How much do you GET about the importance of product and service quality?

Although many companies use slogans like "Quality is the life of the enterprise" and "Quality first" as catchy corporate mottos, and make attractive promises about their products and services in marketing and sales promotions, in practice, customer complaints about product and service quality issues continue, and sometimes customers have to switch to other manufacturers due to quality problems. Many quality management managers feel very aggrieved about this.

Because the vast majority of them subjectively want to put quality first and provide customers with high-quality products and services. However, in the practice of quality management, they cannot consistently uphold quality first. What is the root of the problem?

Long-term research at home and abroad and the practices of advanced enterprises have proven that, ultimately, it is due to traditional concepts of quality, quality strategies, quality management, quality technologies and methods, and their tools lagging behind modern market competition. To understand the problem, please first review some industrial survey results below.

Why do customers switch to other manufacturers for products and services?

Surveys in the United States in the 1980s proved that the reasons customers switch manufacturers for products and services include:

1% caused injury or death to customers or users;

3% manufacturers changed sales or service locations;

5% switched manufacturers due to persuasion by others;

9% competition from rivals;

14% customer dissatisfaction with the sales company's service;

68% customer dissatisfaction with the products and services provided by the manufacturer.

What do the above survey results indicate? According to the 80/20 (Pareto) rule, 82% of the results in the above survey are caused by customer dissatisfaction with product and service quality. This result warns us: only by providing customers with products and services of higher quality than competitors can we win and retain customers.

What are the reasons for customer returns and complaints?

Many people believe that the purpose of business operation is to make money. Today, the practices of domestic and foreign enterprises and the Theory of Constraints (TOC) prove that the purpose of business operation is "to make the beneficiaries completely satisfied" (TSS). To achieve this goal, making money (to Make Money) must be the overall objective of business operations. To realize this goal, it is necessary to provide customers with high-quality, low-cost products and services on time—that is, "to provide customers with products and services that satisfy them" as the business work objective, and to minimize customer returns and complaints as much as possible. However, what needs to be studied is: what causes customer returns and complaints? Japanese industrial survey results show:

70% of the causes are due to design errors, especially design quality issues (such as safety, reliability, product performance and functional quality, as well as appearance quality and other quality aspects);

30% of the causes are due to manufacturing, transportation, storage, and other factors.

Customer dissatisfaction with the products and services you provide will cause your company to quickly lose market share.

Pay attention to customer feedback.

Before the 1990s, some foreign companies did not pay much attention to the few customer complaints they received. Because, in their view, it was a very small proportion compared to the total number of customers purchasing products and receiving services. However, the U.S. Consumer Affairs Committee (TARP) survey in the 1990s proved that this idea was completely wrong. Their survey results are as follows:

Only 4% of dissatisfied customers actually file complaints, i.e., the actual complaint rate is 4%;

One customer complaint can influence 20 to 25 potential customers not to buy your product or accept your service;

Quickly resolving customer dissatisfaction issues can help you recover 90% of the impact;

One customer who has their problem satisfactorily resolved will tell 5 people that your company is good.

Discussion:

A shopping mall manager said: "Our mall has 10,000 customers shopping every month, and we only receive 12 complaints on average each month. So, the products sold and services provided by our mall are quite good and should be maintained." Do you think his statement is correct? How is the service quality and product quality of this mall? Is the percentage of dissatisfied customers 0.12% of total customers (i.e., 12 ÷ 10,000), or (60% to 75%) [i.e., 12 × (20 to 25) ÷ 4% × 10,000 - 1]?

The correct answer is: the percentage of customers dissatisfied with the products sold and services provided by this mall has reached 60% to 75%. With so many dissatisfied customers, how long can this mall sustain? You will learn how to calculate customer complaint rates in Chapter 10 of this book, where you will be able to correctly calculate customer complaint rates or customer satisfaction rates.

The survey by China Little Swan Company proved:

One satisfied customer will influence the purchase intention of 8 potential customers, among whom at least one new customer will buy your product;

One dissatisfied customer will vent dissatisfaction to 25 potential customers, affecting their decision not to buy your product;

The cost of retaining one old customer is only one-sixth of the cost of acquiring one new customer.

In summary, the quality of products and services provided by an enterprise determines whether it can win customer favor relative to competitors offering the same or similar products and services, thereby winning or retaining market share. From this, it can be concluded that the quality of products and services provided to customers is a critical issue related to the survival of the enterprise.

Therefore, enterprises must attach great importance to quality improvement and quality management. Do you agree with this conclusion? If not, please explain your reasons. If you agree, please consider what insights can be gained from it.

Insights

The above important survey results and the practices of many enterprises in various countries over the past decade have proven the following philosophy of competition:

The goal of product and service quality can only be "to make customers completely satisfied" (TCS);

Change is endless; 80% of manufacturing quality problems are caused by process variation, so continuous quality improvement is the task of enterprises;

90% of quality problems lie in quality management; good quality organization and management guarantee high quality;

Ensuring product and service quality is an unshirkable responsibility of the company and every employee;

Traditional concepts, strategies, technologies, methods, and tools of quality must be innovated, otherwise it will be difficult to adapt to modern domestic and international market competition.