CHAPTER 7 CUSTOMER

SATISFACTION, RETENTION, AND

LOYALTY

Directed By :Doaa Abu Alwafa

UNDERSTANDING CUSTOMER-DEFINED QUALITY

In a total quality setting, quality is defined by the customer. The following points about customer-defined quality:

1. The customer must be the organization’s top priority.

2. Reliable customers(who buy repeatedly from the same organization) are the most important customers.

3. Customer satisfaction is ensured by producing high-quality products.

IDENTIFY EXTERNAL AND INTERNAL CUSTOMER NEEDS

Six-step strategy for identify external customer needs:

1. Speculate about results.

2. Develop an information-gathering plan.

3. Gathering the information.

4. Analyze the results.

5. Check the validity of your conclusions.

6. Take action as indicated. Identify the needs of internal customers(employees) is done

by encouraging and facilitating communication between them. (see pages 139-140)

Communicating with customer: continual communication with customer is essential in a competitive marketplace. Establishing effective mechanisms for facilitating communication and using them are critical strategies in establishing a customer focus.

Communication with customer must extend to both internal and external customers

Know your customer’s operation: as supplier to other companies (customer). Its important to know their operations. The more that is known about customer's operation's. the easier it will be to provide products that meet its need.

See pages 141-142

IDENTIFY EXTERNAL AND INTERNAL CUSTOMER NEEDS

USING CUSTOMER FEEDBACK TO MAKE DESIGN IMPROVEMENTS

Quality function development and design improvement (QFD) QFD is a model for incorporating customer input and feedback

into product development. QFD allows for: the systematic incorporation of customer needs,

production capabilities and capacity, and all other relevant parameters into product development.

QFD consists of the following basic activities:

1. Deployment of customer requirements (quality needs).

2. Deployment of measurable quality characteristics.

3. Determination of the correlation between quality needs and characteristics.

4. Assignment of numerical values to each quality characteristics.

5. Integration of quality characteristics into the product.

6. Detailed design, design, production, and quality control of the product.

CUSTOMER SATISFACTION PROCESS Customer focus is part of a process that leads to continual

improvements in organization that, in turn, result in customer satisfaction.

Customer satisfaction process:

1. Determine who your customer are.

2. Determine what attributes of your product or service are most important to your customer.

3. Arrange these attributes in the order of importance indicated by your customers.

4. Determine your customers’ level of satisfaction with each of these attributes.

5. Tie of customer feedback to your processes.

CUSTOMER SATISFACTION PROCESS6. Develop a set of metrics( measurements) that tell how you are

performing

7. Implement measurements at the lowest possible level in the organization.

8. Work on those processes that relate to attributes that having high importance but low customer satisfaction ratings.

9. Work on area within process that offer the greatest opportunity to improve.

10. Update customer input and feedback on a continual basis.

11. Maintain open, continual communication with all stakeholders.

12. Aggregate metrics organization-wide into a format for management review.

CUSTOMER-DEFINED VALUE The value of a product or service is the sum of a customer’s

perceptions of the following factors:

1. Product or service quality

2. Service provided by the organization

3. The organization’s personnel

4. The organization’s image

5. Selling price of the product or service

6. Overall cost of the product or service

CUSTOMER RETENTION Customer satisfaction is a fundamental cornerstone of total

quality. An organisation develops a customer focus to be better able to satisfy its customer. Consequently, forward-looking organisation use customer satisfaction data to measure success.. But measuring customer satisfaction alone is not enough. Another important measure of success is customer retention.

Customer satisfaction is the critical component in customer retention

Customer satisfied is not always a customer retained.

Customer retention is the activity that a selling organization undertakes in order to reduce customer defections. Successful customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship. A company’s ability to attract and retain new customers, is not only related to its product or services, but strongly related to the way it services its existing customers and the reputation it creates within and across the marketplace.

Customer retention is more than giving the customer what they expect, it’s about exceeding their expectations so that they become loyal advocates for your brand.

To retain customers over the long term, organizations must turn them into partners and proactively seek their input rather than waiting for and reacting to feedback provided after a problem has occurred

CUSTOMER RETENTION

ESTABLISHING A CUSTOMER FOCUS Companies that have successfully established a customer focus

share a number of common characteristics:

1. Vision, commitment, and climate.

2. Alignment with customers.

3. Willingness to find and eliminate customers’ problems.

4. Use of customer information.

5. Reaching out to customers

6. Competence, capability, and empowerment.

7. Continual improvement of products and processes.

(See page 149)

RECOGNIZING THE CUSTOMER-DRIVEN ORGANIZATION

Characteristics of customer-driven organization

1. Reliability-an organization that dependably delivers what is promised on time every time.

2. Assurance-an organization that is able to generate and convey trust and confidence.

3. Tangibles-an organization that pays attention to the details in all aspects of its operations

4. Empathy-an organization that conveys a real interest in its customers.

5. Responsiveness-an organization that is willingly attentive to customer needs.

6. (See page 150)

7.

CUSTOMER LOYALTY Organization attempt to consistently exceed customer expectation

for the purpose of creating and maintaining customer loyalty. Customer loyalty is all about attracting the right customer, getting

them to buy, buy often, buy in higher quantities and bring you even more customer

Companies work hard to build customer loyalty. Loyal customer is a customer forever.

CUSTOMER LOYALTY MODEL The customer loyalty model consists of four components:

1. Business performance.

2. Global perceptions.

3. Loyalty behaviours.

4. Financial outcomes.

(See page 151-152)