Customer satisfaction- a relationship

perspective

Customer satisfaction is as much an economic as it is a

strategic business imperative that is not always to
measure. It largely depends on how the product1 has
performed relative to the customers expectations. It is
particularly relevant in contemporary times as
businesses strive for competitive advantage in an
increasingly global environment where customers have
become all-powerful.

The challenge for businesses is not so much to satisfy

the customer at point of purchase or consumption but
to provide an integrated service experience at the prepurchase, post-purchase and future-purchase phases of
the customer-relationship continuum.

As indicated in the graph below, the life cycle of the

customer can be explained in terms five related but
distinct phases that call upon specific functions of the
organisation. These functions need to be carefully
orchestrated to ensure that the consumer is attracted to
the brand, then convert that consumer into a customer
of a product, which is well supported by service
strategies to retain that customer whilst anticipating
his/her changing needs for future-purchases.

During the pre-purchase phase, the marginal cost to the

organisation far outweighs marginal revenues as it
engages heavily in marketing, advertising, promotional,
and sales-training activities. Thereafter revenue
increases as the cost of conversion and retention fall
relative to revenues.

These pre-purchase activities are designed to gain the

customers confidence in the brand, create expectations in
their minds as to the products value with the view of a
purchase. The strategies and tactics employed by the
organisation in converting the consumer who scans the
market place for value-for-money products into a customer
of value can and does influence customer satisfaction.
Simply put, if the customer feels as if he/she has been
subliminally induced into a purchase decision, it is highly
likely that he/she will experience post-purchase remorse
which in turn may affect a re-purchase decision, due to this
reduced level of satisfaction.

As the relationship spans the pre-purchase and into the postpurchase phase where the organisation now shifts attention
to strategies that will stop defection and cause a re-purchase
of not only the same product but also other products on offer
with an increased frequency. In order to do this the
organisation must know the customer well. It must strive
towards the creation of relationships with its customers
where an emotional attachment is created between the
customer and the brand rather than the mere focus on
discrete economic transactions.

This type of relationship driven service/product

differentiation will then place the organisation in a more
conducive space to anticipate the customers needs and
expectations. By doing so the customer-satisfaction
challenge during each phase can be consolidated to ensure
that expectations held by the customer pre and post purchase
are aligned with the organisations intentions and actions.

a) Importance of service quality.

Service quality is increasingly ranked as a high strategic
objective for businesses that are serious about creating and
sustaining a long-term competitive advantage. It is wellsupported by various total-quality-management approaches
that strive to integrate all service-delivery intentions
regarding service integrity, reliability, responsiveness,
assurance and quality, together with the customer
relationships straddling Figure 1 continuum.

Service quality is an effective differentiator in any market

especially with regard to the delivery of intangible products.
The following matrix demonstrates the key organisational
outcomes of service quality:

Outcomes where service quality is advocated as a strategic

objective
Rationale
1. Enables small firms to compete with larger ones.
Superior quality service costs far less that the differentiation
it creates, thereby allowing smaller less financially resourced
firms to compete well.
2. Encourages repeat purchases of same product, purchases
of new product and overall frequency of purchased.
Superior service quality positively affects the recipient and
creates a feel-good factor. It reassures the customer that
the right choice was made in terms of product and provider
which reduces risks that would otherwise exist in future
purchases.

3. Creates new customers.

The feel-good factor combined with the low-risk of
dissatisfaction, stimulates positive word-of-mouth that
ultimately attracts new customers, who also perceive a lowrisk encounter.
4. Improves organisational morale.
Superior service quality positively impacts on the way the
organisation and its people are perceived by stakeholders,
customers, community, and competitors. As a consequence
morale is elevated as personnel feel rewarded for a job well
done.

5. Improves brand image and value.

Superior service quality differentiates homogenous service
offerings, and visibly manifests a customer-centric culture.
These are the building blocks of a strong brand image which
ultimately adds value to the organisation as a whole.
6. Supports higher prices therefore higher profits.
Superior service quality leads to greater customer
satisfaction which leads to confidence, loyalty, and
emotional affinity to the brand. Subject to the products
cross-elasticity, demand is not affected by higher prices are
and higher profits are generated as price sensitivity lessens.

7. Reduces costs therefore higher profits.

Marketing, selling, and administrative costs are reduced
when service quality is high as customer complaints are low
therefore low recovery costs, low defection rates and
increase word-of-mouth therefore less customer acquisition
costs.
8. Contributes to overall brand equity, in particular brand
preference.
Brand equity comprises strong loyalty to and awareness and
preference for the brand. Service quality is a strong
differentiator and determinant of preference.

9. Reduces delivery gap (difference between what the service

promises and what is actually experienced by the customer).
Given the inseparability of the customer and providers
involvement in the production process, a commitment to
superior service quality must also commit to maximizing the
customers satisfaction in the production process. The greater
the satisfaction, the greater the feel-good, the more
ownership the customer takes of the process, therefore the
less risk of a substantive delivery gap.

Dr. Maurice Roussety is an Executive Consultant at DST

Advisory and Lecturer in Small Business, Franchising and
Entrepreneurship at Griffith University in Queensland,
Australia. Maurice holds a PhD from the Griffith University
in Intellectual Property and Franchise Goodwill Valuation.
He also holds a Masters degree in Leadership and a Master
of Business Administration.