CHAPTER 7 CUSTOMER 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. Unfor tunately, I have dealt with surgery cases in my family so many times and every c ase was a torturous experience full of agony and mental stress. The timings give n for operation are never followed. You never know as to how long will your pati ent 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. Rec ently 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 i nstructions included each and every question that could come to your mind. Timin gs for every major event were spelled out well in advance. The punctuality of ev ents was remarkable. I was just wondering as to how this could happen in Pakista n. All this reduced our worries to almost nothing as we knew well in advance wha t is the sequence of events and we prepared ourselves accordingly. Hats off to t he 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 Satisfaction 7.0 Customer Focus and Satisfaction 7.1 7.2 7.3 7.4 7.5 7.6 Customer expectation: current and future Customer relati onship management Commitment to customer Customer satisfaction determination Cus tomer satisfaction results Customer satisfaction comparison 300 35 65 15 30 85 70

Who is the customer? There are two types of customer: External and Internal External Customer Direct purchaser Influencer Current, prospective, and lost customers Internal Customer (Functions supporting each other) Engineering Production Order processing Etc.

Customer Supplier Chain Inputs from External Customers Internal Customers Outputs To External Customers

Characteristics of external customer An external customer can be defined in many ways, such as one who uses the produ ct or service, or the one who influences the sale of product or service. An exte rnal customer exists outside the organization and generally falls into three cat egories:

1. Current customers 2. Prospective customers, and 3. Lost customer

Characteristics of external customer Every function, whether it be engineering, order processing, or production has an internal customer each receives a product or ser vice 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 assu red.

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 has How much they buy, and How 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 System Customer Expectations Human Resource Management Company Operations (Processes) Customer Satisfaction

Customer Relationship Management Customer 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 wag es.

Customer CareFront-Line People Customers 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 bes t employees are worthy of a companys customers. Three things are very important a bout the front-line employees: 1. Hire the best. 2. Develop the best employees i nto professionals. 3. Motivate the professionals to stay and excel.

Customer CareFront-Line People Why front-line employees important for an enterprise? Front-line people deal with the customers every day. They are valuab le source of information for the enterprise. They know better than management wh at the customers want.

Internal Customer Conflict Internal customer are the people, activities, and functions within the company that are the customers of other peo ple, 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 Model There 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 graph ical form. 1. 2. 3.

Kano Model Customer Satisfied Easily identified Exciters Quickly become expected Typically pe rformance related Innovation Spoken and expected requirements Requirements satisfied Unspoken but expected re quirements Obvious on the casual observer Known only to the experienced users an d designers Typically rediscovered during analysis of lessons learned Customer d issatisfied Requirements Not satisfied

Translating Needs into Requirements: Kano Model Kano model conceptualizes customer requirements. It represents three major areas of customer satisfaction. First Area: Spoken or Exp ected 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 Model Second 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 Model Third Area: Unstated and Unspoke n Requirements The third and most significant area of customer satisfaction represents unstated or unspoken requirements. the figure. These are shown in the curve in the lower right corner of The customer may indee d be unaware of these requirements, or may assume that such requirements will be automatically supplie d. prove very costly if ignored. These implied requirements are the hardest to define but

Understanding voice of the customer The 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 customer How is the voice of the customer heard? Customer reports NBA Surveys Focus group s Design reviews Interviews Site visits Voice of the customer For evaluating Int ernal External Who is the customer? Clarify verbatim Affinity diagrams QFD IPD Team meetings For listening For listening How is the voice of the customer evaluated? Who has what responsibilities?

The Driver of Customer Satisfaction If you cannot measure it, you cannot manage it. This time-tested adage certainly applies to the timemanagement of customer satis faction and retention. Customer retention is directly related to Customer Satisfaction. And what drives the satisfaction can be known by simply a sking the customers directly. There, however, are certain pitfalls in the method ology: Customer can be approached by surveys. Mailed questionnaires lose control over who respond Customers are less likely to respond if they are dissatisfied

Getting Employee Input Employees Input can be solicited concurrent to customer research It could help i dentify barriers and solutions to service and product problems as well as servin g as a customer-company interface. customerIn addition to customer related consi derations, employee surveys can measure: 1. 2. 3. 4. 5. TQM effectiveness Skills and behaviors that need improvement The effectiveness o f team problem-solving problemprocesses The outcomes of training programs Needs of internal customers

Measurement of Customer Satisfaction There are two basic steps in measurement system: 1. Develop key indicators that drive customer satisfaction 2. Collect data regarding perception of quality rece ived by customers

Key Indicators for Physical Products Reliability Aesthetics Adaptability Usabili ty Functionality Appropriateness Key Indicators for Services Friendliness/courte ousness of employees Safety/risk of service Billing/invoicing procedure Responsi veness to requests Appearance of physical facilities Approachability of the serv ice provider Willingness to listen to customer Honesty and an ability to communi cate in clear language

Service Quality and Customer Retention The ultimate outcome of Customer Focus and Satisfaction is to achieve profit in the private sector and productivity in the public or non-profit sector. nonTh e one thing which is proven as result of various studies is the relationship bet ween 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 Quality , organization culture directed towards quality. Employee retention, which is achi eved through good human resources retention, management practices and organizati on development methods such as teams, job development, and empowerment. Employee retention depends on employee satisfaction, which in turn can be related to ext ernal services and customer satisfaction. External service quality, which is del ivered through organization's quality quality, infrastructure. Customer Satisfac tion and follow up, in order to reduce customer defections up, and improve reten tion and profit.

Customer Retention and Profitability System Internal Service Quality Employee Satisfaction Driver Employee Retention Customer Retention Profit External Service Quality Customer Satisfaction

Buyer Supplier Relationship Almost 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 buyerreduce costs and improve profits. Deming realizes this and suggested that a long-term relationship longbetween pur chasers and suppliers is necessary for best economy.

Buyer Supplier Relationship Several guideline will help both the supplier and customer benefit from a long-t erm partnering relationship: longImplementation of TQM by both supplier and customer. Long-term commitment to TQM and to the partnering relationship Longbetween the parties. Reduction is supplier base. ch, development, and design. Benchmarking Get suppliers involved in the early stages of resear

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