How to Calculate the Cost of Poor Quality

Do you ever have quality problems?

Here is a technique to help you work through the cost of poor quality.  Get a group of people in a room and the ask them to estimate the answers to the following questions.

• How many customers do you treat badly each year?
• How many of them complain?
• When they complain do you solve their problems?
• Do they take their custom elsewhere?
• How many of their friends did they tell?
• How much is a customer worth to you?

Now multiply the numbers together and there is your answer.

It is important that you use their estimates, not your own, that way the answer will be there answer not yours.

I’ll wager it is expensive.

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