Customer satisfaction has received a great deal of attention for decades now. It is in fact one of the most unassailable concepts of modern management rhetoric. Not only does the idea of satisfying customers have a clear, common-sense appeal, it is also generally believed that customer satisfaction leads to loyalty and translates to higher future profits.1 For these and other reasons, customer satisfaction practices have become one of the core prescriptions for managers and organizations.2 Indeed, for many companies, customer satisfaction has become the guiding principle, as they increasingly initiate all manner of strategies and processes under its banner.
The basic idea is a sound one: True customer orientation,3 based on genuine customer understanding, will provide superior customer value and thereby superior company value. Increasingly, however, corporate customer satisfaction (CS) practices — which comprise how customer satisfaction is defined and measured, and how the resulting knowledge is used in the organization — seem to be losing their effectiveness for both companies and their customers alike. In the worst cases, companies can get stuck in a customer satisfaction rut.
Although many organizations employ rigorous and extensive CS measurements, they may be measuring the wrong variables and using the information in mainly reactive ways. The concept of customer satisfaction has been wrongly equated with the concept of quality, for example. It has become more important to prevent dissatisfaction, which is an internal focus on fixing what has “gone wrong,” than to increase satisfaction, which requires an external focus on developing what will “go right.” Many companies have fallen into a self-perpetuating pattern in which practices that are not truly customer-oriented are reinforced and those that are customer-centered remain undiscovered and unexplored, a ll while the company’s distance from the customer gradually but inexorably increases. Managers who wish to climb out of this rut must move beyond the mere measurement of quality and satisfaction and refocus their CS practices on the actual customer experience. They then must formulate a comprehensive strategy for using that knowledge throughout the organization.
Compared to the body of research that has been devoted to methodological and conceptual examinations of customer satisfaction, surprisingly little has focused on how such practices and their associated assumptions and challenges play out in real organizations.
1. For an overview of the relation between customer satisfaction and other business parameters, see E.W. Anderson and M. Sullivan, “The Antecedents and Consequences of Customer Satisfaction for Firms,” Marketing Science 12, no. 2 (1993): 125–143; and E.W. Anderson, C. Fornell and D.R. Lehmann, “Customer Satisfaction, Market Share and Profitability: Findings From Sweden,” Journal of Marketing 58 (July 1994): 53–66.
2. N.F. Piercy, “The Effects of Customer Satisfaction Measurement: The Internal Market Versus the External Market,” Marketing Intelligence and Planning 14, no. 4 (1996): 9–15.
3. “Customer orientation” is used in the meaning of the widely acknowledged term “market orientation.” See S.F. Slater and J.C. Narver, “Customer-Led and Market-Oriented: Let’s Not Confuse the Two,” Strategic Management Journal 19 (October 1998): 1,001–1,106.
4. B. Lin and C.A. Jones, “Some Issues in Conducting Customer Satisfaction Surveys,” Journal of Marketing Practice: Applied Marketing Science 3, no. 1 (1997): 4–13.
5. The confirmation/disconfirmation paradigm for satisfaction/dissatisfaction is presented in Y. Yi, “A Critical Review of Customer Satisfaction,” in “Review of Marketing 1990,” ed. V.A. Zeithaml (Chicago: American Marketing Association, 1990).
6. Y-T. Yu and A. Dean, “The Contribution of Emotional Satisfaction to Consumer Loyalty,” International Journal of Service Industry Management 12, no. 3 (2001): 234–250.
7. F. Huber and A. Herrmann, “Achieving Brand and Dealer Loyalty: The Case of the Automotive Industry,” International Review of Retail, Distribution and Consumer Research 11 (April 2001): 97–122.
8. R.T. Rust, C. Moorman and P.R. Dickson, “Getting Return on Quality: Revenue Expansion, Cost Reduction or Both?” Journal of Marketing 66 (October 2002): 7–24.
9. S. Fournier and D.G. Mick, “Rediscovering Satisfaction,” Journal of Marketing 63 (October 1999): 5–23; and R.L. Oliver, R.T. Rust and S. Varki, “Customer Delight: Foundations, Findings and Managerial Insight,” Journal of Retailing 73, no. 3 (1997): 311–336.
10. L. Nilsson, M.D. Johnson and A. Gustafsson, “The Impact of Quality Practices on Customer Satisfaction and Business Results: Product Versus Service Organizations,” Journal of Quality Management 6, no. 1 (2001): 5–27.
11. A. Gustafsson, F. Ekdahl, K. Falk and M. Johnson, “Linking Customer Satisfaction to Product Design: A Key Success for Volvo,” Quality Management Journal 7, no. 1 (2000): 27–38; and A. Herrmann, F. Huber and C. Braunstein, “Market-Driven Product and Service Design: Bridging the Gap Between Customer Needs, Quality Management and Customer Satisfaction,” International Journal of Production Economics 66 (June 2000): 77–96.
12. J. McColl-Kennedy and U. Schneider, “Measuring Customer Satisfaction: Why, What and How,” Total Quality Management 11, no. 7 (2000): 883–896.
13. M. Söderlund, “Customer Satisfaction and Its Consequences on Customer Behavior Revisited — the Impact of Different Levels of Satisfaction on Word-of-Mouth, Feedback to the Supplier and Loyalty,” International Journal of Service Industry Management 9, no. 2 (1998): 169–188.
14. A. Gustafsson and M.D. Johnson, “Measuring and Managing the Satisfaction-Loyalty-Performance Links at Volvo,” Journal of Targeting, Measurement and Analysis for Marketing 10, no. 3 (2002): 249–258.
15. J.B. Pine II, D. Peppers and M. Rogers, “Do You Want To Keep Your Customers Forever?” Harvard Business Review 73 (March-April 1995): 103–114.
16. E. Maltz and A.K. Kohli, “Market Intelligence Dissemination Across Functional Boundaries,” Journal of Marketing Research 33 (February 1996): 47–61.
17. H. Lee, F. Acito and R.L. Day, “Evaluation and Use of Marketing Research by Decision Makers: A Behavioral Simulation,” Journal of Marketing Research 24 (May 1987): 187–196.
18. P.M. Senge, “The Leader’s New Work: Building Learning Organizations,” Sloan Management Review 32 (fall 1990): 7–23.
19. A.M. Pettigrew, “Context and Action in the Transformation of the Firm,” Journal of Management Studies 24 (November 1987): 649–670.
20. D. Leonard and J.F. Rayport, “Spark Innovation Through Empathic Design,” Harvard Business Review 75 (November-December 1997): 102–113.
21. S.F. Slater, “Developing a Customer Value-Based Theory of the Firm,” Journal of the Academy of Marketing Science 25, no. 2 (1997): 162–167.