This document discusses total quality management (TQM) and its focus on customer satisfaction. It provides definitions of TQM, outlines its key principles such as customer focus, leadership and employee involvement. It discusses the importance of internal and external customers and measuring customer satisfaction. It also describes techniques for gathering customer feedback and cultivating long-term customer relationships to improve retention. The overall message is that customer satisfaction should be the top priority of any organization and drive continuous improvement.
3. • TQM is a business management strategy
aimed at embedding awareness of Quality
in all organizational processes.
• Attainment of Total Quality Through
Everyone’s Commitment on a Daily Basis
4. Definition
When used together as a phrase, the three words in
this expression have the following meanings:
Total
Involving the entire organization, supply chain, and/or
product life cycle
Quality
With its usual definitions, with all its complexities
Management
The system of managing with steps like
Plan, Organize, Control, Lead ,Staff, provisioning
and organizing
5. The TQM philosophy
derives from one
foundational idea:
everything must be geared
towards customer
satisfaction, the engine
which drives the company
and on which its future
survival depends.
6. ORGANIZATIONAL
HIERARCHIAL DIAGRAMS
Earlier approach TQM approach
CEO
SENIOR
MANAGER
FUNCTIONAL
OPERATIONAL
AREAS
FRONT LINE
REPREENTATIVES
CUSTOMERS
CUSTOMERS
FRONT LINE
REPREENTATIVES
FUNCTIONAL
OPERATIONAL
AREAS
SENIOR
MANAGER
CEO
•
9. Continuous Satisfaction of Customer
Requirements.
• ISO 9000:
"Degree to which a set of inherent characteristics
fulfills requirements." The standard defines
requirement as need or expectation.
• Six Sigma:
"Number of defects per million opportunities.
10. Satisfaction is basically a psychological state, care
should be taken in the effort of quantitative
measurement, although a large quantity of research
in this area has recently been developed.
The Research gives ten domains of
satisfaction include:
Quality,
Value,
Timeliness,
Efficiency,
Ease of Access,
Environment,
Inter-departmental Teamwork,
Front line Service Behaviors,
Commitment to the Customer & Innovation.
11. • The Most important Asset of any
Organization is its Customers.
• Satisfied Customers ---the
Lifeblood of any Organization .
12. The Customer is the Ultimate Judge of Value
Quality.
TQM is driven by long-term growth goals
and flexibility, focusing on
“bringing the customer in”.
13. • Improve each and everyday,
Do not focus on problem, focus on
improvements.
• IF YOU’RE NOT PART OF THE SOLUTION,
YOU’RE PART OF THE PROBLEM.
14. Products must go through continuous improvement
• Customers are not interested in excuses, they’re
interested in results.
• We must Be proactive - because if we don’t, someone
else will..
• Ishikawa Says:
“The organization which does not make a
change in the 06 months is a dead
organizations”.
15. •
TQM and having satisfied
long-term supplier
relations, will end in
attaining the common goal
of organization and
suppliers---to satisfy end
user.
There is a deliberate need of
continuous improvement
and innovation to have
updated Quality products
---to have retained, loyal
customers till the end.
18. 18
Process Vs. Customer
Three-part customer satisfaction system
1. company processes (operation)
I. company employees
II. customer expectation
Listen to the voice
of the customer
Predict customer
behavior
Determine customer
Quality expectations
Listen to the voice
Of the process
Predict process
behavior
Determine optimum
Process outcomes
Propose and test
Process improvement
19. 19
Key Customer Groups
• Organization level
– consumers
– external customers
– employees
– society
• Process level
– internal customer units or groups
• Performer level
– individual internal customers
20. 20
Internal Customers Conflict
• 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?
21. 21
Defining QualityThe several dimensions of quality:
• People-focused management system
• Focus on increasing customer satisfaction
and reducing costs
• A systems approach that integrates
organizational functions and the entire
supply chain
• Stresses learning and adaptation to change
• Based on the scientific method
22. 22
A Quality focus
• “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.
• Marker break points, where improving
performance will change customer behavior.
• Common theme: integrate the many individual or
group efforts that may have their own priority.
24. 24
The Driver of Customer Satisfaction (1 of 2)
Key excellence indicators for customer satisfaction
• Service standards derived from customer requirements
• Understanding customer requirement
– Thoroughness/objectivity
– Customer types
– Product/service features
• Front-line empowerment (resolution)
• Strategic infrastructure support for front-line employees
• Attention to hiring, training, attitude, morals for
employees
• High levels of satisfaction – customer awards
25. 25
The Driver of Customer Satisfaction (2 of 2)
• Proactive management of relationships with
customer
• Use of all listening posts
– Surveys
– Product/service follow ups
– Complaints
– Turnover of customers
– Employees
• Quality requirements of market segments
– Survey go beyond current customers
– Commitment to customer
(trust/confidence/making good on word)
26. 26
Getting Employee Input
• Employee input can be solicited concurrent with
customer research
• Identify barriers and solution to service and product
problem
• Serving as a customer-company interface
Employee surveys can measure
(1)TQM effectiveness (2) skill and behaviors
improvement (3) effectiveness of team problem-
solving process (4) outcomes of training (5) needs of
internal customer
27. 27
Measuring 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
28. 28
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
29. 29
The Role Of Marketing And Sales
Marketing and sales are function charged with
gathering customer input but in many firms the people
in these function are unfamiliar with quality
improvement. Shortcomings in marketing as identified
by critics include:
• Partnering arrangement with dealers and distribution channels
• Focusing on the physical characteristics of products and
overlooking the related services
• Losing a sense of customer price sensitivity
• Not measuring or certifying suppliers such as advertisers
• Failing to perform cost/benefit analyses on promotion costs
• Losing markets to generics and house brands
30. 30
The Sales Process
TQM become a part of sales and marketing
processes -- Selling, advertising, promoting,
innovating, distribution, pricing, and
packaging – as they relate to customer
satisfaction. sales a process that lends itself
to analysis and improvement for customer
satisfaction.
31. Total Quality Management
Total quality management is continual
improvement and responding to customer needs
and expectations.
Marketer’s role in delivering Quality
to target customers
1. Identify customer needs and requirements
2. Communicate customer expectation
3. Fill customer order on time
4. Check that customer know the use of product
5. Stay with customer after selling
6. Gather information for further improvements
32. 32
Service Quality And Customer Retention
Service companies measure cost of customers
who will not come back because of poor
services. These are customer defections and
they have a substantial impact on cost and
profit. Indeed, it is estimated that customer
defections can have a greater impact than
economies of scale, market share, or unit
cost. Many companies fail to measure
defections, determine the cause of defections,
and improve the process to reduce defections.
33. 33
Customer Retention And Profitability
Internal Service Quality
Employee Retention
External Service Quality
Customer Satisfaction
Profitability and customer Retention
Employee
Satisfaction
Customer
Retention
Profit
System
35. Customer Feedback is essential for the
organization nowadays to beat the sharp
competition and to retain their customers.
It enables us to know:
About their satisfaction level
Priorities of qualities
Performance and competition
Opportunities for improvement.
36. ۞ HAVING COMMENT CARDS AND
A BOX TO PUT THEM IN.
۞ COMMENT CARDS ENCLOSED WITH
EACH ORDER .
۞ CUSTOMER QUESTIONNAIRE..
۞ FOCUS GROUP
۞ REPORT CARD
۞ HIRING A TELEMARKETING FIRM TO CALL
CUSTOMERS FOR FEEDBACK
37. ۞ PUBLISIZING ( toll-free number) .
۞ ASKING CUSTOMERS TO STAY ON PHONE
AND COMPLETE A SHORT SURVEY AFTER
THEY FINISH PLACING AN ORDER
۞ WEB BASED SURVEYS VIA E-MAILS TO
CUSTOMERS WITHIN A SHORT PERIOD OF
TIME AFTER THEIR PURCHASE
۞ USE GOOGLE ALERTS TO TRACK
MENTIONS OF UR BUSINESS ON THE
INTERNET AND IN THE BLOGOSPHERE.
38. ۞ MANAGERS AND OWNER CONTACT
CUSTOMERS TO GET DIRECT REPORT
۞ CUSTOMER VISITS(MEETING THEM AT
LUNCH
۞ EMPLOYEE’S FEEDBACK
۞ PUTTING WEBSITE URL ON CUSTOMER
RECEIPTS AND ASKING CUSTOMERS TO GO
THERE TO DELIVER FEEDBACK FOR
WINNING PRIZES.
39. CUSTOMER COMPLAINTS
THE FEEDBACK OBTAINED IN ALL ABOVE CASES
IS PROACTIVE
CUSTOMER COMPLAINT IS REACTIVE BUT VERY
USEFUL.
BY TAKING THE POSITIVE APPROACH TO THE
COMPLAINTS IT IS POSSIBLE TO IMPROVE THE
PRODUCTS/SERVICES
IN FACT COMPLAINTS GIVE THE
ORGANIZATION A SECOND CHANCE
TO WIN!!
40. GOOD CUSTOMER SERVICES &
RETENTION OF CUSTOMERS
Good Customer Service is all about bringing customers back.
And about sending them away happy…
---HAPPY enough to pass Positive Feedback about your
business along to others,
who may then try the product or service you offer for
themselves and in their turn become Repeat Customers/
(loyal customers).
41. Building Customer value, Satisfaction
and loyalty
Customer Value:
The level of priority the customer
gives to a product.
Customer Satisfaction:
When the customer perceive
expected value from the product is called customer
satisfaction.
Customer Loyalty:
The totality of feelings or attitudes
that would incline a customer to consider the re-purchase of
a particular product, service or brand or re-visit a particular
company, shop or website.
42.
43. Image benefit Psychological cost
Personal benefit Energy cost
Time cost
Product benefit Monetary cost
Total customer benefit Total customer cost
Determinants of Customer
Perceived Value
44. Customer Value Analysis Steps
1. Identify the major attributes and benefits that
customers value
2. Assess the quantitative importance of the
different attributes and benefits
3. Assess the company’s and competitor’s
performances on the different customer values
against their rated importance
4. Examine how customers in a specific segment
rate the company’s performance against a
specific major competitor on an individual
attribute or benefit basis
5. Monitor customer values over time
45. Total Customer Satisfaction:
Customer
satisfaction depends on the offer’s performance that
meets customer expectation.
1.If the performance matches the expectations, the
customer is satisfied.
2. If the performance exceeds the expectations , the
customer is highly satisfied or delighted.
Satisfaction is a person’s feeling of pleasure or
disappointment that result from comparing a product’s
perceived performance to their expectations.
46. How do Buyers form their
Expectations
Expectations result from past buying experience;
friends’ and associates’ advice and marketers’
and competitors’ information and promises.
1.If marketers raise expectations too high, the
buyer is likely to be disappointed.
2.If the company sets expectations too low, it
won’t attract enough buyers.
47. Monitoring Satisfaction
Companies should measure systematically that how well
they treat with the customers, identifying the factors shaping
satisfaction, and making changes in their operations and
marketing as a result.
Monitoring satisfaction is very important because one key to
Customer Retention is Customer Satisfaction.
A highly satisfied customer generally stays loyal longer,
buys more as the company introduces new products and
upgrades existing products, talks favorably to others about
the company and its products, pay less attention to
competing brands and is less sensitive to price, offers
products or service ideas to the company, and costs less to
serve than new customers.
High customer satisfaction has also been linked to higher
returns and lower risk in the stock market.
48. Rated Customer Satisfaction on
a
Scale from One to Five
1. At a level one, customers are likely to
abandon the company and even bad-of-
mouth.
2. At level two to four, customers are fairly
satisfied but still find it easy to switch when a
better offer comes along.
3. At level five, the customers is very likely to
repurchase and even spread good word of
mouth about the company
49. Measurement Techniques
Periodic Surveys is way to measure the customer
satisfaction.
Customer loss rate also tells about the customer
satisfaction.
Questionnaire from customers who have stopped
buying or who have switched to another supplier
to find out Why?
Finally, companies can hire mystery shoppers to
pose as potential buyers and report on strong and
weak points experienced in buying the company’s
and competitors’ products.
50. Impact of Quality
1. Quality is the key to value creation and customer
satisfaction.
2. High level of quality means high satisfaction of customer
which support high prices and (often) low cost.
3. There is a high correlation between relative product
quality and company profitability.
51. Maximizing Customer
Life-Time Value
CLV is the net present value of the cash flows
attributed to the relationship with a customer.
The well known 20-80 rule says that the top 20 of
customers often generates 80% or more of the
company’s profit.
The least profitable 10% to 20% of customers , on the
other hand, can actually reduce profits between 50%
and 200% per account, with the middle 60% to 70%
breaking even.
52. Cultivating Customer Relationships
Maximizing customer value means cultivating long-term
customer relationships.
Customer Relationship Marketing:
CRM is the process of
carefully managing detailed information about individual
customers and all customer “touch points” to maximize
customer loyalty.
• A customer “touch point” is any occasion on which a
customer encounters the brand and product—from actual
experience to personal or mass communications to
casual observation.
• Customer relationship management enables companies
to provide excellent real-time customer service through
the effective use of individual account information.
53. Cultivating Customer Relationship
One To One Marketing
One-to-one marketing is a customer relationship
management (CRM) strategy emphasizing
personalized interaction with customers.
Four Step framework for one to one marketing
• Identify your prospects and customers
• Differentiate customers in terms of their needs and their value to
your company
• Interact with individual customers to improve your knowledge about
their individual needs and to build stronger relationships
• Customize products, service and messages to each customers.
54. Cultivating Customer Relationship
1. Reducing the rate of customer defection
2. Increasing the longevity of the customer
relationship
3. Enhancing the growth potential of each
customer through “share-of- wallet”, cross-
selling and up-selling
4. Making low profit customers more profitable
or terminating them
55. Reduce Customer Defection
– Define and measure retention rate
– Distinguish causes of customer attrition
– Estimate profit loss associated with loss of
customer
– Assess cost to reduce customer defection
– Gather customer feedback
Cultivating Customer
lationship
56. Building Loyalty
• Create superior products, services and experiences for the
target market.
• Get cross departmental participation in planning and
managing the customer satisfaction and retention process.
• Integrate the “Voice of the Customer” to capture their stated
and unstated needs or requirements in all business decisions.
• Organize and make accessible a database of information on
individual customer needs, preferences, contacts, purchase
frequency and satisfaction.
57. • Make it easy for customers to reach appropriate
company personnel and express their needs,
perceptions, and complaints.
• Assess the potential of frequency programs and club
marketing programs.
• Run award programs recognize outstanding
employees
Building Loyalty
58. Customer Database:
A customer database is an organized
collection of comprehensive information about individual
customers or prospects that is current, accessible, and
actionable for such marketing purposes as lead
generation, lead qualification, sale of a product or
service, or maintenance of customer relationships.
Database Marketing:
Data base marketing is the process
of building, maintaining and using customer databases and
other data bases to contact, transact, and build customer
relationship.
59. Data Warehouse:
Where marketers can
capture, query, and analyze it to draw
inferences about an individual customer’s
needs and responses.
Data Mining:
Through data mining marketing
statisticians can extract useful information
about individual trends, and segments from
the mass of data.
60. Use of Database
1. To identify prospects
2. To decide which customer should receive a
particular offer
3. To deepen customer loyalty
4. To reactive customer purchase
5. To avoid serious customer mistakes
61. Four problem that prevent a firm
effectively using CRM
• Large Investment
• Difficulty in getting every one
customer oriented
• Not all customers want an ongoing
relationship
62. Comprises
Acquiring the right
customer
Crafting the right
value proposition
Instituting the best
processes
Motivating
employees
Learning to retain
customer
CRM Imperative
You Get It When…
•Have identified most
valuable customers
•Have calculated
share of their wallet for
goods/services
•Have studied what
products/services
customers need
today, tomorrow
•Have surveyed what
competitors offer
today, tomorrow
•Have spotted what
products/services we
should offer
•Have researched the
best way to deliver
products/services to
customers
•Including alliance
need to strike, tech
need to invest, and
services capabilities
that need to be
developed or acquired
•Know what tools our
employees need to
use to foster customer
relationships
•Have identified HR
systems needed to
boost employee loyalty
•Have learned why
customers defect and
how to win them back
•Have analyzed what
competitors do to win
your high value
customers
•Senior management
monitors customer
defection metrics
CRM Technology Can Help…
•Analyze customer
revenue & cost data to
identify current and
future high value
customers
•Target direct-
marketing efforts
better
•Capture relevant
product/service
behavior data
•Create new
distribution channels
•Develop new pricing
models
•Build communities
•Process transaction
faster
•Provide better info to
the front line
•Manage logistic and
supply chain more
efficiently
•Catalyze collaborative
commerce
•Align incentives and
metrics
•Deploy knowledge
management systems
•Track customer
defection and retention
levels
•Track customer
service satisfaction
levels
Source: Darrel K., Reichheld F., and Schefter P., “Avoid the Four Perils of CRM” Harvard Business Review (Feb, 2002) pg. 106
63. THE BENEFITS OF CUSTOMER
RETENTION
• Profits derived from sales
– Reducing defections by 5% can boost profits 25%
to 85%
• Profits from reduced operation costs
– It is 3 to 5 times cheaper to keep a customer than
to recruit a new one
• Profits from referrals
64. • Maintain the proper perspective
• Build trusting relationships
• Protect confidential information
• Tell customers the truth
• Provide full information (pros and cons)
• Be dependable, courteous, and considerate
• Be actively involved in community affairs
CUSTOMER RETENTION TACTICS
65. CUSTOMER RETENTION TACTICS
• Monitor the service delivery process
• Properly install products and train
customers
• Be there when you are needed the most
• Provide discretionary effort
66. IS IT ALWAYS WORTHWHILE
TO KEEP A CUSTOMER? (disadvantages
and challenges)
• The account is no longer profitable
• Contract conditions are no longer being met
• Customers demands are beyond reasonable
• Customer is abusive to the point that it
lowers employee morale
• Customer’s reputation is so poor that it
tarnishes the reputation of the selling firm
