How Satisfied Are Your Customers?

There are countless reasons for a business to make certain that all of its customers walk away feeling satisfied. Satisfied customers bring in new business. Satisfied customers are compelled to share their positive experiences with your brand on social media. And most importantly, satisfied customers fuel the economic engine that generates continuous, sustained growth of a product or a service over time. It’s therefore essential that businesses find ways to make sure they have at least met the basic criteria that customers generally set for their own satisfaction.

For many years business leaders and academics alike have worked to generate theories of customer satisfaction. Having a solid handle on which of these theories best applies to you can be particularly useful and important when trying to create processes and business objectives designed to enhance the customer experience. This article discusses today’s dominant theories of customer satisfaction and looks at some of their shortcomings, as well as some common mistakes that businesses make during the measurement and identification processes.

Theories of Customer Satisfaction

Although satisfaction is a simple concept in itself, this simplicity can be a trap. Many factors go into whether or not a customer walks away from your product satisfied. Product quality plays a substantial role, but is far from the only thing in play. Business academics have constructed several frameworks for understanding why a customer will leave satisfied or unsatisfied using concepts from social psychology and business application to help paint a clearer picture.

Expectancy-Confirmation: Not Adding Up

Customers often bring their own ideas of what matters about a product to the table, and the expectancy-confirmation theory (also known as expectation theory) takes those ideas into account in considering customer satisfaction. This theory argues that whenever a customer purchases a product, he or she has a general sense of what they’d like to get out of it. If that product doesn’t meet or exceed their expectations, the theory says that customers walk away dissatisfied because what they thought was going to happen simply didn’t occur. If the product does live up to those expectations, the opposite is true: everybody’s happy.

Expectation theory applies best when customers can search out significant information about a product they’re purchasing before buying. With the slew of information on sites like Yelp, this has become easier for service-oriented businesses to achieve, but product-driven businesses tend to have the easiest time generating clear expectations and taking advantage of them to create satisfaction. Such products can often guarantee relatively consistent experiences, and thus have an easier time communicating what that experience will be in a way that doesn’t leave customers blindsided.

A Similar Alternative: Assimilation-Contrast Theory

This theory comes from social psychology rather than from business, but still provides a useful framework in which to discuss customer satisfaction. Unlike expectancy-confirmation, which requires a customer to have a stable, singular expectation, assimilation-contrast theory only demands a general, broad sense of what the product is. In this theory, customers bring with them ranges of acceptable product performance, “assimilating” possibilities that might not be ideal into the range of acceptability. These ranges are affected by preconceptions, but don’t exclusively come from them, either.


  A hypothetical view of satisfaction based on expectation and actual performance of a product.

If a product delivers performance that falls within the acceptable band, the customer will find the experience ultimately satisfactory, even if it didn’t quite knock their expectations out of the park. The customer will typically bring a close relative into the band of acceptability as well. Conversely, if the product just barely misses that expectation range, the customer may begin to think of its failings as more significant than they truly were, assimilating the negative result down towards the middle of that negative band.

General Negativity Theory: Further Afield

Like the others, general negativity theory must engage with customers’ expectations, but unlike the rest, it’s not solely interested in whether or not the expectation is met. Instead, general negativity theory holds that customers who have expectations that don’t match reality will see the differences as less severe than they really are, and will see results that match expectations more vividly. For instance, a customer told that a dish is spicy, only to find out it actually tastes sweet, will see the food as less sweet than it actually is. On the other hand, a customer who receives a spicy dish in such a case will effectively perceive the dish as even spicier than what they expected.

General negativity focuses on the idea that “the well can be poisoned”—leading to problems further down the line. Reputation management becomes essential for those who adhere to the tenets of this theory. If a brand has a poor reputation, even good experiences with its products can be seen as “less good” or less enjoyable than they actually are. A brand which has a stellar reputation, according to this theory, is buffered from isolated incidents where performance is poor.

Disadvantages of Expectation-Based Theories

One situation in which expectancy-confirmation theory and its close relatives do a poor job of measuring satisfaction is when a brand’s reputation is already weak or negative. Customers who don’t expect much from a company might not walk away dissatisfied when their expectations are flouted, but they probably won’t end up wholly satisfied, either. Such a situation needs a different model, as expectations alone won’t paint a comprehensive picture of why a customer is buying and what they ultimately seek to get out of the purchase. General negativity works a little better when looking into these situations, but for businesses with weak reputations, this isn’t necessarily good news.

Another important factor to consider when looking at this cluster of theories is that customer experiences don’t necessarily match up with the intended purpose of a product. A computer can have fantastic specifications, for instance, but won’t meet expectations if what the customer is looking for is a quick, easy way to check e-mail and look at pictures of cats. “The customer is always right” might seem trite, but with theories that key off customers’ expectations, it’s the only metric that matters. If the customer walks in with an expectation that’s not in line with the reality of your product, that customer is going to walk away dissatisfied.

These models also break down when customers don’t have significant preconceptions of what the product, service, or experience entails. This can happen for several reasons, including a lack of prior knowledge of the brand or a product with significant variability in experience from user to user. In cases like these, expectancy-confirmation can’t meaningfully be applied, or at least not on the scale that makes such a metric useful.

Physical and Psychological Attribute Theory: What Really Matters Here?

This theory looks at the attributes of the product or service itself, rather than at the relationship of customer expectations to reality. Customers, according to attribute theory, look at a relatively limited scope of product qualities when deciding how satisfied they are. Products generally meet minimum standards of usefulness in the modern economy, according to this theory, so the “salient attributes” of a product in a given circumstance are what determine the customer’s valuation.
intrinsic product qualities

The spectrum of salient attributes and their potential effects on customer satisfaction.

Instrumental attributes, those that relate to the immediate function of the product, mostly contribute to dissatisfaction. Once a product meets a reasonable threshold, according to attribute theory, there’s only so much satisfaction that raw performance can add. Conversely, expressive attributes, such as aesthetics or feeling, tend to enhance feelings of satisfaction. A minimum level of performance is necessary, but a calming or aesthetically-pleasing performance enables that success and creates lasting feelings of significant satisfaction in the customer’s mind.

Experience and Satisfaction: Feeding in On Itself

All of these measurements, whether expectation-based or attribute based, are subject to drift as a customer has more experiences. Once a baseline is set by an actual use of the product, customers will come to see it as the experience associated with use, whether this core understanding is expressed in terms of expectations or sufficient instrumental attributes. If the results shift from these understood qualities, the customer’s satisfaction will likewise move up or down.

A customer who buys the same drink once a week for a decade and suddenly finds its flavor changed will likely find the experience less pleasurable. Both types of theories offer explanations for this—expectation-based theories will say that there was a discontinuity between reality and an expectation built through experience, while attribute-based theories will say that the expressive attributes of the product changed and led to disapproval. Either way, it means the same thing: once a customer has a picture of a product or a brand in mind from repeated experience, the effects of a change become significantly magnified.

Satisfaction Metrics

Customer satisfaction measurements usually require surveys or other feedback opportunities. The only way a company can really know what its customers are thinking is for the customer to be willing to talk, which means regular surveying of their opinions and thoughts on the product. Building a truly helpful survey, however, requires an understanding of the above theories as well as the limitations of the medium in which the survey will be conducted.

A Happy Medium: Issues with Conducting Surveys

A survey must be designed well not only for the business itself, but also for the medium through which it will be distributed. A survey that expects short answers, for example, works well in an online environment or in a phone call, but might suffer due to handwriting and space issues in a physical comment card. Broader ranges of options will show limitations during phone surveys, as the caller may have to remind customers of several available choices multiple times in order to get an answer.

Unlike the theoretical frameworks, these issues are strictly practical and won’t present themselves just through thought. Consider running the survey in its intended format with a few employees or associates as a test before you administer it to customers. If there’s a widespread issue with the format itself, a few dry runs will likely call attention to it, saving you a lot of time and money in the grand scheme.

Non-Response Bias: Where Metrics Won’t Help … And Where They Can

Survey respondents and total customers sometimes don’t perfectly overlap, which can blow problems out of proportion or make them seem insignificant. Non-response bias occurs when those who are willing to take the time to respond to surveys differ significantly in product experience, inclinations, and expectations from those who choose not to. Even a large sample size can’t fully eliminate the possibility of non-response bias.

This is not to say that all surveying is ultimately a futile effort. Consider looking at other demographic factors known about potential survey respondents compared to the overall population of customers and seeing if non-respondents significantly differ in any way. If other measurements of difference don’t indicate much of a gap, the data is likely still useful. If there happens to be a big difference, such as a major market segment that doesn’t respond to surveys, consider making a more concerted effort to look into that unique segment’s response to the product (this may ultimately require much more effort).

Getting Responses

As a rule, assume that when considering methods of customer feedback that customers are as lazy as possible regarding purchases and interactions. Make it as easy as possible for them to share their thoughts, or they won’t bother. For businesses which do a lot of selling over the phone or through e-mail, consider building at least a little feedback-gathering into every interaction. Purchases, support calls, and even cancellations provide an opportunity for companies to measure satisfaction and determine how well things are really going.

This also provides a great opportunity to put CRM software to work. By building customer satisfaction surveys into interactions in which a CRM system will be involved, companies can create a smoother workflow that gets this data into the pipeline more quickly. Having such data can in turn strengthen leads, provide clearer profiles of market segments, and make it easier to satisfy a greater number of customers.

Satisfaction and Loyalty: Not One and the Same, But Close

When one thinks of a customer who’s satisfied, one generally visualizes a customer that will remain loyal to the brand. The data seems to bear this out: customer satisfaction and perceived value ultimately lead to improvements in loyalty. It’s important to distinguish these measurements from one another, however, because even if they’re correlates, they are not the same.

Satisfaction: Looking Back on the Good Times

Customer satisfaction looks back at the experiences customers have already had. The questions in customer satisfaction surveys focus primarily on the past, dealing with issues such as number of purchases within the last six months or how well the last purchase went. The concept itself—have customers had their needs or expectations met?—lends itself to this sort of analysis, and as such it cannot truly predict future behavior. It often supports predictions, but doesn’t always, because loyalty is different.

Loyalty: Looking Forward to Better Times

Loyalty looks forward, considering whether a customer will continue to buy from the same company in the future. Customers who are satisfied won’t always necessarily be loyal, especially in industries like technology where disruption is frequent and new competitors emerge seemingly overnight. A customer whose satisfaction is low but who doesn’t seem to have many alternatives is a potential defector in the event that a credible competitor arrives. Satisfaction metrics looking good isn’t necessarily an indicator that one can stop trying as hard as possible. Instead, they should be seen as an indicator that things are okay right now, and that the things which satisfy customers now should be strengthened to make that relationship even more durable.

International Attitudes on Customer Satisfaction

Not all cultures place the same weight on customer satisfaction as a major measurement of a company’s success that America does. A study published in a 1999 issue of the Graziadio Business Review indicated that German research and interest in this field, at that time, was a comparatively small niche interest, and only businesses with significant international operations meaningfully invested in the field. Cultural attitudes among customers likewise differed, with many customers proving resistant to the idea of being bothered for their opinions or having their data collected. Some cultural structures, such as restrictive business hours and a focus on low-risk, consistent results, also work against the use of satisfaction as a meaningful metric.

This is not to say that customer satisfaction isn’t a meaningful metric to monitor in such countries, provided there’s a way to do so without intruding on customers’ lives. Dissastisfaction during the study was on the rise, and customers had indeed begun taking their business elsewhere, even if they weren’t interesting in having that dissatisfaction assessed or measured. Satisfaction still impacts loyalty even in such a case.

When doing business globally, spend some time looking into the attitude toward customer satisfaction measurement before considering how to measure or model it. While having a good sense of how satisfied customers can assist in making adjustments, some cultures’ customers are simply more interested in voting with their wallets rather than with filling out surveys about how a product makes them feel or what the product can do better.

What Do You Think?

Customer satisfaction affects almost every aspect of a company’s business, from product development to customer service. Have you been a part of a major customer satisfaction initiative? Do you have unique ways that you measure how satisfied your customers are? Share your stories with us in the comments.

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