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Wirtz of wisdom: creating strategic leverage by listening to your customer.

consultant Ted Wirtz of John R. Starr Inc. describes the importance of having a process to consistently evaluate a company's ability to match or exceed customer expectations and defines the rewards for doing so

In the 1980's, particularly the later half, we began to hear more and more about "Total Quality Management" and the role it could play in improving the manufacturing operation. Phrases like "Quality as a Strategic Weapon" began to appear. Demming, Juran and Crosby became conference room names. Companies embracing these processes became more prevalent, sharing their successes with us in one public forum or another. The positive impact of this "quality revolution" on American business has become undeniable. As a key part of the quality journey, it is critical for companies to have in place a reliable method of measuring customer satisfaction, so the true benefits of the TQM process can be effectively monitored and fully exploited.

The Dichotomy

Have you ever run into the situation where the sales department is claiming product quality is poor and/or has deteriorated and, at the same time, the manufacturing group tells you waste rates are down and product conformance to spec is at an all time high? Many industrial manufacturing operations run into this scenario from time to time - some much too frequently. It is distracting and diversionary because it is an issue that must be straightened out immediately, before the customer or market share is permanently lost. It can cause the CEO to "pop a clutch."

A day at the office is already tough enough, considering we live in a world where rapid technology change is underway, where product life cycles have been shortened, where competition has intensified, especially the off shore variety, and where growth rates in many of our major markets have slowed.

In this intense competitive environment, having the right information, at the right time, is a necessity, not a convenience. In today's business arena, conformance to specifications alone no longer wins the game. Listening to the customer has become more important than ever before. The question of the 90's is "who will best match the changing needs of the customer?" Your company's success may be a matter of simply turning up the hearing aid.

As they consider the best path for the future of their business, the business team must address total customer satisfaction as one of the critical issues. Regarding their customers and prospects, today's managers need accurate, timely knowledge of.

- What does the customer base really think about our products?

- What criteria determines their buying behavior?

* how well are we meeting those needs?

* are our competitors doing as well?

- How important is product quality in the markets we serve?

- Does every department in our business have precisely the same understanding of our customers' needs?

- Are we confident we are measuring the right properties?

- Are we investing in the right process improvements?

For purposes of this article, let us define what we mean by high quality. Recall from lessons in business economics that "Value" is the relationship between Quality and Price (V = P x Q). Value is what drives the customer's buying decision. Also, when quality is determined, we must measure it in terms of both "Product" and "Service." But who determines what counts as good or poor quality? Should we have a systematic way to measure and track changes in these Value equations over time? How can we become more cognizant of our competitors? How important is Price in the buying decision?

In today's competitive context the quality of a particular product or service is whatever the customer perceives it to be. It is solely the customer's behavior that is crucial. Therefore, quality is whatever the customer says it is. Additionally he sees the quality of your product and service, and that of your competitors, and measures one against the other as he makes his buying decision. Hence, it is his "perceived" value of the total package of product characteristics and service attributes, combined with price and relative to other competitive offerings, that influences customer purchasing behavior. It determines whether you get the order or someone else does!

Winning the Game

In the long run, the single most important factor affecting a business unit's performance is the quality of its products and services, relative to those of competitors. A quality edge in the marketplace boosts performance in two ways:

a) In the short run, superior quality commands premium prices and yields increased profits.

b) In the longer term, superior relative quality leads to gains in market share and higher market share also raises profits.

What causes these gratifying results? Several key competitive benefits accrue to businesses that offer superior perceived relative quality:

- stronger customer loyalty

- more repeat purchases

- less vulnerability to price wars.

Also the sharp competitor knows that product improvement and refinement is internally driven rather than occurring solely as a response to customer complaints, or worse yet, to competitor moves. By then it is probably too late!

So we have seen that there is a linkage between quality and business performance. Also we have seen that businesses that achieve a superior quality position tend to gain market share and that both superior quality and large market share individually will boost profitability and that the combination of these is virtually irresistible.

After working closely with a number of companies, from small to large, we have learned that perceived quality, relative to your competition, can be simply and accurately measured, related to business performance and monitored over time.

We've found that it is not that unusual for management to not know where they truly stand in the marketplace. For many companies, it is simply a matter of there not being a process in place for gathering, publishing and tracking quality performance. Additionally, when considering how well their products are meeting market needs, many companies too often exclude the role of service, ignore the competition and sometimes forget the customer.

However, you cannot rationally select the best path for the future until you know where you are today. What will enhance the path selection decision is a simple, fast, cost effective testing process that will clearly profile how your customers and prospects choose the products they buy. The characteristics of a good profiling process are one that will:

- decode customer expectations

- compare and contrast your management's perceptions with your customer's and prospect's perceptions

- rate/rank you vs. your key competitors

- identify your competitive strengths and weaknesses

- uncover market segmentation opportunities.

The search for quality improvement reaches beyond the company itself. It includes involvement with the customer, asking questions, anticipating needs. Your customers are likely to have excellent ideas about the products and services you provide. You may not like everything they tell you but in today's environment, you can hardly afford not to listen. Hearing what they are saying can provide an opportunity to leap-frog the competition. This should be a part of the everyday responsibilities of each business team. However, having an outside, independent cross-check, free of company baggage and bias, will normally prove to be a high return investment. The bottom line will be a clear understanding of what's needed to enhance/improve quality, which when achieved will lead to higher customer loyalty and more repeat sales. It will also reduce costs by improving the odds of making it right the first time.

Ted Wirtz is a vice president of John R. Starr, Inc., Osterville, MA, having joined the company in January 1992 after more than 20 years with The Dexter Corporation and five years as an independent management consultant. Mr. Wirtz has extensive expertise in sales and marketing management, strategic planning, business development and public affairs. Mr. Wirtz is a graduate of Georgia Tech and has continued his education at the Wharton School and the Strategic Planning Institute.
COPYRIGHT 1993 Rodman Publications, Inc.
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:consultant Ted Wirtz of John R. Starr Inc. evaluates successful customer service strategies
Author:Wirtz, Ted
Publication:Nonwovens Industry
Date:Jan 1, 1993
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