Republic of the Philippines

ISABELA STATE UNIVERSITY

Cauayan Campus

Mgt 56A - Total Quality Management

Chapter 8: Customer Value Strategy

Objectives:
At the end of the chapter, the students should be able to:
 Differentiate between internal and external customer.
 Describe customer satisfaction and its nature.
 Define customer focus.
 Explain customer service.

Learning Content

Total quality management ensures that employees understand their target customers well before making
any changes in the process and systems to deliver superior quality products for better customer
satisfaction. In fact, organizations introduce total quality management or any other quality management
process to increase their customer base and levels of customer satisfaction. Total quality management
increases an organization’s database of loyal customers who would not go anywhere, no matter what.
Without customers a business can’t even exist.

IDENTIFYING CUSTOMERS
There are two types of customers namely external and internal.

Internal customers have a relationship with, and within, your company, either through employment or
as partners who deliver your product or service to the end user or the external customer. Less obvious
but certainly still significant, stakeholders and shareholders are also internal customers. All of these may
or may not purchase your product or service.

External customers are the people that pay for and use the products or services your company offers.
When brainstorming problems and designing solutions, these customers are who you’re designing for.
An external customer is a person who is not directly connected to your organization other than by
purchasing your product or service. This customer could be a one-time purchaser or a person who’ve you
worked with long-term and to whom you’ve provided add-ons or customization options. External
customers are also known as “clients”.

CUSTOMER SATISFACTION
Customer satisfaction is defined as a measurement that determines how happy customers are with a
company’s products, services, and capabilities. Customer satisfaction information, including surveys and
ratings, can help a company determine how to best improve or changes its products and services.

It’s obvious that satisfied customers are a good thing. However, it may be a bit harder to articulate exactly
why. The short answer: companies that prioritize customer satisfaction grow and increase
revenue. Those that do not, don’t.

Beyond the growth correlation – if you actively work to increase customer satisfaction, you’re more likely
to see an increase in revenue – there are plenty of other reasons to make it a top priority.

Take word-of-mouth, for example. It matters, especially in the ultra-connected and always-on digital
world we call home. We can instantly share our experience with a brand with thousands of others on
social media and review sites

You’d better do your best to ensure each customer interaction is a positive one. If you don’t place a
premium on relationship marketing and customer satisfaction, you won’t be aware of problems or
complaints until it’s too late. Once the word is out, it’s out. As the saying goes, you can’t manage what you
don’t measure. If you prioritize keeping your customers happy, you’ll reduce the number of unhappy
ones, and you’ll know about and work to resolve dissatisfaction that much faster.

So, what should your customer satisfaction goals include? Hard to say. No one knows your business better
than you. Your goals may not be my goals, and vice versa.

Generally speaking, you want to keep things simple. Use the SMART goal system (Specific, Measurable,
Achievable, Relevant, and Time-limited). Set only 1-2 at a time (otherwise they start competing with each
other). Write them down (studies show you’re 2-3x more likely to follow-through). Keep them realistic.
Your first goal should be to start collecting customer satisfaction data if you haven’t already. That’s a no-
brainer, and we’ll get into the how in a moment.

Identify the problem spots, the bottlenecks, and the frequent complaints.

After that, your goals may include reducing churn or increasing retention, reducing the number of contact
points with repeat customers, decreasing complaint response time, experiment with different
communication channels, boost the number of “completely satisfied” customer interactions, reduce
shipping time, and so on.

CUSTOMER SATISFACTION METHODS

Here are some of the methods that could be used to satisfy customers:
1. Encouraging face-to-face dealing with customers.
2. Respond to messages promptly and keep the clients informed.
3. Being friendly and approachable by customers.
4. Have a clearly-defined customer service policy.

Approaches of Customer Satisfaction

Here are some approaches to customer satisfaction:
1. Regular customer feedback system. This involves allowing communication from customers
through suggestion boxes.
2. Market research. This is done to understand customer better. This can be done through
sampling a few customers using appropriate sampling techniques and a detailed study is
conducted on their likes and dislikes.
3. New or Last customer survey. These are useful ways of finding out what attracts customers to
the organization and indeed why they left.
4. Focus groups. This is intended to know what customers are thinking. A group of customers is
assembled in a meeting to answer a series of questions.
5. Customer visits. This involves making visits to the customer’s premises to collect information.
These are meant to know how the product or service is performing.
6. Front line personnel. This is the use of employees who are in direct contact with customers to
understand the customer’s expectations. These employees should be trained on how to carry out
this task.
7. Critical incidents technique. This attempts to identify issues that delight the customer and
those that satisfy them.

Determinants of Customer Satisfaction

There are TWO indicators of customer satisfaction namely:

1. Key indicator for physical product

a. Reliability
b. Aesthetics
c. Adaptability
d. Usability
e. Functionality
f. Appropriateness
2. Key indicators for service
a. Friendliness/Courteousness of employees
b. Safety/risk of service
c. Billing/invoicing procedure
d. Responsiveness to requests
e. Appearance of physical facilities
f. Approachability of the service provider
 g. Willingness to listen to customer
h. Honesty and an ability to communicate in clear language

CUSTOMER FOCUS
Whatever companies do for quality improvement, it must always be remembered that only
customers determine the level of quality.
The customers are the valuable assets for any organization. The success of an organization
depends on the satisfied customer. The satisfied customer tends to purchase frequently and more.
Focusing on the customer involves designing products or service that meet or exceed the
customer’s expectations.
By having a strategic approach to improvement, processes are developed and tested to ensure
the product or service’s quality. This also involves making sure suppliers offer quality supplies needed to
produce products.
Improving continuously means always analyzing the way work is being performed to determine
if more effective and efficient ways are possible, making improvements and striving for excellence all the
time.
Encouraging teamwork and mutual respect is also important because it fosters a single-
organizational culture of excellence by knowing that every employee from top to bottom of the hierarchy
holds the same TQM core principle at heart.

CUSTOMER SERVICE
Quality assurance means developing operational controls to ensure that the result match the
desired outcomes. Customer service operations are designed to keep customer satisfied while protecting
the organization. To make sure customer service achieves these goals in business, the person responsible
for quality assurance must define the quality functions as they apply to how the company serves its
customers.

Customer Service Quality Goals

Customer service means helping customers solve problems. To carry out this function effectively,
customer service has to be easily accessible, knowledgeable, reliable and deliver results. Quality
assurance identifies these requirements and measures how well customer service performs with respect
to each one. The company can define quality assurance in customer service as a means to evaluate the
characteristics that make customer service effective.

Reliability – the quality assurance system can compare what the company promises the
customer to what the customer expects and what the customer service delivers. If the delivered service
matches the customer expectations and what is promised to deliver, quality with respect to this customer
service is high. If there are gaps, it can be use the quality assurance system to track improvements.

Competence – customers expect competent delivery of their services, and the definition of
quality assurance includes tracking competence. Quality assurance evaluates competence by training and
results. The employee delivering customer service has to have the training that allows competent
delivery, and he actually has to supply competent service.

Delivery – customers expects reliable and competent service delivery in an easily accessible
form.

Solutions – customers are mainly interested in solutions to their problems. Quality assurance
includes documenting customer’s complaints, tracking the action taken to resolve them, and surveying
customers on their satisfaction with the result.

ACTIVITY

Read the about Starbucks and answer the following questions.

1. What are the requirements of customers on Starbucks which the company always try to meet?
2. How does Starbucks tracks its progress overall performance?
SELF-ASSESSMENT

True of False
Write T if the statement is correct and F is the statement is wrong.

_____1. New or Last customer survey are useful ways of finding out what attracts customers to the
organization and indeed why they left.
_____2. Regular customer feedback system involves allowing communication from customers through
suggestion boxes.
_____3. Market research is being done to understand customer better. This can be done through sampling a
few customers using appropriate sampling techniques and a detailed study is conducted on their likes
and dislikes.
_____4. When we say reliability, customers expect competent delivery of their services, and the definition
of quality assurance includes tracking competence.
_____5. Focus groups are intended to know what customers are thinking.
_____6. Customer visits involves making visits to the customer’s premises to collect information. These are
meant to know how the product or service is performing.
_____7. When we talk about competence, customers are mainly interested in solutions to their problems.
_____8. Critical incidents technique attempts to identify issues that delight the customer and those that
satisfy them.
_____9. In delivery, customers expect competent delivery of their services, and the definition of quality
assurance includes tracking competence.
_____10. Front line personnel is the use of employees who are in direct contact with customers to
understand the customer’s expectations. These employees should be trained on how to carry out this
task.

References
Serrano, Angelita Ong Camillar Total Quality Management 2016
https://www.userlike.com/en/blog/6-proven-methods-for-measuring-your-customer-satisfaction
https://www.zendesk.com/blog/what-is-customer-focus/
https://www.myperfectresume.com/career-center/interviews/questions/define-excellent-customer-
service