CHAPTER 7

CUSTOMER SATISFACTION,RETENTION AND LOYALTY

BY: DAYAO, NIMIAHDE GUZMAN, SHEENA MARIE

ESTADILLA, CHRISTIAN ERIC

UNDERSTANDING WHO IS A CUSTOMER

Those who interact with the company prior to production have been considered as suppliers. And those who interact after the production process have been viewed as a customer.

In a total quality setting, customers and suppliers exist inside and outside the organization.

SUPPLIER

SUPPLIER

SUPPLIER

CUSTOMER

CUSTOMER

CUSTOMER

COMPANY

Customers were considered outsiders who used a company’s product, and the suppliers were outsiders who provided the materials needed to produce the products.

UNDERSTANDING CUSTOMER-DEFINED QUALITY

In a total quality setting, customer defines quality. When quality is defined by the customers, these factors apply:

- The customer must be the organizations top priority.

- Reliable customer are the most important.

- Customer satisfaction is ensured by producing high quality products.

STEPS IN IDENTIFYING EXTERNALCUSTOMER NEEDS

1. SPECULATE ABOUT THE RESULTS2. DEVELOP AN INFORMATION-

GATHERING PLAN3. GATHER THE INFORMATION4. ANALYZE THE RESULTS5. CHECK THE VALIDITY OF

CONCLUSIONS6. TAKE ACTION

IDENTIFYING INTERNAL CUSTOMER NEEDS

Continual communication is essential, there are various ways to collect information such as research, survey and the use of internet.

Do you know your customer’s operation?

The more the business knows about a customer operation, the easier it will be

to provide products that meet their needs.

BENEFITS OF KNOWING YOUR CUSTOMER: Product Enhancement Improved Productivity Internal Improvement

USING CUSTOMERS FEEDBACK TO MAKE DESIGN IMPROVEMENT

Collecting customer input and feedback is important when a business competes in a global market. In collecting those data, the following can be used:

Quality Function Deployment and Design Improvement

Affinity Diagrams and Design Improvement

QUALITY FUNCTION DEPLOYMENT AND DESIGN IMPROVEMENT

BASIC ACTIVITIES: DEPLOYMENT OF CUSTOMER REQUIREMENTS DEPLOYMENT OF MEASURABLE QUALITY

CHARACTERISTICS DETERMINATION OF THE CORRELATION BETWEEN

QUALITY NEEDS AND CHARACTERISTICS ASSIGNMENT OF NUMERICAL VALUES TO EACH

QUALITY CHARACTERISTICS INTEGRATION OF QUALITY CHARACTERISTICS INTO

THE PRODUCT DETAILED DESIGN, PRODUCTION, AND QUALITY

CONTROL OF PRODUCTS

CUSTOMER SATISFACTION PROCESS Determine who your customers are

Determine what attributes of your product or service are most important to your customers

Arrange these attributes in the order of importance by your customers

Determine your customers’ level of satisfaction with each of these attributes

Tie results of customer feedback to your processes.

Develop a set of metrics that tells how you are performing

CUSTOMER SATISFACTION PROCESS Implement measurement at the lowest possible

level Work on those processes that relate to attributes

that have high importance Work on those areas within the process that offer

the greatest opportunity to improve Update customer input and feedback on a

continual basis Maintain open, continual communication with

stakeholders on what is being done Aggregate metrics organization-wide into a format

for management review on a continual basis

CUSTOMER-DEFINED VALUE

Factors on how customer value products:

Product and service quality Service provided by the

organization The organizations personnel The organizations image Selling price of the

product/service Overall cost of the

product/service

QUALITY FUNCTION DEPLOYMENTAND DESIGN IMPROVEMENT

An integrated approach on product deployment and quality in all pre production activities.

It allows for a systematic

incorporations of customer needs, production capabilities, and all other parameters.

CUSTOMER VALUE ANALYSIS

Determine what attributes customer value most.

Rate relative importance of the attributes Asses organization performance relative

to the attribute. Ask customer to rate all attributes of

your product or services against the same product and services attributes of your competitor.

Repeat process periodically

CUSTOMER RETENTION

To retain customers over the long term, organizations must turn them into partners and proactively seek their input rather than waiting for and reacting to feedbacks provide after a problem has occurred.

ESTABLISHING CUSTOMER FOCUS

CLUSTERS: Vision, commitment and climate Alignment with customers Willingness to find and eliminate customer

problem Use customer information Reaching out to customer Competence, capability, and empowerment

of people Continual improvement of people and process

RECOGNIZING THE CUSTOMER-DESIRED ORGANIZATION

Recognizable by these characteristics:

Promptly follows promises. Can be trusted Credibility Attends to smallest detail Responsiveness

VALUE PERCEPTION ANDCUSTOMER LOYALTY

Companies work hard to build customer loyalty and the best way to do that is to provide customers product with superior value.

CUSTOMER LOYALTY MODEL

This consist of four components:- Business Performance - Loyalty

Behavior- Global Perception - Financial

Outcomes

CUSTOMER LOYALTY MODELBUSINESS PERFORMANCE

CATEGORIES: Product quality Service quality Relationship quality Image strength Price perception

CUSTOMER LOYALTY MODEL

FINANCIAL OUTCOME KEY FACTORS:1. MARKET SHARE2. REDUCE COST3. EMPLOYEE ATTITUDES4. PROFIT5. SHARE HOLDER VALUE

CUSTOMER LOYALTYVERSUS

CUSTOMER PROFITABILITY

Butterflies – high profit, short term

True friends – high profit, long term

Strangers – low profit, short term

Barnacles – low profit, long term

CUSTOMERS AS INNOVATION PARTNERS

Traditional Product Development VS the Innovation Partnership Approach

When the Innovation Partnership Approach is Appropriate

An Innovative approach to product development that is gaining

acceptance is turning customers into innovation partners.

Implementing the Innovation Partnership Approach

1. Develop tool for customer that easy to use

2. Increase the flexibility of your production processes

3. Carefully select the first customer to use your tool kit.

4. Continually Improvement your tool kit and do so quickly to satisfy your best customer.

5. Adapt your business practices to accommodate the innovation partnership

PRODUCT INNOVATION MODEL AND CUSTOMER RETENTION

Target the OpportunityExplore the IdeasDevelop AlternativesOptimize the SolutionCommercialize the

Innovation

THAT’S ALLTHANK YOU

FOR LISTENING