Sunday, October 24, 2010

Is the Customer Always Right?

Leading organisations are now ensuring that customer satisfaction becomes a critical success factor in their corporate strategic plans; where in the past, many executives would simply trust that improving customer satisfaction would lead to improved company performance. Today, executives have access to detailed research studies from 1990 to the present that have shown that higher levels of customer satisfaction lead to greater customer loyalty, which in turn has a positive impact on profitability. Other studies, over the same period, have also shown that satisfied customers also improve organisational growth and profitability by ‘introducing new customers’ through the influence of ‘word of mouth’ in conversation with friends and neighbours, (Homburg, Koschate and Hoyer, 2005, p.84).

Customer satisfaction relates to the comparison of the customer experience and the expectation; where it’s worth noting that there is a difference between focusing on ‘transaction specific satisfaction’ and ‘cumulative satisfaction.’ As Homburg, Koschate and Hoyer (2005) state, “transaction specific satisfaction is a customer’s evaluation of his or her experience with, and reactions to, a particular product transaction, episode, or service encounter; and cumulative satisfaction refers to the customer’s overall evaluation of a product or service provider to date,” (p.85).

Customer’s experience dissatisfaction when their product or service experience falls short of their expectations. This links to ‘disappointment theory’, which states that the greater the disparity between outcome and expectations, the greater the customer’s disappointment or elation.

This theory and the whole concept of customer satisfaction assumes that the customer’s expectations are correct in the first place. But is the customer always right and whose fault is it if the customer is, in fact, wrong? What if the customer’s expectations are incorrect?

99% of the time the organisation is at fault, and it is up to the organisation to ensure two key things; firstly that they interact with their customers to understand their expectations and second, that they are in a position to change those expectations when they are unrealistic. This also highlights the common principle of under promising and over delivering, not on a once-off, but on a continuous basis.

Jay Kandampully highlights that, “customers are becoming increasingly critical of the quality of service they experience. Customer demand and competition are forcing firms to cut loose from the traditional customer satisfaction paradigm, to adopt proactive strategies which will assist them to take the lead in the market place,” (p.431). Also, an organisations growth is highly influenced by its ability, not only to maintain but, to grow a loyal customer base – where one ratio that should be used to measure customer service is an organisations ‘returning customer ratio.’

With this in mind it has become critical for organisations to focus on customer service way beyond the short-term financial goal to the long-term relationship and loyalty value. The relationship value paradigm between; the customer and employee; the customer and the organisation; the employee and their organisation; the organisation and collaborative partnerships; has now become a significant factor in sustainable success.

Your customer’s expectations and perceptions are formed, in most cases, from the interaction the customer has with your front line staff. If these front line staff give the wrong expectations, real or perceived, then you can’t be surprised if your customers are dissatisfied with their experience. As Kandampully highlights “service management literature has repeatedly emphasised the importance of the human element in the delivery of superior service. Moreover the human propensity for the delivery of superior service is greatly enhanced by continuous service innovation,” (p.434).

Customer’s expectations are not only formed at the point of service contact, but also through your marketing strategy as well. Kandampully highlights how “management has failed to understand that the true purpose of marketing is to build and maintain relationships (bridge) between the producer and the customer thus reinforcing the producers promise and, ultimately, the bond between the producer and customer. There has been a change in the focus of marketing: transactional marketing emphasises the individual sale, whereas relationship marketing is designed to affect a long-term, on-going relationship,” (p.437).

In conclusion “the most successful service companies emphasise employees’ personal attention as the pre-eminent factor for service delivery. A firm’s relationship with its customers is instigated and established by the service personnel who interact with the customer day in and day out. It is the service personnel’s commitment to seamless, consistent and superior service that enables the firm to create an emotional, lasting, loyal relationship with the customer in which personal interaction assumes centre stage,” (Kandampully, 1998, p.438).

So is your internal and external customer always right? Yes, they should be and it’s your responsibility to make sure they are, through;

1) Actively listening to your customers needs and expectations;
2) Giving the customer the right message in the first place;
3) Proactively keeping the customer updated with new product and/or service developments; and
4) Where your customer’s expectations are unrealistic, for whatever reason, it is your responsibility to change these expectations through focused dialogue and accurate marketing and public relations.


Homburg, C., Koschate, N. and Hoyer, W.D. (2005) Do Satisfied Customers Really Pay More? A Study of the Relationship Between Customer Satisfaction and Willingness to Pay. Journal of Marketing, Vol. 69, p.84-96.

Kandampully, J. (1998). Service quality to service loyalty: A relationship which goes beyond customer service. Total Quality Management. Vol. 9, No.6, p.431-443.

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