When Services Are Performed On Account, What Is The Effect?
Corporate executives and consumers take in recent years adopted divergent views of product quality. Several contempo surveys point how broad the quality perception gap is:
- Iii out of five chief executives of the country's largest 1,300 companies said in a 1981 survey that quality is improving; only thirteen% said it is failing.1 Nonetheless 49% of seven,000 consumers surveyed in a separate 1981 study said that the quality of U.Due south. products had declined in the past five years. In add-on, 59% expected quality to stay down or reject further in the upcoming five years.two
- 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 belief.three
- Executives of U.S. auto manufacturers cite internal records that show 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 show that consumers perceive the quality of U.S. cars to be declining in comparison with imported cars, peculiarly those from Japan.
Mindful of this gap, many U.S. companies have turned to promotional tactics to better their quality image. Such efforts are evident in two trends. The first is the greater accent advertisements place on the discussion quality and on such themes as reliability, durability, and workmanship. Ford, for instance, advertises that "quality is chore ane," and Levi Strauss proffers the notion that "quality never goes out of style." And many ads at present merits that products are "the best" or "ameliorate than" competitors'.
The second trend is the move to quality assurance and extended service programs. Chrysler offers a five-year, 50,000 mile warranty; Whirlpool Corporation promises that parts for all models will be available for xv years; Hewlett-Packard gives customers a 99% uptime service guarantee on its computers; and Mercedes-Benz makes technicians bachelor for roadside assistance after normal dealer service hours.
While these attempts to change client perceptions are a step in the right direction, a company's or a product'due south quality image obviously cannot be improved overnight. It takes time to cultivate customer confidence, and promotional tactics alone volition not do the job. In fact, they tin can backfire if the claims and promises practise non hold up and customers perceive them equally gimmicks.
To ensure delivery of advertising claims, companies must build quality into their products or services. From a production perspective, this means a companywide commitment to eliminate errors at every stage of the production development process—product blueprint, process design, and manufacturing. It besides means working closely with suppliers to eliminate defects from all incoming parts.
Equally important nevertheless often overlooked are the marketing aspects of quality-improvement programs. Companies must be sure they are offer the benefits customers seek. Quality should be primarily customer-driven, not technology-driven, production-driven, or competitor-driven.
In developing production quality programs, companies oft fail to take into account two basic sets of questions. Kickoff, how practice customers define quality, and why are they suddenly demanding higher quality than in the by? 2nd, how important is loftier quality in customer service, and how tin information technology exist ensured after the sale?
As mundane as these questions may audio, the answers provide essential data on how to build an effective client-driven quality programme. We should not forget that customers, after all, serve as the ultimate gauge of quality in the marketplace.
The Product-Service Connection
Product performance and client service are closely linked in any quality program; the greater the attention to product quality in production, the fewer the demands on the customer service operation to correct subsequent problems. Office equipment manufacturers, for example, are designing products to have fewer transmission and more than automatic controls. Not only are the products easier to operate and less susceptible to misuse but they as well crave little maintenance and have internal troubleshooting systems to assistance in problem identification. The upwards-forepart investment in quality minimizes the demand for client service.
Besides its usual functions, customer service tin human action equally an early alarm system to detect production quality issues. Client surveys measuring product operation can also assistance spot quality control or design difficulties. And of class detecting defects early on spares later on embarrassment and headaches.
Quality-comeback successes
It is relevant at this point to consider ii companies that have developed successful client-driven quality programs: L.L. Bean, Inc. and Caterpillar Tractor Company. Although these 2 companies are in different businesses—L.L. Bean sells outdoor apparel and equipment primarily through mail-order while Caterpillar articles earth-moving equipment, diesel engines, and materials-treatment devices, which it sells through dealers—both enjoy an enviable reputation for high quality.
Some 96.7% of three,000 customers 50.L. Edible bean recently surveyed said that quality is the attribute they like most nearly the company. Bean executes a customer-driven quality program by:
Conducting regular client satisfaction surveys and sample grouping interviews to track customer and noncustomer perceptions of the quality of its ain and its competitors' products and services.
Tracking on its computer all client inquiries and complaints and updating the file daily.
Guaranteeing all its products to be 100% satisfactory and providing a full cash refund, if requested, on any returns.
Asking customers to fill up out a short, coded questionnaire and explicate their reasons for returning the trade.
Performing all-encompassing field tests on any new outdoor equipment before listing information technology in the company's catalogs.
Even stocking extra buttons for most of the clothes items carried years ago, only in instance a customer needs 1.
Despite contempo financial setbacks, Caterpillar continues to be fully committed to sticking with its quality programme, which includes:
Conducting two customer satisfaction surveys following each buy, one after 300 hours of production utilize and the second afterward 500 hours of use.
Maintaining a centrally managed list of product issues every bit identified by customers from around the world.
Analyzing warranty and service reports submitted by dealers, equally part of a product improvement plan.
Asking dealers to bear a quality audit as before long every bit the products are received and to attribute defects to either assembly errors or shipping amercement.
Guaranteeing 48—hour delivery of whatever office to whatsoever customer in the earth.
Encouraging dealers to plant side businesses in rebuilding parts to reduce costs and increase the speed of repairs.
How Practise Customers Define Quality?
To sympathize how customers perceive quality, both 50.L. Edible bean and Caterpillar collect much information directly from them. Even with such information, though, pinpointing what consumers really want is no simple job. For one thing, consumers cannot always articulate their quality requirements. They oftentimes speak in generalities, complaining, for example, that they bought "a lemon" or that manufacturers "don't make 'em like they used to."
Consumers' priorities and perceptions also change over time. Taking automobiles as an example, market data compiled past SRI International advise that consumer priorities shifted from styling in 1970 to fuel economy in 1975 then to quality of design and performance in 1980.5 (Run across Exhibit I.)
Changes in the importance to customers of U.Southward. machine characteristics
In addition, consumers perceive a production'southward quality relative to competing products. Every bit John F. Welch, chairman and chief executive of General Electric Company, observed, "The client…rates us meliorate or worse than somebody else. It's not very scientific, merely it's disastrous if you score low."6
One of the major problems facing U.S. machine 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 thought that Japanese-made cars are usually better quality than those made here, about the same, or not equally good, 34% answered ameliorate, thirty% said the aforementioned, 22% said not every bit good, and 14% did non know. When the Roper Organization asked the same question in 1977, merely 18% said amend, xxx% said the aforementioned, 32% said non as skilful, and 20% did non know.seven
Further, consumers are demanding high quality at low prices. When a national panel of shoppers was asked where it would similar to meet food manufacturers invest more, the highest-rated response was "better quality for the same price."8 In search of such value, some consumers are fifty-fifty chartering buses to Cohoes Manufacturing Company, an apparel specialty store located in Cohoes, New York that has a reputation for offering high-quality, designer-characterization trade at discount prices.
Consumers' perceptions of product quality are influenced past various factors at each phase of the buying process. Some of the major influences are listed in Exhibit Ii.
Showroom 2 Factors influencing consumer perception of quality* *Not necessarily in order of importance.
Watching for fundamental trends
What should companies do to improve their agreement of customers' perspectives on quality? Nosotros know of no other way than to collect and analyze internal information and to monitor publicly available information.
Internally generated information is obtained principally through customer surveys, interviews of potential customers (such as focus group interviews), reports from salespeople, and field experiments. Recall how Fifty.L. Edible bean and Caterpillar apply these approaches to obtain information on how their current and potential customers charge per unit their products' quality versus those of competitors'.
Publicly available information of a more than general nature tin exist obtained through pollsters, independent inquiry organizations, government agencies, and the news media. Such sources are frequently helpful in identifying shifts in societal attitudes.
Companies that endeavour to define their customers' attitudes on product and service quality oftentimes focus too narrowly on the meaning of quality for their products and services; an understanding of changing attitudes in the broader market place tin be equally valuable.
Toward the stop of the last decade, too many U.South. companies failed to observe that the optimism of the mid-1970s was increasingly giving way to a mood of cynicism and restraint because of deteriorating economic conditions. Several polls taken during the 1970s indicated the nature and extent of this shift;9 for example, Gallup polls showed that while only 21% of Americans in the early 1970s believed "adjacent yr will exist worse than this year," 55% held this pessimistic outlook by the stop of the 1970s.
Pessimistic about what the future held, consumers began adjusting their life-styles. The unrestrained want during the mid-1970s to purchase and own more gave mode to more restrained behavior, such equally "integrity" buying, "investment" buying, and "life-bike" buying.
Integrity purchases are those made for their perceived importance to society rather than solely for personal status. Ownership a small, free energy-efficient automobile, for example, tin be a sign of personal integrity. Investment buying is geared toward long-lasting products, even if that ways paying a niggling more than. The accent is on such values as durability, reliability, craftsmanship, and longevity. In the apparel business, for example, more manufacturers take begun stressing the investment value of clothing. And life-cycle buying entails comparison the price of buying with the cost of owning. For example, some might encounter a $10 calorie-free seedling, which uses one-tertiary as much electricity and lasts iv times equally long as a $1 conventional low-cal bulb, as the better deal.
These changes in buying behavior reflect the pessimistic outlook of consumers and their growing emphasis on quality rather than quantity: "If nosotros're going to buy less, let information technology be better."
By overlooking this key shift in consumer attitudes, companies missed the opportunity to capitalize on it. If they had monitored the data available, managers could accept identified and responded to the trends earlier.
Ensuring Quality After the Sale
As we suggested earlier, the quality of customer service after the auction is frequently equally important equally the quality of the product itself. Of course, excellent client service can rarely compensate for a weak product. But poor client service tin chop-chop negate all the advantages associated with delivering a product of superior quality. At companies similar Fifty.L. Edible bean and Caterpillar, customer service is not an afterthought but an integral part of the production offering and is subject to the aforementioned quality standards as the product process. These companies realize that a top-notch customer service operation can be an effective means of accomplishing the following three objectives:
1. Differentiating a company from competitors. Equally more customers seek to extend the lives of their durable goods, the perceived quality of customer service becomes an increasingly important gene in the purchase determination. Whirlpool Corporation promises to stand up by its products rather than hide behind its distribution channels; it has parlayed a reputation for effective customer service into a distinct competitive reward that reinforces its image of quality.
two. Generating new sales leads and discouraging switches to alternative suppliers. Keeping in regular contact with customers and then equally to deliver new data to them and get together suggestions for product improvements can ensure the connected satisfaction of existing customers and improve the chances of meeting the needs of potential purchasers.
3. Reinforcing dealer loyalty. Companies with strong customer service programs can besides broaden their distribution channels more easily to include outlets that may non be able to evangelize high levels of postpurchase client service on their own.
The client service audit
To be effective, a customer service operation requires a marketing plan. Client services should be viewed as a product line that must be packaged, priced, communicated, and delivered to customers. An evaluation of a visitor's current client service functioning—a customer service inspect—is essential to the evolution of such a plan.
A customer service inspect asks managers the post-obit questions:
What are your customer service objectives?
Many companies have not established objectives for their client service operations and have no concept of the function customer service should play in their business organisation and marketing strategies. Every company should know what percentage of its acquirement stream information technology expects to derive from service sales and whether the goal is to brand a profit, interruption even, or—for reasons of competitive reward—sustain a loss.
What services do you provide?
It is useful to develop a grid 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 preparation, spare-parts inventory, repair service, and claims and complaints handling.
How exercise you compare with the competition?
A like grid can be used to chart the client services your competitors provide. Through customer surveys, you lot tin identify those areas of customer service in which your company rates higher or lower than the competition. In areas where your company is weak, tin can you invest to improve your performance? Where you are strong, how piece of cake is it for competitors to lucifer or exceed your performance?
What services do your customers want?
At that place is little value in developing superior performance in areas of customer service nigh customers consider only marginally important. An essential ingredient of the audit is, therefore, to understand the relative importance of various customer services to current and potential customers. Distinct customer segments can often exist identified according to the priorities they attach to item services.
What are your customers' service demand patterns?
The level and nature of customer service needed often alter over the product'southward life. Services that are top priority at the time of sale may be less of import five years later. Companies must understand the patterns and timing of demand for customer services on each of their products. These they can graph, as Exhibit III shows.
Exhibit Iii Postpurchase service demands for two products
Product A in the exhibit is a security control system, an electronics product with few moving parts. A high level of service is needed immediately following installation to train operators and debug the system. Thereafter, the demand for service apace drops to only periodic replacement of mechanical parts, such as frequently used door switches.
Production B is an automobile. Service requirements are significant during the warranty period because of client sensitivity to any aesthetic and functional defects and besides because repairs are free (to the client). Afterward the warranty period, however, service requirements beyond basic maintenance volition exist more extensive for B than for A, since there are more than mechanical parts to wear out.
What trade-offs are your customers prepared to brand?
Splendid service can ever be extended—at a toll. You should know the costs to your visitor of providing assorted customer services through diverse delivery systems (an 800 phone number, a client service agent, a salesperson) at dissimilar levels of performance efficiency. At the same time, you should plant what value your customers place on varying levels of client 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 purchase price.
Customers are likely to differ widely in cost sensitivity. A press press manufacturer, for example, has found that daily paper publishers, considering of the time sensitivity of their product, are willing to pay a high price for firsthand repair service, whereas book publishers, being less time pressured, can afford to be more than price conscious.
The Customer Service Program
The success of the marketing program will depend every bit much on constructive implementation as on sound analysis and research. Afterward reviewing several customer service operations in a variety of industries, we believe that managers should concentrate on the following seven guidelines for constructive program implementation:
i. Educate your customers. Customers must be taught both how to use and how not to use a production. And through appropriate training programs, companies tin reduce the chances of calls for highly trained service personnel to solve simple problems. Full general Electric recently established a network of product education centers that purchasers of GE appliances can phone call toll free. Many consumer problems during the warranty menstruum tin can be handled at a cost of $five per call rather than the $thirty to $l cost for a service technician to visit a consumer'south home.
2. Brainwash your employees. In many organizations, employees view the customer with a trouble as an annoyance rather than every bit a source of information. A marketing programme is oft needed to change such negative attitudes and to convince employees not only that customers are the ultimate judge of quality but also that their criticisms should be respected and acted on immediately. The internal marketing program should incorporate detailed procedures to guide client-employee interactions.
3. Be efficient first, nice 2d. Given the choice, most customers would rather have efficient resolution of their problem than a grin confront. The two of course are not mutually exclusive, 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 function to improve quality control 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.
4. Standardize service response systems. A standard response mechanism is essential for handling inquiries and complaints. Fifty.Fifty. Bean has a standard form that client service personnel use to cover all phone inquiries and complaints. Every bit noted before, the documented information is immediately fed into a computer and updated daily to expedite follow-through. In add-on, virtually companies should establish a response system to handle customer problems in which technically sophisticated people are called in on problems non solved within specific fourth dimension periods by lower-level employees.
5. Develop a pricing policy. Quality customer service does non necessarily mean free service. Many customers even prefer to pay for service beyond a minimum level. This is why long warranty periods frequently have limited appeal; customers recognize that product prices must rise to cover extra warranty costs, which may principally benefit those customers who misuse the product.10 More important to success than free service is the development of pricing policies and multiple-option service contracts that customers view as equitable and easy to empathise.
Because a carve up marketplace exists for postsale service in many product categories, running the customer service operation every bit a profit eye is increasingly common. But the philosophy of "selling the product inexpensive and making coin on the service" is probable to be cocky-defeating over the long term, since it implicitly encourages poor product quality.
6. Involve subcontractors, if necessary. To ensure quality, about companies prefer to take all client services performed by in-firm personnel. When effectiveness is compromised equally a issue, even so, the visitor must consider subcontracting selected service functions to other members of the distribution aqueduct or to other manufacturers. Otherwise the quality of client service will decline as an aftermath of cost-cutting or attempts to artificially stimulate demand for customer service to use slack capacity. Docutel, the automated teller manufacturer, for case, transferred responsibleness for customer service operations to Texas Instruments because servicing its pocket-sized base of operations of equipment dispersed nationwide was unprofitable.
7. Evaluate customer service. Whether the customer service operation is treated equally a cost heart or a profit heart, quantitative performance standards should be prepare for each element of the service package. Practice an analysis of variances between bodily and standard performances. American Airlines and other companies utilise such variances to calculate bonuses to service personnel. In add-on, many companies regularly solicit customers' opinions about service operations and personnel.
In determination, nosotros must stress that responsibility for quality cannot rest exclusively with the product section. Marketers must as well be active in contributing to perceptions of quality. Marketers take been too passive in managing quality. Successful businesses of today will utilize marketing techniques to plan, design, and implement quality strategies that stretch beyond the factory floor.
References
1. Results of a Wall Street Journal:-Gallup survey conducted in September 1981, published in the Wall Street Periodical, October 12, 1981.
2. Results of a survey conducted by the American Society 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'southward New Stress on Quality," New York Times, April 30, 1981.
5. Norman B. McEachron and Harold Southward. Javitz, "Managing Quality: A Strategic Perspective," SRI International, Business concern Intelligence Program Report No. 658 (Stanford, Calif.: 1981).
vi. John F. Welch, "Where Is Marketing Now That We Actually Need It?" a speech presented to the Conference Board's 1981 Marketing Conference, New York Urban center, October 28, 1981.
7. John Holusha, Ibid.
eight. Beak Abrams, "Research Suggests Consumers Will Increasingly Seek Quality," Wall Street Periodical, Oct 15, 1981.
nine. 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, study to the Canadian Ministry building of Consumer and Corporate Affairs, 1979.
A version of this article appeared in the July 1983 event of Harvard Business Review.
Source: https://hbr.org/1983/07/quality-is-more-than-making-a-good-product
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