Problem Impact Measure
A new perspective on reliability
Ten years ago Strategic Vision introduced its unique Total Quality Index (TQI). This complete, holistic measure of the vehicle ownership experience encompasses positive product experience, reliability, dealership experience and the emotional response. We took this broader view of quality because new owners told us that all parts of the buying, owning and driving experience interact to form an overall impression. Other measures that fail to recognize this interaction can be misleading.
Previously the prevailing industry definition of quality counted defects stated in terms of Things-Gone-Wrong per 100 vehicles (TGW/100). This measure becomes increasingly irrelevant as the number of reported problems are generally converging for all companies below one problem per buyer on average.
Even when design flaws are assessed in addition to things gone wrong, the issues associated with quality are ambiguous. Is a flaw in a transmission equal to that in a mirror?
Strategic Vision has now come back to the issue of reported problems (a subset of Total Quality) to better address important elements missing in any reliability measure that just counts problems. Specifically, we propose that problems be analyzed in terms of their impact on the customer. This requires considering several other pieces of information obtained from the consumer.
We believe that it is first important to understand the severity of the problem. A loose screw on the glove compartment door is quite different than a failed transmission. Next, we want to consider the role of the dealer when a problem occurs. Has the dealer fixed the problem satisfactorily? An unresolved problem deemed serious by the owner can have a devastating impact on overall satisfaction.
We also want to consider the expectations regarding reliability that the customer had going into the new vehicle ownership experience. For example, a new Lexus owner may have considerably different expectations regarding reliability than a new Hyundai owner.
To provide better insights into the reliability issues for both manufacturers and the car buying public, Strategic Vision has continued to provide a new metric (the Problem Impact Measure) that considers all of the factors just discussed.
Calculation of the Problem Impact Measure (PIM)
The PIM equation includes the following questions:
Weights are applied at various junctures in the equation that reflect the impact of the situation on the Total Quality score and overall satisfaction. To facilitate understanding and usefulness of the measure, the score is stated in terms of the average impact that the problem has on the perception of Total Quality for the segment. Previously, the relative impact was reported in terms of % of customers experiencing significant problems, but the impact on Total Quality tells you directly how much positive change you can have if you resolve your problems. A PIM of 10 means that if you resolved your problems, you would increase your customers' perceptions of Quality by 10 points - a significant boost. If you had no problems at all, you could increase the boost in Total Quality by 10x the PIM score.
Typically, differences of 3-5 percentage points in this scoring system are significant depending on the nature and size of the sample.
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