Basic Business Cents
A Community Performance Improvement Plan for Small Business
MONTH THREE: CUSTOMERS AND MARKETS
“To survive, a company must win against competition in the world market. Needless to say, it must strengthen its cost competitiveness by perfecting its quality improvement efforts or downsizing and differentiating its existing products and services… It is obvious, however, that the path of continuous downsizing eventually would lead to a company with no employees… Therefore, to continue to survive and prosper, a company needs to develop new products and services, create new markets, secure employment, and upsize the organization.” Dr. Noriaki Kano, “Attractive Quality Creation” October 17, 1994
In this session we will focus on the numerator of the revenue/expense ratio and explore Market Creation. Dr. Noriaki Kano has been pioneering work in this area for two decades with his work on “Attractive Quality Creation.” He says we need to move beyond customer satisfaction to delighting customers. His methods of determining those features that create loyal customers will be studied. A simple survey technique to determine customer loyalty will also be presented.
By now it is apparent the sessions will start on a self-assessment of the category of the Baldrige criteria being covered. Category 3 is titled, Customer Focus. Attendees are asked to score their organization first on the section, “Voice of the Customer; How do you obtain information from your customers?” It includes detailed questions in the areas of:
- Customer Listening
- Current Customers
- Potential Customers
- Determination of Customer Satisfaction and Engagement
- Satisfaction and Engagement
- Satisfaction Relative to Competitors
Part 2 will address “Customer Engagement; How do you engage customers to serve their needs and build relationships?” It includes questions in the areas of:
- Product Offerings and Customer Support
- Product Offerings
- Customer Support
- Customer Segmentation
- Customer Data Use
- Building Customer Relationships
- Relationship Management
- Complaint Management
When the scoring is completed on their organizations by the attendees and they have identified opportunities for improvement, training will be provided to help in those improvement activities.
The dynamic change in the world around us is exciting, bewildering, and frightening. In the past decades we have seen a productivity emphasis in the ’70s, a quality emphasis in the ’80s, a reengineering emphasis in the ’90s, and Six Sigma and Lean Thinking in the past decade. What are the major thrusts for this decade? If we look at the focus of the last four decades, we are looking at emphasis primarily on improving cost effectiveness. Elements of these three major thrusts have resulted in restructuring, de-layering, and downsizing. We need to continue our efforts on cost effectiveness forever in order to become more productive, but we also need to work on areas to create a bigger demand for our services so that we can provide more jobs and have a resultant upsizing. To survive and prosper in the next decade it will be necessary to work continually on cost effectiveness but we need parallel efforts to achieve a unique advantage by creating pull for our services and upsizing the organization. Market Creation methods as developed by Noriaki Kano can lead to breakthroughs in new and better services and result in survival and prosperity for the future. The elements of Dr. Kano’s Attractive Quality Creation—“Must Be Quality, More is Better Quality, and Attractive Quality will be presented along with a means to identify the Attractive Quality features.
After these attractive quality features are identified and incorporated into the products and services, continual monitoring of customer satisfaction is required. However many customers are weary of lengthy satisfaction surveys and choose to ignore them.
Business Week had an article in their January 30, 2006 edition that was very interesting and timely. It was titled, “Would You Recommend Us? That simple query to customers is shaking up planning and executive pay.” It referred to an uncluttered approach that first appeared in a Harvard Business Review article. Basically, it is a very simple customer survey that asks, “On a scale of 0-10, how likely is it that you would recommend (insert your product, service, or organization) to your friends or colleagues?” This is followed by a question asking for reasons that prompted the rating and what could be done to provide a better experience. A scoring guide is provided; a 0 rating would mean not at all likely, 5 is neutral, and 10 would be extremely likely. The 9 or 10 responders are classified as Promoters, 7-8 responders are called Passively Satisfied, and 0-6 responders are labeled Detractors. The percent of Detractors are subtracted from the percent of Promoters to get a score that can be used to compare and track progress.
Deming used to say satisfying customers is not sufficient; satisfied customers will switch when something better comes along. He said we need loyal customers. Kano says roughly the same thing in his Attractive Quality Creation work when he talks about the need to have “delighted” customers. This survey appears to be a simple, effective way to measure loyal customers.