CUSTOMERS SATISFACTION

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CUSTOMERS SATISFACTION

• NOR ASNIDAR BINTI AZIZ
• (GS18560)
• SAFIDA ZALMA BINTI MD PIAH
• (GS18670)

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Objectives of Unit

• to understand the importance of customer focus,
• to understand what it take to create satisfied
  customers,
• to identify customers,
• to understand customer needs,
• to gather customer information,
• to know what constitute an excellent customer
  relationship management, and
• to know how to measure customer satisfaction.

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CUSTOMERS SATISFACTION

• THERE IS ONLY ONE BOSS THE CUSTOMER
• And he or she can fire everybody in the
  company from the chairman down, by spending his
  or her money somewhere else
• Sam Walton

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What is Customer Satisfaction?

• Satisfaction is the end result the customer
  experiences when we have done all that is
  necessary to meet and exceed their expectations
  in a timely, responsible fashion, on a
  consistent basis. It is ultimately the experience
  our customer has, that defines their level of
  satisfaction

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Types of Customers

• External - outside the organization
• Internal - people within your organization who
  receive your work
• In many situations, producers have multiple
  customers and therefore find it useful to
  identify core customers

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THE IMPORTANCE OF CUSTOMER FOCUS

• Not just a quality issue- business practice.
• The strategic management literature defines
  competitive advantage as a firm's ability to
  achieve market superiority over its competitors.
• A strong competitive advantage is
  characteristically driven by customer wants and
  needs.

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THE IMPORTANCE OF CUSTOMER FOCUS

• Any business has four key goals
• 1. To satisfy its customers
• 2. To achieve higher customer satisfaction
  than its competitors
• 3. To retain customers in the long run
• 4. To gain market share

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THE IMPORTANCE OF CUSTOMER FOCUS

• Benefits of Satisfaction
• - insulate your customers from competition
• - can create a sustainable advantage
• - reduce failure costs
• - encourage repeat patronage and loyalty
• - enhance and promote positive word-of-mouth
• - lower the costs of attracting new customers,
  and
• - can have a significant positive effect on
  profitability.

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THE IMPORTANCE OF CUSTOMER FOCUS

• deliver ever-improving value to its customers.
• Value, is quality related to price-
• Consumers no longer buy solely on the basis of
  price but compare the total package of products
  and services that a business offers (sometimes
  called the consumer benefit package) with the
  price and with competitive offerings.
• The consumer benefit package influences the
  perception of quality and includes the physical
  product and its quality dimensions

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THE IMPORTANCE OF CUSTOMER FOCUS

• SO ..If competitors offer
• better choices for a similar price?
• the same package of goods and services at a lower
  price?
• Lower prices require lower costs if the firm is
  to continue to be profitable - Quality
  improvements in operations to reduce costs.
• Businesses must focus on both - continually
  improving product quality and reducing costs.

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THE IMPORTANCE OF CUSTOMER FOCUS

• Customer satisfaction occurs when
• - products and services respond to customers
  needs that is, when products and services meet
  or exceed customer expectations -- our
  principal definition of quality.
• Customer satisfaction translates directly into
  increased profits because
• - Loyal customers spend more than new
  clients - less costly to do business with.
• On the other hand, Poor quality products and
  services, lead to customer dissatisfaction

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THE IMPORTANCE OF CUSTOMER FOCUS

• Customer dissatisfaction - One study found that
• customers are five times more likely to switch
  because of perceived service problems than for
  price concerns or product quality issues.
• Problems result from unkept promises, failure to
  provide full service, service not provided when
  needed, incorrectly or incompletely performed
  service, or failure to convey the correct
  information
• dissatisfied customers tell at least twice as
  many friends about bad experiences than they tell
  about good ones.
• complaints, returns, and unfavorable word /mouth
  publicity or purchase from competitors.

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CREATING SATISFIED CUSTOMERS

• Customer satisfaction results from providing
  goods and services that meet or exceed customers'
  needs.

• Perceived Quality actual quality expected
  quality
• Actual quality - the outcome of the production/
  service process and what is delivered to the
  customer
• Expected quality - What the customer assumes will
  be received
• Unexpected satisfaction - occurs when actual
  quality exceeds expected quality

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CREATING SATISFIED CUSTOMERS
Figure 1 Customer-Driven Quality Circle
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Identifying Customers

• To understand customers needs, a company must
  know who their customer are.
• Identifying customers begins with asking
  questions
• What products or services are produced?
• Who uses these products and services?
• Who do employees call, write to, or answer
  questions for?
• Who supplies the inputs to the process

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Identifying Customers

• ATT Customer Supplier Model
• - This model suggests that suppliers must be
  considered as a customer
• - Every process receives inputs from
  suppliers and creates outputs for customers

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Customer Segmentation

• Demographics
• Geography
• Volumes
• Profit potential

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UNDERSTANDING CUSTOMER NEEDS

• Quality has many dimensions, which are
  difficult to satisfy simultaneously

Quality Dimension Manufactured Product (Stereo Amplifier) Service Product (Checking Account)
Performance Signal-to-noise ratio power Time to process customer requests
Features Remote control Automatic bill paying
Conformance Workmanship Accuracy
Reliability Mean time to failure Variability of time to process requests
Durability Useful life Keeping pace with industry trends
Serviceability Ease of repair Resolution of errors
Aesthetics Oak cabinet Appearance of Bank Lobby
Table 1 Quality dimensions of a Manufactured
Product and Service
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UNDERSTANDING CUSTOMER NEEDS

• Five key dimensions of service quality contribute
  to Customer perceptionReliability - Ability to
  provide what was promised, dependably and
  accurately
• Assurance The knowledge and courtesy of
  employees, and their ability to convey trust
  confidence
• Tangibles The physical facilities,
  equipment, appearance of personnel
• Empathy The degree of caring and individual
  attention provided to customers.
• Responsiveness - willingness to help
  customers provide prompt service

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UNDERSTANDING CUSTOMER NEEDS

• Kano Model of Customer Needs- suggested three
  classes of customer requirements

Dissatisfers requirements that are expected. If
these features are not present, the customer is
dissatisfied. (clean hotel room) Satisfiers
requirements that customers say they want. (want
sunroof in car) Exciters/delighters new or
innovative features that customers do not expect.
Leads ti high perceptions of quality.
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UNDERSTANDING CUSTOMER NEEDS
Figure 3 Classes or Levels of Customer
Requirements
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Factors Influencing Customer Satisfaction

• Product/service quality
• Specific product or service features
• Attributions for service success or failure
• Perceptions of equity or fairness
• Other consumers, family members, and coworkers
• Price
• Personal factors -
• the customers mood or emotional state
• situational factors

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Gathering Customer Information
Some of the key approaches to gathering customer
information include

• Comment cards and formal surveys
• Gathering information pertaining to the
  customers perception of a particular quality
  dimension (open-ended questions)
• Focus groups
• Panel of individuals who answer questions about a
  companys product or services (allows for
  in-depth probing)
• Direct customer contact
• Workers (CEOs, managers, etc..) contacting
  customers

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Gathering Customer Information

• Study complaints
• Evaluating complaints to learn about product
  failures or service problems
• Field intelligence
• Gathering information using employees who have
  direct contact with the customer (repair
  technician)
• Approximately one out of 25 customers complains!!
• Monitor the Internet
• Monitoring discussion forums to obtain valuable
  insights

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Tools for Classifying Customer Requirements

• Affinity diagram
• Used to organize large numbers of ideas or facts
  into natural patterns or groupings
• Tree diagram
• Shows hierarchical structure of facts and ideas
• Used in designing implementation plans for
  projects

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Tools for Classifying Customer Requirements
Affinity diagram Tree
diagram
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Affinity Diagram (KJ Diagram)

• A diagram that is used as a method of sorting
  qualitative data, which usually comes in the form
  of short phrases or setences (eg.customers are
  unhappy with delivery delays). It is often done
  with Post-it Notes, although the original method
  used 3 x 5 cards.

Header
Header
Header Summarizes the element in the group
Element
Element
Element
Element
Each element describes one aspect of the problem
Element
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Affinity Diagram (KJ Diagram)

• When to use it
• Use it to bring order to fragmented and
  uncertain information and where there is no clear
  structure
• Use it when information is subjective and
  emotive, to gain consensus whilst avoiding verbal
  argument
• Use it when current opinions, typically about
  existing system, obscure potential new solution
• Use it, rather than a Relations Diagram, When
  the situation calls more for creative
  organization than for logical organization.

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• An example of organizing customer requirements in
  an affinity diagram for a new digital camera is
  shown below.

Next Generation Digital Camera
Features
Composing Picture
Size ergonomics
Picture capabilities
Long Battery life
Have a large view finder screen
Easy to hold carry
Take action pictures
Large picture Storage capacity
Have a separate view finder
Compact, fits in pocket
Take close up picture
Zoom Lens
Capture picture accurately
Ease of Use
Responsiveness
Value
Easy to use
No delay in turning on
Easy to select picture modes
No delay in picture taking
Reasonably price
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The Tree Diagram

• The Tree Diagram is a deceptively simple tool
  that can be used in many analysis situation. It
  can be used to find problem causes in the same
  way as a cause-effect Diagram or be used to find
  an appropriate solution

Quality Ingredient
Good Food
Good Recipe
Prompt Attention
Good Service
Satisfied Customer
Professional Waiter
Happy Atmosphere
Pleasant Surrounding
Good Table presentation
Pleasing Decor
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The Tree Diagram

• When to use it
• Use it when planning, to break down task into
  manageable and assignable units
• Use it when investigating a problem, to
  discover the detailed component parts of any
  complex topic
• Use it only when the problem can be broken down
  in hierarchical manner
• Use it, rather than a Relations Diagram, to
  break down a problem when the problem is
  hierarchical in nature

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Customer Relationship Management

• Excellent customer relationship management
  depends on five aspects
• Commitments to customers
• Zaring Homes promises that homes will be built
  on-time, within budget, within specification
  or the home is free
• Customer-focused service standards
• Responding to a customers call within two
  hours

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Customer Relationship Management

• Training and empowerment
• Job orientation, on-the-job training, job
  certification
• Effective complaint management
• Employees at Ritz-Carlton can spend up to
  2000 to resolve a complaint with no questions
  asked

• Customer Partnership
• working closely with suppliers that share
  common values.

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Measuring Customer Satisfaction

• Measurement of customer satisfaction allow a
  business to
• Discover customer perceptions of business
  effectiveness
• Compare companys performance relative to
  competitors
• Identify areas for improvement
• Track trends to determine if changes result in
  improvements

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Measuring Customer Satisfaction

• ? Accurately identify customersrequirements
  and their relative importance
• ? Understand how customers perceive your
  organization whether your performance meets
  their requirements
• ? Identify PFIs areas where improvements in
  performance will produce the greatest gain in
  customer satisfaction

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Measuring Customer Satisfaction

• ? Pinpoint understanding gaps where your own
  staff have a misunderstanding of
  customerspriorities or their ability to meet
  customers needs
• ? Set goals for service improvement and monitor
  progress against a customer satisfaction index
• ? Increase profits through improved customer
  loyalty and retention

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Methods to Collect Customer Satisfaction Data

• Negative Feedback Analysis
• customer complaints, warranty claims, repair
  records - focus on problems
• concern many dissatisfied customers do not
  complain (1/20 complain).
• Proactive Feedback (ask customers for their
  opinions)
• examples customer surveys, focus groups,
  employees as customers.
• advantage identify key product features and
  assess levels of performance.

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Methods to Collect Customer Satisfaction Data

• Analysis of Competitor Products
• examples Benchmarking, War Rooms or Tear Down
  Analysis
• advantage Know thy competitor, know thyself

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American Customer Satisfaction Index

• Measures customer satisfaction at national level
• Introduced in 1994 by University of Michigan and
  American Society for Quality
• The American Customer Satisfaction Index (ACSI)
  covers 10 economic sectors, 41 industries and
  more than 200 companies and federal or local
  government agencies.

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ACSI Model of Customer Satisfaction
Customer complaints
Perceived quality
Perceived value
Customer satisfaction
Customer expectations
Customer loyalty
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Some Data on Customer Attitudes and Loyalty

• An average customer with a complaint tells 9-10
  people if it is resolved he/she only tells 5
  people.
• For every complaint received, there are twenty
  others that are not reported.
• It costs 5-10 times more in resources to replace
  a customer than it does to retain one.
• Companies spend 95 of service time redressing
  problems and only 5 trying to figure out what
  made the customer angry.

(Source Winning Back Angry Customers, Quality
Progress, 1993)
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The customer feedback Iceberg
Of those whose customer experience is below
expectation-
You can influence the result
10 make an official complaint
Its unlikely you will know
25 mention the problem to an employee
65 dont talk to anyone in the organization may
take their business elsewhere, but tell lots of
other people.
A problem well solved often creates a delighted
customer
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TQMs Customer Approach

• the customer defines quality.
• the customer is always right.
• the customer always comes first.
• the customer is king.
• quality begins and ends with the customer

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Conclusion

• Customer satisfaction is customers
  perception of the degree to which the customers
  requirements have been fulfilled.
• Customer complaints are a common indicator of low
  customer satisfaction but their absence does not
  necessarily imply high customer satisfaction.
• Your organizations performance may be
  outstanding but if your customers feel that it is
  poor or even no better than the competition
  they may report that their satisfaction is low.
•   .

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Remember This

• Remember, customer satisfaction is from the
  customer point of view, not your organizations
  point of view. Also, an organization cannot be
  great on all things.  Focus on those things that
  bring value to your customers.

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Remember This

• A customer is the most important visitor on our
  premises. He is not dependent on us we are
  dependent on him. He is not an interruption in
  our work he is the purpose of it. He is not an
  outsider in our business he is a part of it. We
  are not doing him a favor by serving him he is
  doing us the favor by giving us an opportunity to
  do so.
• Mahatma Gandhi

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THANK YOU