Most of the interactions a company has with its customers are service encounters. But how do you give your customers good service?

By the term "service", we're not just talking about giving customers the selection and products they want, and at a price that's reasonable. Service is such an intangible idea (consider how much a service rep's attitude influences a service encounter) that customers often look for cues (like a company's procedures and flow of activities) to help them understand what's really going on.

So, what makes a customer satisfied with service? Better yet, what can you do to enhance a customer's satisfaction?

THE FIRST STEP

Research and common sense indicates the first step to service satisfaction is exceeding a customer's expectations.

But where do expectations come from? Well, every communication you have with a customer impacts their expectations. This includes media communcations, word-of-mouth, and prior contacts with the company.

Here's the simplest idea you can remember about service and satisfaction: The more a customer perceives their experience is better than their expectations, the more they're satisfied. While exceeding expectations is best, minimally a customer's experience should equal their expectations.

This sounds easy and simplistic, doesn't it? But companies often fail at this straightforward idea. Salespeople promise customers the world, and deliver less than expected with the result of unsatisfied customers. You've probably had many service encounters yourself where what was delivered was less than what you expected. In many cases the service failure was due to a difference between the actual service and the promised service. But remember, expectations drive this process, so implicit promises can come from many indirect places.

One lesson for companies is to manage their service expectations appropriately. Set them too high (meaning you'll never meet it) and customers will be unhappy. Better to set them appropriate to what you can deliver. In any case expectations should be managed or else customers will set their own expectations (and they're likely to set them very high). In some cases, it may be best to set low expectations so you can easily exceed them.

WHEN EXPECTATIONS AREN'T MET

Often, customer's expectations aren't met in a service encounter. Does that mean customers will become dissatisfied? Not always. That depends on to whom they attribute the service failure.

When we say "attribute", we mean who or what causes the events the customer experiences. Customers always (implicitly) look for causes of their experiences.

Attribution, in fact, is a tricky idea, because customers are likely to attribute service failures to the company, even if it was the customer's own fault. This is known as the "fundamental attribution error", and you can click here to see some examples of this.

In short, the fundamental attribution error goes like this: "If something goes right, it's because of me. If something goes wrong, it's because of you."

WHO'S RESPONSIBLE FOR THE SERVICE FAILURE?

So whether a customer ultimately becomes dissatisfied from a service failure depends on who they perceive causes the service problem.

For example, you might call up a technical support person for Quicken, expecting great help, but not receiving the type of information you wanted. Now, you've got a gap between your expectations and your experience. You're likely to become dissatisfied.

But why did the technical person not solve your problem? Well, maybe it's something out of the control of the service person or even the company. Say, it's a software glitch in Quicken, but not due to the Quicken program, rather it's the operating system and thus its' Microsoft that's at fault. A logical explanation of problem can go a long way here (of course, that requires having service people who understand the difficulty a customer might have seeing the logic).

Alternatively, if the customer perceives this is a rare event, they are likely to be more satisfied than if they think this is reoccurring.

In these situations, customers are likely to give you a break and not become dissatisfied (at least, not with technical support person or Intuit – who makes Quicken). However, if the customer perceives the service breakdown is under the control of the company and is a reoccurring event, satisfaction will go way down.

So the first lesson is when expectations are not met, make sure the customer perceives the breakdown is out of your control, rare, and logically explained to the customer.

Again, this may sound easy, but how often have you run into service encounters where you were informed that nobody had any idea when the problem would be fixed or whether it would happen again? This is common, and this is why people have so many unsatisfying service encounters.

COMPENSATION WORKS!

Another way to minimize the dissatisfaction of violated expectations is through compensation for the service failure. Service level agreements (SLAs) in many industries are just examples of providing compensation for failed service. However these are rare in consumer service encounters. Consumer firms need out to think more clearly about ways to compensate customers for bad service if they want to increase customer satisfaction.

And here's the real trick. Some research demonstrates that actions such as compensation and logical explanations for service failures can even turn a dissatisfying event into a memorable, satisfying experience. What more could you want after failing a customer's service expectation!