How can I make my customers come back for more at

Happy customers pay the price successful entrepreneurs want. The first thing to ask is whether there is a match between your own definition of quality and that of your customers.

In the QDP (Quality, Delivery and Productivity) module which Prof. Francisco Bernardo, Jr. and I developed for the AIM’s Master in Entrepreneurship (ME) Program, our fundamental maxim is that price or cost should not be the basis of competitiveness. If your product or service is being patronized because of its price, you are already headed for trouble. When your customer is bargaining for a lower price for your product or service, likewise, you are headed for trouble.

Q. What is the fundamental focus of QDP?

A. The QDP model starts with the understanding of customers. The customers define quality, nobody else. It has been found that customers are willing to wait for the right quality. This explains why people wait in barber shops and beauty salons until their favorite barber or beautician becomes available. Being able to deliver a service ahead is an advantage, if and only if, in the perception of the customer, there is parity in quality. Otherwise, the customer will wait.

That is also true for price. If the basis of competitiveness is price, then in the perception of the customer, there is no differentiation in quality and delivery. A correct application of QDP will make the customer perceive the reality that only your product or service can consistently satisfy his needs.

QDP has four steps. One, understanding the customer. Two, finding out where customer’s needs are found in the product or service. Three, making sure the transformation process is designed to consistently deliver the needs of the customer. Four, redefining the entrepreneur’s business.

Q. What happens to their businesses when QDP is applied?

A. Let me cite some examples.

One ME student who was into phone card vending machine operations found out that what the customer needed was a reliable source of pre-paid cell cards, and not a vending machine that sold pre-paid cards. Because of this discovery, the business was redefined and he created a network of pre-paid card sellers ranging from manual to automated processes. As a result, his business grew by at least ten times.

Another student found out that what the customer needed was a place to leave the children while shopping in the mall. At first, he thought that his competitors were places like Time Zone. He later realized that it was the playgrounds of fast food stores that were his match. This learning led him to reconfigure his operations to a different competitive benchmark. He is now making more money than before.

Another student in the food service knew that his customers hated wrong deliveries. When he re-configured his processes, the delivery errors dropped to zero and the number of customers and his revenues increased.

After fully understanding the customer, another student discovered that changing the sourcing of raw materials did not affect the satisfaction of the customer. He is now saving over P100,000 a month.

In food outlets, I have observed that one food store would have customers waiting in line for an hour while the food store beside it would hardly have customers. Obviously, the first food store has found the "magic" formula that makes the customer wait and pay. It is harvesting the benefits of QDP but, unless the entrepreneur finds out "why", the lines will soon be gone.

Q. How does QDP define a customer?

A. A customer is a person or a group of persons who have a need and, when satisfied, will pay for your cost and profit. Emphasis is on the following words: need…satisfied…pay…cost…profit. People who want to satisfy their needs but are unwilling to pay are not customers. They are bandits! Be wary of them.

Q. What should one do if one’s current competitiveness is only because of price?

A. Your product or service is perceived as something that can be purchased anywhere and is not desperately needed. I also suspect that you do not know your customer.

The first thing to do is to know your customer intimately. Observe him. What questions does he ask when evaluating your product or service? How does he hold the product? Why did the he ask those questions? This first step will reveal what the customer will be willing to pay.

In addition, find out how much the customer is willing to pay. The more he needs it, the more he will be willing to pay a higher price. What appeals to him: is it the color, the shape or the image? Is it the smell, the taste, or the size? Is it just the prestige of being seen as a buyer? Or, is it simply because the weather is hot and humid? One must know "why", otherwise, the only weapon will be price.

I advice that you look at the customer when the customer is not looking. You will learn more and find out the real needs.

Q. If I really know and understand my customer, what should I do next?

A. Examine your product or service. Where is the particular customer "need" found in the product or service? What are the conditions that make him need it?

For example, is he there for the taste of the food or the size of the servings? Or not at all? He may be there for the need to be seen eating in your place because it happens to be just a good spot for people. If you cannot find "it" in your product or service, then be ready for change.

If you find "it" but others can also deliver "it", you have two options. Find out, if there is anything else that you can uniquely give that the customer is still looking for. The other option is to find out if you can out-deliver the competition.

Given the two, I’d rather try the first option and only go for the second, if and when, I really run out of ideas.

(Alejandrino Ferreria is the associate dean of the Asian Institute of Management’s Asian Center for Entrepreneurship (ACE). You may send your questions/feedback to [email protected])