Quality is considered to be one of the building blocks of any business. If your company, or you, don’t deliver quality work chances are you won’t be getting many customers or inquiries in the future.
We could define quality in business terms as:
“A product or service that meets the requirements and expectations of the customer”
The importance of requirements and expectations for quality
Let’s imagine for a second the following scenario:
We are at work and we forgot to pack lunch. We are in a rush because there is an important meeting to attend in 30 minutes, so we decide to get a quick bite at McDonald’s.
This decision might be influenced by the fact we can’t spend an hour sitting around in a fancy restaurant and we need to be back in the office quickly.
Our expectation, in this case, might be to get a quick meal, tasty enough, for an affordable price.
As a customer, this is the expectation McDonald’s has to meet for us to be happy after our purchase. If any of those 3 requirements are not met, we will be disappointed and we might not decide to go there again should we find ourselves in the same situation. Meaning a potential loss in revenue for the company.
The expectations the customer has, need to be aligned with the delivery expectations of the company. Failure to meet those expectations will lead to us being perceived as unreliable or untrustworthy which will directly affect our reputation
Expectations are directly linked to requirements. For a company, it’s imperative to spend time assessing and evaluating its customer requirements constantly to ensure they can fulfill them.
Requirements must be:
- Verifiable: How can we quantify/qualify if we meet the requirements? What kind of performance criteria would we follow? Are there any clear KPIs to meet?
- Feasible: Can we deliver on time? Are we equipped to deliver the requirements?
- Understandable: Any ambiguity could lead to delivering something completely different for the customer. This is one of those situations where things need to be black or white (not 50 shades of grey).
- Necessary: Any non-required work could lead to delays in the delivery or could waste resources.
Customers define quality for a business
In any industry, every single company has a reputation to live up to.
That reputation is directly linked to the quality of service received by the customer. You might be thinking you can’t independently affect how McDonald’s operates but if a complaint was the rule rather than the exception, many customers would be unhappy and that would directly affect the company’s perception.
People could say the company doesn’t care about its customers.
Always remember, no matter the situation, the market, and the customer set the expectations for your product or service.
That doesn’t mean the customer is always right, your “target customer”, the one you decide to serve, is the one that sets the expectations for your company, but you also have a say in it.
Expectations could be around:
- Performance: Is it fit for purpose? Is it reliable? In our previous example, we were searching for something tasty and quick to eat, so we chose a product accordingly to that. Another example could be car brakes, are you able to break when you travel at a certain speed in a controlled manner before you hit something? Performance could be critical to quality.
- Appearance: Imagine you receive a burger in pieces, that wouldn’t make it a very appealing meal, would it? An undesirable appearance could be seen as a lack of care, and could potentially lead to the customer thinking they are not important. Perception is an intangible measure of quality, keep your standards high.
- Availability / Delivery: In manufacturing, On-Time Delivery is one of the most common KPIs used in the Supply Chain. If your customer is expecting a deliverable or a product on a specific date and you fail to reach that milestone, you are directly damaging your relationship. Failure to meet deadlines could mean other processes or deliverables can’t be executed, potentially setting customers back and creating a poor customer experience for others.
- Price / Value for money: Our previous decision of going to McDonald’s enabled us to get a quick meal for an affordable price. The speed of the process, the cooking method, and the ingredients are completely different from those of a high-end restaurant, but in that situation, the value received met our financial expectations. Customers will always want the highest value for the lowest price.
If we meet all of the above requirements, our customers will be happy and we will have the chance to engage with them again in any future business.
Failure to meet any of the above will jeopardize our relationship and could potentially prevent us from getting any future business.
Why is then quality so important in business?
We have touched upon some interesting topics already. Quality in business terms means, for most people, to deliver the maximum amount of value at the lowest price, always meeting the expectations of the customer or going beyond.
As we said before if there are 2 similar products or services out there, offered at the same price, why would a customer choose to get less value?
The same applies to pricing, if 2 similar products or services deliver the same value, why would a customer choose to pay more?
The previous question probably deserves its own post but, in simple terms, nobody can justify paying more for the same offer.
The market is highly competitive in any field, even the most disruptive and innovative companies face competition early on.
Customers demand more and more each day, forcing companies to minimize their costs and come up with ideas to improve their services or products constantly. Many customers have their own in-house experts to push the boundaries of other people’s products and services. They are more and more prepared.
Added to that, any product or service is at the mercy of public media these days. Any customer can pick up their phone and review any company on Google or create a post on social media to express their disappointment (or happiness).
Social media has made it tremendously easy for people to share information. It can be a tremendous marketing tool, or it can destroy your business.
There are many different things challenging the way your business operates and its reputation.
Quality leads to a higher reputation, the higher the quality of your product or service, the higher the value you provide to your customer. The more value you provide, the easier it is to keep and get new customers.
As you can see in the previous process flow, quality is not about the product or service itself. Quality is about people and value.
The quality function should aim to support every other function of your business. Your customers are as much external than internal.
In engineering, some companies tend to see quality as a necessary evil but it’s exactly the opposite.
Quality is the umbrella that protects companies from harming their chances to grow and develop. It creates an environment where you can mature.
This is true regardless of the industry you are in.
If you are a software developer and you can’t deliver a program free of bugs nobody would use it.
If you are a clothing retailer but your clothes are torn nobody would buy them.
Quality is about the whole experience, internally and externally. It’s about making every function the best it can be.
Cost of quality vs cost of poor quality
Delivering quality has also a cost attached to it. It very rarely comes for free.
Many people assume investing in quality is an unnecessary expenditure. This couldn’t be further away from the truth.
Let’s put another McDonald’s example:
We are the manager of a particular restaurant and we have a new recruit on their first day, it’s a hectic day and we can’t spend too much time with them so we just give them a few indications as to what they need to do that day. We ask him to start putting together burgers to support their colleagues and we go back to our office to carry on with our work.
An hour later, one of your supervisors comes to your office complaining about the fact that every single burger is missing an ingredient.
Some are missing cheese, some others are missing bacon, some others are missing sauce…
You now have a long queue of customers demanding a replacement.
The next day you start seeing some reviews where customers express their disappointment with the service from the day before.
This example could lead to people choosing to go to one of your competitors next time or to make sure to pack food.
In this scenario, we can easily talk about the cost of quality vs the cost of poor quality.
To avoid this situation, a smart decision would have been to train our new recruit before we actually put them to execute the task he was hired for.
We could have gone through the steps of putting a burger together, shown them the differences between products, or paired them up with a more experienced member of the team to ensure they can perform the task at hand.
All in all, it would have taken us only a few hours to get them trained to ensure they at least know how to do the basics before we leave them on their own.
On the contrary, if we start getting bad reviews and unhappy customers it could affect our reputation and we could potentially be looking at a severe drop in turnover in the upcoming months.
This drop would be difficult to quantify as there are many factors to have into consideration but it is for sure more costly than spending a few hours with the new recruit.
Below there is a list of tangibles and intangibles related to the cost of quality and poor quality.
Conclusion
- Quality in business terms is all about meeting the expectations that your customers have placed upon your product or service.
- The market is tremendously competitive. Ensure you deliver as much quality and value as possible. When two offers have the same price tag, the one adding the more value will win.
- Quality is never an isolated entity. It touches every other function of your business when properly executed.
- Quality leads to reputation, reputation leads to more customers, and more customers lead to more revenue.
- Invest early and frequently in quality; not doing so could have catastrophic consequences in the future.