In the 1980s, U.S. manufacturers turned to quality as a way to create competitive advantage and sustain customer loyalty. The 1990s are emerging as the era for customer satisfaction in service industries. Service quality and customer satisfaction are important to marketers because a customer’s evaluation of a purchase is thought to determine the likelihood of repurchase and, ultimately, to affect bottom-line measures of business success. Customer satisfaction is important to all marketers, but especially to service marketers, because, unlike their manufacturing counterparts, they have fewer objective measures of quality for judging their production.

In particular, service marketers have embraced the “gap model,” which suggests that consumers will judge a service encounter as high quality if the experience exceeds his or her expectations. This concept is simple and intuitively appealing; it is consistent with our own experiences as consumers who have been frustrated by service that did not meet our expectations or pleasantly surprised by the service provider who “went the extra mile” for us and performed “above and beyond the call of duty.”

Simple ideas are often those that “catch on” fastest, and, true to form, the gap concept is popular in industry and academia. Books on customer service invariably feature examples of service providers who made extra efforts to please their customers. Furthermore, it is currently in vogue for managers in many industries to make statements such as, “We don’t want to just meet our customers’ expectations, we want to exceed them,” or “We don’t want to simply satisfy our customers (by meeting expectations), we want to ‘delight’ them (or ‘amaze’ them) by exceeding their expectations.”

Despite the pervasiveness of managers striving to “exceed their customers’ expectations,” this point of view has its limitations. The strength of the concept — its simplicity — is simultaneously its weakness; it is too simple to provide a thorough understanding of customer evaluations. We recognize that these ideas have taken the industry by storm and, indeed, seem so well accepted that they are beyond questioning. However, we feel compelled to discuss the shortcomings in order to put a brake on the current unquestioned use of the “exceeding expectations” ideology.

The Emperor’s New Clothes — There’s Nothing New Going on Here

“Customer satisfaction” may be a new buzzword, but the concept is not new. Striving for customer satisfaction is no different than good marketing. By “marketing,” we do not mean the “Four Ps” (product, price, promotion, and place) but, rather, marketing in the classic sense of being customer oriented and market driven. Attempting to find out what customers want and then trying to deliver may be seen as striving for customer satisfaction or simply doing good marketing.

Attention to customers is what distinguishes marketers from engineers and operations and other personnel. The goal of the satisfied customer, like good marketing, must permeate the entire service delivery process, from planning through execution; if customer satisfaction is used only for post-purchase assessment, then it is no more advanced than a salesforce counting its receipts.

We are not saying that a focus on customer satisfaction is not necessary or is a bad thing. Indeed, that would be like saying marketing is not necessary or is bad. If it takes a new buzzword to refresh an attention to the consumer, so be it.

A new industry of consultants has appeared who offer their experience and advice in measuring and achieving customer satisfaction. They, too, offer nothing new. Do we begrudge them their careers? Of course not, but, in hiring them, one should realize that they are simply doing marketing and marketing research. Asking customers whether they are satisfied is no different from asking for their other opinions, e.g., “How does this ad make you feel?” “Which package design do you prefer?” “How far would you drive for this discount?”

Consistent with the gap model, recent customer surveys ask a particular question that addresses the extent to which the firm has “exceeded,” “met,” or “fallen short of ” your expectations. This type of question has no more inherent value than questions that ask whether the service experience was “good,” “average,” or “poor.” The former question may provide more information only if other questions are also posed to explicate the customer’s expectations, but this argument is true only because more information is always better. Asking questions about whether customers’ expectations have been exceeded is trendy. While this trend is not harmful, neither is it helpful.

Chicken Little Proclaims, “The Sky Is Falling” — Gross Exaggerations

Managers are running around proclaiming “The Customer Is King” and sketching organizational charts with customers positioned where CEOs used to sit. Achieving customer satisfaction is an admirable goal, but a firm must answer to multiple sets of “customers” (e.g., consumers, boards, shareholders), many of whose goals may be in conflict. For example, while a consumer may wish for a wide variety of products and customization to his or her needs, this flexibility and personalization may not be supportable financially. From a shareholder’s point of view, businesses are not in business to satisfy customers; businesses are in business to make money. In many situations, the customer need not be satisfied at all; monopolies (and most oligopolies) are extreme examples, but consider also industries in which a customer makes a purchase from a competitor known for good quality in its core product (goods or services), but whose supplemental services are spartan. There is repeat purchasing with minimal customer satisfaction.

Similarly, the claim, “The Customer Is Always Right,” is utter nonsense. Studies of product liability constantly attribute at least half of product failures to consumer misuse. In addition, the briefest inquiry to any salesforce will confirm that some customers are uninformed, unrealistic, and demanding. Most businesses have certain segments of customers who are not profitably worth satisfying.

Little Red Riding Hood and the Wolf —Customer Satisfaction and Price

Customers evaluate purchases as an aggregate function of a number of factors. Value, or the tradeoff between the quality of the item and its costs, is a primary consideration. In essence, this judgment is one of equity —how do the outcomes rate (e.g., the quality of what I receive) relative to the inputs (e.g., the price I paid or efforts and costs I incurred). Learning the price after finding suitable merchandise or service provision is like discovering granny is a wolf — costs too have teeth.

Notice too that a simple derivation of the desire to “exceed expectations” would be to sell products at costs low enough to be unprofitable to businesses, e.g., giving away a Mercedes would no doubt satisfy (and even “delight”) a customer. While many businesses are seeking high levels of customer satisfaction, none would do so rationally if it meant jeopardizing their long-term existence. The “exceed expectations” perspective would be more thoughtful and useful if such constraints were also explicitly considered.

Goldilocks and the Three Bears —Segmentation

Aside from the rare “Coca-Colas,” most firms cannot be all things to all people. Most businesses know this and typically offer a variety of products in an attempt to please multiple segments of consumers. Thus, for a given consumer making a given purchase, some of a firm’s offerings may be “too hot” or “too cold,” but the company hopes there is a product that is “just right.”

The question then is, what drives customer satisfaction? A company may modify the goods and services it offers, and it needs guidance to know which alterations are most desirable and profitable. An important distinction that has developed in discussions of services, but is equally applicable to goods, is the difference between one’s “core” product offering and one’s “supplemental” (or sometimes, “value-added”) services. Examples of core products are: safe transport from one city to another via airplane, a physician’s proper diagnosis and treatment, an attorney’s sound legal advice, a hotel room with a comfortable bed and clean bath, the car to be purchased from an auto dealer, etc. Examples of supplementals are: a movie and meal on board the airplane, the physician’s friendly bedside manner, the trustworthiness of the attorney, bathroom amenities and minibars in the hotel room, and the car dealership’s financing.

In studies of customer satisfaction in these and other industries, managers are frequently surprised to find their customers are judging them “on the little things” (i.e., on the “supplementals”). There are good reasons for this phenomenon. First, customers assume the core offering will be of high quality — it is a given. And while a poor “core” will result in customer dissatisfaction, a good “core” execution is not sufficient for customer satisfaction.

A supporting reason is that, within and across competitors, there is typically little variability in the core product offerings — planes usually do arrive safely, medical treatment is fairly accurate, hotel rooms usually do have decent bedding, etc. With so few differences among competitors on the core product (or within a competitor across different purchases), this information is not distinctive and therefore not useful to a customer forming an evaluation. Furthermore, most consumers find the core of some services hard to judge (e.g., most do not have the expertise to judge an attorney’s contracts and suggestions). What varies more, and is easier to evaluate, are the supplementals. Interpersonal skills differ greatly from physician to physician and attorney to attorney, and hotel room and lobby accoutrements also vary widely; all these things are easy to judge. Thus, in an evaluation of a service experience or in a choice between service providers, supplemental services provide greater information to consumers and become those features of the product offering that drive satisfaction and choice.

Snow White and the Seven Dwarfs —Empowerment and Service Guarantees

Just as customers differ in their wants and needs, so too do employees differ in their abilities. Even with rigorous selection and hiring, and education and training procedures, front-line (and other) personnel differ in their abilities to deal with customers and prevent or recover from service failures. No matter what the corporate culture, those front-line people can occasionally be sleepy, grumpy, and dopey!

Due to innate individual differences in ability and/or personality, a blanket policy of empowerment may be optimistic and naive. Is it good business practice for a firm to adopt a policy of giving every employee some discretion in resolving customer conflicts? Some employees are more capable than others in using that discretion wisely.

Is it wise for a firm to offer customer service guarantees? Not only do service providers’ abilities vary, but even a “good” employee has mood fluctuations. It is not clear that some portion of a firm’s profits should be tied to a component in the service delivery system that is not entirely in the firm’s control.

Tortoise and Hare, Fox and “Sour” Grapes, and Pied Piper — In Summary

Just as in the tale of the tortoise and the hare, those firms that have been customer focused all along will show stronger performances than those firms that have only recently turned their attention to satisfying their customers, perhaps in reaction to increased competition. Continual efforts toward improvement, even if slow, are superior to mad-dash redefinitions of one’s business priorities.

In the fable about the fox who could not jump high enough to reach a bunch of grapes, he finally walked away, rationalizing that the grapes were probably sour anyway. During the past ten to fifteen years, many “quality” and related efforts have been proposed as “the answer,” and, as each new adaptation yields little in the way of immediate results, managers are left feeling wary of the next trend. Their experiences do not necessarily lead to the conclusion that these various programs are not useful, but rather, in all likelihood, that none of the programs had been truly integrated into the firm. Thus, while much is said about managing customers’ expectations, management also needs to set reasonable expectations.

For example, industry spokespersons are currently trying to encourage firms to “delight” their customers or have them get “emotional” about their purchases. This advice is not realistic; it ignores the fact that many, many purchases are low involvement. Seeking “delight” or “emotions” for such items will prove fruitless and lead to much frustration.

Similarly, service industries may be attracted to the manufacturing-based TQM- and “six sigma”-like philosophies but may be thwarted in their specific attempts to apply them. For example, in many services (e.g., personal, professional), a standardized service encounter tends to be less satisfying than a personalized service, but the former are easier to measure and control than the latter. The contrast between routinized and tailored encounters suggests that a blanket goal of “minimized variance” needs to be rethought. Furthermore, it is not clear whether a target such as “six sigma” or “99.5 percent” is meaningful for subjective rating scales of customer satisfaction or perceptions of service quality.

Finally, rather than follow the “Pied Piper” like everyone else who is seeking to “exceed expectations,” managers should be more creative and wary of mindless trends. Businesses need to find their own way in striving for excellence; choosing a different route may be more appropriate for each business’s needs and lead to surer successes.


We are especially grateful to Sidney Levy and Louis Stern for their encouraging and amused reactions to this article.