Toughest ISO 9001:2000 Requirements (8.2.1)

In an earlier newsletter, I identified twelve ISO 9001:2000 clauses as the toughest requirements to understand and meet with conforming practices. Clauses 4.1, 5.1, 5.4.1, 6.3, 7.3.1, and 7.5.2 have been addressed in past newsletters.

This article picks up with clause 8.2.1, Customer Satisfaction:


As one of the measurements of the performance of the quality management system, the organization shall monitor information relating to customer perception as to whether the organization has met customer requirements. The methods for obtaining and using this information shall be determined.


Will tracking only customer complaints satisfy this requirement? What is meant by customer perception? Could it involve actually asking the customer how well you are meeting their requirements? Could it mean establishing customer communications on the subject?

Clause 7.2.3 requires “communicating with customers in relation to (c) customer feedback, including customer complaints.” So, customer feedback is expected to be more than just complaints.

Customer satisfaction is defined by ISO 9000:2000 as the “customer’s perception of the degree to which the customer’s requirements have been fulfilled.” Notice it doesn’t refer to the organization’s own perception; instead, it focuses on the customer’s view of how well their requirements are being met.

Note 1 states “customer complaints are a common indicator of low customer satisfaction, but their absence does not necessarily imply high customer satisfaction.”

Note 2 says “even when customer requirements have been agreed with the customer and fulfilled, this does not necessarily ensure high customer satisfaction.”

If you agree that complaints alone may not satisfy the customer satisfaction requirement, what would? One option is to ask for feedback through surveys to gain direct information on how well customers perceive your products and services. The survey information could be gathered by an independent firm, solicited by your own sales group, or collected through forms distributed with your offering.

However, complaints are an important indicator and should not be overlooked. This information, along with other feedback, such as product returns and customer scorecards, can provide early warning signals between periods of your more direct monitoring of customer satisfaction.

Capturing the “voice of the customer” is an important business activity. Recognize that you may have different types of customers. If you sell to wholesalers, who sell to retailers, who sell to the end users, then you have three types of customers, all with different needs. You might be satisfying one group and upsetting another. To be successful, you need to satisfy each customer in the supply chain.

Organizations need to systematically collect, record, and analyze data on the quality of their products and services (as viewed by customers). The customer view of your performance as a supplier will likely change over time, so monitoring the degree of satisfaction is an ongoing activity. However, the cost of monitoring all your customers might be prohibitive. So, select the appropriate customer set based on factors like:

  • Impact of any individual customer on your business
  • Criticality of your offering on the customer business
  • Degree of repeat business by individual customers

Studies have shown a strong linkage between customer satisfaction and financial performance. To ensure customer feedback is properly evaluated, organizations should identify the specific attributes that customers believe are most critical, as well as, the relative importance of these attributes. We should ask the right questions to learn what customers think about our offerings.

Examples of product attributes include ease of installation, reliability, efficiency, ease of maintenance, and durability. How do we go about obtaining information on these and other customer satisfaction attributes? Sources may include market surveys, focus groups, trip reports, customer questionnaires, product survey cards, post-transaction interviews, service reports, warranty reports, competitor benchmarks, advisory groups, trade associations, consumer organizations, as well as, complaints, returns, and other forms of customer feedback.

Competition

If you are going to ask customers about your products and services, wouldn’t it be nice to also know how they compare you to the competition? Your key customers may be “satisfied” with your performance, but “more satisfied” with your competitors. Without this information, your organization may fail to take the appropriate actions. Sometimes, customers help by issuing periodic supplier scorecards that compare the performance of their suppliers.

Loyalty

Customer satisfaction measures the customer’s view of an organization’s performance. Customer loyalty is the behavioral outcome of these customer perceptions.  Acceptable levels of customer satisfaction do not guarantee loyalty and acceptable sales. In some industries, 9 of 10 customers report they are satisfied or very satisfied, but only a third of them actually buy again. To better understand the customer satisfaction data, you should investigate customer loyalty and their intention to purchase again. One study showed that reducing the defection rate to your competitors by 50% can increase profits by more than 25%.

Analysis

Clause 8.4 on Analysis of Data requires an organization to determine, collect, and analyze data to evaluate how to improve the effectiveness of the quality management system. Customer satisfaction is listed as one of the key areas needing analysis.

The results of these measurements must be used by the organization to achieve higher levels of customer satisfaction. The results should be communicated to line management so they understand the feedback and take the appropriate actions.

Research on customer satisfaction can be expensive. Start simple. Identify the basic measurements. Include gathering information from customers as part of your planning cycle.

Surveys

Surveys aren’t as simple as just asking for the customer’s overall satisfaction. They may be pleased with your product, yet dissatisfied with your support. Consider measuring several attributes so you understand what was behind the overall satisfaction rating.

Possible questions for a simple customer satisfaction survey are:

How satisfied are you with:
1. Customer Service: our process for easily placing orders and providing timely product information?
2. Product Delivery: the on-time delivery and received condition of our products?
3. Product Quality: the degree to which your requirements for our products are being met?
4. Sales Support: the product knowledge, support, and responsiveness of your sales representative?
5. Product Value: the value of our products considering their application, operation, and cost?
6. Competitive Comparison: our products and support compared to that of our competition?
7. Overall Performance: our overall performance considering the importance of these areas to your business?

The response scale could be on a scale of 1-10, or a) very satisfied; b) satisfied; c) neutral; d) dissatisfied; and e) very dissatisfied.

You could also ask customers about:

8. Improvement Suggestions: If you could improve one thing about our product, what would it be?
9. Customer Loyalty: Do you expect to buy from us again? Would you recommend us to others?
10. Other Comments: Do you have any comments to share with us about our products, services, or support?

Independent of ISO 9001, we should already be trying to satisfy our customers as a basic business strategy. An article in a past issue of Quality Digest (Measuring and Managing Customer Satisfaction by Kevin Cacioppo) included these interesting facts:

  • A 5 percent increase in loyalty can increase profits by 25% to 85%
  • A “very satisfied” customer is nearly six times more likely to repurchase and/or recommend your product than a customer who is just “satisfied”
  • Only 4 percent of dissatisfied customers will complain
  • The average customer with a problem eventually tells nine other people
  • Satisfied customers tell five other people about their good treatment

You must also define the methods for obtaining and using the customer satisfaction data. Although a documented procedure isn’t required, your organization may want to document the process due to its importance. The process should include reporting customer satisfaction levels and trends at management reviews and then initiating the necessary activities to improve customer relationships. We had better do it well. Customers are the reason we are in business.