323
Zurich also has protocols for
reacting to unhappy customers;
when several customers complained
that payment was too slow when
their policies matured, Zurich used
the “five whys” to discover that the
problem lay in a delay in sending
out claim forms. The company put
in an automatic system to send out
the forms 10 days before policies
matured, resulting in a 78 percent
drop in complaints. Zurich has won
many service awards, including two
“Five-star Service Awards” based
on 25,000 completed questionnaires.
Added value
Businesses can also create high-
quality products by adding value.
Value added is the difference
between a product’s price and the
raw material cost of making the
product. Companies can add value
to their products with new features,
innovative functions, or add-ons
designed to benefit, and appeal
to, actual and potential buyers.
In the hotel business, Ibis adds
value by promising customers that
their specially designed beds,
mattresses, comforter, and pillows
will give them a better night’s
sleep. The cost of these items is
balanced against improvement in
retention of customers, or by higher
prices that create extra revenue.
Other hotels have been even bolder
in pursuing value added. In the
premium segment of the market,
hotels create additional value by
redefining their core function.
These hotels do not just sell a
comfortable place to sleep; they sell
an “experience,” in which guests
are offered a range of “delighters”—
aspects of the hotel’s service that
delight the guest, but which are not
usually expected. Examples include
HD televisions; branded, high-end
shower gel and shampoo; free
champagne; and free slippers that
guests can take home with them.
Adding value is a constant
battle because a “delighter” can
soon become an expectation. If a
hotel fails to meet the constantly
rising requirements of its guests,
it will lose customers to its rivals.
Successful hotels are constantly on
the lookout for new “delighters” that
will surprise their guests without
becoming too expensive. Low-cost
delighters are the ideal way to
create value added, generate repeat
purchases, and ultimately produce
healthy profits. ■DELIVERING THE GOODS
Hotel guests are pleasantly surprised
to discover luxury extras that they
were not expecting. These could be
complimentary services or products.Quality ... is not what the
supplier puts in. It is what the
customer gets out and is
willing to pay for.
Peter Drucker
US management guru (1909 –2005)W. Edwards Deming
William Edwards Deming was
born in 1900 in Sioux City, IA.
He studied physics at the
University of Wyoming before
going on to receive a PhD from
Yale. After leaving full-time
education he worked for Bell
Telephones, where he was
part of a team working to
improve quality control.
One of his key ideas was
that the quality of bought-in
raw materials and components
matters more than their price
because their quality will be a
major factor in determining
the quality of the finished
product. Consequently, he
argued, manufacturers should
not choose their suppliers
solely on the basis of the price
charged. Ideally, companies
should try to develop a
long-running relationship with
a single supplier, which is
based on trust. This approach
would be more likely to lead to
better-quality materials.
In addition, Deming also
believed that quality came
from a production process that
was stable and consistent.Key works1982 Out of the Crisis
1993 The New Economics