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Home > Performance Management Best Practice > Generating Increased Revenue and Profitability through Improved Customer Satisfaction:Essential Elements of a Customer Quality Assurance (CQA) System

Performance Management Best Practice

Generating Increased Revenue and Profitability through Improved Customer Satisfaction:Essential Elements of a Customer Quality Assurance (CQA) System

by Jeffrey T. Luftig and Steven M. Ouellette

This Chapter Covers

  • The importance of having a system to ensure that customers receive a quality product or service.

  • A suggested model for customer quality assurance (CQA).

  • Best practices and common errors in CQA.

  • Unique example output from a CQA system.

Introduction

For most firms, the key to enhancing profitability and achieving steady growth in revenue, sales, and market share is to understand and respond to the needs of their customers. The process, which is often referred to as customer quality assurance (CQA), is that system that allows us to:

  • identify critical customers—those customers who are essential to meeting our strategic and business plans, and who significantly impact the firm’s key performance indicators (KPIs);

  • assess and respond to their needs and desires;

  • track our progress and the customers’ level of satisfaction, as translated into financial terms. It is important to note that a CQA system that is to offer the ability to effectively achieve these goals must be one that is wholly integrated into the organization’s strategic and business planning process and constitutes a major input to the firm’s policy deployment (also known as hoshin planning) activities. Without such integration, the CQA process will become little more than a process of conducting ongoing surveys of customers that have little to do with the day-to-day activities of the workforce. In the presence of such a nonintegrated process, the measured level of customer satisfaction will bear little relationship to critical performance metrics (CPMs), whether they are financial KPIs such as sales revenues, profitability measures such as return on investment (ROI) and return on assets (ROA), or nonfinancial indicators (NFIs) such as market share and on-time delivery.

Ultimately, customer satisfaction, measured and real, will quickly erode.

[sidebar]

Hoshin planning (see pp. 3–17), or policy deployment, is a process whereby the strategic intent of the company is translated from the highest levels of the company on down to every individual. This way, not only are all employees aware of the strategic plan, but more importantly they know what they need to do in order to support the company in achieving its goals.

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