How Might A Service Organization Best Increase The Quality Of Its Products Or Services?
Corporate executives and consumers have in contempo years adopted divergent views of production quality. Several recent surveys indicate how wide the quality perception gap is:
- Three out of five master executives of the country'southward largest i,300 companies said in a 1981 survey that quality is improving; only 13% said it is failing.ane Yet 49% of 7,000 consumers surveyed in a separate 1981 study said that the quality of U.S. products had declined in the past five years. In add-on, 59% expected quality to stay down or pass up farther in the upcoming v years.2
- Half the executives of major American appliance manufacturers said in a 1981 survey that the reliability of their products had improved in recent years. Only 21% of U.S. consumers expressed that conventionalities.3
- Executives of U.South. auto manufacturers cite internal records that prove quality to be improving each year. "Ford quality improved by 27% in our 1981 models over 1980 models," said a Ford executive.4 But surveys testify that consumers perceive the quality of U.S. cars to be declining in comparing with imported cars, particularly those from Japan.
Mindful of this gap, many U.S. companies accept turned to promotional tactics to better their quality paradigm. Such efforts are evident in two trends. The first is the greater emphasis advertisements place on the word quality and on such themes as reliability, immovability, and workmanship. Ford, for instance, advertises that "quality is job i," and Levi Strauss proffers the notion that "quality never goes out of style." And many ads now claim that products are "the best" or "ameliorate than" competitors'.
The second trend is the move to quality balls and extended service programs. Chrysler offers a v-year, fifty,000 mile warranty; Whirlpool Corporation promises that parts for all models will be available for 15 years; Hewlett-Packard gives customers a 99% uptime service guarantee on its computers; and Mercedes-Benz makes technicians available for roadside assist later on normal dealer service hours.
While these attempts to modify customer perceptions are a pace in the right direction, a company'southward or a production'south quality image plain cannot be improved overnight. It takes time to cultivate customer conviction, and promotional tactics alone will not practise the job. In fact, they can backfire if the claims and promises do not hold up and customers perceive them as gimmicks.
To ensure delivery of advertising claims, companies must build quality into their products or services. From a production perspective, this means a companywide delivery to eliminate errors at every stage of the product development process—product design, procedure design, and manufacturing. It likewise means working closely with suppliers to eliminate defects from all incoming parts.
Every bit important yet ofttimes overlooked are the marketing aspects of quality-comeback programs. Companies must exist sure they are offering the benefits customers seek. Quality should be primarily client-driven, not technology-driven, production-driven, or competitor-driven.
In developing product quality programs, companies ofttimes fail to take into business relationship two basic sets of questions. First, how practise customers define quality, and why are they suddenly demanding college quality than in the by? Second, how important is high quality in customer service, and how tin it exist ensured after the sale?
As mundane as these questions may sound, the answers provide essential data on how to build an effective customer-driven quality program. We should non forget that customers, after all, serve as the ultimate judge of quality in the marketplace.
The Product-Service Connection
Product performance and customer service are closely linked in whatever quality program; the greater the attention to production quality in production, the fewer the demands on the customer service operation to correct subsequent issues. Office equipment manufacturers, for example, are designing products to accept fewer manual and more automated controls. Not but are the products easier to operate and less susceptible to misuse but they too require little maintenance and have internal troubleshooting systems to aid in problem identification. The up-front investment in quality minimizes the need for customer service.
Besides its usual functions, customer service can act every bit an early on warning system to detect product quality bug. Customer surveys measuring product performance can too assist spot quality control or design difficulties. And of course detecting defects early spares afterward embarrassment and headaches.
Quality-improvement successes
It is relevant at this signal to consider 2 companies that have developed successful customer-driven quality programs: L.L. Bean, Inc. and Caterpillar Tractor Company. Although these two companies are in different businesses—L.Fifty. Bean sells outdoor apparel and equipment primarily through mail-gild while Caterpillar manufactures earth-moving equipment, diesel engines, and materials-handling devices, which it sells through dealers—both savour an enviable reputation for loftier quality.
Some 96.7% of 3,000 customers L.L. Bean recently surveyed said that quality is the attribute they similar nigh about the company. Edible bean executes a customer-driven quality program past:
Conducting regular customer satisfaction surveys and sample group interviews to runway client and noncustomer perceptions of the quality of its own and its competitors' products and services.
Tracking on its reckoner all customer inquiries and complaints and updating the file daily.
Guaranteeing all its products to be 100% satisfactory and providing a total greenbacks refund, if requested, on whatsoever returns.
Asking customers to fill out a short, coded questionnaire and explain their reasons for returning the trade.
Performing all-encompassing field tests on any new outdoor equipment before listing it in the company's catalogs.
Even stocking actress buttons for about of the apparel items carried years ago, simply in case a customer needs ane.
Despite contempo financial setbacks, Caterpillar continues to be fully committed to sticking with its quality plan, which includes:
Conducting two client satisfaction surveys following each purchase, one afterwards 300 hours of product use and the second after 500 hours of use.
Maintaining a centrally managed listing of production problems as identified by customers from around the world.
Analyzing warranty and service reports submitted by dealers, as part of a production improvement program.
Asking dealers to conduct a quality audit as soon equally the products are received and to attribute defects to either assembly errors or shipping damages.
Guaranteeing 48—60 minutes commitment of any function to any client in the globe.
Encouraging dealers to establish side businesses in rebuilding parts to reduce costs and increment the speed of repairs.
How Practice Customers Define Quality?
To understand how customers perceive quality, both L.L. Bean and Caterpillar collect much information directly from them. Even with such information, though, pinpointing what consumers actually desire is no simple task. For one affair, consumers cannot e'er articulate their quality requirements. They often speak in generalities, complaining, for example, that they bought "a lemon" or that manufacturers "don't brand 'em like they used to."
Consumers' priorities and perceptions also change over fourth dimension. Taking automobiles every bit an example, market data compiled by SRI International suggest that consumer priorities shifted from styling in 1970 to fuel economic system in 1975 and then to quality of design and performance in 1980.5 (See Exhibit I.)
Changes in the importance to customers of U.South. machine characteristics
In addition, consumers perceive a product'due south quality relative to competing products. Equally John F. Welch, chairman and chief executive of General Electric Company, observed, "The customer…rates u.s. better or worse than somebody else. Information technology's not very scientific, but it's disastrous if you lot score low."6
One of the major issues facing U.S. automobile manufacturers is the public perception that imported cars, particularly those from Japan, are of higher quality. When a 1981 New York Times-CBS News poll asked consumers if they idea that Japanese-made cars are usually better quality than those fabricated here, most the same, or not as practiced, 34% answered better, xxx% said the same, 22% said not equally good, and 14% did not know. When the Roper Organisation asked the same question in 1977, simply xviii% said better, thirty% said the same, 32% said not equally good, and twenty% did not know.7
Further, consumers are demanding high quality at depression prices. When a national panel of shoppers was asked where it would similar to run into food manufacturers invest more, the highest-rated response was "improve quality for the same price."8 In search of such value, some consumers are even chartering buses to Cohoes Manufacturing Company, an apparel specialty store located in Cohoes, New York that has a reputation for offer high-quality, designer-characterization merchandise at disbelieve prices.
Consumers' perceptions of production quality are influenced past various factors at each phase of the ownership process. Some of the major influences are listed in Showroom II.
Exhibit Ii Factors influencing consumer perception of quality* *Not necessarily in order of importance.
Watching for key trends
What should companies do to meliorate their understanding of customers' perspectives on quality? Nosotros know of no other fashion than to collect and clarify internal data and to monitor publicly available information.
Internally generated information is obtained principally through client surveys, interviews of potential customers (such every bit focus group interviews), reports from salespeople, and field experiments. Recall how L.L. Edible bean and Caterpillar use these approaches to obtain data on how their current and potential customers rate their products' quality versus those of competitors'.
Publicly available information of a more than general nature tin can exist obtained through pollsters, independent inquiry organizations, regime agencies, and the news media. Such sources are ofttimes helpful in identifying shifts in societal attitudes.
Companies that attempt to define their customers' attitudes on product and service quality often focus as well narrowly on the meaning of quality for their products and services; an understanding of changing attitudes in the broader market can be every bit valuable.
Toward the finish of the last decade, too many U.Southward. companies failed to observe that the optimism of the mid-1970s was increasingly giving way to a mood of pessimism and restraint because of deteriorating economic weather condition. Several polls taken during the 1970s indicated the nature and extent of this shift;9 for instance, Gallup polls showed that while only 21% of Americans in the early 1970s believed "adjacent twelvemonth will be worse than this twelvemonth," 55% held this pessimistic outlook by the end of the 1970s.
Pessimistic well-nigh what the futurity held, consumers began adjusting their life-styles. The unrestrained want during the mid-1970s to buy and own more gave fashion to more than restrained behavior, such as "integrity" buying, "investment" buying, and "life-cycle" buying.
Integrity purchases are those fabricated for their perceived importance to guild rather than solely for personal status. Buying a minor, energy-efficient automobile, for example, can be a sign of personal integrity. Investment buying is geared toward long-lasting products, even if that means paying a piffling more. The emphasis is on such values as durability, reliability, adroitness, and longevity. In the apparel business, for example, more than manufacturers take begun stressing the investment value of clothing. And life-cycle buying entails comparison the price of ownership with the cost of owning. For example, some might see a $10 light seedling, which uses one-tertiary every bit much electricity and lasts iv times equally long every bit a $1 conventional light bulb, as the ameliorate deal.
These changes in ownership behavior reflect the pessimistic outlook of consumers and their growing accent on quality rather than quantity: "If we're going to buy less, allow it be amend."
By overlooking this primal shift in consumer attitudes, companies missed the opportunity to capitalize on it. If they had monitored the information available, managers could take identified and responded to the trends earlier.
Ensuring Quality Subsequently the Auction
Every bit we suggested earlier, the quality of customer service after the sale is ofttimes as important as the quality of the production itself. Of grade, excellent customer service tin rarely compensate for a weak product. Only poor customer service can quickly negate all the advantages associated with delivering a production of superior quality. At companies like L.L. Edible bean and Caterpillar, customer service is not an afterthought just an integral part of the product offering and is subject to the same quality standards every bit the production process. These companies realize that a pinnacle-notch customer service functioning can be an effective means of accomplishing the post-obit three objectives:
one. Differentiating a company from competitors. As more than customers seek to extend the lives of their durable goods, the perceived quality of client service becomes an increasingly important factor in the purchase decision. Whirlpool Corporation promises to stand by its products rather than hide behind its distribution channels; it has parlayed a reputation for effective customer service into a distinct competitive advantage that reinforces its prototype of quality.
2. Generating new sales leads and discouraging switches to alternative suppliers. Keeping in regular contact with customers so as to deliver new data to them and assemble suggestions for product improvements can ensure the continued satisfaction of existing customers and amend the chances of meeting the needs of potential purchasers.
3. Reinforcing dealer loyalty. Companies with potent customer service programs tin can also broaden their distribution channels more easily to include outlets that may not be able to deliver high levels of postpurchase customer service on their own.
The client service audit
To be effective, a client service operation requires a marketing program. Client services should be viewed as a product line that must exist packaged, priced, communicated, and delivered to customers. An evaluation of a visitor's current customer service operation—a client service inspect—is essential to the development of such a programme.
A customer service audit asks managers the following questions:
What are your client service objectives?
Many companies have not established objectives for their customer service operations and accept no concept of the role customer service should play in their business and marketing strategies. Every visitor should know what percentage of its revenue stream it expects to derive from service sales and whether the goal is to brand a profit, break fifty-fifty, or—for reasons of competitive advantage—sustain a loss.
What services do you provide?
It is useful to develop a filigree showing which services your company provides or could provide for each of the products in your line. These might include client education, financing arrangements, order confirmation and tracing, predelivery training, spare-parts inventory, repair service, and claims and complaints handling.
How exercise you compare with the competition?
A similar grid tin exist used to chart the customer services your competitors provide. Through customer surveys, you can identify those areas of customer service in which your company rates higher or lower than the competition. In areas where your company is weak, can y'all invest to improve your performance? Where you are stiff, how like shooting fish in a barrel is it for competitors to match or exceed your functioning?
What services practise your customers want?
There is lilliputian value in developing superior performance in areas of customer service most customers consider only marginally of import. An essential ingredient of the audit is, therefore, to understand the relative importance of various customer services to electric current and potential customers. Distinct customer segments tin often be identified according to the priorities they adhere to particular services.
What are your customers' service need patterns?
The level and nature of customer service needed often change over the product's life. Services that are tiptop priority at the time of sale may be less important five years later. Companies must understand the patterns and timing of demand for customer services on each of their products. These they tin graph, equally Showroom Three shows.
Exhibit Iii Postpurchase service demands for 2 products
Product A in the exhibit is a security control organization, an electronics product with few moving parts. A high level of service is needed immediately following installation to train operators and debug the arrangement. Thereafter, the need for service quickly drops to just periodic replacement of mechanical parts, such every bit often used door switches.
Product B is an automobile. Service requirements are pregnant during the warranty period because of customer sensitivity to whatever artful and functional defects and also because repairs are free (to the customer). After the warranty period, however, service requirements beyond basic maintenance will be more extensive for B than for A, since there are more mechanical parts to clothing out.
What merchandise-offs are your customers prepared to brand?
Excellent service can ever exist extended—at a cost. You should know the costs to your company of providing assorted client services through various delivery systems (an 800 telephone number, a client service agent, a salesperson) at different levels of functioning efficiency. At the same fourth dimension, you should establish what value your customers place on varying levels of customer service, what level of service quality they are prepared to pay for, and whether they prefer to pay for services separately or as part of the product buy price.
Customers are likely to differ widely in toll sensitivity. A press printing manufacturer, for example, has establish that daily newspaper publishers, because of the time sensitivity of their product, are willing to pay a high toll for immediate repair service, whereas volume publishers, being less time pressured, tin can beget to be more price conscious.
The Customer Service Program
The success of the marketing plan will depend equally much on effective implementation as on sound analysis and inquiry. After reviewing several client service operations in a variety of industries, we believe that managers should concentrate on the following seven guidelines for effective program implementation:
1. Brainwash your customers. Customers must exist taught both how to use and how not to use a product. And through appropriate training programs, companies tin can reduce the chances of calls for highly trained service personnel to solve simple problems. General Electrical recently established a network of product instruction centers that purchasers of GE appliances tin can call price gratis. Many consumer problems during the warranty period tin can be handled at a cost of $5 per telephone call rather than the $30 to $50 cost for a service technician to visit a consumer's home.
ii. Educate your employees. In many organizations, employees view the customer with a trouble as an annoyance rather than as a source of data. A marketing program is often needed to alter such negative attitudes and to convince employees not only that customers are the ultimate judge of quality but also that their criticisms should exist respected and acted on immediately. The internal marketing program should incorporate detailed procedures to guide customer-employee interactions.
3. Be efficient offset, nice second. Given the choice, nigh customers would rather have efficient resolution of their trouble than a smile confront. The two of class are non mutually sectional, but no company should hesitate to centralize its customer service operation in the interests of efficiency. Federal Express, for example, recently centralized its customer service office to improve quality command of customer-employee interactions, to more than easily monitor customer service operation, and to enable field personnel to concentrate on operations and selling. The fear that channeling all calls through iii national centers would depersonalize service and annoy customers used to dealing with a field office sales representative proved unwarranted.
iv. Standardize service response systems. A standard response machinery is essential for treatment inquiries and complaints. L.Fifty. Bean has a standard form that customer service personnel utilize to cover all phone inquiries and complaints. As noted earlier, the documented information is immediately fed into a figurer and updated daily to expedite follow-through. In addition, most companies should constitute a response system to handle customer issues in which technically sophisticated people are called in on bug not solved within specific time periods by lower-level employees.
v. Develop a pricing policy. Quality customer service does not necessarily mean costless service. Many customers fifty-fifty adopt to pay for service beyond a minimum level. This is why long warranty periods often take express appeal; customers recognize that product prices must rising to cover extra warranty costs, which may principally benefit those customers who misuse the product.10 More of import to success than free service is the development of pricing policies and multiple-option service contracts that customers view as equitable and easy to sympathise.
Considering a carve up market exists for postsale service in many product categories, running the customer service operation as a profit middle is increasingly common. Merely the philosophy of "selling the product cheap and making money on the service" is likely to exist cocky-defeating over the long term, since information technology implicitly encourages poor product quality.
6. Involve subcontractors, if necessary. To ensure quality, most companies prefer to accept all client services performed by in-business firm personnel. When effectiveness is compromised as a result, however, the company must consider subcontracting selected service functions to other members of the distribution channel or to other manufacturers. Otherwise the quality of client service will decline equally an aftermath of toll-cut or attempts to artificially stimulate demand for customer service to employ slack capacity. Docutel, the automated teller manufacturer, for example, transferred responsibility for client service operations to Texas Instruments considering servicing its minor base of equipment dispersed nationwide was unprofitable.
vii. Evaluate customer service. Whether the customer service operation is treated as a toll center or a profit middle, quantitative performance standards should exist ready for each element of the service package. Do an analysis of variances between bodily and standard performances. American Airlines and other companies use such variances to calculate bonuses to service personnel. In add-on, many companies regularly solicit customers' opinions almost service operations and personnel.
In conclusion, we must stress that responsibility for quality cannot rest exclusively with the production department. Marketers must as well exist active in contributing to perceptions of quality. Marketers accept been as well passive in managing quality. Successful businesses of today will utilize marketing techniques to plan, pattern, and implement quality strategies that stretch across the factory floor.
References
ane. Results of a Wall Street Journal:-Gallup survey conducted in September 1981, published in the Wall Street Journal, October 12, 1981.
ii. Results of a survey conducted by the American Gild for Quality Control and published in the Boston Globe, January 25, 1981.
3. 1981 survey data from Appliance Manufacturer, April 1981.
4. John Holusha, "Detroit's New Stress on Quality," New York Times, Apr 30, 1981.
five. Norman B. McEachron and Harold S. Javitz, "Managing Quality: A Strategic Perspective," SRI International, Business Intelligence Program Report No. 658 (Stanford, Calif.: 1981).
6. John F. Welch, "Where Is Marketing Now That Nosotros Really Demand It?" a oral communication presented to the Conference Board's 1981 Marketing Briefing, New York City, Oct 28, 1981.
7. John Holusha, Ibid.
8. Bill Abrams, "Research Suggests Consumers Volition Increasingly Seek Quality," Wall Street Journal, October 15, 1981.
ix. Daniel Yankelovich, New Rules (New York: Random House, 1981), p. 182.
10. For evidence of this fact, see John R. Kennedy, Michael R. Pearce, and John A. Quelch, Consumer Products Warranties: Perspectives, Issues, and Options, written report to the Canadian Ministry of Consumer and Corporate Affairs, 1979.
A version of this article appeared in the July 1983 issue of Harvard Business Review.
How Might A Service Organization Best Increase The Quality Of Its Products Or Services?,
Source: https://hbr.org/1983/07/quality-is-more-than-making-a-good-product
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