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CHAPTER 3
Focusing on Customers
ANSWERS TO INSTRUCTOR RESERVE MATERIALS
Instructor Reserve materials are older Quality in Practice features and Cases from previous editions that may be used
by the instructor to give the students additional experiences. These are available in the Instructor materials in a
separate folder.
Quality in Practice – Customer Focus at Amazon.com
1. Amazon’s CRM software helps in multiple ways to gain market share and maintain
competitive advantage over their rivals. The list of the characteristics that make up their
vision of customer service points to numerous features that are hard to duplicate in
conventional websites or store chains. For instance, Amazon:
• has deep selection that is unconstrained by shelf space.
• turns their inventory 19 times in a year.
• personalizes the store for every customer.
• trades real estate for technology
• displays customer reviews critical of their products.
• allows customers can make a purchase with a few seconds and one click.
Thus, the firm demonstrates the advantages of their CRM approach through exploiting
technology, as characterized in the text:
• Segmenting markets based on demographic and behavioral characteristics,
• Tracking sales trends and advertising effectiveness by customer and market
segment,
• Identifying which customers should be the focus of targeted marketing initiatives
with predicted high customer response rates,
• Forecasting customer retention (and defection) rates and provides feedback as to
why customers leave a company,
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2. Amazon.com’s operating efficiencies in order fulfillment activities are almost bound to
improve over time. The capabilities of its high-tech warehouses, such as its nearly perfect
process for sorting multiple item orders, create a built-in method for driving out
unnecessary costs. As it expands its offerings and adds more retail partners, Amazon’s
fulfillment capabilities pay dividends to its partners, as well as adding revenues to
Amazon.
3. Customer privacy risks, besides the ones mentioned in the case, that Amazon.com must
guard against include an increasing number of threats in order to continue to grow its
business. These include the growing sophistication of computer “hackers,” the
uncertainties about government surveillance, and the temptations to make potentially
Quality in Practice – Improving Customer Satisfaction at a Software Support Call Center
1. The case suggests that it is often difficult to understand customers’ true needs and
expectations. The study required an iterative process to get past the obvious conclusions,
develop a workable hypothesis, and test it out. The case also shows that it is often necessary
to bring the perspectives of diverse groups to bear on a problem, rather than depend on the
analysis and insights of only one or two people. Finally, the case shows that it is possible
to train individuals to combine technical skills with human skills in order to be effective in
service delivery situations.
2. The transparency principle is a 3-stage process that involves:
• Immediate establishment of the engineer as a problem solver and expert
• Initiating the troubleshooting
• Open admission of a wrong hypothesis (if required)
These three steps appear to be extremely simple and almost intuitive. However, it took
considerable research effort to develop them. The implications of this are that it takes more
than technical expertise to satisfy/delight the customer in service delivery (as well as in
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3. The learning from this case could be applied to similar technical situation, but might extend
even further than the high-tech applications in which it was first developed. In similar high
tech areas, the transparency principle could certainly be applied to a number of different
Case – Gold Star Chili: Customer and Market Knowledge
1. Some moments of truth in Gold Star’s environment start with the corporate – franchisee
relationship, where: corporate managers have signed a pledge guaranteeing to return calls
within 24 hours. The moment of truth is whether those calls are consistently received
within that time frame. Another moment of truth opportunity relates to franchisees
reporting any problem with product quality, and whether Gold Star will follow up by
2. Gold Star Chili defines two key customer groups: direct customers who use Gold Star
products and services, and indirect customers with whom Gold Star has other
relationships. Direct customers are divided into six customer segments, determined by
product use: restaurant customers, franchisees, franchise applicants, retail customers,
retail wholesalers, and mail-order customers. Indirect customers include product
3. Gold Star could collect direct data from franchisees, retailers and wholesalers on
complaints, product movement, and what works well, or not so well, through frequent
personal contact between company franchise coordinators and franchisees. For suppliers,
methods of supply, billing problems, etc. could be areas in which Gold Star could listen
and learn from these customer groups. From restaurant customers, satisfaction surveys
and focus groups could be used.
4. It would seem that customer loyalty is an important requirement for success in Gold
Star’s competitive retail business environment. Thus, questions relating to loyalty would
be desirable, such as measures of:
• Overall satisfaction.
• Likelihood of a first-time purchaser to return to the restaurant.
• Likelihood to recommend.
• Likelihood to continue purchasing the same products from the menu.
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• Likelihood to purchase different products.
• Likelihood to increase frequency of visits to the restaurant.
• Likelihood to switch to a different restaurant or chain.
For franchisees (who are customers of the corporation), survey questions relating to franchise
service to the franchisee would need to be asked. For example, franchisee satisfaction with:
– Geo-demographic analysis of locations prior to building
– Reliability, empathy, accuracy, responsiveness, etc. of service from FSR’s who are
Case – The Case of the Missing Reservation
1. Although it is difficult to speculate on the amount of empowerment that a restaurant
hostess/manager might have, it is apparent that she did not attempt to “move heaven and
earth to satisfy a customer” as employees are empowered to do at Ritz-Carlton. As one
student pointed out in a write-up of this case, “… any business’ top goals include customer
2. Different people have a higher and lower tolerance for poor service. Most people would
not have taken the time to write and send a letter as Mark did. The complaint should have
been taken seriously, since only a small percentage of unhappy customers bother to
complain. Again, the response from the hotel inadequate. The letter was “delegated” to
the “quality person,” the response letter was polite, but simply stated the facts without
apology for any mistake. There was no offer of service, refund or other compensation for
inconvenience. The student cited above developed this table:
Measurement
Perceived Performance
Reliability
(-) Customer had made reservation and rightly expected guaranteed and timely
restaurant seating.
Assurance
(-) Although not unpleasant, manager was not accommodating and did not
exude confidence that customers would be seated ASAP.
Tangibles
n.a.
Empathy
(-) No sign of caring or individual attention; not empathetic or sympathetic.
Responsiveness
(-) Not at all responsive; no sense of urgency to provide prompt service to
customers.
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Case – Cincinnati Veteran’s Administration Medical Center
1. The CVAMC offers a wide range of services to veterans, who comprise their major
patient category. They include primary and internal medical care, with several sub-
specialties; general surgery, with several sub-specialties; mental health, with psychiatric
and psychological support care including several disorders; neurology, and physical
medicine and rehabilitation services. In addition, they support trainee education and
pursuit of new knowledge through research. Other customers include the families of
veteran patients, the veterans support organizations (VSO), the trainees including
To achieve its vision of being truly customer focused, the CVAMC should develop a
number of approaches to understand customer expectations, deploy short-term and long-
term requirements, ensure relevance of current products/services, and develop new
opportunities.
• It should determine which of its services are the strongest in meeting current
customer needs, which have opportunities for improvement, and what factors
contribute to each. For example, how could it build on its strength in having ties to a
research facility (the University of Cincinnati), its ability to purchase materials at low
cost through a buying network, the vertically integrated health care delivery system
that it has built, and specialties in areas of use to an aging population of health care
customers?
• It should determine market needs of current customers that are well served versus
those that are under-served and consider ways to extend services to the under-served.
2. The VA Survey appears to have broad coverage, but has some opportunities for
improvement, as well. The following is a brief case analysis according to the dimensions
of service quality developed earlier in the chapter.
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Analysis
Introduction
The focus of a customer satisfaction survey, such as developed by the CVAMC, should
be to obtain actionable information from customers. To be actionable, an organization
should be able to tie the information to key business processes, and should be able to
determine cost/revenue implications for improvement priority setting.
CVAMC’s vision is to “… shape our future by breaking the traditional VA mold,
building on our strengths, and emerging as the health care center of choice for all
Veterans. As pioneers of change we will:
A. Establish the patient at the core of all processes with the focus on continuity of
care leading to optimal patient outcomes.
Information for Analysis
The following classifies the questions in the questionnaire according to characteristics of
service quality.
Measurement
Perceived Performance
Reliability
Questions 2, 21, 24, 34
Assurance
Questions 3, 5, 6, 7, 8, 10, 12, 16, 18, 23, 26, 38, 39, 40, 41, 42, 43
Tangibles
Empathy
Questions 8, 9, 11, 14, 15, 17, 20, 22, 28, 35, 36, 37
Responsiveness
Questions 4, 13, 19, 25, 27, 29, 30, 31, 32
A few questions were too general or global to classify into one of the above
characteristics of service quality, such as Questions 1, 44, 45, 46, 47.
Note also that there were no questions relating to tangibles, such as facilities and
paperwork, which could affect the patients’ overall perceptions of quality.
Actionable information for improvement
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Although a number of the questions addressed areas related to key business processes and
key patient needs and expectations, few would be considered actionable for improvement
purposes. For example, it is unlikely that patients would be able to accurately judge how
long their wait should be, whether enough information was given to family members, and
how long they had to wait before receiving pain medicine.
Address key patient needs and expectations
The background information provided by hospital management indicated that patients
have the following needs and expectations:
1. Veteran patients require accessibility to care. This includes the need to be seen at
a location convenient to them, as much as possible.
2. They must be able to get an appointment with their clinicians within a reasonable
period of time. A thirty-day limit for specialty clinic consultation has been
targeted as a key customer service standard.
3. Patients do not want to have to wait for long periods on the day of their
appointments.
7. These patients deserve the availability of a range of services to meet their needs.
8. They recognize the need for interdisciplinary approaches to solve some of their
health problems.
9. They demand to be heard during medical decision-making and want their end-of-
life wishes respected.
Needs indicated in items 1, 2, 4, 6, and 7 were not specifically addressed in the survey.
Others were touched on, but not fully addressed, such as 3, 5, 8, and 9.
Address satisfaction and loyalty
General questions were asked in order to ascertain an overall quality rating, determine
whether a person would choose free care at another hospital if available, and assess
Conclusions and recommendations
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The patient survey can be one of several tools that the CVAMC uses to assess whether it
is meeting or exceeding the goals listed in its vision statement. The survey should be
redesigned to provide actionable information for improvement, address key patient needs
and expectations, and address satisfaction and loyalty. Thus, each question must be tied