For any small business, happy customers are essential to success. The astute business owner analyzes performance to identify areas for improvement. How such performance is assessed varies between manufacturing and service sectors or, in some cases, internally between manufacturing and service departments. Generally, performance metrics come down to quantitative measurements for manufactured goods and qualitative assessment for services.
A product is tangible. The customer's satisfaction is based on the product itself. A manufactured product has established specifications, whether appearance or performance, that can be measured directly. Combined with productivity -- the measure of efficiency with which a business can produce a product -- adherence of a product to those design specifications establishes expectations for overall quality from a company's standpoint before sales. After sales, customers express their satisfaction through sales and returns. Measures of quality for manufactured goods are also tangible.
Tangible measures for evaluating product quality exist through the supply chain. Parts and sub-assemblies are measured by inspectors for size and performance before assembly into automobiles, for example. Failure rates are calculated against the number of parts made. A finished product may be checked against specific performance criteria. Vacuum cleaners must meet a minimum suction rating matching their design specifications. Returns from dissatisfied customers are categorized and measured against the number of units sold.
Services are less tangible. For example, attention from restaurant servers is not easy to measure, nor are performance expectations consistent from customer to customer. Measures of quality for service stem from direct interaction with a customer. While a service mechanic may not meet the car owner, the time taken to complete an analysis or repair and its proper completion directly impact the car owner's perception of quality of service -- as much or more so than the customer's interaction with service counter staff.
Measuring service quality in practice requires quantifying intangible performance, so "qualitative" is, to a degree, a misnomer. However, many symptoms of service quality can be quantified for measurement and comparison. A salon may receive occasional complaints about stylists. Taking total complaints about each stylist and dividing that by the number of clients served in a given period derives a performance indicator. Qualitative measures tend to be less objective.