CHAPTER 7CUSTOMER FOCUS AND SATISFACTION

TQM in Pakistan

Acknowledgement by the customer in the from of Letter Published in Daily Dawn on Thursday, September 27, 2007

Amazing experience I WENT through an amazing experience while dealing with a medical surgery. Unfortunately, I have dealt with surgery cases in my family so many times and every case was a torturous experience full of agony and mental stress. The timings given for operation are never followed. You never know as to how long will your patient be kept in the ICU after operation. Lastly, it is never confirmed as to when your patient would be released from hospital. The attendants are always asking one question or the other regarding different things concerning the patient. Recently one of my sisters was operated upon by Dr Kishwer Nazli in Fatima Hospital in Lahore. The case was handled with amazing professional ethics and efficiency. Patient and caretakers were told about each and every step in writing. These instructions included each and every question that could come to your mind. Timings for every major event were spelled out well in advance. The punctuality of events was remarkable. I was just wondering as to how this could happen in Pakistan. All this reduced our worries to almost nothing as we knew well in advance what is the sequence of events and we prepared ourselves accordingly. Hats off to the professional standards maintained by the respected doctor and the hospital. I wish other hospitals can also follow the same standard. DILAWAR HUSAIN Karachi

The Baldrige Criteria of Customer Satisfaction7.0 Customer Focus and Satisfaction 300

7.1 Customer expectation: current and future 35

7.2 Customer relationship management 65

7.3 Commitment to customer 15

7.4 Customer satisfaction determination 30

7.5 Customer satisfaction results 85

7.6 Customer satisfaction comparison 70

Who is the customer?There are two types of customer: External and Internal

External Customer

Direct purchaserInfluencer

Internal Customer (Functions supporting each other)EngineeringProductionOrder processingEtc.

Current, prospective, and lost customers

Customer Supplier ChainInputs from ExternalCustomersInternal CustomersOutputsTo ExternalCustomers

Characteristics of external customer

An external customer can be defined in many ways, such as one who uses the product or service, or the one who influences the sale of product or service.

An external customer exists outside the organization and generally falls into three categories:

Current customersProspective customers, and Lost customer

Characteristics of external customer

Every function, whether it be engineering, order processing, or production has an internal customereach receives a product or service and in exchange, provides a product or service.

Every person in a process is considered customer of the preceding process.

Each workers goal is to make sure that the quality meets the expectations of the next person.

When that happens throughout the manufacturing, sales, and distribution chain, the satisfaction of the external customer should be assured.

Why do customers are important for an organization?The most important asset of any organization is its customers.

An organizations success depends on:

How many customers it hasHow much they buy, andHow often they buy

Customers that are satisfied will increase in number, buy more, and buy more frequently.

Satisfied customers also pay their bills promptly, which greatly improves cash flowthe life blood of any organization.

Customer Satisfaction: Three Parts SystemCompany Operations(Processes)Customer SatisfactionCustomer ExpectationsHuman Resource Management

Customer Relationship ManagementCustomer Care

An organization should revolve around the customer, because customers are the key to any business.

A customer, any customer, should be valued and treated like a friend.

If they are treated with respect customers will simply forgive errors and positively promote the organization.

Henry Ford once said to his employees, It is not the employer who pays wageshe only handles the money. It is the customer who pays wages.

Customer CareFront-Line PeopleCustomers are the most valuable assets of any company and should not be referred to employees who have not been trained to handle their complaints.

Only the best employees are worthy of a companys customers.

Three things are very important about the front-line employees:

Hire the best.Develop the best employees into professionals.Motivate the professionals to stay and excel.

Customer CareFront-Line PeopleWhy front-line employees important for an enterprise?Front-line people deal with the customers every day.They are valuable source of information for the enterprise.They know better than management what the customers want.

Internal Customer ConflictInternal customer are the people, activities, and functions within the company that are the customers of other people, activities and functions.

Conflict frequently arises between the needs of internal and external customers.

The solution is to determine the real needs of each and design the process to meet the both.

Translating Needs into Requirements: Kano ModelThere are three areas of customer needs or requirements of customers:

Spoken or expected requirements of customers

Innovative products or services requirements.

Unstated and unspoken requirements

Kano presented these requirements in a graphical form.

Kano ModelEasily identified

Typically performance relatedExcitersQuickly become expectedInnovationObvious on the casual observerKnown only to the experienced users anddesignersTypically rediscovered during analysisof lessons learnedUnspoken but expectedrequirementsSpoken and expectedrequirementsCustomer SatisfiedCustomer dissatisfiedRequirements

Not satisfiedRequirements

satisfied

Translating Needs into Requirements: Kano Model

Kano model conceptualizes customer requirements. It represents three major areas of customer satisfaction.

First Area: Spoken or Expected Requirements of Customers

The first area of customer satisfaction represented by diagonal line, represents explicit requirements.

These are easily identified requirements, expected to be met and typically performance related.

Satisfying the customer would be relatively simple.

Translating Needs into Requirements: Kano ModelSecond Area: Innovation

This area is represented by a curve line in the upper left corner of the figure.

A customers written instructions are purposefully vague to avoid shifting new ideas during conceptualization and product definition.

Because they are unexpected, these creative ideas often excite and delight customer.

These ideas quickly become expected.

Translating Needs into Requirements: Kano ModelThird Area: Unstated and Unspoken Requirements

The third and most significant area of customer satisfaction represents unstated or unspoken requirements.

These are shown in the curve in the lower right corner of the figure.

The customer may indeed be unaware of these requirements, or may assume that such requirements will be automatically supplied.

These implied requirements are the hardest to define but prove very costly if ignored.

Understanding voice of the customerThe voice of customer is important to be heard and incorporated in the product or service.

Customers doesnt buy specification; customer buys the product or service to fulfill need.

Peter Drucker once said, Customer dont buy products, they buy results.

Customers are loyal to whatever best helps them achieve their desired outcome.

Just meeting customers need is not enough; the organization must exceed customers needs.

Voice of the customerVoice of the customerWho is the customer?How is the voice of the customer heard?Who has what responsibilities?How is the voice of the customer evaluated?IPD Team meetingsAffinity diagramsQFDClarify verbatimFocus groupsSurveysNBACustomer reportsDesign reviewsInterviewsSite visitsFor listeningInternalExternalFor listeningFor evaluating

The Driver of Customer SatisfactionIf you cannot measure it, you cannot manage it. This time-tested adage certainly applies to the management of customer satisfaction and retention.

Customer retention is directly related to Customer Satisfaction. And what drives the satisfaction can be known by simply asking the customers directly.

Customer can be approached by surveys. There, however, are certain pitfalls in the methodology:

Mailed questionnaires lose control over who respondCustomers are less likely to respond if they are dissatisfied

Getting Employee InputEmployees Input can be solicited concurrent to customer research

It could help identify barriers and solutions to service and product problems as well as serving as a customer-company interface.

In addition to customer related considerations, employee surveys can measure:

TQM effectivenessSkills and behaviors that need improvementThe effectiveness of team problem-solving processesThe outcomes of training programsNeeds of internal customers

Measurement of Customer SatisfactionThere are two basic steps in measurement system:

Develop key indicators that drive customer satisfactionCollect data regarding perception of quality received by customers

Key Indicators for Physical ProductsReliabilityAestheticsAdaptabilityUsabilityFunctionalityAppropriateness

Key Indicators for Services

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

Service Quality and Customer RetentionThe ultimate outcome of Customer Focus and Satisfaction is to achieve profit in the private sector and productivity in the public or non-profit sector.The one thing which is proven as result of various studies is the relationship between customer retention and profit.The system for improving customer retention and profitability has following components:Internal Service Quality, which established and reinforces a climate and organization culture directed towards quality.Employee retention, which is achieved through good human resources management practices and organization development methods such as teams, job development, and empowerment. Employee retention depends on employee satisfaction, which in turn can be related to external services and customer satisfaction.External service quality, which is delivered through organization's quality infrastructure.Customer Satisfaction and follow up, in order to reduce customer defections and improve retention and profit.

System

Customer Retention and Profitability

EmployeeSatisfactionProfitCustomerRetentionCustomer SatisfactionExternalServiceQualityEmployee RetentionInternalServiceQualityDriver

Buyer Supplier RelationshipAlmost every company purchases products, supplies, or services in an amount that frequently equals around 50% of its sales

Traditionally many of companies follow lowest bidder practices where price is critical criterion.

Now companies are realizing that careful concentration of purchases, together with long term buyer-supplier relationship, will reduce costs and improve profits.

Deming realizes this and suggested that a long-term relationship between purchasers and suppliers is necessary for best economy.

Buyer Supplier Relationship Several guideline will help both the supplier and customer benefit from a long-term partnering relationship:

Implementation of TQM by both supplier and customer.

Long-term commitment to TQM and to the partnering relationship between the parties.

Reduction is supplier base.

Get suppliers involved in the early stages of research, development, and design.

Benchmarking

END OF CHAPTER 7