What are CTQs? The Key to Customer Satisfaction

What’s the number one need of any business? Customers. Every business’s number one goal should be to meet the needs of their customer so that they can build customer trust and loyalty. Think of the last time you went to buy a coffee at your local coffee shop. Would you return to that business if it took an hour to get your morning fix just to have it be lukewarm and watered down? No, of course not! Businesses will not be successful if they do not fully understand the needs and expectations of their customers. That’s where CTQs come in.

What are CTQs?

CTQ stands for critical-to-quality and represents all of the expectations or needs that a customer has for a given product or service. If your product is not meeting these requirements, you will struggle to develop a loyal customer base.

CTQs are a common tool used by businesses with a strong Lean Six Sigma culture to ultimately reduce non-value-added process steps or product features and drive towards high quality standards. 

How do you identify CTQs?

Businesses must use a strategic approach for identifying CTQs to ensure they fully understand and capture all customer requirements. Ultimately, CTQs are based on the Voice of the Customer (VOC) so it is critical that the business has a clear line of communication both directly and indirectly with the customer.

Below are a few examples of both direct and indirect communication methods that you can use to hear the VOC and identify CTQs:

Direct VOC Communication Methods	Indirect VOC Communication Methods
Surveys	Public information such as customer or competitor annual reports
Focus groups	Market research (trade journals, newspaper, magazines, etc.)
Interviews	Advertising media from customers or competitors
Previous customer complaints	Industry conferences and forums

What is a CTQ Tree?

CTQs are often organized into a structure called a CTQ tree also known as a critical-to-quality analysis or a customer requirements tree analysis. The three key components of a CTQ tree are the following:

1. Critical need: the ultimate need that your product or service is aiming to fulfill
2. Drivers: the characteristics that your customer will consider when judging the quality of your product or service.
3. Requirements (CTQs): the standard that your customer will require the drivers to meet to consider the product or service to be acceptable.

Steps for Building a CTQ Tree (with Examples)

Step 1: Capture the Voice of Customer (VOC)

Use the communication methods outlined earlier in this article to help identify the VOC for your product or service. It is important to capture the customer’s “must-haves” as well as their “nice-to-haves.”. A product that meets a customer’s “must-haves” will likely succeed in generating profit, but a product that meets BOTH a customer’s “must-haves” and their “nice-to-haves” can beat out competitors and win a larger market share.

🔎 EXAMPLE: If you own a chocolate chip cookie shop, you might consider sending out a survey to recent customers to get their feedback. You can ask questions like “what did you enjoy most about your experience?”, “what could we improve to make your experience better?”, and “what do you value most when visiting a cookie shop?”. Some other examples of good survey questions can be found here.

Step 2: Use the VOC to Identify the Critical Need

Once you have collected the VOC data, you may find that the customer’s needs are varying and difficult to measure. In this case, you should look for recurring themes to determine focused needs.

Step 3: Identify the Drivers

Once you have determined the critical need of the customer, you will need to break down that need into its key drivers. The drivers should be all of the characteristics or attributes of the product or service that the customer is expecting to see.

Step 4: Set Performance Requirements (CTQs) for Each Driver

The next step is to then set clear, measurable performance requirements for each driver. These performance requirements or CTQs are the standard that the customer expects to deem the product or service as acceptable. If these performance requirements are not met, the business will likely not be successful.

A good CTQ is similar to a SMART goal; it should be specific, measurable, attainable, relevant, and time-bound with a clear target/metric assigned to it.

🔎 EXAMPLE: When we think of CTQs for high-quality chocolate chip cookies, we must think about what is needed to make the cookie taste amazing. For example, the balance of chocolate to dough is very important. In this case, out CTQ could be including 10-12 chocolate chips per cookie produced. This is a specific measurable goal to meet the customer’s need.

Step 5: Create the CTQ Tree

Use the critical need, drivers, and performance requirements identified in steps 2-4 to build out your CTQ tree. The trunk of the tree will be the customer’s critical need, with branches of the tree representing the drivers and performance requirements. 

This structure provides a visual representation of the relationship between the customer’s need and the specific, measurable performance requirements that fulfill that need. This allows the business to keep the customer’s needs at the forefront of their mind when defining continuous improvement activities and KPIs. 

Step 7: Validate the CTQ Tree with Customer Feedback

Once the team creates the CTQ tree, the business should once again reach out to the customer for feedback. Direct communication through surveys, focus groups, and interviews can ensure that no “must-haves” were missed during the creation of the CTQ tree.

It is important to continuously reach out to the customer for feedback to ensure the VOC is up to date. Customer’s needs may adapt over time and the businesses that will stay ahead are those that can anticipate and quickly react to those changing needs.

🔎 EXAMPLE: After creating the CTQ tree in step 6, the chocolate chip cookie shop sends out another survey to customers and discovers that brown sugar-based cookies are now the biggest trend. The business should factor this into their CTQs for taste and define what composition of the cookie should consist of brown sugar.

Step 8: Continuously Monitor the CTQs

Once the CTQ tree is in place, the business should also integrate it into their quality management system. Some examples of monitoring systems and activities that you can use are below:

• You can implement control plans to ensure the process is clearly defined and repeatable.
• Control charts or run charts are useful to monitor whether or not the process/product is meeting each CTQ metric. 
• Any areas for improvement identified on control charts, run charts, or through value stream mapping can be used to define activities for Kaizen events or corrective actions.

Benefits of Using CTQs

As you might be able to imagine, CTQs are crucial to business success, therefore, their benefits are clear.

1. The customer-centric approach when defining CTQs ensures that the product meets the customer’s needs which results in happy, loyal customers that drive profit for the business.
2. Understanding the needs of the customer allows a business to be operationally efficient. They can remove non-value-added processes or features and spend more time and resources focusing on the critical needs of the customer.
3. A deep understanding of CTQs can provide a competitive advantage as businesses can focus their time and energy on ensuring the product or service fulfills the customer’s “must-haves” and “nice-to-haves”.

Tips to Maximize the Benefits of CTQs

• Make sure that every CTQ is measurable so that you have a quantitative means of determining if a CTQ has been met.
• Routinely refresh the VOC to ensure that you are adapting the CTQ tree for new or changing customer needs.
• Continuously monitor the CTQs to make sure they are staying on target. Developing a CTQ tree is not a one and done type of exercise; it is a tool that the team must maintain and continuously reference to ensure the business stays focused on meeting the customer’s expectations.
• Ensure that you are following a strategic approach when creating the CTQ tree. If you treat it as a tick-box exercise and do not take the time to fully understand the needs of the customer and what you need to achieve to meet their standards, the business will ultimately suffer. 

Challenges of CTQs and Methods for Overcoming

Although the benefits of clearly defined CTQs are obvious, that does not mean they come without some challenges. The two primary challenges when defining CTQs are:

1. They can change. Over time, the needs of the customer will change, and it may be difficult to recognize these changes and adapt to them. This is where continuous monitoring and regularly refreshing the VOC are critical.
2. Customer feedback can be difficult to obtain and parse. Surveys, focus groups, and interviews are great forms of customer feedback, but it can often be challenging to get a response and to parse through the feedback. Diversifying the sources of customer feedback can help with this as customer’s may prefer to give their feedback in different forms. Also, focus on the central themes when analyzing customer feedback to ensure you identify the overall critical need rather than wasting time on small, infrequent criticisms.

Conclusion

I hope you now have a better understanding of why CTQs are critical for business success. If you want to have a prosperous business, you need a loyal customer base who is willing to spend money on your product or service. The only way that you will achieve that is through having a deep understanding of the customer’s needs and what the CTQ requirements are to achieve those needs. Are CTQs something that you’ve considered in your business? If so, I’d love to hear about your experience in the comments below.