CUSTOMER FOCUSED PROJECT MANAGEMENT:Threshold Attributes

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LESSON 37

CUSTOMER FOCUSED PROJECT MANAGEMENT

BROAD CONTENTS

Who is customer?

Key Goals for Businesses

Type of customers

Customer Driven Project Organizations

Customer identification

Kano Model

Customer Satisfaction Measurement

CRM (Customer Relationship Management)

Gathering Customer Information

Four Steps to Quality Customer Service

37.1

Who is a customer in any project?

World class projects and organizations are obsessed with meeting and exceeding customer

expectations. Firms should learn to have "customer focused projects", often in response to

competitive crises. Customers in any project refer to:

1. Any individual or group that receives and must be satisfied with the work product or output

of a process.

2. Individual or group whose request a process is intended to fulfill.

3. Anyone who is impacted by the product or process.

Looking at your project organization from you customers' point of view and "improving

processes" to enable you to meet and exceed your customers' expectations is the only way to

achieve quality.

It important to meet customer expectations as it is the prime responsibility of every organization

to meet the needs of its customers. Understanding of one's customers leads to customer

satisfaction. Japanese relate quality to customer satisfaction.

Figure 37.1: Importance of Customer Satisfaction (CS) in Project Management

37.2

Key goals for businesses:

Following are the four key goals for any business:

Satisfy customers

Achieve higher customer satisfaction than competitors

Retain customers in long run

Gain market share

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To achieve aims and goals, a business must deliver ever-improving value to its customers.

Value refers to "quality related to price". It is important as consumers no longer buy solely on

the basis of price.

Figure 37.2: Customer Satisfaction

37.3

Types of Customers:

Primary:

"Direct receiver of output of the process" (bank loan seeker, lab test report receiver). It is

the source of product and process requirement.

Secondary:

Secondary customers are from "outside of process" boundaries, who also receive any

process output, but not reason for "process' existence" (bank's head office receiver

secondary output)

Indirect:

When original boundaries do not receive process output directly but are affected if process

output is incorrect or late (logistic department)

External Customers:

Those who are located outside the organizational boundaries, receive end product or service

but is not the actual user. (Power supplier for computers manufacturing, distributors)

Consumer End User:

This refers to the final user of the product. Sometimes the external customers and

consumers are the same.

Intermediary:

In between producer and end user (Transporter).

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False:

When a process that performs activities that do not add value to product or service.

Inspectors doing 100 % inspection. It needs to be eliminated.

Internal:

Next person to whom product passed on for further processing. His requests must be met,

but not at cost of external customers.

37.4

Customer-Driven Project Organizations:

Figure 37.3: Customer Value Package

If competitors offer better choices for similar price, consumers naturally select package with

highest "perceived quality".

37.5

Customer Identification:

37.5.1 Fundamental Questions in Identifying Customers:

Identifying customers begins with asking some fundamental questions:

What products/services are produced?

Who uses products/ services?

Do employees call/ write to/ answer questions for?

Supplies inputs

37.5.2 Importance of Identifying Customer Types:

Every customer type, source of product, product requirements must be identified and

process effectiveness must be measured.

Information on what satisfies customer, and what improvements are necessary. It comes

from lost, prospective, and competitors' customer, who provide useful insights.

37.6

Kano Model:

The Kano Model of Customer (Consumer) Satisfaction classifies product attributes based on

how they are perceived by customers and their effect on customer satisfaction. These

classifications are useful for guiding design decisions in that they indicate when good is good

enough, and when more is better.

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Figure 37.4: Analyzing Customer Satisfaction Data Kano Model

Project activities in which the Kano Model is useful:

1. Identifying customer needs

2. Determining functional requirements

3. Concept development

4. Analysing competitive products

Other tools that are useful in conjunction with the Kano Model:

1. Eliciting Customer Input

2. Prioritisation Matrices

3. Quality Function Deployment

4. Value Analysis

Introduction

The Kano Model of Customer satisfaction (Figure 37.4) divides product attributes into three categories:

threshold, performance, and excitement. A competitive product meets basic attributes, maximises

performances attributes, and includes as many "excitement" attributes as possible at a cost the market

can bear.

Threshold Attributes

Threshold (or basic) attributes are the expected attributes or "musts" of a product, and do not provide an

opportunity for product differentiation. Increasing the performance of these attributes provides

diminishing returns in terms of customer satisfaction; however the absence or poor performance of these

attributes results in extreme customer dissatisfaction. An example of a threshold attribute would be

brakes on a car.

Kano Model Analysis

Threshold attributes are not typically captured in QFDs (Quality Function Deployment) or other

evaluation tools as products are not rated on the degree to which a threshold attribute is met, the

attribute is either satisfied or not.

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Performance Attributes

Performance attributes are those for which more is generally better, and will improve customer

satisfaction. Conversely, an absent or weak performance attribute reduces customer satisfaction. Of the

needs customers verbalise, most will fall into the category of performance attributes. These attributes

will form the weighted needs against which product concepts will be evaluated. The price for which

customer is willing to pay for a product is closely tied to performance attributes. For example,

customers would be willing to pay more for a car that provides them with better fuel economy.

Excitement Attributes

Excitement attributes are unspoken and unexpected by customers but can result in high levels of

customer satisfaction, however their absence does not lead to dissatisfaction. Excitement attributes often

satisfy latent needs real needs of which customers are currently unaware. In a competitive marketplace

where manufacturers' products provide similar performance, providing excitement attributes that

address "unknown needs" can provide a competitive advantage. Although they have followed the

typical evolution to a performance then a threshold attribute, cup holders were initially excitement

attributes.

Other Attributes

Products often have attributes that cannot be classified according to the Kano Model. These attributes

are often of little or no consequence to the customer, and do not factor into consumer decisions. An

example of this type of attribute is a plate listing part numbers can be found under the hood on many

vehicles for use by repairpersons.

Application of the Kano Model Analysis

A relatively simple approach to applying the Kano Model Analysis is to ask customers two simple

questions for each attribute:

1. Rate your satisfaction if the product has this attribute?; and

2. Rate your satisfaction if the product did not have this attribute?

Kano Model Analysis

Customers should be asked to answer with one of the following responses:

A) Satisfied;

B) Neutral (Its normally that way);

C) Dissatisfied;

D) Don't care.

Basic attributes generally receive the "Neutral" response to Question 1 and the "Dissatisfied" response

to Question 2. Exclusion of these attributes in the product has the potential to severely impact the

success of the product in the marketplace.

· Eliminate or include performance or excitement attributes that their presence or absence

respectively lead to customer dissatisfaction. This often requires a trade-off analysis against

cost. As Customers frequently rate most attributes or functionality as important, asking the

question "How much extra would you be willing to pay for this attribute or more of this

attribute?" will aid in trade-off decisions, especially for performance attributes. Prioritisation

matrices can be useful in determining which excitement attributes would provide the greatest

returns on Customer satisfaction.

· Consideration should be given to attributes receiving a "Don't care" response as they will not

increase customer satisfaction nor motivate the customer to pay an increased price for the

product. However, do not immediately dismiss these attributes if they play a critical role to the

product functionality or are necessary for other reasons than to satisfy the customer. The

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information obtained from the Kano Model Analysis, specifically regarding performance and

excitement attributes, provides valuable input for the Quality Function Deployment process.

37.7

CUSTOMER SATISFACTION MEASUREMENT:

Figure 37.5: Measuring Customer Satisfaction Levels

37.7.1 Methods of Customer Retention:

Following are the methods for retaining customers:

· Establish honest relationship and empathize

· Reward loyalty (airline's frequent flyer)

· Reward usage (Coupons, credit points, preferential treatment)

· Provide unpaid service (free product targets, after sales service)

37.7.2 Seven Steps to Customer Satisfaction System:

Step 1: Total management commitment

Step 2: Get to know your customers

Step 3: Develop "performance and process standards" of service quality

Step 4: Hire, train, and compensate good staff

Step 5: Reward service accomplishments

Step 6: Stay close to your customers

Step 7: Work towards continuous improvement in "service quality performance

37.7.3 Customer Defections:

Figure 37.6: Customer Retention and Profitability

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Figure 37.7: Customer Driven Quality Cycle

1. Leading practices for profitability and market share must understand linkages

between voice of customer and design, production, and delivery processes.

2. Ensures that no critical requirements fall through cracks and minimizes potential

gaps between expected quality and actual quality.

3. Make commitment to customer that promotes trust and confidence in products and

services.

4. Must have effective Customer Relationship Management (CRM)" processes by

which customer can easily seek assistance, comment, complain and receive prompt

resolution of their concerns.

37.7.4 Must measure Customer Satisfaction:

1. Compare results relative to competitors

2. Use information to evaluate

3. Improve internal processes

37.7.5 Methods of Measuring Customer Satisfaction:

There are the following two methods of measuring customer satisfaction:

1. Quality Dimension Development

2. Generate Critical Incidents

Figure 37.8: Methods of Measuring Customer Satisfaction

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37.7.5.1Quality Dimensions Development Method:

Step 1: Creating list of quality dimensions (Table 37.1):

a) Read professional literature and enlist quality dimensions

b) Generate list from personal experience

Step 2: Write definitions of each dimensions:

a) Definition can be in general terms

Step 3: Develop specific examples for each quality dimension:

Examples: Specific-reflecting service or product

Examples:

Specific

behaviors

providers

Declarative statements

Table 37.1: Quality Dimensions

37.7.5.2Five Key Dimensions of Service Quality:

1. Reliability:

· Ability to provide what was promised, dependably and

accurately.

· Customer service representatives respond in promised time.

· Following customer instructions.

· Providing error free invoices and statements.

· Making repairs correctly first time.

· Assurance: Knowledge and courtesy of employees.

· Their ability to convey "trust and confidence".

· Ability to answer questions.

· Having capabilities to do necessary work.

· Monitoring credit card transactions to avoid possible fraud.

· Being polite and pleasant during customer transactions.

2. Tangibles:

· Physical facilities

· Equipment and appearance of persons include:

o Attractive facilities

o Appropriately dressed employees

o Well designed forms that are easy to read and interpret

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3. Empathy:

· Degree of Caring and include attention provided to customer

· Explaining "Tech Jargon" in: layman's language

· Recognizing regular customers by name

4. Responsiveness:

· Willingness to help customer and provide prompt service. For

example:

o Acting quickly to resolve problems

o Promptly crediting returned merchandise

o Rapidly replacing defective products

Table 37.2: Quality Dimensions of a Manufactured Product and Service

5. Timeliness of Support:

· They completed the job when expected

· They met my deadlines

· They finished their responsibilities within stated time frame

· The project was completed on time

6. Responsiveness of Support:

· They were quick to respond when I asked for help

· They immediately helped me when I needed help

· I waited a short period of time to get help after I asked for it

37.8

Customer Relationship Management (CRM):

Customer Relationship Management (CRM) includes attention to:

· Target and developing customer contact employees.

· Empowering them to do whatever is necessary to satisfy customers.

37.9

Gathering Customer Information:

· Customer requirements called "voice of customer":

There are a variety of methods to "listen" to the Voice of Customer. To do it effectively,

information needs to be collected about the customer like:

a) Needs and expectations

b) Importance

c) Satisfaction with company's performance

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37.10

Four Steps to Quality Customer Service:

There are the following four steps to quality customer service:

Step 1: Send positive attitude:

· Product Knowledge / command

· Appearance (dress, quality, cleanliness, orderliness, etc)

· Body language (head, arms facial, smile, body movement, eye contact)

· Sound of your voice (tone and how you say it)

o Face to face

o On telephone (telephone skills)

· Staying energized

· Empathize (concern for customer's benefits)

Step 2: Identify needs of your customers, guests, clients

a) Human Needs: (welcomed, respected, comfortable, orderly, understood, helped, important,

appreciated, recognized)

b) Timing Needs: (hold time on telephone, waiting in office, letter response, return calls,

appropriate time to meet, width and depth of product/service needs)

c) Location Needs:

d) Product Needs: (stated, unstated, basic, delighter)

e) Create an environment to listen

f) Careful Listening and Understanding

g) Feedback / Evaluation

Figure 37.9: Use of Kano Model to Identify Must-be, Delighters and One Dimensional

Qualities

Step 3: Provide for needs of your customers, guests, clients

Are you ready to fulfill the human, timing, location, and product needs of the customer?

Are you capable to fulfill the human, timing, location, and product needs of the

customer?

Do you have the required product / service to meet the needs of the customer?

Have you actually fulfilled the human, timing, location, and product needs of the

customer?

Step 4: Make sure your customers, clients, guests return to you

Make sure you delivered both the procedures and the personal

Be sensitive to check your performance by the outcomes before, during and after the service

delivery

Handling complaint for cases of gaps, customers will complain (within themselves,

gestures, light words, strong words, strong reactions).

o Listen to their stated and non-stated complains carefully

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Empathize

Repeat and confirm whether you understood clearly

Apologize genuinely

Acknowledge sympathy

Correct the situation

Identify root-causes and prevent recurrence

Types of difficult customers with whom you have to deal nicely

o Angry

o Nasty or Obnoxious

o Demanding

o Constant Critic

o Non-Stop Talker

o Indecisive

o Intoxicated

o Argumentative

They are usually difficult for their own reasons - not because of you

Figure 37.10: Why Companies Lose Customers?

Reasons Why Customers are Difficult:

o Negative experience

o Frustrated

o Confused

o Satisfy their ego or self-esteem

o Ignored

o Treated poorly

o In bad mood

Get Difficult Customers on Your Side:

o Do not take it personally, hold on to your confidence

o Remain calm; listen carefully

o Do not just protect yourself or your company, share his/her grievance

o Focus on the problem, not the person

o Turn the difficult one into a satisfied, consider it an accomplishments

Take an extra step - surprise the customer. For example:

o Ticket agent: would you like me to select a seat for your return flight now?

o Salesperson: I will deliver it personally this afternoon

o Nurse: Since you are awake, let me give you a drink

o Waiter: may I bring extra glass of coffee

o Hotel desk clerk: may I call a cab for you

o Mechanic: since car will take long, may I give you a newspaper

o Grocer: may I give you help to carry your goods

o Bank Cashier: may I give you brand new notes

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Re-engineer your Customer Satisfaction into Quality Customer Satisfaction:

Customer Satisfaction Vision and Policy

Customer Satisfaction Training

Customer Satisfaction Personality Grooming and Development

Customer Satisfaction Systems and Procedures

Customer Satisfaction Consistency

Customer Satisfaction Measurement (e.g. customer retention rate)

Develop and regularize Customer Satisfaction Delighters

1. Determine Questions:

· Be Concise, Precise

· Be Direct

· Discard Superfluous Words

· Be Unambiguous

Examples: How are these questions?

· The SDO was good

· The bank manager listened to me and took a short time to handle my complaint

· The SDO was not available when he was needed

· The SDO was available when he was needed

· The staff was courteous

2. Response Format:

a) Checklist Format (yes/no)

b) Liker-type (1-5 scale)

Table 37.3: Liker Scale

"Introduction" to Questionnaires:

For example: "To better serve you, we would like to know your opinion of the quality of our

service at XYZ Company. You recently received service from our company. Please indicate

the extent to which you agree or disagree with the following statements about the service you

received from the staff. Circle the appropriate number using the scale below.

1, 2, 3, 4, 5

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Finally, select appropriate questions; ensure critical customer requirements are addressed

properly.

Sampling

Some of the common sampling techniques used are briefly defined below:

Census

· To gather information from all of customers (sample is the total population) for example,

doctors response by drug manufacturers.

Judgmental Sampling

· Use judgment in the selection of customers.

Statistical Sampling

· Select sample based on statistical probability (rely on chance).

It becomes easy to

generalize, if not biased.

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