Customer Satisfaction, Retention,

and Loyalty
Done By Tasneem Faiez Alrabee
• Major topic:
• Understand who is customer;
• Understanding customer defined quality;
• Identifying External customer needs;
• Identifying Internal customer needs;
• Communicating with customers
• Using Customer feedback to make design
improvements
• Customer Satisfaction process
• Customer defined value;
• Customer value analysis
• Customer retention
• Establishing a customer focus
• Customer loyalty Model
• Customer as innovation partners.
Figure 7.1 Traditional View of Suppliers and Customers Showing That Customers and Suppliers Are Strictly
External Entities
Figure 7.2 Contemporary View of Suppliers and Customers Showing That Employees Are Suppliers and Customers to
Each Other
 Understanding Who is A Customer
• In a total quality setting customers and suppliers
exist inside and outside of the organization. My
employee whose work precedes that of another
employee is a supplier for that of employee.
Correspondingly, any employee whose work
follows that of another employee and is dependent
in some way on it is a customer.
• So we have external and internal customers.
• Why we considered that the employees are
customers?
• In TQM setting, quality is defined by the
customer. The customers defines quality. The
customers must be the organizations top priority.
The organization’s survival depends on the
employee. Customer satisfaction is essential.
• What is a reliable customer? Reliable customers
are the most important customer. A reliable
customer is one who buys repeatedly from the
same organization. Customers who are satisfied
with the quality of their purchases from an
organization become reliable customer.
• Voice Of the Customer (VOC): research method used to collect
customer feedback. VOC program can help you capture how your
customers feel about your business, product, service, giving you
insights that can help you create a stronger customer experience
• Customer Journey: representation of the touchpoints a customer
engages with a brand. It documents the full experience of being a
customer
• Customer Experience (CX): is how you feel about the whole
process. Is the sum of all interactions that a customer has with an
organization over the life of the relationship
• Customer centricity: putting the customer first and at the center of
everything you do
• Customer Experience Management (CXM): “the practice of
designing and reacting to customer interactions to meet or exceed
customer expectations and, thus, increase customer satisfaction, loyalty and
advocacy.” (Gartner)

Keeping in mind the big picture, makes it easier for you to adopt agile
practices and helps you remain focused on meeting customer’s
expectations
• How is customer satisfaction ensured?
• To ensure customer satisfaction, it must be
renewed with every new purchase. This cannot be
accomplished if quality, even though it is high, is
static. Satisfaction implies continual
improvement. Continual improvement is the only
way to keep a customer satisfied and loyal.
• Briefly describe what is meant by an
organization that has customer focus.
• Traditional management practices that take the
management by results approach are inward-
looking. An organization with a customer focus is
outward-looking.
• How does an organization go about establishing
a customer focus?
• The key to establishing a customer focus is putting
employees in touch with customers and
empowering those employees to act as necessary
to satisfy the customers. There are a number of
ways to put employees in touch with customers.
Actual contact may be in person, by telephone, or
through reviewing customer- provided data. The
employee-customer interaction is a critical
element in establishing a customer focus.
 
• Customer Satisfaction: customer satisfaction is
important in all manufacturing and service
industries. Satisfaction is the outcome of
customers’ overall assessments of their
perceptions and experiences of the service
compared to their prior expectations. Recently in
business, customer satisfaction has become an
approach to quality development. To satisfy
customers, understanding of their requirements,
and which requirements effect satisfaction is
required.
Discovering the Kano Model
 Kano Model
• It's commonly believed that customers
don’t really know what they want; they have to be
told.
• The truth is customers do know what they want,
but they may not be proficient at describing their
needs. By understanding the three types of
customer needs and how to reveal them, you’ll
better know your customers' true needs and how to
address them.
• The Kano model is useful in gaining a
thorough understanding of a customer’s
needs. You can translate and transform the
resulting verbatims using the 
voice of the customer table that, subsequently,
becomes an excellent input as the what's in a 
quality function deployment (QFD) 
House of Quality.

• We will do this together

• Kano’s study a paired questionnaire consisting
of a positive question and an inverse question.
To satisfy customers, the organization has to
understand how solutions to their problem
effect satisfaction and that there are four ways
in which solutions to problem can lead to
satisfaction:
• 1. Basic attributes or expected requirement
by the customer: these requirements are basic
and undertaken for granted from the offered
product or service and must be fulfilled,
• In addition, their absence is very dissatisfying
to the customer. Examples would be safety on
an airplane and good picture on a TV.
• 2. Desired quality: is typically what
organization gets by just asking customers
what they want, these features being directly
connected to their degree of satisfaction. An
example would be how much faster or slower
a service is delivered, such as take-away food
service.
• 3. Exciting or attractive requirements , are
difficult to define. However, their presence
produces a high degree of satisfaction as they are
beyond the customers’ expectations. Their
absence does not dissatisfy; but their presence
excites. (a lifetime warranty)
• 4. Reverse attributes: the customer does not
want these features and will pay to avoid taking
them on. Example tourism noise in the
accommodation facilities or group tour.
• Find more examples about Kano Model
requirements.
 Identifying External Customer Needs
• Historically, customers were excluded from the
product/service development. The key to
establishing a customer focus is putting
employees in touch with customers and
empowering those employee to act as necessary.

• When involving the customer in producing the

product/ service, the organization will satisfy
them.
Figure 7.3 Six-Step Strategy for Identifying Customer Needs
• 6 step Strategy for Identifying Customer needs:
• 1. Speculate About Results: Write down what you
think customers will say so that you can compare
your expectations with what is actually said.
• 2. Plan how to gather the information:, develop
the plan and should be systematically under-taken
and well-organized. What types of information are
needed and who will be asked to provide it.
( questionnaire, interview, observation, telephone or
personal visit…).
Figure 7.4 Information-Gathering Plan
• 3. Gather the information: conduct a smaller pilot study
involving just a few customers. They will identify problems
with the information-gathering methodology that should be
corrected before proceed on a larger scale.
• 4. Analyze the results: results should be analyzed
carefully and objectively. Do they match the
speculated results from the first step? How do
they agree and disagree? What problems did
customers identify? What strong points? What
their trends? How many customers complained of
the same problem ? What changes in the product
or services relating to it were suggested?
• 5.Check the Validity of conclusions: Select
several customers and share the conclusions
with them. Do they agree with the conclusions?
Also share the conclusions with other people in
the organization and get the feed back. Adjust
your conclusions as needed based on this
external and internal feedback.
• 6. Take Action: Based on the final conclusions,
what changes needed to be made? Which of these
changes are short term? Which can be made
immediately? And which will require a longer time?
• Take any corrective action that can be made
immediately and lay out a plan for completing any
that is in long term in nature.
• Meet with customers and let them know what is
going to be done and when.
• Make sure that changes are made, in the same
order of PRIORITY as that dictated by customer
needs.
• Identifying Internal Customer Needs:
• Quality Circles, Self- managed teams, cross
departmental teams, and improvement teams. Are all
examples of mechanisms for improving
communication and in turn Quality. Measuring
employee satisfaction and the whole environment
system

• Identifying External Customer Needs:

• QFD ( Quality Function Deployment)
• SERVQUAL Questionnaire
• Analytical hierarchy process
• Affinity Diagrams
• Quality Function Deployment ( Green Belt):
• QFD provides a framework for an organization to understand its
customers’ requirements and to resolve problems, which customers
have experienced. QFD gathers customer requirements and
interprets them into the design and technical requirements in
product and service development so that they meet customer
requirements In addition, the enhanced product is meeting customer
requirements, by involving customers in the design and development
process. This section includes an evaluation of QFD development, by
providing definitions and benefits of QFD, explains the application of
QFD, and finally, evaluates QFD tools, of the House of Quality
(HOQ), the Analytical Hierarchy Process (AHP) and the Hierarchy
Diagram.
• QFD was conceived and developed according to the concepts of
TQM tools during the late 1960s in Japan by Yoji. It was first
introduced at Mitsubishi’s Kobe Shipyard in 1972, and later in
1983, was introduced into the USA . In the beginning, there was
little interest in QFD, with few publications until a published paper
by Mitsubishi Heavy Industry in 1972. After the first publication
interest grew and further QFD related articles were published. By
the mid-1990s more than 10000 case study reports had been
published.
• The successful implementation in these organizations has meant
QFD to becoming recognised as an effective tool. Since then, QFD
has also been used in service organizations. It was used in Japan in
1981 for a shopping mall, a sports complex, and a retail store. Since
then, QFD has been further developed and used widely in different
industries such as automotive, hotels, professional services,
technical library and information services, electronics, banking,
insurance, healthcare, aerospace, software engineering, utilities,
food processing and distribution, construction and marketing. QFD
has been used by US companies such as 3M, AT&T, Baxter
Healthcare, Budd, Chrysler, DEC, Ford Motors, General Motors,
Goodyear, Hewlett-Packard, IBM, ITT, Kodak Eastman, Motorola,
NASA, NCR, Polaroid, Procter and Gamble, and Xerox (Chan and
Wu, 2002).
• It is applied in all industries, and Chan and Wu (2002) found more
than 650 publications talking about quality function deployment
(QFD) models.
• The founder of QFD, Akao (1990:42), defined it as follows:

• “A method for developing a quality design aimed at satisfying the

customer and then translating the consumer’s demands and
requirements into design targets and major quality assurance
points to be used throughout the production phase”
• The Japanese define QFD as a philosophy, which ensures high
product and service quality in the design stage. “The aim is to
satisfy the customer by ensuring quality at each stage of the
product development process” (Akao, 1990). Therefore, QFD
considers that quality must be designed into the product or service,
rather than just being present at the delivery stage.

QFD process depends on

External factors (Industry, Market, Internal factors (Projects, Strategy,

Customers, Competitors and Management, Design, Production
Technology) and Distribution)
• Explain briefly the concept of QFD and how it relates to
customer satisfaction.
• Quality Function Deployment was developed to ensure that
products entering production would fully satisfy the needs
of their customers by building in the necessary quality
levels as well as maximize suitability at every state of
product development. It is an integrated approach to
product development and quality in all reproduction
activities. QFD is actually a model for incorporating
customer input and feedback into product development. It
establishes an operational structure for the concept of
building quality in. The underlying philosophy is that even
a perfectly manufactured product may not satisfy the
customer because it may be nothing more than a perfect
example of what the customer does not want.
• Process of QFD concern with
• Based on The Voice of the company and the
customer
• math that is accurate and valid many small focus
tools rarely matrices
• focused on speed and efficiency
• focused on the accurate choice
• voice is the customer is the central concept
• A Company’s processes should focus on the highest
value activities. With QFD, Value is driven by what
is important to the customer.
• The quality of what you produce is concentrated by the
weakest link in the process not determined by your
strengths this is a fundamental principle of systems and
systems thinking getting better or getting more mature
in areas which are not important to your customer is a
fundamental improvement error and a waste of time
and effort
• QFD is socio-technical system > human experience +
define methods
• how many critical customer needs can your organisation
address in to end at one time it's essential to understand
which are the critical few that will make or break your
project and then allocate resource to those that give the
best customer value for the effort this is a coherent
approach much like a laser sight in used to aim rifle
• We must explore the voice of customer:
• 1. Explore the Voice of Customer
• 2. discover the true needs of customers
• 3. analyse the needs of the customers
• 4. uncoverr unstated needs and their importance
• 5. deploy high vneeds to alue all essential tasks in
your project and plan
• 6. where to focus best efforts to ensure customer
satisfaction with what we create
• Benefits of QFD
• better vision of competitors
• shorter time to market
• reduced engineering changes
• Better are cross function communication
• cost reduction
• strengthen concurrent engineering
• improved teamwork
• increased employee satisfaction
• increased customer satisfaction
• increase quality and reliability
• Principles of modern QFD

• focus with the priority [ Hierarchy Diagram, AHP]

• understand the causes [ Cause and effect diagram]
• understand the situation [ Gemba]
• market-in versus product-out [ deliver customer
need].
• define the process [ QFD Process Flow Diagram and
Customer Process model]
• better communication [ Social and Technical ]
• listen to voice customer [ translate the VOC]
• Getting through customers needs we don't have to
meet all the customers requirement to satisfy them.
but to understand why this is the case we must
understand (1) the relative effect of doing certain
types of requirements and customer satisfaction (2)
the relative importance of the customers
requirements (3) what requirements are and how they
are different from features. In QFD we take a very
different approach to exploring and then engineering
requirements we don't ask customers what features
they want. instead, we ask about the source of value [
their problems their opportunities things that make
them look good to others bitter good about
themselves ]
• you must therefore:
• explore the voice of customer
• discover the true needs of the customers
• analyse the needs of the customers and uncover
unstated needs and their importance
• deploy high value needs to all social tasks in your
project and plan
• focus best effort to assure customer satisfaction with
what we create
• in summary [ explorer , investigate what matter most
to your customers and why , analyse the needs and
priorities, deploy, communicate value to customer to
all the key players