If a large problemis resolved to the customer's satisfaction, about 8 persons
will be told about the experience; if the customer isdissatisfied with the resolution, 16 other persons will betold
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Satisfied Customers
Organizations need to identify customers needs
Design the production and service systems to meet those
needs
Measure performance as the basis for improvement
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Why bother?
Business environment is extremely competitive
Todays consumers demand quality more than ever before
Consumers are more willing to switch from company to
company and not just to get a better price. They will
switch for better service: reliability, accessibility, courtesy,
and so on
It is significantly cheaper to retain existing customers than
to attract new ones
Our competitors are gaining and its not getting any easier
The Management and Control of Quality, Sixth Edition, Evans & Lindsay
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Leading Practices
Define and segment key customer groups and markets
Understand the customer needs and wants (VOC)
Understand linkages between VOC and capabilities
(design, production, and delivery)
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
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Customer-Driven Quality Cycle(Evans & Lindsay)
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
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Who is the customer?
Many traditional organizations focus on internal processes
and products as identified from an internal perspective
Six Sigma organizations take the perspective of the
external customer when identifying projects
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Customer Groups
Organization level
consumers
external customers
employees
society
Process level
internal customer units or groups
Performer level
individual internal customers
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AT&T Customer-Supplier Model
Requirementsand feedback Requirementsand feedback
YourSuppliers
YourProcesses
YourCustomers
Inputs Outputs
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Identifying Customers
Customer-supplier linkages among individuals,
departments, and functions create a chain of customers
and connect every individual and function to the external
customers, thus characterizing the organizations value
chainWhat 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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Creating a Customer Focus
How will we know what the customer wants?
Ask them.
Companies use a variety of methods to collect information
about customer needs and expectations
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Customer Listening Posts
Comment cards and formal surveys
Focus groups
Direct customer contact
Field intelligenceComplaint analysis
Internet monitoring
Moments of Truth - Every instance in which a customercomes in contact with an employee of the company
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Customer Surveys
Purpose:
To learn about the customers point of view on service issues,
product/service attributes, and performance
To create a personal experience with individual customers yet
yield information on populationsThe types of questions to ask in a survey must be properly
worded to achieve actionable results. By actionable, we
mean that responses are tied directly to key business
processes, so that what needs to be improved is clear; and
information can be translated into cost/revenue
implications to support the setting of improvement
priorities.
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Survey Design
Identify purpose
Brainstorm to identify list of features and/or problems
Determine who should conduct the survey
Design questions and response scales worded in a positivepoint of view without interjecting bias
Prepare your list of questions and measurement scales
(typically Likert)
Collect a trial dataset using your survey to determine ifyou have designed the survey to meet your objectives
Finalize your survey
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Steps to Conduct a Survey
Determine the required sample size
Send out the survey and collect data
Analyze your results
The information from this type of survey can be plotted ina perceptual map (Urban and Hasser, 1980)
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Measuring Customer Satisfaction
Discover customer perceptions of business effectiveness
Compare company performance relative to competitors
Identify areas for improvement
Track trends to determine if changes result inimprovements
An effective measurement system are provide reliable
information about the customers likelihood of future
business
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Dimensions of Service Quality that are Important toCustomers
Reliabilityability to provide what was promised
Assuranceknowledge and courtesy of employees and
ability to convey trust
Tangiblesphysical facilities and appearance of personnel
Empathydegree of caring and individual attention
Responsivenesswillingness to help customers and
provide prompt service
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Dimensions of Product Quality that are Important toCustomers
Performanceprimary operating characteristics
Featuresbells and whistles
Reliabilityprobability of operating for specific time and
conditions of use
Conformancedegree to which characteristics match
standards
Durability - amount of use before deterioration or
replacement
Serviceabilityspeed, courtesy, and competence of repair
Aestheticslook, feel, sound, taste, smell
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Satisfaction-Importance Analysis
Satisfaction
Importance
Low High
Low
High
Who cares? Overkill
Vulnerable Strengths
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Customer Satisfaction vs.Customer 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
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Customer Loyalty is created by:
Developing trustBeing accessible and honoring commitments
Communicating with customers
Effectively managing the interactions and relationships
throughApproach
People
Selecting and developing customer contact employees
Handling complaints timely and to the customerssatisfaction
Strategic partnerships and alliances
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Difficulties with Customer SatisfactionMeasurement
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
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Kano Model of Customer Needs
Kanos model attempts to identify product attributes which
are perceived to be important to customers
Good method to evaluate the relative importance of
customer requirements
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Steps to Conducting a Kano Analysis
Collect customer information through all listening poststo determine customer needs and requirements
List all customer needs and requirements (stated andunstated)
For each listed need, ask the customer to assessHow would they feel if the need was addressed?
How would they feel if the need was notaddressed?
Using a scale of:Id like it
It is normally that way and I expect it
I dont care
I wouldnt like it
Classify each need as Exciter, Satisfier, Dissatisfier
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Like it Expected Dont
Care
Dont Like
it
Like it Exciter Exciter Satisfier
Expected Dissatisfier Dissatisfier
Dont
Care
Dissatisfier
Dont Like
it
How
would the
customer
feel if the
need was
addressed?
How would the customer feel if the need was notaddressed?
Kano Analysis
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Kano Model of Customer Needs
Exciter:Unexpected features or characteristics that increase satisfaction andimpress customers
Occurs when someone recognizes a need that customers are not aware oflinking technologies that no one has thought of applying to that need
As customers become familiar with them, exciters/delighters becomesatisfiers over time
Satisfiers:
Expressed performance requirements, standard characteristics thatincrease or decrease satisfaction (price, ease of use, speed, etc.)
Eventually, satisfiers become dissatisfiers
Dissatisfiers:Expected basic requirements and featuresif not met, customer will beextremely dissatisfied
Often these are unspoken requirements or assumed requirements (e.g. carsshould be sold with tires)
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Kano Analysis
Incorporate information into product or servicedevelopment
Must deal with any dissatisfiers - product or service does not meet
basic needsdoes not matter how well you do on other features or
optionsIf you have exciters, strengthen themif not, incorporate new
features to create them
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Tools to discover
ExcitersFocus groups, innovations, careful watching, breakthroughs
Satisfiers
Surveys (ail, phone, email), face to face interviews, market
research, Competitor ads and marketing efforts
Dissatisfiers
Interviews, industry standards, regulatory requirements, unhappy
customer feedback, complaints, refunds, personal experience
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Customers and Suppliers often speak a differentlanguage
A Six Sigma project requires that we:Understand what is important from the customer perspective
(KPOV)
Be able to measure the KPOVs to recognize improvement
The KPIVs in the Six Sigma Project must be directly related tothe measurable KPOV
This ensures improvement from suppliers perspective is
improvement from customer perspective.
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
Relating KPOV with KPIV
Enter the characteristics important to the customer into the KeyProcess Output Variables (KPOV) at the top of the table.
Then numerically rank each KPOV from 1 to 10, the most importantreceiving the highest number and so on. Place these numbers in theCustomer Priority Raking row.
Identify all of the potential cause that can impact the various KPOV's
and list these in the Key Process Input Variables (KPIV) column to theleft of the table.
Next determine the impact of each KPIV on each KPOV bynumerically rating the effect each KPIV has on each KPOV in thebody of the table (use a scale from 1-10, the most important receivingthe highest number).
Look at the KPIV Importance Scores. High KPIV Importance Scores(and corresponding Percentages) have the greatest impact on theidentified KPOV's. By focusing Six Sigma projects around thesevariables, projects will have an impact on what is important to thecustomer.
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Lecture Notes and Electronic Presentations, 2009 Dr. Kelly
KPIV/KPOV Table
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Example KPIV/KPOV Table