Most Six Sigma initiatives are geared toward customer satisfaction. If these projects succeed in pleasing customers then they are considered successful.
Lately however, some business organizations have realized that satisfying customers may not be the best metric of business performance or even success. They’ve found out that satisfaction has little to do with the conventional metrics of business performance , such as revenues, market share or profitability. The following are some of the reasons why they believe so:
* Satisfaction is an emotional response, not the sort of cognitive or evaluative response used by companies in most purchase situations.
* Satisfaction ignores the interaction among quality, image and price. This is essential for
understanding the nature of the buying dynamic.* Satisfaction has little, if any, linkage to an organization’s performance.
More companies are now beginning to focus on the more actionable metric of customer value. To measure customer value, you need to establish a cognitive calculation of tradeoffs, which include thinking through and evaluating the benefits received from a product or service as against its alternative. Value is measured whether the purchase or interaction was worth the tradeoff from the customer’s perspective or not.
Because of this, customer value is considered a better fit with Six Sigma than customer satisfaction metrics for two reasons.
1. First, the metrics of customer value explicitly recognize the importance of quality to success and lead to identification of specific critical-to-quality (CTQ) characteristics.
2. Second, perceptions of price competitiveness are highly related to quality, and high levels of quality (low defects) are inversely related to cost. In other words, the more a company improves quality by reducing defects, the lower the cost of producing its product, and the more it will be able to charge for that quality, thereby increasing profit margins.
Value Matters as a Key Metric for Six Sigma Initiatives
