1

Customer and Market Focus in the Baldrige Criteria

Examines how an organization determines requirements, expectations, and preferences of customers and markets; and how it builds relationships with customers and determines the key factors that lead to customer acquisition, satisfaction, and retention, and to business expansion.

3.1 Customer and Market Knowledge

3.2 Customer Relationships and Satisfaction

a. Customer Relationship Building

b. Customer Satisfaction Determination

2

Importance of Customer Satisfaction and 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.

3

Characteristics of Satisfied Customers (1 of 2)

A happy and satisfied customer would tell

five other people about the company; many

of them would become customers of the

business.

50% to 75% of the customers who complain

and have their problems resolved would

again do business with the company.

4

Characteristics of Satisfied Customers (2 of 2)

If the complaints are resolved quickly, 95%

would return to do business with the

company.

How a customer is treated and how rapidly

customer complaints are resolved is one of

the most powerful tools shaping customers’

perception of overall quality.

5

Characteristics of Dissatisfied Customers

The average “unhappy” customer tell nine other people about the poor service he/she received.

The cost of losing a customer is equal to five times the annual value of that customer’s account.

Most (over 90%) of a company’s dissatisfied customers never complain. Most of them just stop doing business with the company.

6

Customer-Driven Quality Cycle

measurement and feedback

Customer needs and expectations (expected quality)

Identification of customer needs

Translation into product/service specifications (design quality)

Output (actual quality)

Customer perceptions (perceived quality)

PERCEIVED QUALITY = ACTUAL - EXPECTED

7

Leading Practices (1 of 2)

Define and segment key customer groups

and markets

Understand the voice of the customer

(VOC)

Understand linkages between VOC and

design, production, and delivery (i.e., tell a

consistent and compelling story)

8

Leading Practices (2 of 2)

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

9

Key Customer Groups

Organization level

• consumers (end-users)

• external customers (direct, partners, suppliers)

• employees

• society Process level

• internal customer units or groups Performer level

• individual internal customers

10

Customer Segmentation

Products

Demographics

Geography

Volumes

Profit potential

11

Performance-Importance Analysis

Performance

Importance

Low High

Low

High

Who cares? Overkill

Vulnerable Strengths

12

Kano Model of Customer Needs

Dissatisfiers (Basic): expected requirements

Satisfiers (Performance): expressed

requirements

Exciters/delighters: unexpected features

13

Customer Satisfaction vs. Degree of Achievement (1 of 2)

Basic (expected) Features

• Customers are dissatisfied if they are

missing.

Performance Features

• Customers tell you what they want, and are

happier if you can do a better job for them

14

Customer Satisfaction vs. Degree of Achievement (2 of 2)

Exciting Features

• Customers don’t know about them, but

will be delighted when the features are

offered.

15

Methods for Getting Customer Feedback (Listening Posts) (1 of 2)

Satisfaction Surveys (Telephone, Mail, Web)

Focus Group Studies

Customer Visits

Transaction-Based Response Cards

Hot lines - 800 numbers, Fax, Web, E-mail

Roundtable Discussions with Customers

16

Methods for Getting Customer Feedback (2 of 2)

Employee Surveys

Discussions with Front-Line Staff

Complaint Tracking (Informal & Formal)

“Mystery Shopper”

Thank-you Calls or Notes

Lost-Sales Follow-Up

17

Customer Satisfaction Survey Process (1 of 2)

Determine target customer group

Establish survey objectives

Identify customer needs

Determine survey method and resource

requirements

Design survey instrument

18

Customer Satisfaction Survey Process (2 of 2)

Conduct trial survey and revise instrument Notify and train customers Conduct survey Analyze results Report results to customers Establish and implement follow-up

procedures

19

Consideration of Response Cards

Are the survey cards visible to customers?

Is the card easy to fill out and submit?

How are the cards collected, reviewed and

responded?

Is there enough space for comments?

Will the cards be able to capture source of

satisfaction/dissatisfaction?

20

Example: The Olive Garden

The Lobby

• Was the lobby staff friendly and did they welcome you to the restaurant?

• Were you seated in a timely, efficient manner?

The Table Area

• Was your table area clean when you were seated?

The Server

• Was your server attentive and there when you needed him/her?

• Was your server knowledgeable and able to answer your questions about our food and beverages?

• How was the pace of your meal? The Food

• How would you rate the taste of your food?

• Please rate the temperature of your food, hot food being piping hot.

• Please rate your visit on the value for the money.

• Overall, how would you rate your visit

• Would you recommend this Olive Garden to a close friend or relative?

Scale: 1 = poor ….5 = excellent

21

Example: The Olive Garden

Open-ended questions:

• What one thing did you like most about your visit?

• What one thing could we do to improve your experience at The Olive Garden?

Survey form provides address, 800 number, FAX, and TDD number for hearing impaired

22

Customer Relationship Management

Commitments to customers Relevant customer-focused service standards Training and empowerment of front-line staff Effective complaint management Identifying and creating new customer values Establishing strategic partnerships and

alliances

23

Purpose of Measuring and Tracking Customer Satisfaction

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

24

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