Delighting Customers in Emerging Markets Essay
Perhaps no recent measure of business performance has attracted as much attention as customer satisfaction and delight. With a large and continuing academic research stream and substantial adoption by industry, customer satisfaction and delight measures have become important benchmarks in many industries, and have been suggested as plausible measures to include in a balanced scorecard. Customer satisfaction lies at the heart of all modern thinking on quality and business management.
Many corporate mission statements set customers as the focus of an organization’s business activities, and key thinkers have defined the quality of goods and services with reference to how well they satisfy needs and expectations of the customer base. Every company must be able to satisfy and delight customers. That is the key to its business performance. Does the company align its activities to satisfy and delight customers? Too often the answer is either “no” or “not so well. ” In the 1970s, quality gurus argued that “quality is free.”
That is, a tireless pursuit of improvement should not only increase efficiency but also increase customer satisfaction in the process, saving enough on costs and bringing in enough new and repeat business to more than cover any expenditures on quality. This was an underlying concept in the success of many Japanese companies. In the 1980s the experts began to focus more directly on increasing customer delight as an explicit goal. Satisfying and keeping customers, it was argued, is simply less expensive than constantly replacing them.
Yet to argue that quality, or satisfaction, or delight is what matters misses the point. These factors form a chain of cause and effect, building on each other so that they cannot be treated separately. They represent a system that must be measured and managed as a whole if the company wants to maximize results. Market quality and “the marketing concept” are closely related. As West and Berman (1995) claim: “The marketing concept is a consumer-oriented, integrated, goal-oriented philosophy”.
The marketing concept serves as the overriding philosophy in conducting marketing management tasks of a company. This concept, which is presumed to be the philosophical orientation of American business, prescribes that management should strive to achieve company goals by delivering consumer delight, which ultimately requires delivering consumer values at a reasonable and competitive price. Service quality expert T. Scott Gross (1994) defined the theme of the Customer Loyalty Pyramid SM succinctly and well: “Delight is easy. Quality is a notch up the ladder. Value is where it’s at.”
Charles Garfield (1992) has broadened this to say: “The business that offers not just the bare-bones basics but exceptional, value-amplified (products and) service, that anticipates and caters to a whole range of customer needs and desires, sets itself far above the crowd. ” Similarly, a partner in the Coopers & Lybrand’s auto consulting practice has said, “Country of origin of an automaker doesn’t really matter anymore. Quality is a given, so only value, as perceived by the customer at the point of sale and over the life of the vehicle, determines what will sell”.
This is the lesson of Saturn, and luxury car makers like Infiniti and Lexus. Companies wishing to create and sustain a customer commitment-based culture and infrastructure must also create and sustain real value for the customer. Value can be expressed in terms of tangibles (time, money, efficiency, quality, etc. ) or intangibles (pride and wellbeing). Customers have become increasingly selective and less strictly logical in their search for more attractive quality, service, price, and other equity elements. Like needs, problems, expectations, and complaints, customer-perceived value is constantly changing.
Customers now have more information about the products and services they purchase than at any time in the past. Periodicals, books, newspapers, databases, and newsletters evaluate, rate, or describe the features of hundreds of products. It should be said that information exchanged in interpersonal communication has a stronger impact on consumer purchasing than advertising . The views of the opinion leader are recognized as authoritative, and his/her advice is followed because it is deemed to be unbiased and impartial.
Prior to purchase, the judgments of the opinion leader on consumer brands shape and fashion the beliefs of his immediate environment; these judgments contribute to customer satisfaction (or dissatisfaction). A consumer brand endorsed by the opinion leader will tend to increase its appeal among its target. The belief that customer satisfaction and customer delight are an identical must change. Over the years, millions have been spent measuring customer satisfaction when satisfaction has relatively little to do with bottom line performance. Satisfaction is a passive state. Delight is proactive and more complex.
It involves the customer’s own criteria for value. At best, the relationship between customer satisfaction and customer delight is unreliable and inconsistent. Tucker (1995) continues: Most businesses, and the people who run them, assume they know what their customers value, when in fact they have never really made finding out a matter of top priority. This leaves firms vulnerable. Companies that do not determine – and then regularly take the blinders off and redetermine – what their customers value, often miss fundamental changes. What customers value changes; it is not static.
This is the creation of customer insight. Sustaining value, if anything, is considerably more challenging because it requires change in company culture, infrastructure, and information flow, possibly even total transformation. Companies must ask and re-ask what they are willing and able to commit to sustain customer value. External quality and delight encompasses what customers see in the purchase and consumption experience: the attributes and benefits that products and services provide and the costs they impose, and the conclusions the customers draw about the company.
In the area of customer delight and loyalty, loyalty is a customer’s intention or predisposition to buy, while delight is the behavior itself (as when a customer returns to a restaurant, comes back to buy the same brand of car, or purchases another financial instrument from the same institution). Customer delight is a term that may have been coined by Deming (1982). It occurs when the product exceeds, or positively disconfirms, customer expectations: What you need are customers that are more than happy. You need customers who boast about your product. Just to have the customer satisfied is not enough.
Just to meet expectations – what you think the customer requires – you’ll have to do better than that. It is very important to have customers who brag about buying your product or service. Just to be satisfied – that will not keep you in business . Customer expectation can be met, not met, or exceeded by the nature of the function of the product/service itself. Additionally, customer expectations can be affected by the reaction of the seller when an external failure occurs. For example, guaranteed twenty-four hour road service and a free loaner car are services that some automobile manufacturers are using to affect customer satisfaction.
Suppose a customer purchases an automobile and has a problem with the radio and “expects” repairs to be made at the dealership fairly quickly. Upon taking it to the dealer for repairs the dealer might (a) find no problem, (b) find the problem, but fail to repair it, (c) find the problem and repair it in the expected time, (d) replace the entire sound system with a new one, thus reducing the customer’s Bayesian probability that a future repair will be needed, or (e) perform “d” and find a new problem that the customer did not know about and correct it in the same expected time for the sound system repair.
It is probable that “c” will meet the customer’s expectations (zero disconfirmation), performing “d” will probably exceed his/her expectations (positive disconfirmation), but, performing “e” might create enough positive disconfirmation to create customer “delight. ” At this time the marketing literature is inconclusive regarding the marginal benefits to customer delight. It is possible that meeting or slightly exceeding customer expectations can create repeat buying behavior.
It is also plausible that exceeding expectations by a magnitude that delights the customer may cause the customer to tell other potential customers about the product and thereby create additional sales at no additional marketing costs to the firm. In early 1995, Infinity Division of Nissan Motor Corporation introduced a new model with a substantial promotion that suggested that their new “I 30” will exceed customer expectations. In one promotion brochure they state: This is the luxury car engineered to exceed expectations and surpass all previous standards in its class (Newspaper Insert, May 1995).
Thus, the need to exceed customer expectations is evidenced in current promotions of new products. ‘Delight the customer’ focuses on how to satisfy the external customer. This implies understanding the needs of both products and services, tangible and intangible, according to Kanji and Asher. The two core concepts, ‘customer satisfaction’ and ‘internal customers are real’ are related to this principle. The internal customer is the next operation, department or user in the value-chain and should be regarded as a true customer and the reason why your operation or department exists.
Within an organization there are a number of customer-supplier relationships, which have to be managed. A typical example is between design and production. A chain is never stronger than the weakest link. This applies to the value-chain as well. The customer is also regarded as a supplier, supplying information about its requirements. Marketing receives customer information and writes requirements from R&D department, which, for example, is the internal customer of the requirements. The same procedure is used from R&D to production, production to sales, and finally from sales back to the external customer.
Delighting the customers is the purpose of TQM. This is achieved by a continual striving to meet both internal and external customers’ needs and expectations. Customers’ needs are established by regularly soliciting their views. There are various methods of doing this: focus groups; questionnaires; advisory groups; open days; and informally talking to people. It is important that this work is done systematically, and that the views of people who decide not to attend the institution are also solicited. The information from these consultations must be collated and analyzed and used when taking decisions.
It is important to involve the customers in the process because, at the end of the day, it is their views that count, not those of the institution’s management. Barrie Dale (1994) in his study of Japanese approaches to quality shows the total belief that exists in Japanese companies that business operations and efficiency can always be improved by reflecting customer needs and requirements. He demonstrates the considerable lengths to which Japanese firms go to identify needs and to keep the company focused on the market.
However, the key idea mentioned by Dale is the translation of customer requirements into the design of products. Unless this link between listening and action is established, the activity of sampling customer requirements has little purpose. With an effective customer measurement and management system, the company can build organizational value. To do so, it will continually pursue three key activities that underlie a customer orientation: (1) gather customer information, (2) spread that information throughout the organization, and (3) use the information to maintain, improve, or innovate in products and processes.
To maintain a customer orientation throughout the organization, the company need to make sure that customer information gets to everyone who is involved—either directly or indirectly— in improving quality and value and satisfying customers. This both prepares the entire organization for change and provides benchmarks by which to monitor its performance. Finally, the company needs to prime the organization to act on the customer information to improve product and service offerings so as to increase satisfaction, loyalty, and delight.
This makes it essential to clarify the links among these three factors and understand how the company delivers a compelling product to its customers. Creating a customer measurement and management system is central to the pursuit of all three of these activities. With such a system in place, the company has its customer information in a form that can serve as a basis for both incremental and more revolutionary product and service improvements. The system also makes it easier to share customer information throughout an organization, enhancing its ability to follow through on that information to make product and process changes.
It is essential to view customer measurement from a systems perspective that encompasses multiple areas of measurement and expertise (from engineering and design through market research and strategy to finance and accounting) so that the company pick up both concrete and abstract details— both what the customers like and dislike and why they react that way—and develop information that will be genuinely useful. Studies of the behavior and anticipated behavior of customers in many industries mirror the findings of Fay and several other experts.
Operating for years from the perspective that customer purchasing activity with a supplier reflects the culture, total quality initiatives, and performance delivery of that supplier, there is a firm hypothesis that there exists a hierarchy, or pyramid, of customer delight. Blocks for building the pyramid come from the cultural character, quality delivery processes, and customer information systems within the supplier company. Simply stated, the pyramid has three distinct stages, or levels. Stage 1: Satisfaction-Based
The supplier company approaches customers in a largely passive and reactive manner, confident that it can select, acquire, understand, and readily retain them as desired. Sales operations are emphasized. Management operates from a traditional bureaucratic model. Processes for performance measurement are rudimentary, and so is internal and external communication. Staff have minimal empowerment. Stage 2: Performance-Based The supplier company has greater awareness and sensitivity regarding customers.
Though management still tends to operate from a traditional hierarchy, the company has formal processes in place for measuring performance and collecting/acting on complaints. Some companies engage in evaluating customer needs, training staff to be more proactive with customers, and/or creating teams or assigning individuals to upgrade customer services. In addition, performance-based companies more frequently compensate sales and other staff at least partially on customer satisfaction scores. Stage 3: Commitment-Based The supplier company is entirely customer-driven, proactively approaching customers as partners.
Companies are strategically directed toward keeping customers, with attaining commitment and delight (of both staff and customers), a paramount objective. Management style is often lattice or horizontal, with company focus on continuous improvement in all activities: understanding and serving customers, creating knowledge and information flow around customer needs, staff communication and empowerment, team process, and so forth. Performance measurement is ongoing, with improvement activity prioritized around customer retention, their intended market action, and proclivity to remain loyal.
Since everyone in the company contributes to success through keeping customers, everyone – from the CEO to the file clerk – receives incentives and recognition based on the company’s level of customer delight, sales, and profits. Companies in each stage of the pyramid tend to display very definite characteristics. While proportionate segmentation may vary somewhat from industry to industry, most companies are in Stage 1, more proactive companies have moved into Stage 2, and may even be poised to make the final transformations that would enable them to join the select few truly customer-driven companies that have reached Stage 3.
The basic notion behind customer satisfaction is that customers have expectations about the products and services they buy, and are more or less satisfied depending on how well the consumption experience meets or exceeds those expectations. Having a customer delight base is considered an important marketing asset because it should lead to increased loyalty, with its consequent revenue implications and lower marketing costs. Measurement of delight is typically accomplished by surveys, often extensive, of the customer base.