Return on Investment of Quality Programs


Customer satisfaction is not just "nice-to-have", it is a "must have" in today’s environment. Customers today have more options than they did in the past. Recent studies suggest that the costs of acquiring a new customer are 6 to 7 times more than keeping an existing customer.  Organizations that apply science and statistical analysis to understanding the customer experience in its entirety will have the competitive edge.

In today’s competitive market, companies must take advantage of any opportunity to reduce the costs of poor quality so that they can reap the benefits of providing high quality products and services.

In order to fully understand the ROI of quality programs, companies must first understand the costs of dissatisfied customers along with the benefits of satisfied ones.


Costs of Poor Quality

  • Loss of Revenue

  • Dissatisfied Customers Finding Alternatives to Goods and Services

  • Reduced Customer Loyalty

  • Complaint Handling Costs

  • Costs of Repeated Training and Inspections

  • Wasted Time

  • Legal Costs

  • Costs of Excessive Oversight

  • Costs of Attracting New Customers

  • Loss of Potential Customers Due to a Reduced "Net Promoter Score"

  • Loss of Reputation - Losing the "Benefit of the Doubt" with Existing Customers

  • Increased Difficulty to Cross-Sell Different Products or Services

  • Increased Marketing Costs to Counteract the Impact of Poor Quality

  • Decreased Pricing Power - Companies with Poor Quality Typically Must Discount Products and Services

  • The Value Proposition - If the Cost/Value Ratio Gets Too High then Customers are Likely to Seek Other Alternatives


Benefits of Quality Improvement Programs

  • Reduction of Internal Costs

  • Increased Efficiency

  • Reduced Costs of Dissatisfied Customers

  • Less Time Dealing with Poor Quality

  • Increased Reputation

  • Growth of Customer Base Through Retention and Gaining New Customers

  • The Benefits of High Quality can have a Long Lasting Impact - Such as the Lifetime of Existing Customers or Even the Multi-Generational Benefits as Today’s Customers’ Children Become Future Customers