Management Issues Surrounding Customer Satisfaction

Retail clerk serving customer

What is the value of a satisfied customer? What is the potential cost of a dissatisfied customer? 

The late, great management and quality guru, W. Edwards Deming described those as numbers that are, "unknown and unknowable, but critically important." In this era of social media where we chronicle our experiences practically in real-time, our connections and potentially the world learns of our satisfaction or dissatisfaction with our retail and business interactions.

For any manager, the opportunity for positive interactions to go viral is exciting and for negative interactions to do the same, the thought is horrifying. 

The measurement and monitoring of customer satisfaction is an important management activity and one that is filled with opportunities to promote organizational learning and continuous improvement. This article focuses on some of the larger management issues surrounding the topic of customer satisfaction. In a related article, entitled: "Ideas to Help You Measure and Monitor Customer Satisfaction," I offer additional detail for the actual measurement process.

Customer Satisfaction is Personal to the Organization:

Consider the following examples of customer experiences:

  • If you are a member of the team at Ritz Carlton Hotels, the idea that you are one of the "ladies and gentlemen serving ladies and gentlemen" is ingrained in your personal and professional mindset. You are aware that you are a critical representation of your organization and brand, and you are entrusted with ensuring customer satisfaction at every instance. 
  • As a member of the Mayo Clinic organization, your core value is: the needs of the patient come first. Every single decision is filtered against this critical value and customer satisfaction is carefully monitored and measured to ensure this value is upheld. 
  • For many airlines, the focus is on customer safety, which is critical, however, it often appears to frequent flyers as if customer satisfaction with the experience is not a key business driver. Airlines are relentless about measuring on-time arrivals and departures, but rarely talk or brag about how happy their customers are with the overall experience. 
  • At the retailer, Nordstrom's, offering remarkable customer service is something every associate is trained and motivated to deliver. In my own experience, my personal representative has come in to help me on her day off, and recently, when I needed an item altered that I had purchased elsewhere, they took care of me without hesitation, in spite of the reality that they do not alter items purchased from other stores. 
  • Your local plumber is motivated to keep the water and fixtures functioning, but likely cares little as to whether you found the individual friendly or well-dressed. 

Customer satisfaction is relative to the organization and is a very personal decision tied in to branding and overall strategy. One organization may place a premium on the entire experience while another focuses on a narrower attribute, such as safety or functionality.

Customers also have varying expectations for service. While you might expect a remarkable experience at a top restaurant, chances are, you want fair pricing and a reliable repair from your automobile mechanic. Well, and maybe some coffee that has not been sitting on the burner all day would help the auto experience as well!

Customer Satisfaction, Value Discipline and Strategy:

The examples above illustrate a range of customer service experiences.

If your primary means of creating value and differentiating versus competitors for a particular class of customers is around experience and service levels, then you will embed this in every aspect of your business, from hiring and training to seeking out opportunities to surprise and delight customers at every touch point. This discipline becomes a key part of your business strategy and one you measure and monitor from many angles. 

If your focus as an organization is on product innovation or operational excellence, your emphasis on customer satisfaction will reflect the value discipline. You will monitor whether customers view your offerings as the most innovative or the least expensive, and you will correlate customer satisfaction with those dimensions. 

Value discipline and strategy define a firm's priorities and the measures are identified to assess how well a firm is performing against those priorities.

Ideally, the firms look for key drivers of success; leading indicators that predict a future change in outcomes and lagging indicators that assess how the firm performed against targets. If customer satisfaction is core to the firm's DNA, then measures of overall experience and likelihood to recommend are critical. 

Are There Diminishing Returns from Investing in Improving Customer Satisfaction:

While counter-intuitive to consider that investing in strengthening customer satisfaction might not improve a firm's revenue or profit performance, remember, customers often place their emphasis on other factors. You might not care that your plumber did not surprise and delight you as long as your water flows, the fixtures work and the price was reasonable. The plumbing firm could choose to invest in hiring friendly, joke-telling individuals and dress them in smart uniforms and drive fancy trucks, and customers would not buy more plumbing services or feel compelled to spend more with the firm. 

Customer satisfaction is relative to the industry, the firm and the expectations of the firm's targeted and current customers. 

The Bottom Line:

Another late and great management guru, Peter Drucker, suggested that the purpose of a firm is "to acquire and keep customers." A dissatisfied customer will reduce repeat business and potentially cost you many future customers. As part of your work as a manager, you must match customer expectations and competitor approaches for quality and satisfaction and develop your own unique and meaningful approach to serving this critical audience. Before embarking upon a measurement program, carefully think through what customer satisfaction truly means for your customers and for your firm's strategy.


Updated by Art Petty