1	Irresistible Quality – Keeping Customers for Life…
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3	Preview… What is Customer Loyalty? Why should I care? How do I get it?
4	Customer loyalty is… Customers love your company and choose to associate themselves with it They tell others how good you are
5	You should worry about customer loyalty because… Its about the money… Revenue growth and loyalty strongly correlate Acquisition of new customers costs a lot of money
6	Data show that revenue growth and loyalty are strongly related…
7	And its expensive to chase customers… Acquiring a Customer, that is, Bid and Proposal costs, often range $300K to $1M Divide B&P costs by Win Rate to get effective cost Hidden costs of establishing infrastructures and relationships
8	Additional business in government markets may come from… Higher Award Fees Engineering Change Proposals Sole Source Follow-ons Task Orders GSA Orders Studies of next generation systems
9	What we need to get right… Distinguish between true loyalty and pretense Determine what’s important to the customer Assess how we are doing relative to the important items Find out who the customer thinks does it best Do it better
10	Distinguish true loyalty from pretenders… Truly Loyal: Customers like your company and choose to associate themselves with it. Accessible: Customers are willing to give you opportunities to earn their loyalty. Trapped: Customers feel forced to do business with you now but will leave if they can. High-Risk: Customers are dissatisfied and actively looking for alternatives.
11	The key to loyalty is Quality… Studies show that customers’ propensity to repurchase and reference are related to their perception of a vendor’s quality Its customers, not our perception, of quality that counts
12	But, two kinds of quality exist… External quality is about variation around Customers’ expectations – Big Q Internal quality is about variation around specifications – Little q External quality comes first – internal quality closely follow and must be tightly linked
13	External Quality is perceived not measured… Customers form their opinion of us at moments of truth often in impressionistic terms Moments of truth are times where we “expose” our quality to customers External quality are both tangible and intangible attributes
14	“Moments of Truth” abound… Customers form opinions when… Hear about us from another customer Receive our product Use our product Call for service Call for help Receive a bill Read about you in a trade journal
15	We need listening posts to gather information about customer needs… Gather information from all customer touch points Analyze the total information
16	Customers’ perception of quality is relative… Customers often buy similar stuff from several suppliers Customers’ yardstick for quality is relative to what prevails in the marketplace So, we need to understand our competitors
17	And Quality is all non-price attributes, sic, the “whole product”… Both tangible and intangible elements required by target customers to solve his or her whole problem All products, services and relationships required by target customer to fulfill their compelling reasons to buy
18	Customers see us through a number of facets…
19	Measure perceived quality on a Likert scale… Translate impressionistic information into quantitative information Monitor patterns related to time Look for special cause
20	Studies show only high levels of external quality are compelling… Actual data from a systems vendor Compiled from responses
21	Customers’ buy on value…. Most customers buy on value over some relevant range VALUE = QUALITY ¸ PRICE
22	Priority comes from the difference between importance and performance… Givens are as they should be – maintain them Look for those attributes that are important to Customers but the you perform poorly – focus improvement here “Steal” resources to work on Opportunities from Overkills
23	Reliability always seems to be important… Here the factors are aligned much as they should be “Ease to upgrade hardware” is in the Overkill quadrant, but no “Opportunities”
24	Overall, Customers often cite the Service and Support functions as inadequate… Here the opportunity is “Service and Support Effectiveness”
25	Three kinds of customer needs exist… Table Stakes… ante to play the game silence if you have them dissatisfaction if you don’t unspoken Satisfiers… more are better satisfaction proportional to their presence spoken Delighters “wows” if you have them differentiators unspoken customers don’t know they need them key to loyalty
26	Listen to the Voice of the Customer…
27	Listen to the Voice of the Customer…
28	Listen to the Voice of the Customer…
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31	How do I connect External and Internal Quality? The methods of choice are Regression Analysis together with the House of Quality Regression analysis “connects” internal and external quality House of Quality methodically translates “Voice of Customer” perceived quality to product and process specifications
32	The best practice to link internal and external quality is the House of Quality… Used to progressively translate customer needs to requirements, characteristics, and down to specifications at the process-element level Imparts traceablility between customer needs and specifications – useful in diagnostics and change control Reveals the critical-to-quality requirements Points to what and where to measure
33	Three major factors drive loyalty… Ultimately we need to describe the overall system with equation with equations LOYALTY = ¦(x₁, x₂, …) Want to be able to predict loyalty from the things that we do everyday
34	What is the House of Quality? The House of Quality is a graphical tool that summarizes research data The House of Quality helps the project team look at a vast amount of information and select the key measures to be used in the rest of the project realization
35	The House of Quality… House of Quality has seven rooms Just like rooms in a house, there are connections and relationships among rooms
36	Detail on each room…
37	So in the end we want win-win… Customers get what they need with consistently high quality and value