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How important is customer satisfaction to the services sector?
Article Type: Editorial From: Journal of Facilities Management, Volume 8, Issue 4
Walker (1995) states that customer satisfaction “results from a subjective comparison of expected and perceived attribute levels”, where customers predict what the level of service will be like, and consequently compare against their actual perception of the service once it has been used. Walker (1995) conceptualises this through the “disconfirmation model”, where customer satisfaction depends on the nature and size of disconfirmation, based on a comparison between expectation and actual perception of a service. The general theory is that if a customer’s perception is the same as their original expectation, then they will achieve “confirmation”, in which their level of satisfaction is neutral. If a customer’s perception is greater than their original expectation, then they will achieve “positive disconfirmation” and will consequently be satisfied. If however a customer’s expectation is greater than their actual perception, then they will achieve “negative disconfirmation”, and will inevitably be dissatisfied.
The services sector dominates many economies around the world. For example, the UK services sector accounts for around 70 per cent of gross domestic product, with private sector services alone accounting for over 50 per cent of gross domestic product (Office of National Statistics, 2000). The importance and influence of the customer within the services sector is clear, as there is a direct interaction between customers and services at all levels, ranging from “the physical facility, waiting times, and of course, service personnel” (Walker, 1995).
Reis et al. (2003) however portray a more critical stance on the importance of customer satisfaction within a management context, contending that historically, the importance companies place on customer satisfaction has shifted over time due to the influence of technological progress. For example, Reis et al. (2003) discuss the historical changes in business importance towards customer satisfaction. During the Fordism era of the 1940-1960s, mass production was a huge success, based on the concept that car assembly could be broken down into small and manageable tasks by more people involved in the production line. During this time, sellers were not concerned with satisfying customers as it was also an era that shortly followed the Great Depression and the Second World War, where customers were content to buy goods of any quality.
However, this changed from the 1970s as the influx of high-quality foreign imports raised the expectations and perceptions of customers, resulting in dissatisfaction for home grown goods and services. Here, the concept of “quality management” was introduced, where the customer became the number-one business priority as processes were re-engineered to enhance the existing quality of the good or service produced. However, in the contemporary “information age” (Kaplan and Norton, 1996), Reis et al. (2003) contend that prioritising on customer satisfaction is again no longer a business priority. This is primarily due to technological advances where companies are now able to acquire mass intelligence about their customer profile, where they can predict the amount of business they will receive from their customer base. Reis et al. (2003) give the example of returning goods or complaining about a service without question. Companies now have strict policies and procedures in place where the customer now has to justify their reasons before any refundable service is given.
One would contend however that the vital point missing here is that contemporary services industries also live in a world of mass competition, where customers are now more informed about their experiences with a service. This is highlighted by Zairi (2000), stating that:
[…] customers have started to take a keen interest in how we go about providing services to them and they compare us with others […] furthermore, they will be curious of our systems, procedures and processes in rendering services to them and of course, in the service industry […] everything is transparent and customers would observe the anomalies and shortcoming almost immediately.
Managing customer satisfaction as a key performance indicator is paramount to any contemporary services business. If customer expectations and perceptions of service delivery are not properly understood and strategically managed using robust performance measurement systems, then a negative disconfirmation of customer satisfaction often occurs and promptly results in a change in service provider to the next best competitor. Reflecting on the concept of the Balanced Scorecard (Kaplan and Norton, 1996), strategically managing customer satisfaction of service delivery must consistently be considered in harmony with financial, business processes and learning and growth indicators.
Kaplan, R. and Norton, D.P. (1996), The Balanced Scorecard: Translating Strategy into Action, Harvard Business School Press, Boston, MA
Office for National Statistics (2000), The UK Service Sector, Office for National Statistics, London
Reis, D., Pena, L. and Lopes, P.A. (2003), “Customer satisfaction: the historical perspective”, Management Decision, Vol. 41 No. 2, pp. 195–8
Walker, J.L. (1995), “Service encounter satisfaction: conceptualised”, Journal of Services Marketing, Vol. 9 No. 1, pp. 5–14
Zairi, M. (2000), “Managing customer satisfaction: a best practice perspective”, The TQM Magazine, Vol. 12 No. 6, pp. 389–94