Creating a Two Sided Customer Loss Function

In the area of Human Factors and Usability research a desired output of many studies is identification of what value a specific Design Parameter should be set at to minimize customer dissatisfaction.

A Customer Loss Function is a simple way to graphically display the probability customers will be dissatisfied at different levels of a given design parameter, due to a given failure mode. Many design parameters however, have two distinct but related Failure Modes (customer disatisfiers), typically representing two ends of the parameter (i.e. too much/too little; too hot/too cold; too fast/too slow). Each of these Failure modes is represented by its own unique Customer Loss Function. This paper will introduce a technique to combine these two One-Sided Loss Functions into a comprehensive Two Sided Loss Function. The mathematics behind the creation of both one sided and two sided loss functions is based on Binary Logistic Regression [1,2,3] Analysis Techniques.

The benefits of incorporating both failure modes into one two-sided customer loss function include:

1. 1)
   Being able to graphically display the Combined Customer Loss Function curve and utilize this visual aid to identify the level which minimizes customer dissatisfaction.
2. 2)
   A secondary benefit is the ability to use the two-sided loss functions equation to develop an optimization tool for mathematically determining the minimum customer loss point. This is particularly useful if running a limit study (as opposed to a study with set levels).