NAME: Carlos Manuel S.

Abalos DATE: September 18, 2017

SUBJECT: BEC102-Total Quality Management SECTION: III-BSBA-H

Chapter 5 Customer Satisfaction

Introduction

 Customers are the greatest need of any organization. Every organization needs to carry out PDCA
as given below:
o Plan for satisfying customers
o Implement the identified measures to satisfy them
o Check whether they are really satisfied
o If not take corrective action
o If so take preventive action
o Revisit the plan
 The following useful principles and strategies will be discussed in this chapter:
o Service Quality
o Customer Delight
o Kano Model
o Agreed Customer Requirements
o Customer Perceived Quality
o Customer Feedback and Complaints Resolution

Service Quality

 Definition of Service as per ISO 9000: “The results generated by activities at the interface between
the organization’s internal activities to meet customer needs.”
 Importance of Service: According to Deming, in the USA, 75% of the people are employed in
service organizations. In addition even in the manufacturing industry, some people are engaged in
providing service. If this is also taken into account, 86% of people are engaged in providing services

Features of Service

Feature
Speed
Delivery Schedule
Care in Handling
Each Service Offering is
Different
Customer requirements are Service provider has to make efforts to understand the requirements
difficult to comprehend
Difficulty in estimating cost
Description
An imperative for service providers to offer the services as fast as
possible without compromising on quality. Designs which enable
speed and delivery with appropriate staffing are critical requirements
for success in the service industry
Adherence to a time schedule which is critical in the service industry.
The deliverables have to be handled carefully. Customers should also
be handled carefully.
Each service offering is different as it depends upon the personal
preferences of individuals. Each service offering is designed to fulfill
the individual needs of customers
of each customer correctly
Since each service offering is different, every time the setvice
industry has to estimate the charges payable by the customer for the

Difficulty in measuring
performance of services
Difficulty in marketing services  Personal contact with personal buyers
Difficulty in measuring customer more of a psychological problem. It is very difficult to read the minds
satisfaction
Psychology of customers
Customer Delight
Principles of Customer Delight
Feature
Business thrives on customers
Customer attrition
50% of problems are due to Every effort should be made by the customer contact personnel, for
misunderstood requirements
Contractual and non-contractual between the customer and the organization. The documented
requirements of customers
service offered. It is unlike a product where the price is stamped in
the product itself
It is extremely difficult to avoid the subjective element. It is very
difficult to assess the performance of service deliverables. One has
to formulate indirect parameters for measuring the quality of services
The service industry has to do two things for marketing of services,
namely:
 Building credibility of the organization by good services
consistently
Determining customer satisfaction in case of a service industry is
of the people. Therefore, the service organization cannot rely on
normal methods of assessment of customer satisfaction.
The most important requirement for success in any industry is to
understand the psychology of the customers. It may be difficult to
follow one simple rule for all customers
Description
Customers are the very reason for being in business. Profits can be
reaped only if an organization has customers who will pay for the
products or services on a continuing basis. The business will be
successful only if it can give the highest return on investment. This
is possible only if the enterprise is oriented towards customers.
“If the product is good then the customer will come back (again); if
not the product will come back (returned)”.
According to Tom Peters, the customers leave because of the
following reasons:
 15% because of quality problems
 15% because of higher price
 70% did not enjoy doing business with the organization
50% of defects are caused due to misunderstanding of requirements.
identifying not only the stated but also the implied customer
requirements.
The contractual requirements are most of the times documented in
the form of a “Requirement Statement” jointly agreed to and signed
customer requirements are basically the contractual requirements.
The contractual requirements could include the following
parameters:
  Quality: service/product characteristics
 Time schedule for delivery
 Price
 Services such as responsibility for installation, service during
warranty and post warranty, etc.
 Training support

The non-contractual expectations include the following parameters:

 Quality not document before
 Implied requirements
 Value for the money spent
 Environment of conducting business and the friendliness of the
customer service personnel of the organization.
The organization should be familiar with general human nature and
try to understand the hidden requirements of the customer.
Delighting customers
Delighting customers is offering customers what they won’t have
expected.
The customer orientation dictates that customer contact personnel
should be specifically chosen. There should always be a separate set
Customer contact personnel
of people to talk and accept orders from the customers. The customer
service personnel should have pleasant and persuasive skill

COMFORT: According to D.H Stamtis, COMFORT stands for the for the following customer service
attributes

Attribute Definition
The customer service employees should not only be, but perceived to
be very interested in finding out the real needs of the customers and
C for Caring
help them to buy what they really intend to buy, product or service.
They should not drive away customers
The customer contact person should pay attention to the body
O for Observant language of the customers and should also be able to read their
requirements
In the service industry, the customer is always late. This is true in
every service organization. At the same time, the service organization
M for Mindful
may not be able to complete the job immediately due to genuine
reasons. However, the urgency of the customer has to be considered.
The customer service employees have to be friendly with customers.
At times, if the customers or their representatives are not very
F for Friendly
friendly, then, such situations have to be tactfully handled by the
customer service employees
The organization should feel obliged that the customer has visited
O for Obliging
them with an enquiry
While the proposals are being submitted, the organization should feel
R for Responsible
responsible for successfully accomplishing the proposal if accepted
 by the customer. It is better to subject the proposals for “contract
review” before sending.
The customer is supreme. But this cannot mean that they cannot be
T for Tactful
wrong. The organization should tactfully handle such situations.

The Kano Model

 In the 1970s, Dr. Nariaki Kano of Tokyo Rika University came out with an interesting and
practical model for understanding customer satisfaction, known as the Kano Model. He developed
the model from Hertzberg’s Motivator-Hygiene Theory.
 One Dimensional Quality Model: When we measure the performance of a product, we rate them
as good or bad. Similarly, when we rate the satisfaction of the customer we rate them as good or
bad.

Performance

Bad Good

Customer
Satisfaction

Bad Good

One dimensional models for quality

 Two Dimensional Quality Model: Proposed by Dr. Kano, this model has two axes as given in
the figure below. The x-axis represents the performance of the product or service or degree of
implementing the product function. On the x-axis the extreme left point indicates that the product.
function is absent. On the extreme right point, the product function is fully implemented. The y-
axis represents the level of customer satisfaction. On the top most point, the customer is highly
satisfied; on the bottom most the customer satisfaction is quite low.

Satisfaction

Good

Performance

y
  Two Dimensional Quality Model: It combines two characteristics pertaining to quality namely
implementing the product function or degree of implementing the features of a product or service
and the level of satisfaction of the customer. Combining both parameters facilitates understanding
quality in a more sophisticated and holistic manner.
 Kano Model: There are three graphs in the plot and they represent three different quality levels.
The graph is three types of responses if a customer with regard to quality of a product or service –
these are basic quality, performance quality, and excitement quality.

Excitement quality
Customer Satisfaction

Absent Product function Fully implemented

Threshold (basic) quality

Performance quality

Responses Definition
Also called threshold quality, as the graph above indicates, if the
functions are not implemented as agreed, then it results in lower
levels of satisfaction as compared to higher levels of satisfaction,
when fully implemented. It should be noted that providing additional
functionality does not increase customer satisfaction much. It
represents unspoken or minimum expected requirements. Fulfilling
Basic quality basic quality is measured by the following:
 Customer complaints
 Warranty data
 Product recalls
 Number of lawsuits
 Things gone wrong
 Other failure reports
GR: The better the performance, the greater the satisfaction
This measures satisfaction proportionate to the performance of the
product. Performance quality attributes generally cause linear
response. Increased levels of achievements cause increased levels of
Performance quality
satisfaction. The customer requirements for performancce quality
can be found from surveys. Customers freely express their desires,
when they are asked for. This is also called Quality Function
Deployment (QFD).
Excitement is generated because the customer received some feature
Excitement quality
or attribute that they did not expect or think of. In order to generate
 excitement and brand loyalty, organizations must leverage their
creative resources to identify ideas and innovations that cause
customer excitement. Excitement quality becomes the reason why
customers make a specific organization the default choice over its
competitor and return to buy again and again. Excitement attributes
cause an exponential response.
NOTE: Kano Model figure above represents a given time. As time passes, the excitement level may
become performance level and performance level may become a threshold level or basic level. Thus,
customer satisfaction is quite dynamic. The organizations should be able to identify the following:
 Basic features, which must be provided, which if not provided, will dissatisfy the customers
 The features which give linearly proportional customer satisfaction
 The features that will excite the customers and give exponential increase in customer satisfaction

Agreed Customer Requirements

Principles of Agreed Customer Requirements

Principles Definition/Explanation
The requirements of the customers are the most difficult to
comprehend. Every service offering is different, which dictates that
Invest Time for Understanding
determining customer requirements is not a one-time affair.
Customer’s Requirements
Organizations should invest time for understanding each customer’s
requirements.
Service offering is more easily described through subjective
parameters rather than objective parameters.

Reasons for not being able to clarify doubts with the customer:
 Customer may not be available till the delivery time
Find out the right requirements
 Ego interfering with communications
first
 Too busy with other jobs in hand
 Belief that communications may lead to more work without
additional payment
 Due to fear of creating bad reputation
 Fear of senior management coming to know about the problem
Provide a checklist to the customer which should be filled up, before
Checklist for eliminating they discuss about the service to be provided. It is important that the
communication gap checklist is not too long but contains all the relevant details which are
required to understand the service requirements
A contract review should be done before the service request is given
Review the to the service provider. Similarly, when the service request is
contract/requirements received by the service provider, they should also be subjected to a
contract review, in the service organization before final acceptance
Before agreeing to provide the service, the custoemr and the service
Foresee and provide for
provider should agree upon how to amend the service agreement later
amendments
on if necessary. In a service organization, there may arise new points
 while the job is being executed. Such eventualities should be foreseen
and methodology for handling them should be documented
Deming: It is not meeting our own requirements but the customers’
for the success of the business. Each customer should have a
documented policy for handling customers in a pleasant manner,
Documented policy
finding out their correct requirements and converting them into the
requirements, which would be understood by employees in the
organization
There are two checkpoints in a service requirement finalization. The
first one is the initial discussion the customer contact person has with
the customer and the second one is the contract review in the
Code of good customer handling
organization. At these two stages, whatever pitfalls or mistakes are
practices
found by the organization should be identified and documented.
These observations would let the senior management formulate the
“Code of Good Customer Handling Practices”

Customer Perceived Quality

Principles of Customer Perceived Quality

Principles
Importance of measuring ensuring objectivity in measurement of customer satisfaction, it is
customer satisfaction
No hard and fast rule for
identifying measures
Identify vital few measures
Arrive at quantitative indices
Definition/Explanation
It is important to measure customer satisfaction so as to stay ahead
of competition. Continuous improvement of customer satisfaction
can only be confirmed by objective measurement. For the purpose of
essential to arrive at clear strategies for measurement, determine
parameters to be measured, methods of measurements and then
develop documented procedure for measuring customer satisfaction
involving all above.
The customer is satisfied when the value of the product or service is
worth the cost of the item. It is always the value for money spent on
the products which satisfy the customers.
Brainstorming sessions should be carried out to find the measures for
determining customer satisfaction, appropriate to their business and
the spectrum of their customers
Customer satisfaction is subjective but could likely be misleading.
Organizations should take effort to convert evaluations into objective
indices, indices need not have a common unit

Some measures for customer satisfaction

Measures Definition/Explanation
Parameters in determining customer perceived quality:
 Defects in the product on delivery
Customer perceived quality
 Number of requirements fulfilled
 Number of misunderstood requirements

Response time
Errors in documentation
Errors in Delivery
Delay in execution
 Frequency of defects (mean time between failures)
 Time taken for repair (mean time to repair)
Parameters pertaining to response time:
 Delay in delivery
 Delay in installation
 Promptness in service
 Time taken for attending to service calls
 Number of reminders the customer made to his service provider
 Response time of the organization for the customer’s additional
requirement after delivery
25% of non-manufacturing work is redone to correct the defects
according to Philip Crosby
In a service industry, delivery is as important as the design and
therefore, there should be no errors in delivery.
Delay in execution will definitely cause a delay in probable date of
completion (PDC), which will no doubt annoy the customer. Delay I
the processes will force the organization to do two things:
 Postpone the PDC
 Compromise on the quality

Customer Feedback and Complaints Resolution

Principles and methodologies of customer feedback

Principles Definition/Explanation
The most common method of obtaining feedback is by giving a
response sheet or a feedback form to the customers at the conclusion
Feedback forms
of delivery process and seeking feedback. It can be the same as
prescribed for measuring CSI.
To get a true feedback, the feedback form should be kept
Confidentiality confidential. Even when it is taken orally, the confidentiality should
be assured to get realistic feedback
Feedback data should be analyzed at regular intervals. Benefits are:
 The customers come to know that their feedback is taken seriously
Display results
by the organization
 The employees in the organization know where they really stand

Complaints Resolution

 Essence of putting complaints into database or into a register of complaints:

o To keep track of the complaints
o To carry out root cause analysis and take corrective action immediately so as to
eliminate such problems in the future
o To take preventive action
o To find out the cost of poor quality and other statistical purposes
 If a complaint is genuine, the following actions should be taken:
 o Analyze independently
o Give benefit of the doubt to customers
o Satisfying annoying customers

Complaint Recovery Process

 This process is aimed at satisfying customers, resolving problems and take preventive actions.
The problems of the customers have to be recorder. They have to be resolved without delay to
infuse confidence in the customers.
 Complaints should be ranked according to severity and appropriate priority for resolving them.
 Customers should be treated with respect and courtesy after they complained.
 Organizations should always be receptive to complaints