CUSTOMERS SATISFACTION NOR ASNIDAR BINTI AZIZ (GS 18560) SAFIDA ZALMA BINTI MD PIAH (GS 18670) 1
Objectives of Unit: n n n n 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. 2
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 3
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 4
Types of Customers` n n n 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” 5
THE IMPORTANCE OF CUSTOMER FOCUS n n n 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. 6
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 n 7
THE IMPORTANCE OF CUSTOMER FOCUS n 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. 8
THE IMPORTANCE OF CUSTOMER FOCUS n n 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 9
THE IMPORTANCE OF CUSTOMER FOCUS SO. . If competitors offer n n 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. 10
THE IMPORTANCE OF CUSTOMER FOCUS n n n 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 11
THE IMPORTANCE OF CUSTOMER FOCUS Customer dissatisfaction - One study found that n customers are five times more likely to switch because of perceived service problems than for price concerns or product quality issues. n 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 n dissatisfied customers tell at least twice as many friends about bad experiences than they tell about good ones. n complaints, returns, and unfavorable word /mouth publicity or purchase from competitors. 12
CREATING SATISFIED CUSTOMERS Customer satisfaction results from providing goods and services that meet or exceed customers' needs. Perceived Quality = actual quality – expected quality n n Actual quality - the outcome of the production/ service process and what is delivered to the customer n Expected quality - What the customer assumes will be received n Unexpected satisfaction - occurs when actual quality exceeds expected quality 13
CREATING SATISFIED CUSTOMERS Figure 1: Customer-Driven Quality Circle 14
Identifying Customers n n 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 15
Identifying Customers AT&T Customer Supplier Model AT - This model suggests that suppliers must be considered as a customer - Every process receives inputs from suppliers and creates outputs for customers n Your Suppliers Inputs Requirements and feedback Your Outputs Processes Your Customers Requirements and feedback 16
Customer Segmentation Demographics n Geography n Volumes n Profit potential n 17
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 18
UNDERSTANDING CUSTOMER NEEDS n Five key dimensions of service quality contribute to Customer perception: Reliability - 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 19
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. 20
UNDERSTANDING CUSTOMER NEEDS Figure 3: Classes or Levels of Customer Requirements 21
Factors Influencing Customer Satisfaction n Product/service quality n Specific product or service features n Attributions for service success or failure n Perceptions of equity or fairness n Other consumers, family members, and coworkers n Price n Personal factors ¨the customer’s mood or emotional state ¨situational factors 22
Gathering Customer Information Some of the key approaches to gathering customer information include: n Comment cards and formal surveys ¨ Gathering information pertaining to the customers’ perception of a particular quality dimension (open-ended questions) n Focus groups ¨ Panel of individuals who answer questions about a company’s product or services (allows for indepth probing) n Direct customer contact ¨ Workers (CEOs, managers, etc. . ) contacting customers 23
Gathering Customer Information n 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 24
Tools for Classifying Customer Requirements n n 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 25
Tools for Classifying Customer Requirements Affinity diagram Tree diagram 26
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 Element Header Summarizes the element in the group Each element describes one aspect of the problem Element 27
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. n 28
n 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 Ease of Use Responsiveness Value Easy to use No delay in turning on Reasonably price Easy to select picture modes Capture picture accurately No delay in picture taking 29
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 Satisfied Customer Good Service Professional Waiter Happy Atmosphere Pleasant Surrounding Good Table presentation Pleasing Decor 30
The Tree Diagram n 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 31
Customer Relationship Management Excellent customer relationship management depends on five aspects Commitments to customers n Zaring Homes promises that homes will be built on-time, within budget, & within specification or the home is free Customer-focused service standards n Responding to a customer’s call within two hours 32
Customer Relationship Management Training and empowerment n Job orientation, on-the-job training, & job certification Effective complaint management n Employees at Ritz-Carlton can spend up to $2000 to resolve a complaint with no questions asked Customer Partnership n working closely with suppliers that share common values. 33
Measuring Customer Satisfaction n Measurement of customer satisfaction allow a business to: ¨ Discover customer perceptions of business effectiveness ¨ Compare company’s performance relative to competitors ¨ Identify areas for improvement ¨ Track trends to determine if changes result in improvements 34
Measuring Customer Satisfaction ★ Accurately identify customers’requirements 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; 35
Measuring Customer Satisfaction ★ ★ ★ Pinpoint `understanding gaps’ where your own staff have a misunderstanding of customers’priorities 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 36
Methods to Collect Customer Satisfaction Data n n 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. 37
Methods to Collect Customer Satisfaction Data n Analysis of Competitor Products ¨ examples: Benchmarking, “War Rooms” or Tear Down Analysis ¨ advantage: “Know thy competitor, know thyself” 38
American Customer Satisfaction Index n n n 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. 39
ACSI Model of Customer Satisfaction Perceived quality Perceived value Customer expectations Customer complaints Customer satisfaction Customer loyalty 40
Some Data on Customer Attitudes and Loyalty n n 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) 41
The customer feedback ‘Iceberg’ Of those whose customer experience is below expectation: 10% make an official complaint It’s unlikely you will know You can influence the result 25% mention the problem to an employee 65% don’t 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 42
TQM’s Customer Approach n “the customer defines quality. ” n “the customer is always right. ” n “the customer always comes first. ” n “the customer is king. ” n “quality begins and ends with the customer” 43
Conclusion n ‘Customer satisfaction’ is “customers’ perception of the degree to which the customer’s requirements have been fulfilled. n Customer complaints are a common indicator of low customer satisfaction but their absence does not necessarily imply high customer satisfaction. n Your organization’s 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. . 44
Remember This n Remember, customer satisfaction is from the customer point of view, not your organization’s point of view. Also, an organization cannot be great on all things. Focus on those things that bring value to your customers. 45
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 46
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