Key Takeaways
What? Many companies believe exceeding customer expectations is the surest way to positive customer experience and increased sales.
So what? Research shows that it is difficult to sustain everincreasing positive experiences, and customers actually report satisfaction when firms simply avoid disappointing them, rather than delighting them.
Now what? Companies should use statistically valid approaches to identify what dissatisfies customers and how those attributes can be minimized. This approach can reduce their reliance on delighting customers, a costly endeavor.
Special treatment can provide momentary satisfaction, but research shows the sustainable and more effective way to make customers happy is to simply avoid disappointing them
Many executives believe that managing their customers’ experience will improve customer satisfaction and sales. Yet attempts to articulate customer experience typically yield little to no actionable insights. This is because many companies think of customer experience as a subjective exercise that cannot be precisely defined. But customer experience can be precisely defined and measured in terms of the things that satisfy and dissatisfy customers.
For the last two decades, marketing scholars have developed algorithms to statistically identify satisfier and dissatisfier attributes of customer experience. My colleagues and I have analyzed hundreds of attributes in dozens of industries to identify satisfiers and dissatisfiers. Our research reveals how satisfiers and dissatisfiers can be used to analyze customer experience.
Attributes are defined by their impact on overall customer satisfaction. Typically, satisfier attributes are hedonic, sensorial, “nice to have” attributes of a product or service that are not considered critical to the basic utility customers get. At a hotel, a chocolate on your pillow would be a satisfier attribute. Dissatisfier attributes are fundamental aspects of customer experiences, must-haves that deliver the basic utility customers expect from the product or service experience. At a doctor’s office, an accurate diagnosis is a dissatisfier attribute.
Above-average performance of a satisfier attribute has an asymmetrically more positive effect on satisfaction than the negative impact of below-average performance (Figure 1). In the oil and gas sector, sustainability and social responsibility are satisfier attributes. The positive impact on customer satisfaction of providing aboveaverage sustainability and social responsibility will be disproportionately greater than the negative impact of providing below-average sustainability and social responsibility.
Below-average performance on dissatisfier attributes has an asymmetrically more negative effect on overall satisfaction than the positive effect of above-average performance. In other words, below-average performance on a dissatisfier attribute is more deleterious for overall customer satisfaction than the benefit from above-average performance on the attribute.
Communication is a dissatisfier attribute among oil and gas customers; the negative impact of below-average communication on satisfaction is disproportionately larger than the positive impact of above-average communication.
Table 1 shows examples of dissatisfier attributes (such as product quality, safety and confidence in the service provider) and satisfier attributes (including social responsibility and making the customer feel valued) from different industries. In most industries, a large proportion of customer value, as measured by overall customer satisfaction, comes from dissatisfier attributes, not satisfier attributes.
Companies that want to maximize their customers’ experience should focus on reducing and potentially eliminating below-average performance on dissatisfier attributes. By minimizing and eliminating below-average performance on dissatisfiers, they can avoid steep declines in overall customer satisfaction. In general, the negative impact of dissatisfier attributes is twice the positive impact of satisfaction attributes. Thus, any analysis of customer experience should strive to identify dissatisfier attributes, rather than satisfier attributes (so-called “delight attributes”).
Customer experience management is prominent in the services sector with brands such as Ritz-Carlton in hospitality, Sears in retail, JPMorgan Chase in financial services, Ford and Toyota in automotivedealerships and Disney in entertainment. These brands emphasize the sensorial and hedonic aspects of the interaction between brand and customer; the goal is to endlessly please and delight customers by continuously exceeding their expectations.
Delighting customers by providing above-average performance on all attributes theoretically leads to disproportionately higher customer satisfaction. Bloomberg reported on employees at a Ritz-Carlton in Baliwho demonstrated this concept when a child guest with food allergies arrived. The child required special eggs and milk that could only be obtained in Singapore. The staff called in personal favors and transported the food more than 1,000 miles for the child. This increased the overall customer satisfaction disproportionately higher than if the staff had made a subpar effort to accommodate the child.
Based on this, should all companies strive to maximize positive performance on all attributes to delight customers? No.
Scholars have realized that a constant focus on customer delight by exceeding expectations may be unrealistic and unprofitable. Such an approach requires constant investment in ever-increasing performance that can constantly delight customers by improving customer satisfaction. As customer expectations increase, delighting them becomes progressively more difficult and costly; yet due to competitive pressures, most firms are unable to raise prices commensurate with the delight experienced from customer satisfiers. Thus, a strategy of delighting customers through ever-increasing above-average performance may sound good, but it is difficult to implement and likely erodes margins. It is operationally less costly to minimize or eliminate dissatisfiers, rather than to maximize satisfiers.
A B-to-B company we worked with found that customers expect their order to be fulfilled within two weeks. Previously, this company worked to minimize fulfilment time such that some orders were being fulfilled in fewer than two days, but others were being fulfilled in more than three weeks. The average fulfilment time was 1.5 weeks, yet many customers were still dissatisfied when their order took more than two weeks to fulfill. Based on our recommendation, this company implemented a strategy to minimize below-average performance by fulfilling every order in fewer than 12 days. To accomplish this, the company eliminated its policy of rushing orders to delight customers and replaced it with a goal to ensure all orders were met within the 12-day limit. By eliminating rush orders, the company not only saved resources but also ensured overall customer satisfaction increased, leading to an 8.3% increase in sales and 14.6% increase in margins.
My colleagues and I also counseled executives from an oilfield-services company that treated communication as a satisfier attribute. Its sales team and customer service representatives were communicating with customers as often as possible, using as many different modalities as possible. Customers were receiving an average of five communications per week, including customer surveys, service representative calls and messages and requests from salespeople to arrange demo meetings for new products. Rather than delighting customers, the communication fatigued and dissatisfied them. Executives were surprised to learn that communication was a dissatisfier, not a satisfier, for its customers.
Further research showed the optimal communication was one touch point every two weeks, or two communications per month. By decreasing the communication frequency from 20 touch points per month to two, this company maximized overall satisfaction, decreased its cost of doing business by 20.3% and simultaneously increased sales.
What Now
Because losses loom larger than gains, most customers are looking for value that comes from consistent performance and minimization of negative occurrences on dissatisfier attributes. Such an approach runs counter to the oft-touted principle of customer delight, which can be costly to implement, inflate customer expectations and erode margins.
To identify dissatisfier attributes, a company must have a clear and consistent measurement strategy that links attribute performance to overall customer satisfaction after accounting for the asymmetric relationship. This requires a deep understanding of the customer experience, competency in developing customer measurement surveys and fluency with advanced statistical analysis. Such an approach can eventually help a company navigate its goal of astutely managing customer experience, customer satisfaction, resource optimization and its sales and margins.
Courtesy: American Marketing Association