Doing as much as necessary and as little as possible

J.D. Powers has described customer satisfaction as the difference between what customers expect and what they perceive they get. It’s a fine definition: Satisfaction is indeed about meeting expectations and companies should strive to satisfy customers. And most customers complain, if they even bother to speak up when dissatisfied, because expectations were not met.

However, companies are mistaken in thinking customer satisfaction is alone sufficient to sustain repeat business and gain loyalty. Merely satisfied customers will not hesitate to switch to competing options if something better comes along. Long-standing customers are often mistaken as loyal, when, in fact, they simply have not yet encountered a more enticing offering; and when they do, they’ll not hesitate to buy elsewhere. A more insightful metric for understanding customer needs is what my co-author Joe Pine and I call customer sacrifice — the difference between what customers settle for and what they want exactly. Reducing or even eliminating such sacrifice over time is the key to establishing customer relationships that cannot be replicated by any competition.

There’s a distinction to be made between operational dissatisfaction and structural sacrifice. For any customer unhappy with the execution of a routine order or interaction, don’t apologize. Instead, do something. I remember once waiting excessively long for my order of just a chicken sandwich at the Chick-fil-A at Cleveland Hopkins International Airport. When the bag was finally handed to me, the manager simply said, “I put some waffle fries in there for you, too.” Research validates that such gestures acknowledging operational mishaps are much more powerful in restoring customer confidence than words of apology.

When it comes to customer sacrifice, again, words won’t do. I’ve done multiple client projects asking customers about where and how they settle for things other than what they want exactly. I learned this: Customers are so conditioned by current processes and protocols that they struggle to say exactly what they want. Companies need to think on behalf of their customers to identify structural sacrifice that if designed away would create the greatest customer-unique value.

Much insight about what’s best in customer relationships can be gleaned from personal relationships: I don’t send my wife or kids an email or survey asking, “How am I doing?” I should know. Companies should recognize that two dynamics are at play in every interaction: one, the execution of the immediate task at hand, and two, learning about the uniqueness of the other party so that dialogue about future opportunities can replace generic questions about one’s past performance.

Reducing customer sacrifice does not mean doing everything uniquely for every customer. One would go broke doing that. Rather, it means doing as much as necessary and as little as possible where it matters most. Ask what’s the one dimension of sacrifice, if reduced or eliminated, that would create the greatest value. Then focus on that. ●

James H. Gilmore is Associate professor, Design & Innovation Department at Case Western Reserve University Weatherhead School of Management

James H. Gilmore

Associate professor, Design & Innovation Department
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