Organisational Performance and Customer Satisfaction Equation.

Only available on StudyMode
  • Download(s) : 605
  • Published : January 7, 2012
Open Document
Text Preview
As the Chief Executive Officer of Sierra Lighthouse Hotel Freetown, I’ve been provided with an Organisational Performance and Customer Satisfaction equation:

Consumer Expected Quality - Organisational Actual Quality = Customer Perceived Quality

EQ > AQ => Dissatisfaction
EQ = AQ => Mere Satisfaction
AQ > EQ => Delighted Customer

An Organization Performance includes multiple activities, that help in establishing the goals of the organization, and monitor the progress towards the target. It is used to make adjustments to accomplish goals more efficiently and effectively. Organization Performance is what business executives and owners are usually frustrated about. This is so because, even though the employees of the company are hard-working, and are busy doing their tasks, their companies are unable to achieve the planned results. Results are achieved more due to unexpected events and good fortune rather than the efforts made by the employees.

Customer satisfaction, a business term, is a measure of how products and services supplied by a company meet or surpass customer expectation. It is seen as a key performance indicator within business and is part of the four of a Balanced Scorecard. The balanced scorecard (BSC) is a strategic performance management tool - a semi-standard structured report supported by proven design methods and automation tools that can be used by managers to keep track of the execution of activities by staff within their control and monitor the consequences arising from these actions. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy.

Organizations need to retain existing customers while targeting non-customers. Measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. Customer satisfaction is an abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other factors the customer, such as other products against which the customer can compare the organization's products.

Consumer Expected Quality - Organisational Actual Quality = Customer Perceived Quality Analyzing the equation showing how it could lead to all the possible customer perception outcomes: EQ > AQ => Dissatisfaction

EQ = AQ => Mere Satisfaction
AQ > EQ => Delighted Customer

The above figure provides a view of the process in which customers needs and expectations are translated into output during the design, production and delivery process. True consumer needs and expectations are called Expected Quality ( EQ ). EQ is what the customer assumes will be received from the product. The producer identifies these needs and expectations and translates them into specification for products and services.

Actual Quality ( AQ ) is the outcome of the production process and what is delivered to the customer. AQ may differ considerably from EQ. This difference happens when information gets lost or misinterpreted from one step to the next.

Perceived Quality ( PQ ) is the customer's perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives. The quality of the product may considerably differ form what the customer actual receives. Because PQ derives customer behavior, this area is where producers should really concentrate.

Any difference between the EQ and AQ can cause either a delighted customer ( AQ > EQ ) or dissatisfied customer ( EQ> AQ ), but when EQ = AQ results in merely satisfied customer.

EQ > AQ =...
tracking img