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LESSON 37
CUSTOMER FOCUSED PROJECT MANAGEMENT
BROAD CONTENTS
Who is customer?
Key Goals for Businesses
Type of customers
Customer Driven Project Organizations
Customer identification
Kano Model
Customer Satisfaction Measurement
CRM (Customer Relationship Management)
Gathering Customer Information
Four Steps to Quality Customer Service
37.1
Who is a customer in any project?
World class projects and organizations are obsessed with meeting and exceeding customer
expectations. Firms should learn to have "customer focused projects", often in response to
competitive crises. Customers in any project refer to:
1. Any individual or group that receives and must be satisfied with the work product or output
of a process.
2. Individual or group whose request a process is intended to fulfill.
3. Anyone who is impacted by the product or process.
Looking at your project organization from you customers' point of view and "improving
processes" to enable you to meet and exceed your customers' expectations is the only way to
achieve quality.
It important to meet customer expectations as it is the prime responsibility of every organization
to meet the needs of its customers. Understanding of one's customers leads to customer
satisfaction. Japanese relate quality to customer satisfaction.
Figure 37.1: Importance of Customer Satisfaction (CS) in Project Management
37.2
Key goals for businesses:
Following are the four key goals for any business:
1.
Satisfy customers
2.
Achieve higher customer satisfaction than competitors
3.
Retain customers in long run
4.
Gain market share
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To achieve aims and goals, a business must deliver ever-improving value to its customers.
Value refers to "quality related to price". It is important as consumers no longer buy solely on
the basis of price.
Figure 37.2: Customer Satisfaction
37.3
Types of Customers:
Primary:
"Direct receiver of output of the process" (bank loan seeker, lab test report receiver). It is
the source of product and process requirement.
Secondary:
Secondary customers are from "outside of process" boundaries, who also receive any
process output, but not reason for "process' existence" (bank's head office receiver
secondary output)
Indirect:
When original boundaries do not receive process output directly but are affected if process
output is incorrect or late (logistic department)
External Customers:
Those who are located outside the organizational boundaries, receive end product or service
but is not the actual user. (Power supplier for computers manufacturing, distributors)
Consumer End User:
This refers to the final user of the product. Sometimes the external customers and
consumers are the same.
Intermediary:
In between producer and end user (Transporter).
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False:
When a process that performs activities that do not add value to product or service.
Inspectors doing 100 % inspection. It needs to be eliminated.
Internal:
Next person to whom product passed on for further processing. His requests must be met,
but not at cost of external customers.
37.4
Customer-Driven Project Organizations:
Figure 37.3: Customer Value Package
If competitors offer better choices for similar price, consumers naturally select package with
highest "perceived quality".
37.5
Customer Identification:
37.5.1 Fundamental Questions in Identifying Customers:
Identifying customers begins with asking some fundamental questions:
What products/services are produced?
Who uses products/ services?
Do employees call/ write to/ answer questions for?
Supplies inputs
37.5.2 Importance of Identifying Customer Types:
Every customer type, source of product, product requirements must be identified and
process effectiveness must be measured.
Information on what satisfies customer, and what improvements are necessary. It comes
from lost, prospective, and competitors' customer, who provide useful insights.
37.6
Kano Model:
The Kano Model of Customer (Consumer) Satisfaction classifies product attributes based on
how they are perceived by customers and their effect on customer satisfaction. These
classifications are useful for guiding design decisions in that they indicate when good is good
enough, and when more is better.
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Figure 37.4: Analyzing Customer Satisfaction Data ­ Kano Model
Project activities in which the Kano Model is useful:
1. Identifying customer needs
2. Determining functional requirements
3. Concept development
4. Analysing competitive products
Other tools that are useful in conjunction with the Kano Model:
1. Eliciting Customer Input
2. Prioritisation Matrices
3. Quality Function Deployment
4. Value Analysis
Introduction
The Kano Model of Customer satisfaction (Figure 37.4) divides product attributes into three categories:
threshold, performance, and excitement. A competitive product meets basic attributes, maximises
performances attributes, and includes as many "excitement" attributes as possible at a cost the market
can bear.
Threshold Attributes
Threshold (or basic) attributes are the expected attributes or "musts" of a product, and do not provide an
opportunity for product differentiation. Increasing the performance of these attributes provides
diminishing returns in terms of customer satisfaction; however the absence or poor performance of these
attributes results in extreme customer dissatisfaction. An example of a threshold attribute would be
brakes on a car.
Kano Model Analysis
Threshold attributes are not typically captured in QFDs (Quality Function Deployment) or other
evaluation tools as products are not rated on the degree to which a threshold attribute is met, the
attribute is either satisfied or not.
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Performance Attributes
Performance attributes are those for which more is generally better, and will improve customer
satisfaction. Conversely, an absent or weak performance attribute reduces customer satisfaction. Of the
needs customers verbalise, most will fall into the category of performance attributes. These attributes
will form the weighted needs against which product concepts will be evaluated. The price for which
customer is willing to pay for a product is closely tied to performance attributes. For example,
customers would be willing to pay more for a car that provides them with better fuel economy.
Excitement Attributes
Excitement attributes are unspoken and unexpected by customers but can result in high levels of
customer satisfaction, however their absence does not lead to dissatisfaction. Excitement attributes often
satisfy latent needs ­ real needs of which customers are currently unaware. In a competitive marketplace
where manufacturers' products provide similar performance, providing excitement attributes that
address "unknown needs" can provide a competitive advantage. Although they have followed the
typical evolution to a performance then a threshold attribute, cup holders were initially excitement
attributes.
Other Attributes
Products often have attributes that cannot be classified according to the Kano Model. These attributes
are often of little or no consequence to the customer, and do not factor into consumer decisions. An
example of this type of attribute is a plate listing part numbers can be found under the hood on many
vehicles for use by repairpersons.
Application of the Kano Model Analysis
A relatively simple approach to applying the Kano Model Analysis is to ask customers two simple
questions for each attribute:
1. Rate your satisfaction if the product has this attribute?; and
2. Rate your satisfaction if the product did not have this attribute?
Kano Model Analysis
Customers should be asked to answer with one of the following responses:
A) Satisfied;
B) Neutral (Its normally that way);
C) Dissatisfied;
D) Don't care.
Basic attributes generally receive the "Neutral" response to Question 1 and the "Dissatisfied" response
to Question 2. Exclusion of these attributes in the product has the potential to severely impact the
success of the product in the marketplace.
 Eliminate or include performance or excitement attributes that their presence or absence
respectively lead to customer dissatisfaction. This often requires a trade-off analysis against
cost. As Customers frequently rate most attributes or functionality as important, asking the
question "How much extra would you be willing to pay for this attribute or more of this
attribute?" will aid in trade-off decisions, especially for performance attributes. Prioritisation
matrices can be useful in determining which excitement attributes would provide the greatest
returns on Customer satisfaction.
 Consideration should be given to attributes receiving a "Don't care" response as they will not
increase customer satisfaction nor motivate the customer to pay an increased price for the
product. However, do not immediately dismiss these attributes if they play a critical role to the
product functionality or are necessary for other reasons than to satisfy the customer. The
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information obtained from the Kano Model Analysis, specifically regarding performance and
excitement attributes, provides valuable input for the Quality Function Deployment process.
37.7
CUSTOMER SATISFACTION MEASUREMENT:
Figure 37.5: Measuring Customer Satisfaction Levels
37.7.1 Methods of Customer Retention:
Following are the methods for retaining customers:
 Establish honest relationship and empathize
 Reward loyalty (airline's frequent flyer)
 Reward usage (Coupons, credit points, preferential treatment)
 Provide unpaid service (free product targets, after sales service)
37.7.2 Seven Steps to Customer Satisfaction System:
Step 1: Total management commitment
Step 2: Get to know your customers
Step 3: Develop "performance and process standards" of service quality
Step 4: Hire, train, and compensate good staff
Step 5: Reward service accomplishments
Step 6: Stay close to your customers
Step 7: Work towards continuous improvement in "service quality  performance
37.7.3 Customer Defections:
Figure 37.6: Customer Retention and Profitability
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Figure 37.7: Customer Driven Quality Cycle
1. Leading practices for profitability and market share must understand linkages
between voice of customer and design, production, and delivery processes.
2. Ensures that no critical requirements fall through cracks and minimizes potential
gaps between expected quality and actual quality.
3. Make commitment to customer that promotes trust and confidence in products and
services.
4.  Must have effective Customer Relationship Management (CRM)" processes by
which customer can easily seek assistance, comment, complain and receive prompt
resolution of their concerns.
37.7.4 Must measure Customer Satisfaction:
1. Compare results relative to competitors
2. Use information to evaluate
3. Improve internal processes
37.7.5 Methods of Measuring Customer Satisfaction:
There are the following two methods of measuring customer satisfaction:
1. Quality Dimension Development
2. Generate Critical Incidents
Figure 37.8: Methods of Measuring Customer Satisfaction
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37.7.5.1Quality Dimensions Development Method:
Step 1: Creating list of quality dimensions (Table 37.1):
a) Read professional literature and enlist quality dimensions
b) Generate list from personal experience
Step 2: Write definitions of each dimensions:
a) Definition can be in general terms
Step 3: Develop specific examples for each quality dimension:
a)
Examples: Specific-reflecting service or product
b)
Examples:
Specific
behaviors
of
providers
c)
Declarative statements
Table 37.1: Quality Dimensions
37.7.5.2Five Key Dimensions of Service Quality:
1. Reliability:
 Ability to provide what was promised, dependably and
accurately.
 Customer service representatives respond in promised time.
 Following customer instructions.
 Providing error free invoices and statements.
 Making repairs correctly first time.
 Assurance: Knowledge and courtesy of employees.
 Their ability to convey "trust and confidence".
 Ability to answer questions.
 Having capabilities to do necessary work.
 Monitoring credit card transactions to avoid possible fraud.
 Being polite and pleasant during customer transactions.
2. Tangibles:
 Physical facilities
 Equipment and appearance of persons include:
o  Attractive facilities
o  Appropriately dressed employees
o  Well designed forms that are easy to read and interpret
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3. Empathy:
 Degree of Caring and include attention provided to customer
 Explaining "Tech Jargon" in: layman's language
 Recognizing regular customers by name
4. Responsiveness:
 Willingness to help customer and provide prompt service. For
example:
o  Acting quickly to resolve problems
o  Promptly crediting returned merchandise
o  Rapidly replacing defective products
Table 37.2: Quality Dimensions of a Manufactured Product and Service
5. Timeliness of Support:
 They completed the job when expected
 They met my deadlines
 They finished their responsibilities within stated time frame
 The project was completed on time
6. Responsiveness of Support:
 They were quick to respond when I asked for help
 They immediately helped me when I needed help
 I waited a short period of time to get help after I asked for it
37.8
Customer Relationship Management (CRM):
Customer Relationship Management (CRM) includes attention to:
 Target and developing customer contact employees.
 Empowering them to do whatever is necessary to satisfy customers.
37.9
Gathering Customer Information:
 Customer requirements called "voice of customer":
There are a variety of methods to "listen" to the Voice of Customer. To do it effectively,
information needs to be collected about the customer like:
a) Needs and expectations
b) Importance
c) Satisfaction with company's performance
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37.10
Four Steps to Quality Customer Service:
There are the following four steps to quality customer service:
Step 1: Send positive attitude:
 Product Knowledge / command
 Appearance (dress, quality, cleanliness, orderliness, etc)
 Body language (head, arms facial, smile, body movement, eye contact)
 Sound of your voice (tone and how you say it)
o Face to face
o On telephone (telephone skills)
 Staying energized
 Empathize (concern for customer's benefits)
Step 2: Identify needs of your customers, guests, clients
a) Human Needs: (welcomed, respected, comfortable, orderly, understood, helped, important,
appreciated, recognized)
b) Timing Needs: (hold time on telephone, waiting in office, letter response, return calls,
appropriate time to meet, width and depth of product/service needs)
c) Location Needs:
d) Product Needs: (stated, unstated, basic, delighter)
e) Create an environment to listen
f) Careful Listening and Understanding
g) Feedback / Evaluation
Figure 37.9: Use of Kano Model to Identify Must-be, Delighters and One Dimensional
Qualities
Step 3: Provide for needs of your customers, guests, clients
Are you ready to fulfill the human, timing, location, and product needs of the customer?
Are you capable to fulfill the human, timing, location, and product needs of the
customer?
Do you have the required product / service to meet the needs of the customer?
Have you actually fulfilled the human, timing, location, and product needs of the
customer?
Step 4: Make sure your customers, clients, guests return to you
Make sure you delivered both the procedures and the personal
Be sensitive to check your performance by the outcomes before, during and after the service
delivery
Handling complaint for cases of gaps, customers will complain (within themselves,
gestures, light words, strong words, strong reactions).
o  Listen to their stated and non-stated complains carefully
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Empathize
o
Repeat and confirm whether you understood clearly
o
Apologize genuinely
o
Acknowledge sympathy
o
Correct the situation
o
Identify root-causes and prevent recurrence
o
Types of difficult customers with whom you have to deal nicely
o  Angry
o  Nasty or Obnoxious
o  Demanding
o  Constant Critic
o  Non-Stop Talker
o  Indecisive
o  Intoxicated
o  Argumentative
They are usually difficult for their own reasons - not because of you
Figure 37.10: Why Companies Lose Customers?
Reasons Why Customers are Difficult:
o  Negative experience
o  Frustrated
o  Confused
o  Satisfy their ego or self-esteem
o  Ignored
o  Treated poorly
o  In bad mood
Get Difficult Customers on Your Side:
o  Do not take it personally, hold on to your confidence
o  Remain calm; listen carefully
o  Do not just protect yourself or your company, share his/her grievance
o  Focus on the problem, not the person
o  Turn the difficult one into a satisfied, consider it an accomplishments
Take an extra step - surprise the customer. For example:
o  Ticket agent: would you like me to select a seat for your return flight now?
o  Salesperson: I will deliver it personally this afternoon
o  Nurse: Since you are awake, let me give you a drink
o  Waiter: may I bring extra glass of coffee
o  Hotel desk clerk: may I call a cab for you
o  Mechanic: since car will take long, may I give you a newspaper
o  Grocer: may I give you help to carry your goods
o  Bank Cashier: may I give you brand new notes
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Re-engineer your Customer Satisfaction into Quality Customer Satisfaction:
Customer Satisfaction Vision and Policy
Customer Satisfaction Training
Customer Satisfaction Personality Grooming and Development
Customer Satisfaction Systems and Procedures
Customer Satisfaction Consistency
Customer Satisfaction Measurement (e.g. customer retention rate)
Develop and regularize Customer Satisfaction Delighters
1. Determine Questions:
 Be Concise, Precise
 Be Direct
 Discard Superfluous Words
 Be Unambiguous
Examples: How are these questions?
 The SDO was good
 The bank manager listened to me and took a short time to handle my complaint
 The SDO was not available when he was needed
 The SDO was available when he was needed
 The staff was courteous
2. Response Format:
a) Checklist Format (yes/no)
b) Liker-type (1-5 scale)
Table 37.3: Liker Scale
"Introduction" to Questionnaires:
For example: "To better serve you, we would like to know your opinion of the quality of our
service at XYZ Company. You recently received service from our company. Please indicate
the extent to which you agree or disagree with the following statements about the service you
received from the staff. Circle the appropriate number using the scale below.
1, 2, 3, 4, 5
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Finally, select appropriate questions; ensure critical customer requirements are addressed
properly.
Sampling
Some of the common sampling techniques used are briefly defined below:
1.
Census
 To gather information from all of customers (sample is the total population) for example,
doctors response by drug manufacturers.
2.
Judgmental Sampling
 Use judgment in the selection of customers.
3.
Statistical Sampling
 Select sample based on statistical probability (rely on chance).
It becomes easy to
generalize, if not biased.
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Table of Contents:
  1. INTRODUCTION TO PROJECT MANAGEMENT:Broad Contents, Functions of Management
  2. CONCEPTS, DEFINITIONS AND NATURE OF PROJECTS:Why Projects are initiated?, Project Participants
  3. CONCEPTS OF PROJECT MANAGEMENT:THE PROJECT MANAGEMENT SYSTEM, Managerial Skills
  4. PROJECT MANAGEMENT METHODOLOGIES AND ORGANIZATIONAL STRUCTURES:Systems, Programs, and Projects
  5. PROJECT LIFE CYCLES:Conceptual Phase, Implementation Phase, Engineering Project
  6. THE PROJECT MANAGER:Team Building Skills, Conflict Resolution Skills, Organizing
  7. THE PROJECT MANAGER (CONTD.):Project Champions, Project Authority Breakdown
  8. PROJECT CONCEPTION AND PROJECT FEASIBILITY:Feasibility Analysis
  9. PROJECT FEASIBILITY (CONTD.):Scope of Feasibility Analysis, Project Impacts
  10. PROJECT FEASIBILITY (CONTD.):Operations and Production, Sales and Marketing
  11. PROJECT SELECTION:Modeling, The Operating Necessity, The Competitive Necessity
  12. PROJECT SELECTION (CONTD.):Payback Period, Internal Rate of Return (IRR)
  13. PROJECT PROPOSAL:Preparation for Future Proposal, Proposal Effort
  14. PROJECT PROPOSAL (CONTD.):Background on the Opportunity, Costs, Resources Required
  15. PROJECT PLANNING:Planning of Execution, Operations, Installation and Use
  16. PROJECT PLANNING (CONTD.):Outside Clients, Quality Control Planning
  17. PROJECT PLANNING (CONTD.):Elements of a Project Plan, Potential Problems
  18. PROJECT PLANNING (CONTD.):Sorting Out Project, Project Mission, Categories of Planning
  19. PROJECT PLANNING (CONTD.):Identifying Strategic Project Variables, Competitive Resources
  20. PROJECT PLANNING (CONTD.):Responsibilities of Key Players, Line manager will define
  21. PROJECT PLANNING (CONTD.):The Statement of Work (Sow)
  22. WORK BREAKDOWN STRUCTURE:Characteristics of Work Package
  23. WORK BREAKDOWN STRUCTURE:Why Do Plans Fail?
  24. SCHEDULES AND CHARTS:Master Production Scheduling, Program Plan
  25. TOTAL PROJECT PLANNING:Management Control, Project Fast-Tracking
  26. PROJECT SCOPE MANAGEMENT:Why is Scope Important?, Scope Management Plan
  27. PROJECT SCOPE MANAGEMENT:Project Scope Definition, Scope Change Control
  28. NETWORK SCHEDULING TECHNIQUES:Historical Evolution of Networks, Dummy Activities
  29. NETWORK SCHEDULING TECHNIQUES:Slack Time Calculation, Network Re-planning
  30. NETWORK SCHEDULING TECHNIQUES:Total PERT/CPM Planning, PERT/CPM Problem Areas
  31. PRICING AND ESTIMATION:GLOBAL PRICING STRATEGIES, TYPES OF ESTIMATES
  32. PRICING AND ESTIMATION (CONTD.):LABOR DISTRIBUTIONS, OVERHEAD RATES
  33. PRICING AND ESTIMATION (CONTD.):MATERIALS/SUPPORT COSTS, PRICING OUT THE WORK
  34. QUALITY IN PROJECT MANAGEMENT:Value-Based Perspective, Customer-Driven Quality
  35. QUALITY IN PROJECT MANAGEMENT (CONTD.):Total Quality Management
  36. PRINCIPLES OF TOTAL QUALITY:EMPOWERMENT, COST OF QUALITY
  37. CUSTOMER FOCUSED PROJECT MANAGEMENT:Threshold Attributes
  38. QUALITY IMPROVEMENT TOOLS:Data Tables, Identify the problem, Random method
  39. PROJECT EFFECTIVENESS THROUGH ENHANCED PRODUCTIVITY:Messages of Productivity, Productivity Improvement
  40. COST MANAGEMENT AND CONTROL IN PROJECTS:Project benefits, Understanding Control
  41. COST MANAGEMENT AND CONTROL IN PROJECTS:Variance, Depreciation
  42. PROJECT MANAGEMENT THROUGH LEADERSHIP:The Tasks of Leadership, The Job of a Leader
  43. COMMUNICATION IN THE PROJECT MANAGEMENT:Cost of Correspondence, CHANNEL
  44. PROJECT RISK MANAGEMENT:Components of Risk, Categories of Risk, Risk Planning
  45. PROJECT PROCUREMENT, CONTRACT MANAGEMENT, AND ETHICS IN PROJECT MANAGEMENT:Procurement Cycles