It is widely accepted that increasing customer satisfaction will lead to favourable behavioural outcomes and that disappointing customers is a sure method of reducing loyalty and increasing defection. The extension of this understanding, however, is more open to debate.

In recent years, marketing literature and management practice has become enamoured by the idea that customer delight can lead to significant improvements in customer behaviour. If satisfying a customer by meeting their expectations leads to desirable customer behaviours, then it seems obvious that significantly exceeding the customer's expectation will significantly improve behavioural outcomes.

Research conducted by Forethought Research leads to a different conclusion. Initially the research results seem counterintuitive, but they point to a new paradigm of customer behaviour and attitude. The outcome of research conducted by Forethought indicates that management would be better served by focusing on ensuring that the organisation at least meets all customers' expectations, rather than undertaking the substantial investment required to delight the customer.

Three models of the satisfaction/business outcomes relationship.

There have been two major paradigms in the developing marketing literature describing the relationship between behaviour and satisfaction. Originally, it was considered that the relationship was linear. In this model, customer behaviours would increase proportionally to improvements in customer satisfaction. However, empirical evidence soon disproved this paradigm.

It has been replaced by the concept of a 'zone of tolerance'. This posits that customers have a region of satisfaction within which behaviour does not vary markedly. Below this range, customer behaviour declines sharply, and above it, customer behaviour outcomes can significantly improve. This paradigm has burgeoned in popularity, with academics and executives alike concentrating their attention and efforts on 'delighting the customer'. However, empirical evidence found during Forethought projects indicates that this approach may, in fact, be counterproductive.

Research conducted by Forethought indicates that a third model applies. Forethought has found that customers with low or very low satisfaction are highly unlikely to display favourable business outcomes such as loyalty or advocacy. The level of loyalty increases markedly through the middle range of the satisfaction scale, displaying no 'zone of tolerance', and levels off at high levels of satisfaction.

Researching Expectations

It can be inordinately difficult to measure the expectations of potential customers before they become a customer. Once a customer has interacted with an organisation, the customer's expectations will alter to reflect the level of service they received. As it is usually impractical to canvass a potential market prior to their becoming a customer, and not financially viable to survey customers at every point in the service chain, determining a customer's pre-purchase expectations is necessarily a subjective issue. The accepted approach is to explicitly ask the customer to estimate their pre-purchase expectation. This is the approach Forethought takes in its marketing research projects. This article reports on one specific research project, but Forethought has found that these results are representative of the service industry as a whole.

In this project, respondents were initially classified as 'expectations met', 'expectations not met' and 'expectations exceeded'. These groups were then analysed separately to investigate whether they would behave in significantly different ways.

Contrary to expectations based on pre-existing paradigms, the results showed that whilst the behavioural differences between the “expectations not met” and “expectations met” groups were significantly different - predictably, those whose expectations were not met evidenced significantly lower loyalty, retention and advocacy - the differences between “expectations met” and “expectations exceeded” were of a much smaller magnitude. Whilst customers whose expectations were exceeded showed higher levels of desirable outcomes, the differences did not prove statistically significant.

Incorporating a Zone of Tolerance

Forethought postulated that the initial classification of customers was facile, in that it assumed that the 'expectations met' category spanned only one (1) point, on a ten-point scale, around the expected satisfaction level. This meant that a large proportion of customers fell into disconfirmed status despite being only one or two points off their expectations.

In order to test a more forgiving model, Forethought conducted cluster analysis to identify regions on the satisfaction continuum. Only two were found. One cluster was comprised of customers whose experience was within three (3) rating points of their expectation, and the other was of those customers whose expectations were not met by three (3) or more rating points. Whilst no corresponding cluster was detected for those whose expectations were exceeded, Forethought redefined the 'Not met' and 'Exceeded' categories to be three (3) or more rating points distant from the expectations. Thus, if a respondent indicated they expected a performance rating of '5', but experienced '3', they would still be categorised as 'expectations met'; alternatively, if they experienced '2' they would be classified as 'expectations not met'.

Whilst the results of this new grouping were of a greater magnitude than in the first model, the pattern was repeated; customers whose expectations were not met showed significantly lower behavioural outcomes, whilst those whose expectations were exceeded showed slight, but not significant, improvements in behaviour.

Under-promising and Over-delivering

As already stated, after a service experience or product purchase and use, the customer will adjust his or her expectations of subsequent interactions to more closely align with their experience. As a result, delighting a customer will have the effect of raising their expectations for future occasions. Investing a great amount to provide an excellent service to a customer may mean that such investments become seen as normal and required if the customer is not to become dissatisfied.

This result would suggest several potential strategic approaches. These include the option to under promise and over deliver. Intuitively, lowering the customer's expectations of service or product quality will make it easier to satisfy them or even over deliver on the customer's expectations. However, the Forethought experience along with the marketing literature indicates that higher initial levels of expectation lead to higher rated levels of satisfaction. Reducing the expectations may have the counterintuitive result of lowering the customers' satisfaction, again making it harder to satisfy them.

What This Means for Businesses

As a result of this research, Forethought recommends that organisations pay attention to improving the experience of those customers who might currently be dissatisfied, rather than trying to optimise the experience of those whose expectations are being met. Taking into consideration the extra effort and expense required to delight customers as well as the potential risk of raising customers' expectations to unsustainable or impractical levels, the small benefits gained may not be worth the investment. Further, the damage caused by not meeting expectations significantly outweighs the benefits gained from exceeding them. Forethought believes that the principle aims of an organisation should be to inculcate realistic expectations into their customers and then meet those expectations for every customer.

Friend's Email:
Your Name:
Your Email:

Submit