There is a concept that is very widely used, it has a long name and it is called disconfirmation paradigm.
It is very simple as a concept. First of all there is an element what we can call customer expectations, what customers expect. We can take another element and that is customer experiences: experiences on products, service the customers have received.
We have three choices; customers are expecting more than they get, they are expecting exactly what they get or they are expect less than they get. It is evident that equilibrium is certainly what to aim at. In case if customers are expecting more, they will get dissatisfied. And actually to put a long story short the equation here produces customer satisfaction.
Although this is simple we have to elaborate it deeper and to take a look at the both sides of the equation. First of all we have to manage the expectations. We can say that we have an expectation management. We have also production management.
What affects the customer expectations? Word-of-mouth is very important, rumour; what you heard from a colleague, a business associate etc, is very important. There are some other ones; there is marketing communication, face-face communication etc.
To put a slide here to elaborate it further, we can say that there are several issues and this is not a complete list clearly and it is not in an order of importance.
Marketing communication; image, the institutional quality of a corporation; the price of service are all here. Communication you get when in a production process. It means that there is a feedback so that if you have used the services before the past experiences will create your expectations. This is the occasion you are using the first time.
Earlier experiences; investments of a customer, how much you have to invest into the service makes your expectations to be either higher or lower. Details of a situation, the surroundings and other situational factor. So there are several of these kinds of expectations.
If you are not able to manage expectations, you are going to have a lot of problems with experiences because you end up easily in a vicious circle. Expectations are rising all the time and you have problems in satisfying the expectations. It is easy to get into a situation where a customer always expects something more.
Expectation management is very important. In everyday practice you can say that what you promise you have to give. Do not over-promise.
This can also be seen from the perspective of what happens when we think about customer satisfaction from this point-of-view.
Customer expectations, customer perceptions or experiences lead to the commitment and to a loyal customer. If customer is not a dissatisfied or the customer leaves the company. It can lead to profitability or unprofitability. This is very important to note it is not self-evident that committed and loyal customers are profitable. There can be customers who are very loyal but very unprofitable. You have to think about what to do with that kind of customers. It has been said that only extremely satisfied customers can become loyal and committed. So customer satisfaction is only one item that leads to a profitable customer relationship.