Now that we better understand customer expectations, let’s look at how satisfaction differs from quality and value. The answer is not so obvious because the concepts overlap to some extent. Since customer satisfaction is defined relative to customer expectations, it becomes difficult to separate satisfaction from quality and value because customers can hold expectations about quality or value or both. In fact, customers can hold expectations about any part of the product offering, including seemingly minor issues such as parking availability, crowding, or room temperature in addition to major issues like quality and value
To solve this dilemma, think of each concept not in terms of what it is, but in terms of its size. The most narrowly defined concept is quality, which customers judge on an attributeby- attribute basis. Consider a meal at a restaurant. The quality of that meal stems from specific attributes: the quality of the food, the drink, the atmosphere, and the service are each important. We could even go so far as to judge the quality of the ingredients in the food. In fact, many restaurants, like Ruth’s Chris Steakhouse, promote themselves based on the quality of their ingredients. When the customer considers the broader issue of value, they begin to include things other than quality: the price of the meal, the time and effort required getting to the restaurant, parking availability, and opportunity costs. In this case, even the best meal in a great restaurant can be viewed as a poor value if the price is too high in terms of monetary or nonmonetary costs.
When a customer considers satisfaction, he or she will typically respond based on his or her expectations of the item in question. If the quality of the food is not what the customer expected, then the customer will be dissatisfied with the food. Similarly, if the value of the meal is not what the customer expected, the customer will be dissatisfied with the value. Note that these are independent judgments. It is entirely possible for a customer to be satisfied with the quality of the meal, but dissatisfied with its value. The opposite is also true.
However, most customers do not make independent judgments about satisfaction. Instead, customers generally think of satisfaction based on the totality of their experience without overtly considering issues like quality or value. We are not saying that customers do not judge quality or value. Rather, we are saying that customers think of satisfaction in more abstract terms than they do quality or value. This happens because customers’ expectations hence their satisfaction can be based on any number of factors, even factors that have nothing to do with quality or value. Continuing with our restaurant example, it is entirely possible for a customer to receive the absolute best quality and value, yet still be dissatisfied with the experience. The weather, other customers, a bad date, and a bad mood are just a few examples of non-quality and non-value factors that can affect customers’ expectations and cloud their satisfaction judgments.
Customer Satisfaction and Customer Retention
Customer satisfaction is the key to customer retention. Fully satisfied customers are more likely to become loyal customers, or even advocates for the firm and its products. Satisfied customers are less likely to explore alternative suppliers and they are less price sensitive. Therefore, satisfied customers are less likely to switch to competitors. Satisfied customers are also more likely to spread positive word-of-mouth about the firm and its products. However, the way that customers think about satisfaction creates some interesting challenges for marketers. It is one thing to strive for the best in terms of quality and value, but how can a firm control the uncontrollable factors that affect customer satisfaction? Certainly, marketers cannot control the weather or the fact that their customers are in a bad mood. However, there are several things that marketers can do manage customer satisfaction and leverage it in their marketing efforts:
Understand What Can Go Wrong. Managers, particularly those on the frontline, must understand that an endless number of things can and will go wrong in meeting customers’ expectations. Even the best strategies will not work in the face of customers who are in a bad mood. Although some factors are simply uncontrollable, managers should be aware of these factors and be ready to respond if possible.
When a customer considers satisfaction, he or she will typically respond based on his or her expectations of the item in question. If the quality of the food is not what the customer expected, then the customer will be dissatisfied with the food. Similarly, if the value of the meal is not what the customer expected, the customer will be dissatisfied with the value. Note that these are independent judgments. It is entirely possible for a customer to be satisfied with the quality of the meal, but dissatisfied with its value. The opposite is also true.
However, most customers do not make independent judgments about satisfaction. Instead, customers generally think of satisfaction based on the totality of their experience without overtly considering issues like quality or value. We are not saying that customers do not judge quality or value. Rather, we are saying that customers think of satisfaction in more abstract terms than they do quality or value. This happens because customers’ expectations hence their satisfaction can be based on any number of factors, even factors that have nothing to do with quality or value. Continuing with our restaurant example, it is entirely possible for a customer to receive the absolute best quality and value, yet still be dissatisfied with the experience. The weather, other customers, a bad date, and a bad mood are just a few examples of non-quality and non-value factors that can affect customers’ expectations and cloud their satisfaction judgments.
Customer Satisfaction and Customer Retention
Customer satisfaction is the key to customer retention. Fully satisfied customers are more likely to become loyal customers, or even advocates for the firm and its products. Satisfied customers are less likely to explore alternative suppliers and they are less price sensitive. Therefore, satisfied customers are less likely to switch to competitors. Satisfied customers are also more likely to spread positive word-of-mouth about the firm and its products. However, the way that customers think about satisfaction creates some interesting challenges for marketers. It is one thing to strive for the best in terms of quality and value, but how can a firm control the uncontrollable factors that affect customer satisfaction? Certainly, marketers cannot control the weather or the fact that their customers are in a bad mood. However, there are several things that marketers can do manage customer satisfaction and leverage it in their marketing efforts:
Understand What Can Go Wrong. Managers, particularly those on the frontline, must understand that an endless number of things can and will go wrong in meeting customers’ expectations. Even the best strategies will not work in the face of customers who are in a bad mood. Although some factors are simply uncontrollable, managers should be aware of these factors and be ready to respond if possible.
- Focus on Controllable Issues. The key is to keep an eye on the uncontrollable factors, but focus more on things that can be controlled. Core product quality, customer service, atmosphere, experiences, pricing, convenience, distribution, and promotion must all be managed in an effort to increase share of customer and maintain loyal relationships. It is especially important that the core product be of high quality. Without that, the firm stands little chance of creating customer satisfaction or long-term customer relationships
- Manage Customer Expectations. As we have seen, managing customer expectations is more than promising only what you can deliver. To manage expectations well, the firm must educate customers on how to be satisfied by the firm and its products. These efforts can include in-depth product training, educating customers on how to get the best service from the company, telling customers about product availability and delivery schedules, and giving customers tips and hints for improving quality and service. For example, the U.S. Postal Service routinely reminds customers to mail early during the busy holiday season in November and December. This simple reminder is valuable in managing customers’ expectations regarding mail delivery times.
- Offer Satisfaction Guarantees. Companies that care about customer satisfactionback up their offerings by guaranteeing customer satisfaction or product quality. Exhibit 10.8 provides several examples of customer satisfaction guarantees. Guarantees offer a number of benefits. For the firm, a guarantee can serve as a
corporate vision, creed, or goal that all employees can strive to meet. A good guarantee is also a viable marketing tool that can be used to differentiate the firm’s product offering. For customers, guarantees reduce the risk of buying from the firm and give the customer a point of leverage if they have a complaint.
- Make It Easy for Customers to Complain. Over 90 percent of dissatisfied customers never complain—they just go elsewhere to meet their needs. To counter this customer defection, marketers must make it easy for customers to complain. Whether by mail, phone, email, or in person, firms that care about customer satisfaction will make customer complaints an important part of their ongoing research efforts. However, tracking complaints is not enough. The firm must also be willing to listen and act to rectify customers’ problems. Complaining customers are much more likely to buy again if the firm handles their complaints effectively and swiftly
- Create Relationship Programs. As we discussed earlier, firms can use relationship strategies to increase customer loyalty. Today, loyalty or membership programs are everywhere: banks, restaurants, supermarkets, and even bookstores. The idea behind all of these programs is to create financial, social, customization, and/or structural bonds that link customers to the firm.
- Make Customer Satisfaction Measurement an Ongoing Priority. If you don’t know what customers want, need, or expect, everything else is a waste of time. A permanent, ongoing program to measure customer satisfaction is one of the most important foundations of customer relationship management.
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