Customer-driven Quality

By, Srinivasa Varma E (10MBMA03)

"Quality in a service or product is not what you put into it. It is what the client or customer gets out of it" Peter F. Druker

Quality begins and ends with customer. It is no longer possible to run a business without focussing on the customer. customer and business are completely interlinked when it comes to quality.

Company Customer

Customer centric Model

Who Can be a customer? According to dictionary "Customer is the one who purchases a commodity or service." Coming to Quality management a customer is any one (Individual, group of individuals or a firm) who receives and uses what an organisation or individual provides. According to this it means that customer is no longer just beyond the organisation but is within the organisation. For example an assembly line worker's customer is the one to whom he provides goods or service like the next level worker. It means that everyone who receives the goods or service at the next level is a customer for the later. Internal customers are people working with the organisation who have to be served a motivating experience for them to replicate and carryout to the same to the external customer. It is imperative that for a firm all the internal customers should be satisfied to ensure complete satisfaction for the external customer. So proactively fulfilling and quenching the demands of the internal customer is one of the basic requirement of Total Quality Management. Customer focus has to be started with employee service. From a company's point of view customer satisfaction must be the result of the following three components.

1. Company processes. 2. The employee. 3. Customer expectations. In a pictorial form it can be shown as:

Company processes

Employee

Customer satisfaction

Customer expectations The ultimate target of any business is to effectively invest resources to satisfy the customer through empowered people in the face of the market competition, so as to realize a profitable return on the investment. N. Kano, a Japanese scientist has identified three dimensions of customer requirements: Basic Requirements: The customer has few basic expectations from the product or service. For example, safety in airlines. Performance requirements: The customer expectations which are negotiated and agreed upon. For example, the schedule timing of the airline. Delight requirements: These relate to not only meeting the customer requirements but exceeding them. For example, Business class seating and services to normal class. In today's competitive scenario it demands customer delight rather than customer satisfaction. It has been found that a delighted customer takes six times less effort to retain in compared to a new customer. Developing a successful customer service system can be one of the most rewarding factor for the success of the firm. The following steps can be used to retain a customer: Top Management commitment towards customer. Know the customer and their likes and dislikes about the organisation. Develop standards of quality service and performance. Recruit, train and reward good staff. Always be close to the customer. Work towards continuous improvement of the customer service and retention.

Customer Perceptions of the Quality The American Society of the quality survey has found out the end-users perceptions of improvement factors that influence the purchases showed these rankings. 1. Performance, 2. Features, 3. Service, 4. Warranty, 5. Price and 6. Reputation. "An organisation will succeed only when customer needs are satisfied. changing the business focus to a customer-centred paradigm has a broad-reaching impact across the organisation. It gives many companies an opportunity revisit their company as a whole and improved business processes and achieve significant return on investment" Dr Kashmira Pagdiwalla, Director, HR ops, IBPL. Buyer and seller relationship Almost every company which provides a service or finished goods also purchase the raw material or basic services or software from various suppliers. Traditionally lowest bidder practice was employed by the companies to provide the finished goods for a lower price in the price war, off late the companies realized that careful concentration of purchases, together with long-term supplier-buyer relationships, will reduce the cost and increase the revenues. The buyer is choosing the reliable supplier who provide defect free product so as to reduce the inspection and repair time and cost for the raw material from the suppliers.. the buyer is focussing on. Implementation of TQM by both supplier and customer. Long-term commitment to TQM and to the partnering relationship between the parties. Reduction in the suppliers base selecting few best suppliers. Get the supplier involved in the early stages of research, development and design. benchmarking.

Levels of relationship strategy for bonding Customer Leonard Berry and Parashuraman have developed a framework for understanding the bonding fir customer. There are 4 major levels and various strategies the organisations can go on for: Level 1- Financial bonds: Volume and frequency reward, bundling and cross selling, stable pricing. Level 2- Social bonds: Continuous relationship, personal relationship, social bonds among customers. Level 3- Customization bonds: customer intimacy, mass communication, anticipation/ innovation. Level 4- Structural bonds: Shared processes and equipment, joint investments, integrated information systems.

Customer Relationship Management (CRM) CRM has become a strategic initiative in most companies today. CRM is a competitive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer. It involves the integration of marketing, sales, customer service and the supply-chain functions of the organization to achieve great efficiencies and effectiveness in delivering the customer. CRM requires a company to develop a customer centric business model. CRM enables the firm to understand the customer needs, wants and behaviour in an effective manner. It enables the firm to establish a reliable processes and procedures for interacting with the customers and develop stronger relationship between them. The process helps the firm in assimilating information about customers, sales, marketing effectiveness, responsiveness and market trends. Then this information is used to give the insight into the behaviour of customers and the value of retaining those customers. These whole process is designed to reduce cost and increase the profitability by retaining the loyalty of customer. TQM is one of the driving for of CRM. When the organisations integrate TQM philosophy to improve the quality and reduce costs, they involve the suppliers and customers in implementing the process at all levels of the value chain. This has created the need for closer working relationship with customers, suppliers and other members of the marketing infrastructure. Companies like Motorola, IBM, General motors, Toyota and many other companies formed partnering relationships with suppliers and customers to practice TQM. Implementation of CRM The following factors have to be considered to implement CRM; Easy interaction between the customer and the company, responding quickly to customer queries. Easy access to the information about the company such as contents of customization, advantages of the company, benefits doled out to the customer, the quality practices of the organisation. This enhances trust and respect towards the organization. Abundant supply of customer information accumulated and integrated from different channels. Customers information should be updated along with the passage of time. Have a cardinal relationship with other companies which are targeting the same customer segment. Customer information should be segmented to provide support for customisation based on personalized information, i.e. tailoring the organisations product and services accordingly.

Customer defections A customer defection is the rate at which customer stops the usage of a product of a firm. A business with high defection rate will end up losing its customers. It tells the organisation a lot about its products and services from an external customer perspective, which the organisation is mostly not aware of. The concern for reducing and eliminating customer attrition emerged from the studies that indicated the following. Customers are always profitable as the time progressed, the longer they are with the organisation the more profitable they are. The profit can increase 35 to 85 percent by increasing customer retention by only 5 percent. Almost 70 percent customers move to other products or services due the perceived indifference of the existing provider.

Customers who defect may be broadly classified as price defectors, product defectors, service defectors, market defectors, technology defectors and organizational defectors. After 1980s the manufacturing companies started to focus on "Zero defects", Having zero defections requires the organisation to have a mechanism to find out the customers who have switched away from their product and the one who are in the verge of switching. The organisations must focus on the following areas in order to manage and retain the customers for long-term: Companies have to find the customers who can stay for a long-time and are profitable. The organisations must research and understand the customer defection rate and the specific reason for it. Defection analysis is a guide that helps the organisation to decide which service quality investment s will be profitable and also to manage continuous improvement. They also must know the value of their customer in the long run.

Customer retention programmes Retaining a customer is a main concern for most of the organisations. The following step-bystep approach gives a methodology to develop a comprehensive consumer retention programme. Review of mission statement: Mission statement should be based on the needs of the customer and not product or competition based. The companies should revise their mission statements according to the customer and maintain their customer base. Research the customer base: The organisations must make a thorough research and to find out the profitable customers. If the organisation can divide the customer base into several profitable customer segments, it can refine marketing message these segments.

 Measure customer defective rates: It is one of the important step to reduce the customer defections and retain the customers. it is essential for the organisations functional team to ensure quality for each customers individual needs. Many companies have had to create customer teams-interdepartmental groups that focus on the success of one customer or a segment of customers. Stay in front of Customers: Develop contact with the customers by face-to-face meetings, electronic communications or direct mail pieces informing them about their existing and new products. Create a proprietary way of communicating or servicing the customers: Customers should be aware of whom to contact when they have an issue. Customer service manual will all well furnished details should be provided with the product. Information should be provides through internet about the status and to track the service status. constantly survey customers for feedback and ask for detailed responses.