customer statisfaction, retention and loyalty(izzat)
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In a total quality setting, customers define quality and employees
produce it. Historically, organization have viewed customers as
people who buy and use their products. These are external
customers. There are also internal customers within any
organization- the staff.
With this background, an accurate recasting of the first sentence is
as follows: in a total quality setting, external customers define
quality and internal customers produced it.
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UNDERSTANDING WHO IS
CUSTOMERS?
Historically the concept of suppliers and customers has been
interpreted as shown in Figure 1. An organization uses certain
process by which is produces its products.
People who interact with the company after these processes have
produced the product have been viewed as customers. From this
traditional perspective, customers and supplies are both external
entities.
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In a total quality settings, customers and supplies exist inside and
outside the organization. Any employee whose work precedes that
of another employee is a supplier for that employee.
Correspondingly any employee whose work follows that of another
employee and is dependent on it in some way is a customer.
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SIX-STEP STRATEGY FOR IDENTIFYING
CUSTOMER NEEDS
Speculateabout the
result
Plan how togather the
information
Gather theinformation
Analyze theresult
Check thevalidity of
yourconclusions
Take actionas indicated
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SPECULATE ABOUT THE RESULT
Before gathering information about customer needs. It is a good
idea to spend some time speculating about what might be learn
Write down what you think customers will say so that you can
compare expectation.
This step is to help representative determine where there touchthe customer needs.
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PLAN HOW TO GATHER THE INFORMATION
Before implimentating the entire information-gathering plan, its a
good idea to conduct a smaller pilot study involving just a few
customers.
This will identify problems with the information-gathering
methodology that should be correct before produced on a large scale.
Activity
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GATHER THE INFORMATION
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ANALYZE THE RESULT
Result should be analyzed carefully and objectively.
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TAKE ACTION AS INDICATED
Based on the final conclusion, what change need to be made?
Take any corrective action that can be made immediately.
Lay out a plan.
Meet the customer- let them know what is going on
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IDENTIFYING INTERNAL CUSTOMERS
NEEDS
Identifying the needs of internal customers is a matters of ensuring that
employees who depend on one another as individuals, as well as departments
that depend on each other as units, communicate their needs to one
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COMMUNICATING WITH CUSTOMERS
Continual communication with customers is essential in a competitive
marketplace. Establishing effective mechanisms for facilitating communication
and using them are critical strategies in establishing a customer focus.
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KNOW YOUR CUSTOMERS OPERATIONS
As a supplier to other companies (customers), it is important to know their
operations. The more that is known about a customers operations , the easier
it will be to provide products that meet its needs.
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USING CUSTOMER FEEDBACK TO MAKE
DESIGN IMPROVEMENTS
It is important for organizations that compete in the global arena to collect
customer input and feedback and use it to make continual improvements to
the design of their products.
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QUALITY FUNCTION DEPLOYMENT AND
DESIGN IMPROVEMENT
It is important to know that a product will meet the needs of customers before
you put it into production. This is the main reason for conduction the research
necessary to identify customer needs and communicating with internal and
external customers. Quality function deployment was developed with this in
mind.
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QFD ( QUALITY FUNCTION DEPLOYMENT)
Deployment of customer requirements (quality needs).
Deployment of measurable quality characteristic.
Determination of the correlation between quality needs and characteristic.
Assignment of numerical value to each quality characteristic
Integration of quality characteristic into the product.
Detailed design, production, and quality control of the product.
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CUSTOMERS SATISFACTION PROCESS
Determine who your customers are.
Determine what attributes of your product or service are most important toyour customers
Arrange these attributes in the order of importance indicates by yourcustomers.
Determine your customers level of satisfaction with each of these attributes.
Tie result of customer feedback to your process.
Develop a set of metric (measurement) that tell how you performing .
Update customer input and feedback.
Maintain open, continual communication with all stakeholder.
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CUSTOMER RETENTION
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INTRODUCTION
Customer satisfaction is fundamental of total quality.
The success of quality management depend on customer satisfaction.
Customer retention is another part to measure customer satisfaction.
Customer retention defines as the marketing goal of preventing customers
from going to the other competitor.
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Focus
Group
The objective is to improve product and services
Meet together for group discussion
Input
Group
The objective is to improve product and services
There interact using mail, telephone and
facsimile
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OTHER METHOD COLLECTING CUSTOMER INPUT
An individual who dobusiness with theorganization
TESTCUSTOMER
Conduct periodically
to identify issue thatmay become problems
SURVEYCUSTOMER
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ESTABLISHING A CUSTOMER FOCUS
VISION,COMMITMENTAND CLIMATE
Totally committed to satisfying customer
They establish a climate of customer satisfaction.
ALIGNMENTWITH
CUSTOMER
Employee understand what product attribute thecustomer value most and the feedback will contribute toproduct development process.
WILLINGNESS TOFIND ANDELIMINATE
CUSTOMERS
PROBLEM
Company identify and eliminate problem for customer
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CONT.
Continualimprovement of
product and process
Customer as driven of thecompanies on whatnecessary to improvetheir product andprocesses on producing it.
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RECOGNIZING THE CUSTOMER DRIVEN
ORGANIZATION
Customer DrivenOrganization
Promptly follows through on allpromises
Can be trusted
Has credibility
Attends to even the smallest detail
Responsiveness
Management Characteristics
Effective communication withcustomer
Use of customer specific metric
Systematic use of customerfeedback
Customer focused organizational
structure
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VALUE PERCEPTION AND CUSTOMER
LOYALTY
Basically its about what can the organization made you as customer that can
desire loyalty.
Company spend much on marketing to attract customer that they must keep
them for the long time
The best way to generate customer loyalty is to consistently provide customers
with superior services.
Superior Value is a combination of Superior Quality, Superior Cost and
Superior Services.
All these 3 combination will continually improved in order to maintain the
loyalty of customer.
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CUSTOMER LOYALTY MODEL
There are 4 phase model:
Business Performance
Global Perception
Loyalty Behaviors
Financial Outcomes
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GlobalPerceptions
If the customer satisfied with the organization, itwill help to recommend your organization to otherpotential customer.
LoyaltyBehavior
Customer loyalty is a behavioral concept, but it canbe measured.
Measure the volume of business for customergoing up or down
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FINANCIAL OUTCOME
Financial outcomes are affected several key factor including:
Market Share
High customer loyalty leads to a larger market share, which in turn, leads to better
financial outcomes
Reduced Costs
Repeat customer cost less to deal with than new customer, which means that customer
loyalty decreases the cost of doing business
Employee Attitude
Positive employee attitude promote positive customer relation
Profit
Increased market share can result in increased profits, provided the cost of doing
business is held level or even decreased by customer loyalty
Share Holder Value
Customer loyalty can result in higher profit, which, in turn, are a key driven of share
holder value
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CUSTOMER LOYALTY VERSUS CUSTOMER
PROFITABILITY Customer loyalty is as a general rule desirable goal.
Werner Reinartz and V.kumar make the critical point that whencustomer are sorted according to their profitability and longevity, itbecome clear that relationship between loyalty and profits is by nomeans assured.
The different type of business sorted into one of four quadrants:
High profitability / Short TermButterflies
High profitability / Long TermTrue Friend
Low profitability / Short TermStranger
Low profitability / Long Term - Barnacles
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BUTTERFLIES
Butterflies are highly profitable customer, but they dont stay around long.
There are several strategies dealing with butterflies:
1. Aim to achieve transactional satisfaction rather than long term loyalty.
2. Work the accounts only as long as they are active-dont waste time chasing a
rainbow.
3. Make wise decision about the optimum time to break off the relationship.
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TRUE FRIEND
True friend are highly profitable and they are loyal. There several strategies are recommended for dealing with true friend:
1. Communicate consistently, but dont over it
2. Build both attitudinal loyalty and behavioral loyalty.
3. Nurture defend and partner with them to create customer delight.
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STRANGERS
Strangers provide only low profitability and are short term customer.
Several strategies recommended dealing with strangers:
1. Make the best profit possible on every individual transaction
2. Make no investment in the relationship.
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IMPLEMENTING THE INNOVATION
PARTNERSHIP APPROACH
1. Develop a tool kit for customer that is easy to use. The tool kitshould:
1. Enable customer to run repeated try and error
experiments and test quickly easily and efficiently.2. Use technology that allow customer to work in a familiar
design language
3. Include a library of standard design modules to make iteasier for customer to create complex design quickly.
4. Use technologies that tie into manufacturing processes sothat customer design can be sent directly tomanufacturing with little or no tailoring required.
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PRODUCT INNOVATION MODEL FOR
CUSTOMER RETENTION
Providing superior value is innovation
Innovation is how organizations continually improve the quality and cost of
their product as well as the quality of their services.
Praveen Gupta has developed an innovation model that organization can use
to keep product up to date, attractive and relevant for the customers:-
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CONT.
1. Target the opportunity
Focus on identifying customer needs and use them to guide innovation.
2. Explore the idea
Conduct a through research to ensure that the proposed innovation will be successful in themarketplace.
3. Develop alternative
Develop a variety of alternative for the innovation- prototype and test them thoroughly todetermine which is the best.
4. Optimize the solution
Take the chosen alternative and optimize it for production and delivery
5. Commercialized the innovation
Develop and deploy an effective marketing program for the innovation. Never let aninnovations fail for lack of effective marketing.
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