2. Customer and Market Focus
in the Baldrige Criteria
The Customer and Market Focus category 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 Relationships
b. Customer Satisfaction Determination
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3. Process Vs. Customer
Listen to the voice Listen to the voice
of the customer Of the process
Predict customer Predict process
behavior behavior
Determine customer Determine optimum
Quality expectations Process outcomes
Propose and test
Process improvement
Three-part customer satisfaction system
1. company processes (operation)
I. company employees
II. customer expectation
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4. Key Customer Groups
• Organization level
– consumers
– external customers
– employees
– society
• Process level
– internal customer units or groups
• Performer level
– individual internal customers
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5. 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?
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6. Defining Quality
The 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
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7. 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.
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8. A Quality Focus
Perceived Customer
quality complaints
Perceived Customer
value satisfaction
Customer
expectations Customer
loyalty
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9. 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
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10. 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)
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11. 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
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12. 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
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13. 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
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14. 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
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15. 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.
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16. Service Quality And Customer Retention
Service companies measure cost of
customers who will not come back because
pf 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.
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17. Customer Retention And Profitability
Internal Service Quality
Employee Customer
Satisfaction Employee Retention
Retention
External Service Quality
Profit
Customer Satisfaction
System
Profitability and customer Retention
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18. Buyer-Supplier Relationships
Your Inputs Your Outputs Your
Suppliers Processes Customers
Requirements Requirements
and feedback and feedback
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