In the initial part of my professional life, between 1996 and 2001, I carried out Business Reviews for 400+ organizations which had Quality Audits as an essential element. In the last 15 years, while utilizing Six Sigma, I have been working with Quality professionals and leadership teams across domains and countries.
Six Sigma professionals seek to work on defect reduction projects with Quality function and customer satisfaction projects with Marketing function. I have been observing that Marketing & Quality do not collaborate well when needed and the Six Sigma professional finds it hard to bring them together.
Marketing will do anything to enhance customer satisfaction and Quality goes out of the way to ensure the highest quality.
Before we try and explore the reasons for this disconnect, we need to answer a question related to a customer focused business objective. Out of the three related terms, which is the one that the management should seek to enhance more than others?
- Customer Satisfaction
Which, according to you is the measure that an organization must maintain as its highest priority? I recommend that you read further only when you have made up your mind.
While many Quality professionals argue that the objective of a company is to develop or deliver highest quality defect free products/ services, an important question relates to the price at which such high quality can be offered. The perceived value, therefore, comes into play quite often. There have been arguments in the past by Quality Gurus who said that “Quality is free” and “Quality pays for itself”. The Quality Gurus have maintained that it pays to deliver the highest quality to the customer, lower long-term costs and large repeat business will pay back handsomely eventually.
With great quality, you are likely to get repeat customers, word of mouth publicity, more and more people buying your product/ service, huge savings in terms of zero inspection, coupled with low rework, zero scrap or warranty costs.
While the focus on highest quality seems to make perfect sense, there are situations in the practical world, where “Quality DOES NOT pay for itself”. The highest quality many a time does demand a higher price and customer will buy only if he perceives high value.
The infamous Iridium project of Motorola which offered satellite phones with very high first time right quality failed as customers were not willing to buy at the high price . Uber today has premium services in most countries for which there are few takers. Premium cars in Uber are many times available at lower fare category as they do not get business at the price that they probably deserve. Across the world, the highest quality Airlines have lost market share to economy Airlines which provided higher value.
Value and quality are deeply connected. The relationship between quality and price defines value. A higher quality at the same price is higher value. Same quality at a lower price is also higher value. It makes business sense to focus on value instead of quality as value incorporates the concept of quality within it. The highest quality at an acceptable price is what always works. Quality makes sense, value makes more sense.
Let us now explore customer satisfaction. Satisfaction is an emotional response to an experience. Satisfaction or dissatisfaction relates to the difference between the value that was expected and the value that was received. So what should we really focus on? Value or Satisfaction? This really is a big question. Loads and loads of money are being invested on measuring customer satisfaction. Most Marketing folks and Six Sigma professionals would say – Don’t we as businesses exist for enhancing customer satisfaction? What else do we seek other than happiness for a customer? The best business results improvement projects are derived by measuring the VOC (voice of customer).
Some other questions await answers too – Are satisfied customers always supposed to be loyal customers? Does customer satisfaction always predict business growth?
Board members and investors ask for business growth and not for continued or enhanced customer satisfaction. Ask the leadership team of any IT or BPO organization if satisfied customers are likely to give more business next year. They will tell you that the clients who scored the highest on customer satisfaction have sometimes shifted business to a competitor who promised higher value. The majority of satisfied customers shall shift from your product or service when a higher value is offered by a competitor.
Customer retention and customer acquisition are connected more to customer’s value perception as compared to customer satisfaction. Higher value perception leads to enhancement in customer retention as well as customer acquisition.
The bigger objective of Marketing, therefore, must not be enhanced customer satisfaction but to create or recreate higher value for the customer. The larger objective of Quality enthusiasts, similarly, should not defect reduction but higher value generation.
The bigger objectives of Marketing and Quality are commonly misunderstood.
Marketing and Quality functions do not work well together as they generally measure different things and therefore, pursue different goals. If they agree on a common goal of generating higher value, a collaboration between them will improve, and great results are likely to follow.
What is your view? Do you agree with this article? Feel free to present your thoughts here.
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