Page 151 - Marketing Management

128 PART 3 CONNECTING WITH CUSTOMERS

Total Customer Satisfaction

In general, satisfaction is a person’s feelings of pleasure or disap-
pointment that result from comparing a product’s perceived per-
formance (or outcome) to expectations. 17 If the performance falls
short of expectations, the customer is dissatisfied. If it matches ex-
pectations, the customer is satisfied. If it exceeds expectations, the
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customer is highly satisfied or delighted. Customer assessments of
product performance depend on many factors, especially the type of
loyalty relationship the customer has with the brand. 19 Consumers
often form more favorable perceptions of a product with a brand
they already feel positive about.
Although the customer-centered firm seeks to create high
customer satisfaction, that is not its ultimate goal. Increasing
customer satisfaction by lowering price or increasing services may
result in lower profits. The company might be able to increase its
profitability by means other than increased satisfaction (for exam-
ple, by improving manufacturing processes or investing more in
R&D). Also, the company has many stakeholders, including em-
ployees, dealers, suppliers, and stockholders. Spending more to in-
crease customer satisfaction might divert funds from increasing
the satisfaction of other “partners.” Ultimately, the company must
try to deliver a high level of customer satisfaction subject to also
delivering acceptable levels to other stakeholders, given its total
resources. 20
How do buyers form their expectations? Expectations result from
past buying experience, friends’ and associates’ advice, and mar-
Although safety is Volvo’s core
keters’ and competitors’ information and promises. If marketer raise expectations too high, the
position, the value proposition buyer is likely to be disappointed. If it sets expectations too low, it won’t attract enough buyers
the firm offers customers includes (although it will satisfy those who do buy). Some of today’s most successful companies are raising
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other benefits too. expectations and delivering performances to match. Korean automaker Kia found success in the
United States by launching low-cost, high-quality cars with enough reliability to offer 10-year,
100,000 mile warranties.

Monitoring Satisfaction
Many companies are systematically measuring how well they treat customers, identifying the fac-
tors shaping satisfaction, and changing operations and marketing as a result. 22
Wise firms measure customer satisfaction regularly, because it is one key to customer reten-
tion. 23 A highly satisfied customer generally stays loyal longer, buys more as the company intro-
duces new and upgraded products, talks favorably to others about the company and its products,
pays less attention to competing brands and is less sensitive to price, offers product or service ideas
to the company, and costs less to serve than new customers because transactions can become rou-
tine. 24 Greater customer satisfaction has also been linked to higher returns and lower risk in the
stock market. 25
The link between customer satisfaction and customer loyalty is not proportional, however.
Suppose customer satisfaction is rated on a scale from one to five. At a very low level of satisfaction
(level one), customers are likely to abandon the company and even bad-mouth it. At levels two to
four, customers are fairly satisfied but still find it easy to switch when a better offer comes along. At
level five, the customer is very likely to repurchase and even spread good word of mouth about the
company. High satisfaction or delight creates an emotional bond with the brand or company, not
just a rational preference. Xerox’s senior management found its “completely satisfied” customers
were six times more likely to repurchase Xerox products over the following 18 months than even its
“very satisfied” customers. 26
The company needs to recognize, however, that customers vary in how they define good per-
formance. Good delivery could mean early delivery, on-time delivery, or order completeness, and
two customers can report being “highly satisfied” for different reasons. One may be easily satisfied
most of the time and the other might be hard to please but was pleased on this occasion. 27