Chapter Twenty-Five: Customers – The Raw Product of Profitability

ConPriDigm AvatarQuality IS…the raw product of profitability.

Why is the term “customer” often associated with fours concepts: needs, expectations, requirements, and demands? Why is each concept unique, but often overlap with the others?

 

Conceptual Pattern for Customer

A customer is current or potential buyer or user or of goods or services in a particular way from an individual or other company. A customer is a business organization that has authority to consume or employs a good or service that is founded to produce articles of commerce. A customer is a number of persons united or incorporated for joint action and a specific purpose to obtain a benefit or to solve a problem that may not be the actual purchaser of items that are used for later consumption. ( Pattern Engine: Customer N=12 © 2014)

If customers are understood the meaning of Quality will follow.

First Principle: The purpose of the customer is to drive profitability.

Second Principle: Quality in the twenty-first century must start with the customer, not with the tangible product sold or the work process that create it. 1

Third Principle: Internal improvements have to matter to the customer before they can create improved external quality, customer satisfaction and loyalty. 2  

Fourth Principle: The most cost-effective areas of product and service performance to improve are those that are important to the customers and which, at the same time, the organization is performing poorly. 2

Fifth Principle: Successful organizations deliver value to their customers in one of three categories: operational excellence, customer intimacy, or product leadership. 3

Sixth Principle: A customer’s loyalty grows through seven stages: suspect, prospect, qualified prospect, first-time customer, repeat customer, client, advocate. 3

Key Conceptual Patterns

LOYALTY

Loyalty is unwavering devotion and allegiance that may be intellectual or emotional, to a course of action. It is the use of knowledge that creates a tie and a commitment to some purpose. Loyalty is the manifestation of enthusiasm, admiration and a strong attachment that results from a highly developed ability to think, reason, and understand. It may be implied or expressed in return for support and protection, often characterized by intelligence or mental capacity. (Pattern Engine: Loyalty N=12 © 2014)

LEADERSHIP

Leadership is a goal seeking activity and state of mind that results in doing something well. Leadership is an effective way, when measured against a standard. It favors steady progress and typical behavior while accomplishing a task well, with a particular amount of success. Leadership is often the result of some previous phenomenon that brings about an outcome as a direct result of somebody or something else that makes something happen or exist or is responsible for something that happens.  It is characterized by reliance on one’s self, or one’s circumstances; a feeling of self-sufficiency; a feeling of security; self assurance or a belief in one’s ability to succeed. World class leadership is often in free from anxiety or fear. (Pattern Engine: Leadership N=12 © 2014)

Nest Post: Segmentation – Focusing Customer Needs

 1Karl Albrecht: The Only Thing that Matters, Bringing the Power of the Customer into your Business, 1992.

2 Michael D. Johnston & Anders Gustafson: Improving Customer Satisfaction, Loyalty, and Profit, 2000.

3Jill Griffin:  Customer Loyalty, How to Earn It How to Keep It, 2002.

Digiprove sealCopyright secured by Digiprove © 2014 Patrick Kelly

Chapter Twenty-Four: Value – Identifying Aspects of Customer Loyalty

ConPriDigm AvatarQuality IS…value – a subjective aspect.

Why is value the key ingredient for customer loyalty?

 

 

Conceptual Pattern for Value

Value is the extent to which a good or service is perceived by its customer to meet his or her needs or wants. It is a quality that renders something useful. Value is based on the worth or importance of something to somebody.  Perceived importance or usefulness translates to essential and distinguishing attributes. Value is a motivating force that compels action for its satisfaction. Value is something tangible or intangible that results in a grade or standard that identifies the essential nature of something. Value results in something that is a requirement or is wanted or is necessary but cannot be lacking. (Pattern Engine – Value N=12 © 2014)

If value is understood the meaning of Quality will follow.

First Principle: The purpose of value is to create loyal customers.

Second Principle: The subjective concept of quality is closely tied with the utility or value of the objective physical properties of the thing itself.  The subjective concept of quality has to do with what we think, feel or sense as a result of the objective reality. When we consider quality from the subjective viewpoint, comparatively serious difficulties arise.  To begin with there are various aspects of the concept of value. We may differentiate between the following four kinds of value; use, cost, esteem and exchange.1

Third Principle: Value is always increased by decreasing costs and by increasing performance if the customer needs, wants and is willing to pay for more performance.2

Fourth Principle: There are nine potential reasons for poor value from the suppliers and or customers perspective; lack of information, wrong beliefs, risk of personal loss, reluctance to seek advice, shortage of time, negative attitudes, changing technology, strict adherence to requirements and poor human relations.3

Fifth Principle: In the context of function “value” means the lowest cost that would provide a function with the qualities and specifications with which the customer wants to operate. 2

Sixth Principle: The analysis of value is the organized creative approach that has for its purpose the efficient identification of unnecessary cost, that is, cost that provides neither quality nor use nor life nor appearance nor customer features. 2

Key Conceptual Patterns

SUBJECTIVENESS

Subjectiveness is a judgment based on individual personal impressions and feelings and opinions rather than external facts or evidence. It pertains to, or is derived from, one’s own consciousness, in distinction from observation. Subjectiveness is a cognitive state resulting in a personal judgment or vague idea. Subjectiveness leads to awareness and immediate knowledge or perception of the presence of any object, state, or sensation but is not founded on proof or certainty.  Subjectiveness is held with confidence but not substantiated by positive knowledge. It results in a lasting effect in which confidence is placed about understanding something. (Pattern Engine – Subjectiveness N=12 © 2014)

OBJECTIVENESS

Judgment based on facts and the observation of phenomena and not influenced by emotions or personal prejudices and free of bias. It is a partiality about a piece of information that is reached by attentive watching. Objectiveness is a statement of verified information that can be shown to be true, to exist, or to have happened about events that have occurred. Objectiveness is about circumstances that exist or performance of what is prescribed.  It is not an unfair preference preventing consideration and does not leave the mind indifferent. (Pattern Engine – Objectiveness N=12 © 2014)

Next Post: Customers – The Raw Product of Profitability

 1 Walter Shewhart, Economic Control of Manufactured Product, 1931.

2  Lawrence D. Miles, Techniques of Value Analysis and Engineering, 2nd Edition, 1972.

3 Anil Kumar Mukhopadhtyaya, Value Engineering Mastermind, 2009.

Digiprove sealCopyright secured by Digiprove © 2014 Patrick Kelly