Chapter 3

  1. Define Customer Perceived Value.
    CPV measures how customers assess benefits—such as product performance, ease of use, or time savings—against costs, such as purchase price, installation cost or time, and so on, in making purchase decisions.
  2. How do you measure customer loyalty?
    • Overall satisfaction
    • Likelihood of a first-time purchaser to repurchase
    • Likelihood to recommend
    • Likelihood to continue purchasing the same products or services
    • Likelihood to purchase different products or services
    • Likelihood to increase frequency of purchasing
    • Likelihood to switch to a different provider
  3. Why do customer satisfaction efforts fail?
    • 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
  4. What is needed to design a satisfactory survey?
    • Identify purpose – who will make decisions using the survey results?
    • Identify the customer
    • Determine who should conduct the survey (internal, third party, etc.)
    • Select the appropriate survey instrument (written, telephone, face-to-face, etc.)
    • Design questions and response scales to achieve actionable results:
  5. what makes measuring customer satisfaction and engagement effective
    results in reliable information about customer ratings of specific product and service features and about the relationship between these ratings and the customer’s likely future market behavior.
  6. How do you measure customer satisfaction and engagement?
    • 1. Discover customer perceptions of how well the organization is doing in meeting customer needs, and compare performance relative to competitors.
    • 2. Identify causes of dissatisfaction and failed expectations as well as drivers of delight to understand the reasons why customers are loyal or not loyal to the company.
    • 3. Identify internal work process that drive satisfaction and loyalty and discover areas for improvement in the design and delivery of products and services, as well as for training and coaching of employees.
    • 4. Track trends to determine whether changes actually result in improvements.
  7. How do you manage customer relationships?
    • Customer-supplier partnerships - long-term relationships characterized by teamwork and mutual confidence
    • Customer-focused technology
    • Customer relationship management (CRM) software, which typically includes market segmentation and analysis, customer service and relationship building, effective complaint resolution, cross-selling goods and services, order processing, and field service.
  8. Define moments of truth.
    every interaction between a customer and the organization
  9. What does a customer focused organization focus on?
    An organization fosters customer engagement by developing trust, communicating with customers, and effectively managing the interactions and relationships with customers through its processes and its people.
  10. How do you build a customer focused organization?
    • 1. Making sincere commitments to customers
    • 2. Ensuring quality customer contact
    • 3. Selecting and developing customer contact employees
    • 4. Managing complaints and service recovery
  11. What are customer listening posts?
    • Comment cards and formal surveys
    • Focus groups
    • Direct customer contact
    • Field intelligence
    • Complaints
    • Internet and social media monitoring
  12. What is Kano's model of customer requirements?
    • Meeting customer expectations (providing satisfiers) is often considered the minimum required to stay in business.
    • To be truly competitive, organizations must surprise and delight customers by going beyond the expected.

    As customers become familiar with them, exciters/delighters become satisfiers over time. Eventually, satisfiers become dissatisfiers.
  13. What is Kano's model of customer requirements?
    • Dissatisfiers (“must haves”): expected requirements that cause dissatisfaction if not present
    • Satisfiers (“wants”): expressed requirements
    • Exciters/delighters (“never thought of”): unexpected features
  14. What are key dimensions of Service Quality?
    • Reliability – ability to provide what was promised
    • Assurance – knowledge and courtesy of employees and ability to convey trust
    • Tangibles – physical facilities and appearance of personnel
    • Empathy – degree of caring and individual attention
    • Responsiveness – willingness to help customers and provide prompt service
  15. What are key product quality dimensions?
    • Performance – primary operating characteristics
    • Features – “bells and whistles”
    • Reliability – probability of operating for specific time and conditions of use
    • Conformance – degree to which characteristics match standards
    • Durability - amount of use before deterioration or replacement
    • Serviceability – speed, courtesy, and competence of repair
    • Aesthetics – look, feel, sound, taste, smell
  16. What is the Net Present Value of the Customer?
    the total profits (revenues associated with a customer minus expenses needed to serve a customer) discounted over time.

    NPVC is often used to segment customers by profit potential.
  17. Define Customer Segmentation?
    Segmentation allows a company to prioritize customer groups, for instance by considering for each group the benefits of satisfying their requirements and the consequences of failing to satisfy their requirements.
  18. How do you segment customers?
    Demographics, Geography, Volumes, “Vital few” and “useful many”, Profit potential
  19. How do you identify Internal Customers?
    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?
  20. What does ACSI do?
    Measures customer satisfaction at a national level, Introduced in 1994 by University of Michigan and American Society for Quality, Based on results of telephone interviews conducted in a national sample of 46,000 consumers who recently bought or used a company’s product or service.
  21. What is ACSI?
    American Customer Satisfaction Index
  22. What is customer satisfaction and the bottom line
    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. Dissatisfied customers tell more people about their experiences than satisfied customers.
  23. What is Customer Engagement? What are the characteristics?
    customers’ investment in or commitment to a brand and product offerings.

    customer retention and loyalty, customers’ willingness to make an effort to do business with the organization, and customers’ willingness to actively advocate for and recommend the brand and product offerings.
  24. What is Customer Satisfaction? What percentage of customers are existing? Cost of finding new customers?
    the result of delivering a product or service that meets customer requirements.

    65% of business comes from existing customers and it costs 5 times more to find new ones compared to keeping old ones
  25. What are the key customer focused practices for Performance Excellence?
    Identify the most important customer groups and markets, considering competitors and other potential customers, and segment the customer base to better meet differing needs. Understand both near-term and longer-term customer needs and expectations (the “voice of the customer”) and employ systematic processes for listening and learning from customers, potential customers, and customers of competitors to obtain actionable information about products and customer support. Understand the linkages between the voice of the customer and design, production, and delivery processes; and use voice-of-the-customer information to identify and innovate product offerings and customer support processes to meet and exceed customer requirements and expectations, to expand relationships, and to identify and attract new customers and markets. Create an organizational culture and support framework that allows customers to easily contact an organization to conduct business, receive a consistently positive customer experience, provide feedback, obtain assistance, receive prompt resolution of their concerns, and facilitate improvement. Manage customer relationships that build loyalty, enhance satisfaction and engagement, and lead to the acquisition of new customers. Measure customer satisfaction, engagement, and dissatisfaction; compare the results relative to competitors and industry benchmarks; and use the information to evaluate and improve organizational processes.
  26. What is Customer Focus in ISO
    “Top management shall ensure that customer requirements are determined and are met with the aim of enhancing customer satisfaction.” The standards require that the organization determine customer requirements, including delivery and post-delivery activities, and any requirements not stated by the customer but necessary for specified or intended use. The organization must establish procedures for communicating with customers about product information and other inquiries, and for obtaining feedback, including complaints. The standards require that the organization monitor customer perceptions as to whether the organization has met customer requirements; that is, customer satisfaction.
  27. How do companies satisfy customers
    Meeting specifications, reducing defects and errors, and resolving complaints, Designing new products that truly delight the customer, Responding rapidly to changing consumer and market demands, Developing new ways of enhancing customer relationships
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Chapter 3