Quality Digest Article
Picture Picture

The Hidden Costs of
Customer Satisfaction

Customer satisfaction alone can't provide the kind of energy organizations need to sustain continuous improvement.

by John Guaspari


Organizations can become so bogged down in providing what they think customers want that they end up missing the mark. The following four seemingly unrelated items illustrate this.

A personal disclosure -- I'm an avid golfer. So much so, that I'll even confess to loading a golf simulator on my computer. (Should you ever be sitting next to me on an airplane and hear wild cheering break out from a laptop, I've just sunk a long putt.)

I loaded my first golf simulator onto my PC about three years ago. Game play was straightforward yet challenging. The graphics were good. I could get a sense of competition by playing a round against a computerized opponent. Had the publisher asked, I would have given the software very high marks and told the company that its product was terrific.

Then one day about a year later as I browsed in a software store, my eye was caught by a demo of a newly released golf simulator running on one of the in-store PCs. This software was orders of magnitude better than the one I owned. The instant I saw it, my satisfaction level with my heretofore "terrific" product plummeted. I bought the new version, vaporized the old one from my hard drive and never looked back.

A very old joke -- A narcissist was having lunch with some companions. As usual, he was dominating the conversation by talking about his favorite topic: himself. After a while it began to dawn on him that the others weren't exactly hanging on his every word.

"Listen to me, hogging the conversation by talking about myself," he said to them, hoping to make amends. "I should give somebody else a chance. Why don't you talk about me for a while?"

A considerably newer joke -- Years ago there was a Frenchman whose cat came in from a field covered with burrs. The burrs were very hard to remove. When the man used a magnifying glass to see why, he discovered that the burrs' spiky ends had hooked onto the cat's fur in a very interesting way. "If we could create fasteners using this basic design, it could have great commercial potential!" the man thought. This brainstorm ultimately led to the development of Velcro.

However, the funding to develop this idea was delayed for years when the company's new product review board couldn't come up with a satisfactory answer to the following question: Why would anyone want to be able to stick things to a cat?

A motivational message -- Sign seen in the corporate headquarters of a company in the financial services industry: "Our goal: To do such a good job serving our customers that they won't notice!"


What do these four items have in common? Together they can provide some clues as to why customer satisfaction can ultimately, and ironically, be so dissatisfying as an organizational focus.

Before I go any further, though, let me state one thing as clearly and unambiguously as I know how. Any organization in this day and age that doesn't have a formal, rigorous mechanism in place to measure and monitor customer satisfaction -- or is lacking the process mastery and discipline to act upon the invaluable information such a mechanism can uncover -- is, to use a rather untechnical term, nuts. Customer satisfaction is a certifiably good thing and must be given proper attention.

That said, there is still the problem that stems from the all-too-common tendency to think of customer satisfaction in terms of "keeping close to the customer," "being customer-focused," "hearing the voice of the customer" or whatever customer-based rubric you choose to employ. This view is too shortsighted, and significant costs can and do result from such institutional myopia. These costs go well beyond those traditionally accounted for, such as out-of-pocket costs required to conduct customer satisfaction surveys, costs to make a dissatisfied customer "whole" again, the cost of lost business when customers fire a company, and the value of future business the company could have counted on from those former customers.

Interestingly enough, the heretofore hidden costs of customer satisfaction    correlate one-for-one with the four passages that began this article. Let's take a look at each.

A false sense of security

That first golf simulator I had really was a terrific product. I couldn't have been more satisfied with it. Until, of course, I wasn't.

Here's the problem. Customer satisfaction is a function of an organization's performance relative to the complete set of expectations customers have for the buying/ownership experience. This includes product performance, price, customer service, billing policies and procedures, packaging, documentation, the overall "feel" of the business transaction and so forth.

Those expectations in turn are, among other things, a function of the known alternatives at a customer's disposal. The key word here is "known"; customers can't tell you what they don't know. Thus, the first golf simulator company could have measured my satisfaction indefinitely, and they still would have ended up getting blindsided by my defection.

Thus, it's useful for an organization to spell out what it's really asking when it queries customers about their satisfaction levels. A productive question might be: "Given what it is that you're expecting from us -- either because of assumptions on your part or explicit representations we've made -- how are we doing?" Worded this way, the question focuses more on what customer satisfaction is and, just as important, what it isn't. Understanding that distinction can help prevent an organization's products or services from being vaporized, figuratively speaking, from the hard drives of perfectly satisfied customers.

A tendency toward institutional self-absorption

Ask organizations why they measure customer satisfaction, and two answers will bubble up to the surface. The first is that such measurement serves as a source of information that is invaluable to running the business. That answer is absolutely,  categorically, 100-percent true.

The second answer may be worded in different ways, but the point is usually the same: "Paying attention to customer satisfaction helps prevent us from becoming too self-absorbed. What with so much emphasis on quality and reengineering in recent years -- things that require a pretty intensive focus on process and other inherently internal matters -- it's important that we broaden our perspective and consider things which are external to the organization. We need to be less self-absorbed."

Makes sense, doesn't it? But focusing on customer satisfaction is not the way to do this. Consider. When boiled down to its essence, the question a customer satisfaction survey asks is this: How are we doing? or How did we do? Note the pronoun "we." In an effort to be less self-absorbed, we are asking our customers to focus their time and attention … on us. Or to paraphrase the narcissist, "Why don't you talk about us for a while?"

Which is not to say that asking, "How are we doing?" is an unfruitful line of questioning to pursue. The answer is, in fact, essential. But it's hardly a way for organizations to become less self-absorbed. To the extent that such a question promotes smugness about an organization's external focus -- e.g., "We've got the external perspective covered because we measure customer satisfaction!" -- it can be costly.

Missed opportunities

The questions you ask will have a strong effect on the value of the answers you receive. While this truism may seem self-evident, in practice it's not nearly as obvious as it sounds. Remember the Frenchman with the Velcro brainstorm.

If asking customers, "How are we doing?" won't get the job done, what line of questioning will? The trick is to engage customers in a different kind of conversation, to ask them how they are doing. Companies need to find ways to say to their customers, in effect, the following: "We don't want to talk about us. In fact, try to forget that we're even here. We want to talk about you. We want to understand what your wants and needs are, what makes you tick. Because if we understand those things more, we think we'll be able to apply our skills and expertise in ways that will better meet the needs you express, as well as some needs you may not even know you have."

Consider the case of an airport hotel that perennially got straight A's on its satisfaction surveys. Its institutional attitude was this: "Our customers are overwhelmingly satisfied. We seem to be doing a very good job at those things they're expecting us to do, but it's not enough. We need to  understand them better. We need to start asking them about them, not about us."

Like most airport hotels, this one ran shuttle buses to and from the airport's terminals, and it regularly received very high satisfaction scores on all aspects of this operation, including the buses' comfort, timeliness and cleanliness, and the operators' driving skills, friendliness and helpfulness. The reasonable conclusion to draw from those results? No further action required.

But the hotel's "How are you doing?" inquiries uncovered some interesting additional insights. For example, while customers were quite satisfied with the shuttle bus system, they would have preferred not to have to take a shuttle bus at all. They had just gotten off an airplane. They didn't want to be on a bus; they wanted to be in their rooms.

Thus enlightened, the hotel began to frame things a bit differently. Instead of asking, "What do we need to do in order to improve our customers' satisfaction with the shuttle bus system?" they asked, "How can we move our customers from the airport into their rooms as fast as possible?"

Refocused, the hotel's course of action became clear. It mapped the process that an arriving customer goes through, which included getting off the plane, walking through the terminal, retrieving bags at baggage claim, walking to the curb, waiting for the shuttle bus, boarding the bus and riding to the hotel, getting off the bus and, finally, checking into the hotel.

Riding the bus and waiting to check in met two important criteria, the improvement team reasoned. Both were process steps that were completely within its control, and they were clearly not value-added for its customers. So the hotel set up a system that allowed its guests to check in   right on the bus during the ride to the hotel. That way they wouldn't have to stand in line in the lobby and could get into their rooms faster.

As a result, the hotel's customers went from satisfied to super-satisfied; they were, as the saying goes, wowed. And this innovation gave the hotel another bit of positive differentiation from the competition.

Let me reprise a theme. This example doesn't imply that a customer satisfaction focus is unimportant. In fact, the hotel's creative new ideas wouldn't have represented added value if they weren't executed in ways that met customers' expectations.

What this example does imply, however, is that a focus on customer satisfaction sometimes can lead organizations to ask questions whose answers may prompt the conclusion that no further action is required. (Who would want to stick things to their cat?) The point is not whether the action is necessary and taken but whether the opportunity is identified and seized. And the questions a company asks can determine its ability to do so.

A shortfall of institutional energy

A subtle but important problem with customer satisfaction concerns the fact that a reasonable operational definition of it is "the absence of customer dissatisfaction." But, while minimizing the incidences of dissatisfaction is certainly a good and necessary thing to do, it's not  a terribly energizing or nourishing goal for an organization.

The distinction here is analogous to the one between not being sick and being well. Of course life is better if you don't have the flu, and we all do whatever we can to avoid it. But not having the flu is hardly synonymous with the good life. We want life to be richer, more stimulating, more gratifying than that.

That's also true of our work life. People come to work not just to avoid negatives but to create positives as well. There's no reason to think that the people who worked at the airport hotel weren't deeply interested in eliminating negatives, thereby ensuring the satisfaction of their customers. Or that they would have been unconcerned had the hotel's satisfaction scores faltered. Obviously, their attitudes went beyond this mind-set; consequently, they received an infusion of energy when they conceived of their new value-creating idea, implemented it and saw the effect it had not only on their guests' attitudes toward their hotel but on the hotel's competitive position as well.

Think back to the sign on the wall of the financial services company cited at the beginning of this article: "Our goal: To do such a good job serving our customers that they won't notice!" Can you think of a more enervating, dispiriting objective than that? It's tantamount to saying, "If all goes well, we get to remain anonymous!"

There's no question that when things go bad, customers will notice, and that at such moments a company's customer service will be anything but anonymous. Focusing on customer satisfaction can keep an organization attuned to what it must do to achieve the positive kind of anonymity. However, operating exclusively in that mode -- i.e., working hard to avoid or redress problems -- can grind people down.

Customer satisfaction -- that is, the absence of customer dissatisfaction -- is very good as far as it goes. But it can't provide the kind of energy an organization needs in order to sustain an ethos of change and continuous improvement. And over the life of the company, that may prove the highest cost of all.

About the author

John Guaspari is a senior associate with the Lexington, Massachusetts-based management consulting firm, Rath & Strong. He is the author of I Know It When I See It, The Customer Connection, Theory Why and It's About Time. Guaspari's ideas have been translated into award-winning video training programs for the American Management Association.

Guaspari's monthly column for Quality Digest Online debuts this month. It can be reached at www.qualitydigest.com.


[Home Page] [Current] [ISO 9000 Database ] [Daily News] [Phil’s Journal]
Quality Management] ['97 Past Issues]  [Quality Web] [Information ] [Advertising]
Classified Ads] [Subscribe] [Guestbook]

Copyright 1998 QCI International. All rights reserved. Quality Digest can be reached by phone at (530) 893-4095.

Please contact our Webmaster with questions or comments.

ISO9000 ISO 9000 TQM management quality QC QA teams QS9000 QS-9000 quality digest juran deming baldrige ISO9000 ISO 9000 TQM management quality QC QA teams QS9000 QS-9000 quality digest juran deming baldrige ISO9000 ISO 9000 TQM management quality QC QA teams QS9000 QS-9000 quality digest juran deming baldrige ISO9000 ISO 9000 TQM management quality QC QA teams QS9000 QS-9000 quality digest juran deming baldrige ISO9000 ISO 9000 TQM management quality QC QA teams QS9000 QS-9000 quality digest juran deming baldrige


e-mail Quality Digest