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
Lecture Notes and Electronic Presentations, 2016 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 advantage
by carefully and constantly analyzing customers needs
and by organizing and operating to meet these needs the
first time and every time

Lecture Notes and Electronic Presentations, 2016 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?

Lecture Notes and Electronic Presentations, 2016 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 at
the 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 will
purchase again (only 19% if the complaint has not been
resolved)
Word-of-mouth behavior is significant. If a large problem
is resolved to the customer's satisfaction, about 8 persons
will be told about the experience; if the customer is
dissatisfied with the resolution, 16 other persons will be
told

Lecture Notes and Electronic Presentations, 2016 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

Lecture Notes and Electronic Presentations, 2016 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
Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Customer-Driven Quality Cycle

(Evans & Lindsay)

Customer needs and expectations

(expected quality)
Identification of customer needs
Translation into product/service specifications
(design quality)
Output (actual quality)
Customer perceptions (perceived quality)
measurement and feedback
PERCEIVED QUALITY is a comparison of ACTUAL
QUALITY to EXPECTED QUALITY
Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

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

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

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 high impact projects

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

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
chain
What 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?

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

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

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Customer Listening Posts

Comment cards and formal surveys
Focus groups
Direct customer contact
Field intelligence
Complaint analysis
Internet monitoring
Moments of Truth - Every instance in which a customer
comes in contact with an employee of the company

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

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 populations

The 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.
Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

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 positive
point of view without interjecting bias
Prepare your list of questions and measurement scales
(typically Likert)
Collect a trial dataset using your survey to determine if
you have designed the survey to meet your objectives
Finalize your survey

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

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 in
a perceptual map (Urban and Hasser, 1980)

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

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 in
improvements
An effective measurement system provides reliable
information about the customers likelihood of future
business

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Dimensions of Service Quality that are Important to

Customers
Reliability ability to provide what was promised
Assurance knowledge and courtesy of employees and
ability to convey trust
Tangibles physical facilities and appearance of personnel
Empathy degree of caring and individual attention
Responsiveness willingness to help customers and
provide prompt service

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Dimensions of Product Quality that are Important to

Customers
Performance primary operating characteristics
Features bells and whistles
Reliability probability of operating for specific time and
conditions of use
Conformance degree to which characteristics match
standards
Durability - amount of use before deterioration or
replacement
Serviceability speed, courtesy, and competence of repair
Aesthetics look, feel, sound, taste, smell

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Satisfaction-Importance Analysis
Satisfaction
Low

Low

High

Who cares? Overkill

Importance
High

Vulnerable Strengths

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

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

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Customer Loyalty is created by:

Developing trust
Being accessible and honoring commitments
Communicating with customers
Effectively managing the interactions and relationships
through
Approach
People

Selecting and developing customer contact employees

Handling complaints timely and to the customers
satisfaction
Strategic partnerships and alliances

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Difficulties with Customer Satisfaction

Measurement
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

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Kano Model of Customer Needs

Dr. Noriaki Kano - 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

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Kanos Model

Very Satisfied
(Thrilled)

Quality vs. Customer Response

Performance

Satisfier or Basic need - Product or

Service characteristics we expect
Exciters Product or Service
characteristics that are not
expected (and are appreciated)

Poorly
Executed
(cant get it right)

Executed
Very Well
(cant get it wrong)

Very Dissatisfied
(Angry)

Kano Model of Customer Needs

Exciter:
Unexpected features or characteristics that increase satisfaction and
impress customers
Occurs when someone recognizes a need that customers are not aware of
linking technologies that no one has thought of applying to that need
As customers become familiar with them, exciters/delighters become
satisfiers over time

Satisfiers:
Expressed performance requirements, standard characteristics that
increase or decrease satisfaction (price, ease of use, speed, etc.)
Eventually, satisfiers become dissatisfiers

Dissatisfiers:
Expected basic requirements and features if not met, customer will be
extremely dissatisfied
Often these are unspoken requirements or assumed requirements (e.g. cars
should be sold with tires)

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Steps to Conducting a Kano Analysis

Collect customer information through all listening posts
to determine customer needs and requirements
List all customer needs and requirements (stated and
unstated)
For each listed need, ask the customer to assess
How would they feel if the need was addressed?
How would they feel if the need was not addressed?

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

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Kano Analysis
Incorporate information into product or service
development
Must deal with any dissatisfiers - product or service does not meet
basic needs does not matter how well you do on other features or
options
If you have exciters, strengthen them if not, incorporate new
features to create them

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Tools to discover
Exciters
Focus 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

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Customers and Suppliers often speak a

different language
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 to
the measurable KPOV
This ensures improvement from suppliers perspective is
improvement from customer perspective.

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Relating KPOV with KPIV

Enter the characteristics important to the customer into the Key
Process Output Variables (KPOV) at the top of the table.
Then numerically rank each KPOV from 1 to 10, the most important
receiving the highest number and so on. Place these numbers in the
Customer 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 the
left of the table.
Next determine the impact of each KPIV on each KPOV by
numerically rating the effect each KPIV has on each KPOV in the
body of the table (use a scale from 1-10, the most important receiving
the highest number).
Look at the KPIV Importance Scores. High KPIV Importance Scores
(and corresponding Percentages) have the greatest impact on the
identified KPOV's. By focusing Six Sigma projects around these
variables, projects will have an impact on what is important to the
customer.

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

KPIV/KPOV Table

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly

Example KPIV/KPOV Table

Lecture Notes and Electronic Presentations, 2016 Dr. Kelly