Offering quality products and services is one of the most basic things a business can do to earn customer loyalty and increase profits in the long term. But quality can be subjective and difficult to measure in a meaningful, fair way. Businesses use several methods for measuring quality in order to make important decisions about what they sell.
Some of the most common quality measurement metrics are defect ratios, which represent the number of defects as a percentage of total units or sales. A defect ratio may simply divide the number of returned items by the total number of items sold. A more complex defect ratio would factor in repairs, replacements and non-repaired items that were the cause of a customer complaint. Defect ratios may also differentiate between different types of defects based on the cost or repair or the level or severity.
Customer satisfaction is a metric that can indicate the perceived quality, or real world quality of products, which may be very different from internal analysis of a product. A customer service metric may be a ratio of complaints to total units, or a percentage of satisfied customers in a survey or follow-up communication. Customer satisfaction surveys can produce a number of specific metrics that can help companies to determine what the most severe defects are that may prevent future sales, and even how best to address these issues through customer suggestions.
Businesses can also measure customer satisfaction by turning to third-party resources, such as websites and consumer advocacy magazines that feature reviews and feedback forums. A percentage of positive or negative reviews on a popular website can point to where efforts toward improvement would be most useful.
A cost index is useful for businesses that want to determine how much problems with quality cost. These weighted metrics give more importance to defects that cost more to address. They may also incorporate the cost of a quality assurance program, indicating whether or not the quality control methods in place are sufficient, or perhaps even excessive, to deliver quality product at a profitable cost. A cost index may also include the cost of lost opportunities due to negative publicity from a product with poor quality.
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