How Much Do Product Quality and Service Quality Influence Customer Behavior?

Satisfaction has always been a cornerstone of what we understand to be total quality in products and services, as perceived by the customer. Unfortunately, satisfaction, which measures the attitudinal response to the functional and tangible elements of value delivery (time, accuracy, completeness, suitability, price, functionality, etc.) has been proven to have very little impact on, or connection to, actual customer behavior.

Even total quality icon W. Edwards Deming believed that satisfaction was not an ineffective metric for understanding the effect of satisfaction of tangibility on customer actions. In his book, Out of the Crisis (MIT Press, Cambridge, MA, 1982, p. 141), Deming said: “It will not suffice to have customers that are merely satisfied. An unhappy customer will switch. Unfortunately, a satisfied customer may also switch, on the theory that he could not lose much, and might gain. Profit in business comes from repeat customers, customers that boast about your product and service, and that bring friends with them. Fully allocated costs may well show that the profit in a transaction with a customer that comes back voluntarily may be 10 times the profit realized from a customer that responds to advertising and other persuasion.” This quote appeared in my first book, Customer Retention (ASQ Press, Milwaukee, WI, 1995, p. 9).

So, what is the role of tangible quality on customer behavior? And, what is the most actionable way to measure it? Based on extensive consulting, training, and research experience, in b2b and b2c verticals around the world, I’d suggest that much of tangibility is about the emotional and memorable underpinnings of trust and confidence these elements represent. As noted in earlier pieces (http://www.targetmarketingmag.com/blog/customer-centric-trust-based-relationships-humanity-emotion-profits), there is an emotional subtext to all components of value delivery, whether tangible or intangible. Especially with regard to tangible value elements, these “table stakes”, when delivered to spec or as expected, will help drive trust, confidence and future consideration. When the basics are not attained, tangible element under delivery will undermine trust, and influence negative downstream behavior.

Trust formation can be traced organizational rules and process execution, and it is built on the customer-related and employee-related vision, values, and mission regarding transactional experiences and marketplace behavior, through communication and purchasing or service. Trust, externally, is best understood as reputation and image: There are basics associated with trust, such as privacy, consistent delivery of essential elements of tangible value, and building and sustaining a proactive, positive, customer-centric reputation within the marketplace.

Building trust in a customer-supplier relationship begins with meeting these essential customer requirements. Briefly, the customer needs one or more elements of a supplier’s product or service, resulting in that customer moving from prospective to engaged, ‘new customer’ status when an initial purchase is made. Then, the relationship builds, and hopefully sustains, on emotional and rational/functional delivery of perceived value over time, comprising one or more components of the customer’s ‘trust equation’.

They memory of key elements of emotional value delivery will lead to downstream decision making. If any element of trust is received in a less-than-desired manner (including a non-authentic, deceptive, or otherwise negative experience), the relationship can be undermined, sometimes very quickly and sometimes with unattractive, long-term consequences for the vendor. This is especially true with basic, tangible, quality intensive product and service elements. Without trust and authenticity, companies can quickly find themselves back to square one with their customers, where everything they offer in quality and relationships – price, design, convenience, service, etc. – can easily be replicated by competitors.

Many companies endeavor to attract customers and to build trust through a rather passive, commoditized, rational and product-centric sales and marketing approach to value delivery. Such companies often believe that high accuracy, delivery timing and completeness, and other tangible, quality-centric components of value will earn both differentiation and customer loyalty. As a result, they don’t adequately determine the emotions involved with customer’s real priorities and set of expectations, what the customer wants to hear (positioning), how the customer wants to hear it (preferred communication channel), or how they are going to say it (messaging).

And, if the company fails to deliver expected tangible value, i.e. not doing what they say they will do and not meeting basic commitments and requirements, even using traditional one-way communication techniques, the relationship will inevitably fail. Over the years, we’ve seen many b2b and b2c situations where, despite high scores on quality elements of product and service when research is conducted, loyalty levels flatline or even fall.

TQM expert Noriaki Kano, reflecting on the prevailing views of business at the time he created the Kano Model (1980’s), defined his concept of building the perception of quality into measurement systems: “Total Quality Management is exercised under the philosophy that the best way for a corporation to expand sales and make a profit is to provide its customers with satisfaction through its products and services.” So, while there was some concern about the real relationship between quality initiatives and their effect on customer behavior, during this period almost no one was questioning the quality-satisfaction-business performance linkage.

In the past 20 to 30 years, we’ve learned a lot about the connection between quality and customer behavior. Today, we understand the correlation and causation between the tangible, functional aspects of value and customer actions. Tangible and functional quality helps create and sustain (or undermine) trust, but it is far less impactful than, for example, the emotion and memory behind interactions and experiences.