Thursday, December 29, 2005

Shorten your Sales Cycle through Web

Long, complex sales cycles are often misunderstood by marketing staff. Marketers at companies with lengthy sales processes, such as software and technology companies, typically focus exclusively at the very top of the sales funnel, mistakenly believing that their only job is to "generate more leads."

These misguided marketers happily create expensive advertising campaigns and execute programs designed to drive more people into the cycle. Then they simply tie a pretty ribbon around the leads they generate and toss them over the cubicle wall to the sales department.

This strategy is ineffective

Savvy marketing professionals understand that sales and marketing must work together to move prospects through the sales pipeline. This is especially important in the complex sale, with long decision making cycles and multiple buyers that need to be influenced. The good news is that Web content drives people through and shortens the sales cycle for any product or service—especially complex ones that have many steps and take months or even years to complete.

First, understand your sales process in detail.
All sales processes are definable, repeatable and understandable, and effective marketers use the Web to move people into and through the process. You need to get together with salespeople, sales management and product managers to understand exactly what happens in the sales cycle.

You should answer questions such as these:

  • How do people initially find your company or product?
  • When does the sales person first contact a potential buyer?
  • When do they talk about your company's products?
  • When do they offer a price quote?

Understanding the process in detail allows you to create a definable, repeatable and understandable process that Web content can influence.

Segment your prospects right from the home page

A very effective technique is to segment prospects by using "self-select paths" right from the home page. Consider creating a web page(s) dedicated for your prospective customer. A prospect is much more likely to enter the sales cycle by clicking a link that is designed especially for him/her.

Create thought-leadership content at the top of the sales funnel

People in the early stages of the sales cycle need basic information on the product category, especially "thought leadership" pieces. Don't just write about your company and your products at these early stages. When doing initial research, people don't want to hear about you and your company. They want information about them and their problems.

Make Web content, at the early part of the sales process for free

The job of Web content in the early stages of the sales consideration process is just to get a prospect interested in your organization. The best way is to provide valuable content that addresses their problems. You want to build empathy.

At this early stage, avoid forcing people to register their name and contact details. The best thing at that point is for your prospect to think:
"These guys are smart. They understand my problems. I want to learn more."

Provide compelling and detailed content to get people to 'raise their hand'

Once you've developed an online rapport through Web content, it is time to deliver something of value that you can trade for a registration form. Remember, if you are asking for someone's name and contact details, you must trade that personal information for something of equal or better value to your prospect.

At this stage, a compelling white paper, online event (such as a webinar), or online demo is appropriate to move your prospect further down the sales process—and she will happily "raise her hand" to express interest by filling out a form. At this point, you're still not ready to sell a product or service (yet).

When you pass a name to the sales department, provide as much detail about the prospect as you can

Congratulations. Now you've gotten the name of a prospect that a salesperson can contact. But you need to provide sales with as much detail as possible based on the content your prospect accessed. Together with the form she filled out, tell the salesperson details like "She clicked the 'I'm a financial executive' link from the homepage and then requested our white paper." When your salesperson contacts the prospect, he will already know details about her besides those just on the lead form.

Now that you're working the sales prospect, offer even more content

When a prospect is actually talking to sales, your marketing job is not done. Those further along in the process want to compare offerings and need detailed specifications and lists of features and benefits. You should create Web content to help your sales department move the prospect toward a close. Add her to your email newsletter list. Invite her to a webinar. Alert her to your corporate blog. Working with your salesperson, offer her online ROI calculators, feature comparison charts and other tools for the middle and latter portions of the sales cycle.
And don't forget to make certain that your salespeople know about the content you're providing so that they can coordinate by pointing prospects there, too.

Measure and improve

Measure what content is being used and how. Understand through Web metrics what's working, and constantly tweak the content to make it better. Meet regularly with salespeople to gain insights into the sales cycle and how your Web content is helping the process. The good news is that the Web is that it is iterative—you can constantly make adjustments on the fly.

Closing Thoughts

In an increasingly competitive marketplace with a complex sales process, Web content will unlock success, even in highly competitive industries where smaller players are beset upon by larger, better-funded competitors.

Pareto Principle in Marketing

Few rules are more widely quoted in marketing today than the 80/20 Rule (the Pareto's Principle), which states that 80% of your sales come from just 20% of your customer base.

In this age of relationship marketing, this rule has become an often-heard battle cry to focus our efforts on maintaining the loyalty of customers belonging to the golden 20% that drive most of our business, while spending less effort on the trivial other 80%.

Intuitively, it makes sense. But this marketing interpretation of the 80/20 rule is actually flawed.

The present understanding of the 80/20 derives in large part from Dr. Joseph Juran, who in the 1940s wrote a wonderful article describing the 80/20 rule's applicability to industrial quality control. He concluded that the greatest quality gains were to be found in focusing quality assurance efforts on the 20% of all defects that cause 80% of problems. He saw that not all defects were created equal, so it is inefficient to treat them as if they were.

Juran's work has subsequently been expanded to a wide range of other fields, including marketing, where it has found a home in customer loyalty theory and relationship marketing. While interesting, the direct application of Juran's work to marketing is not as straightforward as it first appears, and care should be taken when applying it to our marketing practices.

The 80/20 rule as conceived by Juran assumes an equal return on investment for each opportunity. This is not an assumption that typically works in marketing, where the margins on sales vary widely based upon the terms of those sales. Most importantly, the more a customer buys, the more bargaining power they tend to have to drive down the price they pay per item.
For instance, a bar of soap sold through Wal-Mart will tend to margin less for its manufacturer than the same bar of soap sold through a small grocery chain, since Wal-Mart's purchasing power enables it to drive a significantly better price per bar of soap than everyone else. This difference in margins means that the gains in volume catering to the golden 20% can come at the cost of a lower profit margin. When those differences are great, it is easy to have situations where the "trivial" 80% of customers are actually more profitable on only 20% of the volume.
This observation lies at the heart of a richer interpretation of the 80/20 rule, which can lead you in many circumstances to do the exact opposite of what a simple Juran-style interpretation of 80/20 would lead us to believe.

An alternative way at looking at 80/20 rule in marketing is as a model for creating economy of scale through selling to a few high-volume customers at near cost, while funding continued overall business growth through selling at higher margins and lower volume to everyone else.
As the high-volume customers drive down prices through leveraged negotiation, a marketer is able to offset the need to appease these powerful buyers by margining well everywhere else in their business, as long as they have an adequate population of low-volume buyers.

In this light, the 80/20 is not always an argument to wash our hands of low-volume customers. It actually is an argument to use a blended profit margin to achieve continued growth and competitiveness without being priced out of the highest-volume deals. Those high-volume deals, while having decreasing returns proportionate to their scale, are critical for a business to achieve the necessary economies of scale to competitively lower overall costs of production and distribution.

In other words, the highest-volume 20% of your customer base will drive profitability through creating efficient scales of business, while the lower 80% will drive profitability through aggressive margins. It is easy to see how these two strategies would work best when they feed off each other's efforts, rather than working in isolation. Indeed, there are often harsh growth limits for your business set by selling only to the "best" 20% of your customers, or engaging only in low-volume deals.

This is not to say that relationship marketing efforts to keep the loyalty of "golden" 20% should be abandoned; rather, the health of our marketing relationships with other 80% of our customers needs to be equally addressed and certainly not abandoned. The only exception to this general rule is when the margins on high- and low-volume customers are largely identical or random. In those cases, ignoring the 80% is probably a good idea.

Wednesday, December 14, 2005

Self Service Technologies and Customer Satisfaction

In my earlier writing, I had written about use of Self Service Technologies. Self Service Technologies (SST) are changing the way customers interact with companies. As a result we are seeing a whole lot of firms developing innovative SST with a hope that their customers are satisfied. Firms are experimenting with a wide range of SST, from web based banking to an atrocious self service restaurants. (Recall a Sinefiled episode where Krammer has this new idea for a Pizza restaurant - Restaurant where customers can make their own Pizza’s!!)

Many of these technology products fail in their primary objective: Customer Satisfaction.

In order for an SST to succeed in making customer’s happy, firms must learn and know what drives customer satisfaction. Or in other words answer the question "What is Customer Satisfaction?"

I went around asking people "Define Customer Satisfaction". I was amazed to find out that everyone thinks that they know what is satisfaction, but when asked for a definition nobody knows to define "customer satisfaction".

A formal definition of Customer Satisfaction is: "Satisfaction is the customer’s fulfillment response. It is a judgment that a product or service feature, or the product or service itself. Provides a pleasurable level of consumption related experience"

In layman terms, satisfaction is the customer’s evaluation of a product or service in terms of whether that product or service has met their needs and expectations. Failure to meet the needs and expectations can then result in dissatisfaction with the product or service.

Customer Satisfaction in SST

In this article, I will explain what drives customer satisfaction when customer provides his/her own service with SST. To begin with, I will answer these questions:

  1. What are the sources of Customer Satisfaction and dissatisfaction in encounters involving SSTs?
  2. Are the sources of customer satisfaction and dissatisfaction with SST encounters similar to or different from interpersonal encounters?
  3. How does satisfaction or dissatisfaction with SST affect: Customer complaining, word-of-mouth campaigns and repurchase intentions?

Sources of Customer Satisfaction

Customer’s satisfaction is an outcome of the interaction between customer and the SST. If the outcome falls in the following category of results, the customer is always satisfied.

  1. Solved my Immediate Need

    The most satisfying encounter will occur when the SST in question provides an immediate relief to the customer’s most pressing problem. For example, Customer’s parent is sick & he needs to travel immediately. The online ticket booking helped the customer book a flight ticket and reach his destination. Another example: A customer needs cash immediately to meet a sudden expense - ATM solved the problem.

  2. Better than the Alternative

    The second most satisfying encounter happens when SST provides service which is better than the other alternatives. A good example is Fedex’s on-line package tracking system. Earlier there was no way a customer to track the package. The on-line tracking provides a benefit which was nonexistent before.

  3. Easy to Use

    If the SST is easy to use than the interpersonal service alternative, then SST leads to customer satisfaction. For example booking a ticket over the Internet is better than doing it over the phone for a Computer Savvy person.

  4. Avoid Service Personnel

    SST’s provide an alternative to customers who prefers to avoid customer service personnel for various reasons: Customer may have difficulty in talking in a particular language, may feel that salesperson is trying to sell something he/she does not need or customer is shy. DELL’s Online computer order is another classic example. Customers can configure their PC, know the price and order online. For many people, this is easier than interacting with the salesperson over the phone.

  5. Saves Time

    Most customers are satisfied when SST saves time. For a busy individual, time is precious. If SST saves time when compared to other alternatives, customers are satisfied. For example, getting a SMS alert when a bank check is cleared gives the required information to the customer - and customer does not have to spend time either logging online or calling the bank.

  6. When I want & Where I want

    Customers like to be serviced when they want and not when it can be provided. For example, many of us like to buy a book or something when we want to do so, and need not have to wait for the store to open. provides Internet based option to buy books any time - anywhere and is shipped to where ever the customer wants.

  7. Saves Money

    SST provides platform for customers to provide their own service. Therefore customer will be delighted if the service alternative from an SST is cheaper than the interpersonal alternative. For example, Online banking is offered for free of charge and the bank charges a small fee for using the services of a bank teller to check the account status. This will make customers move towards SSTs and avoid bank personnel.

  8. Did its Job

    Once the customer is used to providing his/her own service via SST, customer is satisfied when the SST did the job like expected. For example, if the banks ATMs work flawlessly all the time - and customer had no issues, then it leads to customer satisfaction.

Sources of Customer Dissatisfaction

Technology has to potential to agonize the customer and make the customer totally dissatisfied with the SST. Customer dissatisfaction arises from:

  1. Technology Failure

    SST is driven by technology and technology can (and in many circumstances will) fail. When SST fails to perform as expected, customers are dissatisfied.

    Typical examples are: Web server is down - thus customer cannot log in, or ATM machine is broke. Companies cannot do much in terms of service recovery when technology breaks down, however it can take steps to alleviate customer dissatisfaction by providing alternatives. For example providing a list of the nearest ATMs at all ATM locations or providing a telephone at the ATM booth so that the customer can use phone banking etc. In case of Web service related failure, the company can provide a phone number for the customer to call in and place an order or do an inquiry etc.

    Customers have become accustomed to some level of technology failure - but they expect the service provider to fix the problem at the earliest - if that happens, then the level of customer dissatisfaction is reduced. In the above example, if the bank fixes the ATM within few hours of failure or if the web site is back in operation within few hours, then customers not likely to hold it against the service provider. But if the ATM is not fixed even after one week - then the bank has lost the customer for good.

  2. Process Failure

    Process failure is an outcome of unintended consequences. Here the SST functioned but delivered a wrong result. To understand this, consider the following example: Customer logs in to and orders a book, the system records the order and gives an acknowledgment - but automated shipment processing machine sends the wrong book to the customer.

  3. Poor Design

    Designing an SST which meets the requirements of all customers is tough. Often there will be situations where the SST fails to meet the requirement of all the customers. Poor design manifests itself in two forms:

    a. Technology Design problem

    There are instances where the SST performed as it was designed to, but the technology performed in such a way that the customer was unhappy with the encounter. For example, Online Train Schedule information offered by Indian Railways - the system works the way it is designed, but for the user, it is almost impossible to read the train schedules - as all the data is presented in cryptic format.

    Technology design problems are most common in Web based services & in automated telephone systems. This happens because the persons designing the system do not use the system.

    b. Service design problem

    There are some instances where SSTs performed as they are designed to, but the design has a flaw. For example, an online bookseller who has not provided the option for the goods to be delivered to an address different than that of credit card holder’s address. Another common instance of this design flaw:- Web sites which provide you an option to retrieve your password, but it insists on you entering your old password (which you are trying to retrieve)

    In these cases, technology did not fail, the SST performed perfectly as per the design. But the design was flawed.

  4. Customer-Driven Failure

    For SST’s to work, customers have to be technology savvy. There are times when companies have moved to SST and have removed all other service options. When customers are not technology savvy, they get intimidated or annoyed - and dissatisfied with the SST.

    For Example, my father does not know how to use all the features in the cell phone and finds using the voice mail facility to be very challenging - as a result, he is dissatisfied with this new service.

Customer Reaction to SST

When customers interact with an SST - there will always be a reaction: sometimes positive, sometimes negative. Although the customers are creating their own service through SST, customers rarely blame themselves for any dissatisfying experience. Most customers are reluctant to complain about the faulty service but they are more than willing to spread the word around. This implies that companies which deploy SST must keep a close watch on customer’s reaction to a SST interaction.

I cannot recall a single incident when I have picked up the phone to tell the bank that their ATM is not working. But there has been several instances when I had recommended others not to use a particular service.

Closing thoughts

SST’s have come of age and are being used extensively. In the future - we will see several new forms of SST’s. Firms which are deploying SST’s must be careful not to alienate their customers through bad design/implementation of the technology. Service recovery with SST is difficult and challenging. Therefore SST’s must be deployed selectively and after intensive testing.

Monday, December 12, 2005

Branding Mistakes - Having a "Me-Too" Brand Name

Imitating the competitor’s name is a fundamentally flawed strategy

Notice how all successful brands are so distinct. By distinct, I mean the brand name is distinct even when there is very little product differentiation. Consider the example of Nikon & Cannon cameras. Both are very successful brands - and yet there is little product difference. Yet both the brands have lots of fiercely loyal customers.

On the other hand, consider the case of Pepsodent and Mentadent toothpaste. Both are good products created and marketed by Unilever. Initially Pepsodent was a big success and captured a significant market share from Colgate. But with introduction of Mentadent brand toothpaste, Unilever lost its US market share - and ended up by selling both the brands to Church & Dwright in 2003. At the same time Arm & Hammer and Crest brands have grown in market share.

Another similar story is repeated in India. Several brands of fairness cream - Fairever, Fair & handsome, Fairone etc. were introduced to compete with the market leader Fair & Lovely. These creams were good products and was offered at a lower price than Fair and lovely, yet the brand Fair & Lovely has 80% of the market share - and is growing.

Now, doesn’t that tell something is wrong?

It does!! And the problem lies with the brand name. Having a similar brand name as that of market leader makes the product a "me-too" product - thus losing its brand differentiator value.

These "me-too" brands have just two chances. They either wither out or speed into a hard-to-grow trap. Brands such as Fairever may continue to exist - but it will not gain any significant market share. Or in case of Hycol - a competitor to Fevicol, the brand disappears. Some of these me-too types, though backed by sound business logic and spirited entrepreneurs, are sure to vanish. They might turn in money but they also ensure that the promoters do not think long-term or promotions because every move to promote "me-too" brands would only uphold the superiority of the targeted brand.

Miming names are flawed fundamentally

A classic branding mistake yet widely believed to trigger success. These brands hang on till they find the toil unworthy. The brand will have initial success if the product is good, but once they become marginally successful, it will fall into the hard-to-grow trap. At this point the market share of the brand suffers from an up-now, down-now syndrome. Beyond this point the company would find the investments in marketing not really yielding.

A few "Me-Too" brands succeed for reasons anything but the name. In fact, they succeed in spite of the name. Invariably, low price is the strategy that puts such brands afloat. In time, smartly managed ones grow till they have carved a segment for themselves. The task now on is more about defending than conquering.

Success apart, these brands lack the potential for progressive branding. Unbelievably, the cap is fixed by the sound of their name, which casts them into a default position. While the promoters may believe that their brand is a challenger, the market perceives it as an imitator.
Fairever, Fairglow and any brand that rhymes with Fair & Lovely would be perceived as underdogs and remain so.

Every move to promote "Me-Too" brands would only uphold the superiority of the targeted brand. Miming names are flawed fundamentally. Even the instant awareness they generate is intrinsically negative. If differentiation is the way to build brands, imitating the competitor’s name is surely wrong thing to do. I can almost hear arguments; how else to call a fairness cream without the word Fair? Well, the very question suggests a challenge and has an opportunity hidden within.

Way Out

What’s the way out to compete when your "Me-Too" brand hits this road block? No options but to build another brand. An independent one—not an extension—that can knock the leader off the shelves.

If CavinKare (makers of Fairever) follows this mantra, it has the potential to snatch as much share with a new brand in half the time it did with Fairever. But companies hardly learn from others’ pitfalls. Recently, Emami, a visibly brand conscious company, has launched a right product with a wrong name - Fair & Handsome. Its mistake has been in choosing the most logical and apparently right name - a name that puts the cap on the possibilities irrespective of market opportunity.

Along from a "Me-Too" brand naming mistake, the worst marketing mistakes are briefly described below.

Nine Major Marketing Mistakes

In today's world, there's so much competition that if you make a mistake your competitors quickly get your business. The chances of getting it back are very slim unless someone else makes a mistake. Hoping competitors make mistakes is like running a race hoping the other racers fall down: It just doesn't happen very often.

Here are the blunders that are the most prevalent in today's hyper-competitive world.


Many people believe that the basic issue in marketing is convincing prospects that you have a better product or service. They say to themselves, "We might not be first, but we're going to be better." That might be true, but if you're late, and you have to do battle with large, well-established competitors, then your marketing strategy is probably faulty. Me-too just won't cut it.

What Are You Selling?

This may surprise you, but a good bit of my time over the years has been spent figuring out exactly what it is that people are trying to sell. In other words, trying to capture the category in a simple, understandable way. Companies, large and small, often have a very tough time describing their product, especially if it's a new category and a new technology. Your biggest marketing successes come with simple, but powerful explanations of what you're offering. Don't get cute or complex.

Truth Will Win Out

Not understanding that marketing is a battle of perceptions, is a simple truth that trips up thousands of would-be entrepreneurs every year. Marketing people are preoccupied with doing research and "getting the facts." They analyze the situation to make sure the truth is on their side. Then they sail confidently into the marketing arena, secure in the knowledge that they have the best product and that ultimately the best product will win.

It's an illusion. There is no objective reality. There are no facts. There are no best products. All that exists in the world of marketing are perceptions in the minds of the customer or prospect. The perception is the reality. Everything else is an illusion.

The Other Guy's Idea

It's bad enough to launch a me-too product, but equally problematic is a me-too idea. The reason is that two companies cannot own the same concept in the prospect's mind. When a competitor owns a word or position in the prospect's mind, it is futile to attempt to own the same word.

Volvo has pre-empted the concept of "safety." Many other automobile companies, including Mercedes-Benz and General Motors have tried to run marketing campaigns based on safety. Yet no one except Volvo has succeeded in getting into the prospect's mind with a safety message.

We're Very Successful
As I've written in the past, success often leads to arrogance and arrogance to failure. When people become successful, they tend to become less objective. They often substitute their own judgment for what the market wants.

As their successes mounted, companies like General Motors, Sears and IBM became arrogant. They felt they could do anything they wanted to in the marketplace. Success leads to trouble.

Everything For Everybody

When you try to be all things to all people, you inevitably wind up in trouble. Better advice comes from one manager who said, "I'd rather be strong somewhere than weak everywhere." This kind of "all things" thinking leads to what we call "line extension," or trying to use a successful brand to mean more than it can in the mind. It's a very popular mistake.

Live By The Numbers

Big companies are in a bind. On the one hand, they have Wall Street staring at them asking, "How much are your sales and profits going to grow next month, next quarter, next year?" On the other hand, there are an endless number of competitors staring at them saying, "We're not going to let you grow if we can help it."

So what happens? The CEO lies to Wall Street and then turns around to the marketing people and tells them what is expected in terms of profit and growth. They in turn scramble back to their offices and try to figure out how to make those unreasonable numbers. Brash predictions about earnings growth often lead to missed targets, battered stock and even creative accounting. But worse than that, it leads to bad decisions.

As panic sets in, what often happens is that they fall into the line extension, or the everything for everybody trap. Rather than stay focused on being strong somewhere, to drive their numbers up they opt for weak everywhere. Their only hope is that they will be promoted before it all hits the fan.

Not Attacking Yourself

Much has been written about the likes of Dell, Xerox, AT&T and Kodak, and their efforts to move from slow growth to high growth businesses. When this is exacerbated, companies are faced with what have been called disruptive technologies. Dell facing the desktop computer revolution. Xerox facing the surge in laser printing, and Kodak facing the digital camera.
Though difficult, a leader has no choice in this matter. They must find a way to move to that better idea or technology, even if it threatens their base business. If they don't, their future will be in question. Especially as that technology is improved and picks up momentum. The trick is how to do it.

Not Being In Charge

When the CEO or very high level management doesn't take charge of strategy, things rarely go well. In today's rough and tumble world, marketing strategy is too important to be left to middle level management.

Tuesday, December 06, 2005

Management Speak - Vocabulary

As an enginner I often hear lots of jargon which for an layman or a fresh college graduate may sound like Greek or Latin. So I decided to put in a small list of most commonly used words in the software Industry. (BTW I am still compiling a similar list for ASIC industry)

Acceptable Quality Level (AQL)
ANSI/ASQC Z1.4-1981 defines AQL as “the maximum percent nonconforming (or the maximum number of nonconformities per hundred units) that, for purposes of sampling inspection, can be considered satisfactory as a process average.”

Acceptance Testing
Testing to ensure that the system meets the needs of the organization and the end user or customer (i.e., validates that the right system was built).

Access Modeling
Used to verify that data requirements (represented in the form of an entity-relationship diagram) support the data demands of process requirements (represented in data flow diagrams and process specifications.)

Activity An identifiable work task that needs to be controlled.

Affinity Diagram
A group process that takes large amounts of language data, such as a list developed by brainstorming, and divides it into categories.

The American National Standards Institute that is the organization that helps set standards and also represents the United States in international standards bodies.

Audience Evaluation
The ability to evaluate audience needs and develop appropriate presentation materials.

An independent inspection or assessment activity that verifies compliance with plans, policies, and proce­dures, and ensures that resources are conserved. Audit is a staff function; it serves as the "eyes and ears" of management.

Work waiting to be done; for IT this in­cludes new systems to be developed and enhancements to be made to existing systems. To be included in the development backlog, the work must have been cost-justified and approved for development.

Baseline A quantitative measure of the current level of performance.

Benchmark An industry or best-of-class norm.

Searches for the best practices or competitive practices that will help define superior performance of a product, service, or support pro­cess.

Black-Box Testing
Data driven testing that focuses on evaluating the function of a program against its specifications.

Brainstorming A group process for generating creative and diverse ideas.

Cause-and-Effect or Fishbone Diagram
A tool used to identify possible causes of a problem by repre­senting the relationship between some effect and its possible causes.

A group activity in which a team's success is made known publicly and praised. This may include tangible rewards such as refreshments and award certificates.

Charter A document defining the formal organiza­tion of a corporate body: a constitution. Authoriza­tion from a central or parent organization to establish a new branch, chapter, etc.

Check Sheet A form used to record data as it is gathered.

Client The customer that pays for the product received, and receives the benefit from the use of the product.

Coaching Providing advice and encouragement to an individual or individu­als to promote a desired behavior.

Computer Society A constituent society (or technical component) of the IEEE.

Conflict Resolution The process of bringing a situation into focus and satisfactorily reducing or eliminating a disagreement or difference between parties.

Contributor Measure A unit of measure by which a result measure is controlled. Contributor measures do not impact the customer directly, but contribute to the success of the result.

Control Chart
A statistical method for distinguishing between common and special cause variation exhibited by processes.

Control Unit
A critical success factor that must be managed to achieve the success of a goal, policy, or strategy.

Cost of Quality (COQ)
Money spent above and beyond expected production costs (labor, materials, equipment) to ensure that the product the customer receives is defect free. This includes the cost of repairing a defective product that was shipped to a customer and the associated damage costs.

The individual or organization, internal or external to the producing organization, that procures the product.

Customer-Recorded Impacts
The positive and negative effects upon the customer resulting from IT actions.

An aggregation of measures, together with their standards, that provides a quantitative analysis of critical components of a process.

From the produc­er's viewpoint, a defect is a product requirement that has not been met, or a product attribute possessed by a product or a function performed by a product that is not in the statement of requirements that define the product. From the customer's viewpoint, a defect is anything that causes customer dissatisfaction, whether in the statement of requirements or not.

Defect Rate
Any relationship between identified measures that indicates, to the metric users, a level of quality.

Documentation Structuring
Designing documents that are clearly, logically, meaningfully, and comprehensively laid out.

Dynamic Testing Testing which involves executing the system’s code.

Effective Listening
Actively listening to what is said by asking for clarification when needed, and providing feedback statements on what was said to reinforce understanding and acknowledge that listening is occurring.

Effective Presentation
Providing or teaching information in a manner that transfers understanding and is appropriate to the audience. The proper use and value of videos, slides, overheads, flipcharts, handouts, brochures, and PC projections are examples of common tools and should be understood.

The Electronics Industry Association, which is an ANSI-accredited standards developer. The EIA is the national trade organization that represents United States electronics manufacturers.

Giving people the knowledge, skills, and authority to act within their area of expertise to do the work and also improve the process.

Exception Reporting The process of reporting only significant variances from what was expected.

The process of helping the progress of some event or activity. An understanding of formal facilitation includes well-defined roles, objectivity of the facilitator, a structured meeting, decision-making by consensus, and defined goals to be achieved.

First Party Audit
An internal audit conducted by auditors who are employed by the organization being audited, but who have no vested interest in the audit results.

A diagram that shows the sequential steps of a process or of a workflow around a product or ser­vice.

Force Field Analysis
A group tech­nique used to identify both driving and restraining forces that influence a current situation.

Functional Tests Tests of business requirements that address the overall behavior of the system.

Gainsharing Sharing in the savings from quality improvement efforts.

A graphical description of individual measured values in a data set that is organized according to the frequency or relative frequency of occurrence. A histogram illustrates the shape of the distribu­tion of individual values in the data set along with information regarding the average and variation.

IEC The International Electrotechnical Commission.

The Institute of Electrical and Electronics Engineers, which is the world’s largest technical professional society with members in almost 150 countries.

Influencing Skills
Capabilities and techniques developed to cause one person to have a certain planned effect on another.

Information Technology (IT)
Any activity (not limited to systems development) that uses information to fulfill its mission. Also called information services, management information services, and information systems.

Products, services, or information needed from suppliers to make a process work.

Integration Testing
Testing performed on groups of modules to ensure that data and control are passed properly between modules.

International Organization for Standardization (ISO)
ISO is a network of the national standards institutes of 146 countries, on the basis of one member per country, with a Central Secretariat in Geneva, Switzerland, that coordinates the system. ISO is a non-governmental organization: its members are not, as is the case in the United Nations system, delegations of national governments.

Interpersonal Effectiveness
The ability to work and negotiate effectively with personnel of different professions, skill levels, organizational levels and varying experience.

Developing and asking questions for the purpose of collecting oral data to be used in an analysis or evaluation.

Joint Application Development (JAD) Session
A meeting where the producer and customer come together to negotiate and agree upon requirements.

Just-in-Time (JIT)
The system known as “the Toyota production system” that has set the standard for world-class manufacturing. The ultimate goal of JIT production is to supply each process with exactly the required items, in exactly the required quantity, at exactly the required time.

Key Result Areas
Broad-based areas of perfor­mance that, when measured, give a unit an evaluation of its critical customer-driven processes.

The ability to guide or influence a group to move in some direction, including inspiring others in a shared vision of what can be, taking risks, serving as a role model, reinforcing and rewarding the accomplishments of others, and helping others to act.

Level of Service
The average performance received by the customer per criterion over a given period of time, which is normally 30 days.

Likert Scale
A way to collect measures, typically on a survey. A Likert Scale contains categories such as Very Satisfied, Slightly Satisfied, Satisfied, Slightly Dissatisfied, and Very Dissatisfied.

Maintenance The process of modifying errors found in a released software product.

A team or individual that manages resources at any level of the organization. Management obtains results through the efforts of other people. It is everyone in the organization except those in positions specifically designated as non-management.

Management by Fact
The process of using qualitative and quantitative data produced from and about work processes to make informed decisions regarding the operation of those work processes. The two components of this process are meeting desired results, and managing the processes to drive the results.

Management by Process The use of processes to achieve management’s desired results.

A number that represents a set of numbers in any of several ways determined by a rule involving all members of the set: AVERAGE.

Measure A single attribute of an entity; a standard unit.

Meeting Management
The process of organizing and conducting meetings to provide maximum productivity over the shortest time period.

Two or more measures combined in a relationship to each other to produce information about an entity.

Metric Name
A short name or expression that conveys the intent of the quality characteristic.

A customer-oriented statement of purpose for a unit or a team.

The process of working together with one or more parties to establish goals to be reached, create options that will satisfy all parties, and select an option that is best for all parties. May utilize skills such as compromising and consensus building.

Objective Performance Measurement
A quantifiable means of measuring the level of service received, such as the number of times reports were late during the month.

Outputs Products, services, or information that result from a process.

Perfective Maintenance The act of improving the product at the same time a fix is made. This is risky and not recommended.

Performance Criteria Major performance related categories, such as accuracy, quality, or timeliness.

Performance Standards
Defined, measurable levels of IT service applicable to an individual customer organization or a group of customer organizations.

The point of view from which assessments or customer satisfaction and quality can be made. Examples include the customer’s view and the provider’s view of quality.

Managerial desires and intents concerning either processes (intended objectives) or products (desired attributes).

Problem Any deviation from defined standards. Same as a defect.

Problem Reporting/Tracking
The process of reporting outstanding problems; having them assigned for resolution, and closing them out when the customer has been notified that the problems have been solved.

The step-by-step method followed to ensure that standards are met.

(1) The work effort that produces a product. This includes efforts of people and equipment guided by policies, standards, and procedures. (2) A statement of purpose and an essential set of practices (activities) that address that purpose. A process or set of processes is used by an organization or project to plan, manage, execute, monitor, control, and improve its software related activities.

Process Definition
A description of the organization's current best practice approaches so that the process is understood, consistently performed, and ready for improvement or redesign.

Process Improvement
The progression of steps taken to change a process to make it produce a given product faster, more economically, or of higher quality. Such changes may require the product to be changed. It involves improving process capability and reducing variation by analyzing the process and product results, identifying root-cause problems, and changing the process to eliminate root causes. The defect rate must be maintained or reduced.

Process Re-engineering The fundamental rethinking and radical redesign of business processes.

Product (or Services)
The output of a process: the work product. There are three useful classes of products: Manufactured Products (standard and custom), Administrative or Information Products (invoices, letters, etc.), and Service Products (physical, intellectual, physiological, and psychologi­cal). Products are defined by a statement of requirements.

Product or Service
Something produced or provided to meet the customer’s requirement.

Product Improvement
Changing the statement of requirements that defines a product to make the product more satisfying and attractive to the customer (more competitive). Such changes may add to, or delete from, the list of attributes or the list of functions defining a product. Such changes frequently require the process to be changed. This process could result in a totally new product.

Production Costs
The cost of producing a product. Production costs, as currently reported, consist of (at least) two parts; actual production or right-the-first time costs (RFT) plus the Cost of Quality. RFT costs include labor, materials, and equipment needed to provide the product RFT.

The ratio of the output of a process to the input, usually measured in the same units. It is frequently useful to compare the value added to a product by a process, to the value of the input resourc­es required (using fair market values for both input and output).

Productivity Metric The ratio of work product (i.e., function points) divided by work effort (i.e., staff days).

Operationally, the word quality refers to products. A product is a quality product if it is defect free. To the producer, a product is a quality product if it meets or conforms to the statement of require­ments that defines the product. This statement is usually shortened to: quality means meets require­ments. To the customer, a product is a quality product if it meets the customer’s needs, regardless of whether the requirements were met. This is referred to as fit for use.

Quality Assurance (QA)
The set of support activi­ties (including facilitation, training, measurement, and analysis) needed to provide adequate confidence that processes are established and continuously improved to produce products that meet specifications and are fit for use.

Quality Control (QC)
The process by which product quality is compared with applicable standards, and the action taken when a nonconformance is detected. It focuses on defect detection and removal. This is a line function - performance of these tasks is the responsibility of the people work­ing within the process.

Quality Function Deployment
A systematic matrix method used to translate customer wants or needs into product or service characteristics that will have a significant positive impact on meeting customer demands.

Quality Improvement
The change to a production process so that the rate at which defective products (defects) are produced is reduced. Some process changes may require the product to be changed.

Quality Improvement Plans (Action Plans) Plans developed to correct identified problems.

Quality Management (QM)
(1) A philosophy consisting of continuous process improvement activities involving everyone in the organization in an integrated effort to improve performance at every level. It requires the commitment of executive management, and an empowerment of employees at all levels that enables them to participate in the improvement of the processes that create products and services. (2) Quality management integrates fundamental management techniques, existing improvement efforts, teamwork, and technical tools in a disciplined approach focused on continuous process improvement. It is also called total customer focus, total quality control, quality assurance, and a leadership program.

Quality Measure
A quantitative assessment of the extent that a product or service demonstrates successful performance, conforms to its requirements, or possesses a given attribute.

Quality Metric Any relationship between identified measures that indicates, to the metric users, a level of quality.

Quality Professional
The individual or group who assists IT management in improving quality, productivity, and customer satisfaction. Other names used for this, depending on specific assignments, include quality function, quality management coordinator, quality assurance, quality consultant, quality control, quality analyst, and QA analyst.

RAD Rapid Application Development.

Regression Testing Testing after changes have been made to ensure that no unwanted changes were introduced.

Reliable Measure
A reliable measure is one that: a) if the measure were to be taken again, the result would be the same; and b) if two or more different people developed the same measure, they would produce the same results.

Reporting Frequency How often a particular report is developed and distributed to its audience.

A formal statement of: 1) an attribute to be possessed by the product or a function to be performed by the product; 2) the performance standard for the attribute or function; or 3) the measuring process to be used in verifying that the standard has been met.

Result Measure A critical success factor or value that must be controlled through measurement. Result measures directly impact the customer.

Run Chart A graph of data points in chronological order used to illustrate trends or cycles of the charac­teristic being measured to suggest­ an assignable cause rather than random variation.

Sampling Looking at a small number of work products or a section of the work product rather than at each product.

Scatter Plot (Correlation Diagram) A graph de­signed to show whether there is a relationship between two changing factors.

Second Party Audit An external audit performed on a supplier, by a customer or a contracted (consulting) organization on behalf of the customer.

Service-Level Objectives A published level of service that information technology will provide customers by performance criterion.

Services See Product.

Stakeholders Individuals who have a vested interest in the success or failure of a quality initiative.

Standard A requirement of a product or process. For example: 100 percent of the functionality must be tested.

Standardize The implementation of procedures to ensure that the output of a process is maintained at a desired level.

Statement of Requirements The exhaustive list of requirements that define a product. The Statement of Requirements should document re­quirements proposed and rejected (including the reason for the rejection) during the requirement determination process.

Static Testing Testing performed without executing the system’s code; can be manual (e.g., reviews) or automated (e.g., code or writing analyzers).

Statistical Process Control The use of statistical techniques and tools to measure an ongoing pro­cess for change or stability.

Structural Tests Tests that require knowledge of the internal logic of a system.

Subjective Performance Measurement A person's perception of a product or activity, including personal attitudes, feelings, and opinions, such as how user-friendly the application is. Different people may measure different values for the same item because of their subjective judgment.

Supplier An individual or organization that provides the inputs needed to generate a product, service, or information to a customer.

System Testing
1) A generic term that differentiates various types of higher order testing from unit testing; 2) A predetermined combination of tests that, when executed successfully, satisfy IT management that the system meets requirements.

Taxonomy Categorization of items for understanding and use.

Team BuildingThe process of aiding a group to define a common goal and work together towards that goal.

Third Party Audit An external audit performed on a supplier by an external participant other than the customer.

Unit Testing Testing performed on a single, stand-alone module or unit of code.

User The customer that actually uses the product received.

Validation Any activity that helps assure that the end product (e.g., system) under defined operating conditions meets its currently approved requirements and expectations.

Verification All QC activities throughout the life cycle that assure that interim product deliverables process their inputs in accordance with specifications and standards.

Vision A statement that describes the desired future state of a unit.

White-Box Testing Testing based on knowledge of internal code structure and logic.