Exceeding Customer Expectations and Achieving Customer Satisfaction and Retention in the Current Climate - Coursework Example

Exceeding expectations and achieving satisfaction and retention in the current climate (Gronroos 2007). Introduction is the boss’ and ‘customer comes first’ are the phrases we listen quite often from marketers. These phrases have their roots back in 1980s when researchers started revealing that it costs more to make a new customer than to retain an old one. Harmon and Funk (2014) stated that staying engaged with old customers is the key to having recurring revenue. The authors asserted that recurring revenue helps generate around 30-40% of the company’s entire revenue hence is a vital source of profitability. This essay critically analyses why customer satisfaction is crucial and how customer satisfaction and retention can be achieved in today’s competitive environment where every next company is striving to retain their old customers to enjoy recurring revenue. The essay will focus on service industry, specifically fast food restaurants, to present and support the arguments. Exceeding Customer Expectations Brox (2010) reported that the underlying principle of fast food industry that dictates customer expectations is ‘quality food served fast’. The author stated that no matter what changes you make to your operational layout, the only thing which must not be compromised is the speed as this is one of the clearest expectations of customers from a fast food restaurant. If looked closely, this expectation translates many other expectations including service pace, order accuracy, speed of service, speaker clarity, Drive thru services and so on (Oches, 2011). Emphasising the importance of customer experience in fast food industry, Brox (2010) quoted Amoruso, the CEO of HyperActive Technologies Inc. that offers technology solutions for restaurants that “It is clear that competition for the consumer is intense; meal deals only go so far, especially when everybody is offering one. It is the customer experience that dictates the winner in the competition.” This means that in order to exceed customer expectations improving service quality is important. Nonetheless, research shows that there is a difference in customer expectations and customer needs and both hold different meanings when applied to the concept of customer satisfaction (Hill et al, 2007). Customer need is to have the quality food delivered fast, however theory says that expectations are set by service encounter and customer experience. Service quality enhances customer experience and therefore though customer needs are satisfied their expectations for the next encounter are enhanced. Perceptions of customers about a service provider also sets certain expectations but measuring customer expectations is not easy (Hill et al, 2007). In order to ensure customer satisfaction and retention, companies should try to exceed customer expectations every time they come in contact with the company. This is also crucial because in today’s competitive world, every company is working on improving consumer experience and in this case when consumer have encounter with any other service provider they set certain expectations for all providers in the same category and the one who will exceed those expectations will win the race (Hill et al, 2007). Expectancy Disconfirmation Model According to Hoffman and Bateson (2010) Expectancy Disconfirmation Model proposes that comparing customer expectations and perceptions will inform if customer has positive or negative encounters with the firm. Customer’s expectations are either confirmed or disconfirmed based on the comparison between their perception and expectation. If expectation matches perception, the expectations are confirmed and if the expectation does not match perception, it will be disconfirmed. Disconfirmation lead to dissatisfaction whereas confirmation of expectations lead to customer satisfaction. In case of fast food industry, if quality of service including service speed is good, the customers will be satisfied as their expectations of having quality food served fast is met. Though expectations are difficult to measure, however there are certain industry standards that can be used to see if customer expectations are met or exceeded. For fast food industry players, these benchmarks are order delivery, speed, order accuracy, customer services, interior and exterior and so on. Change in Organisational Structure To meet the quality expectations of customers in today’s competitive climate, organisations are changing their focus towards customers. This customer orientation has changed the traditional organisational structure putting customer at the top and CEOs at the bottom. To ensure customers are treated on priority basis organisational structures have placed frontline staff right after customers to minimise communication gaps. This enhances customer satisfaction and ensures customer retention. Figure-I presents the customer oriented hierarchy adopted by contemporary organisations. Figure I – Customer Oriented Organisational Hierarchy (Source: Grönroos, 2000, p. 305) This customer focused organisational structure is not simple to implement since it requires flipping down the entire organisational structure. It requires top management involvement and understanding about the importance of customer orientation and how each organisational level is to be involved in the process. It requires a complete strategic implementation and control process in order for it to work smoothly for the business. Top Management Involvement in Ensuring and Enhancing Customer Satisfaction Without the involvement of top management, customer focused organisational setup is impossible to implement. Linking customer satisfaction with strategy process requires involvement of everyone in the organisation. Tschohl (1996) suggested that it is vital to communicate with managers before expanding the service programs. The author asserted that managers should be ensured that putting customers at the top and giving lead to front office staff is crucial but it will not change their authority. Management should realise that this changed structure will require them to mentor, criticise, and educate their staff so that they can link up with customers in a better way. Tschohl (1996) continued that customer focused company structure require managers to be more strategically focused leaving practical implementation stuff for the front line staff. According to Tschohl (1996) customer orientation is about making middle managers resourceful and creative enough to lead and guide front line staff in assisting customers in a better manner. Once the front line staff is better equipped to serve customers, top level management can stay focused on strategic areas. There are certain standards for every industry and top management should be working on areas where they can meet the industry benchmarks. They should be guiding and mentoring middle and lower level staff on customer interaction however they should not be doing it themselves. For example, top management can plan out trainings to improve customer interaction and services (Harmon & Funk, 2014). They should be concerned about issues such as why drive-thru performance (particularly in fast food industry) is not up to the industry benchmark and not about why the customer has not received the correct order. They should be confident that their lower level staff is good enough in handling these areas. Brox (2010) quoting industry experts pinpointed that top management’s task is to work on organisational layout to enhance operational efficiency. In fast food industry, the matters of concern from service point of view, as quoted by Brox (2010), are minute details; for instance, the footsteps and arm stretches to get the food to the customers and time involved in completing those steps. Top management should be working on these areas because slow speed is the death of business for them. This pinpoints the importance of strategic areas that need to be focused by the top management in order to enhance customer satisfaction and retention because these are the areas that will assist front line staff in serving customer better by enhancing their operational efficiency. Creating Value for Customer Satisfaction From the above discussion it is clear that in order to enhance customer satisfaction and retention in today’s climate, value creation is utmost important because everyone is providing basic quality service to meet customer requirements and expectations. In order to exceed customer expectations, it is important create value for the customers. Rajola (2013) quoted Canton (1996) and presented a value loop suggesting how value creation process can be enriched in order to make customers loyal to the company. Figure II – Value Loop (Source: Rajola (2013, p. 128) as quoted by Canton, 1996) Figure-II suggests that customer needs information, innovation and value and organisations that adopt new competencies and present innovative solutions to the customers succeed in creating value. Conclusion In today’s competitive world, it is difficult to satisfy customer expectations because every other service encounter leads to enhanced expectations of customers from the service providers. It is therefore important that companies work on value creation in order to ensure customers’ expectations are confirmed and satisfaction enhanced. When companies come up with innovative solutions and continuous information only then they will be able to provide customers with value. It is important to pay attention to minute business details while working on value creation strategically and leaving customer interaction and services to frontline staff as they are closest to the customers. This also reduces communication gap and make companies customer focused. Top management should play their role in helping frontline and middle level staff improve their operational efficiency so that they can improve customer interactions and communications. This is possible when frontline staff is trained in customer interactions and middle level staff is made resourceful to take decision as and when required. In this manner value, loop between customer and the company will strengthen and customer satisfaction and retention becomes easier in today’s tough and competitive time. References Brox, D. (2010). Fast Food Fast. QSR Magazine. Available at: [Accessed on: May 03, 2014]. Grönroos, C. (2000). Service Management and Marketing. A Customer Relationship Management Approach. Chichester: John Wiley. Harmon, L. L., & Funk, D. S. (2014). 42 Rules for Building a High-Velocity inside Sales Team: Actionable Guide to Creating Inside Sales Teams that Deliver Quantum Results. California: Super Star Press. Hill, N.., Roche, G., & Allen, R. (2007). Customer Satisfaction: The Customer Experience through the Customers Eyes. London: Cogent Publishing Ltd. Hoffman, K., & Bateson, J. (2010). Services Marketing: Concepts, Strategies, & Cases. USA: Cengage Learning. Oches, S. (2011). QSR Drive-Thru Performance Study. QSR Magazine. Available at: [Accessed on: May 03, 2014]. Rajola, F. (2013). Customer Relationship Management in the Financial Industry: Organizational Processes and Technology Innovation. New York: Springer. Tschohl, J. (1996). Achieving Excellence through Customer Service. 5th ed. USA: Best Sellers Publishing. Read More