MIT Sloan Management Review

Companies must move beyond merely fixing what has “gone wrong” to developing what will “go right” by refocusing on the actual customer experience.

As the Internet becomes ubiquitous in business life, early fears that it would disrupt the business models of many companies (for example, by enabling customers to switch suppliers easily) have subsided.

Want to see your customer-satisfaction levels drop? Tell your customers upfront that you’ll be asking them to evaluate your service.

It's a marketing truism: Higher buying rates and lower service costs make long-term customers more valuable. That, of course, influences what companies spend on customer acquisition and retention. But according to an August 2001 working paper titled “Customers as Assets,” by Sunil Gupta and Donald R.

Effective service recovery is vital to maintaining customer and employee satisfaction and loyalty, which contribute significantly to a company’s revenues and profitability. Yet most customers are dissatisfied with the way companies resolve their complaints, and most companies do not take advantage of the learning opportunities afforded by service failures. The authors provide a research-based approach for helping managers develop a comprehensive service recovery system.

To improve service, companies must use multiple research approaches among different customer groups to ensure that they are hearing what customers are saying and responding to their suggestions.

In recent years, changes in the business environment have made it harder for firms to maintain long-term sales growth and profitability levels. Global competition has increased dramatically. A larger selection of products and services is available to the same set of buyers, with little growth in overall markets.