Satisfaction and Dissatisfaction

What satisfies customers? I would argue that it is the tangible attributes, features and characteristics of a product or service itself, and how these function in use. Satisfaction is a function of utility – the benefit that the customer receives from using the product or consuming the service.

Dissatisfaction, on the other hand, is the presence of things that irritate or annoy the customer – late deliveries, a cumbersome ordering process, etc.

What’s really important here is the idea that these two things – satisfaction and dissatisfaction – are not opposites. By removing dissatisfaction you do not necessarily improve satisfaction. When you address the sources of dissatisfaction, you are doing exactly that – reducing dissatisfaction. You are not increasing satisfaction, because it is a function of utility.

I have made the same argument with value improvement versus waste reduction. When you reduce waste (non-value adding activity), you are doing just that – reducing waste and increasing efficiency. You are not necessarily increasing value – value is a utility function, not an efficiency function.

Some firms fall into the trap of equating these two things – satisfaction and dissatisfaction, value improvement and waste reduction. They believe they are exact opposites and that a decrease in one (dissatisfaction or waste) necessarily results in an increase in the other (satisfaction or value). Avoid this conceptual trap at all costs!

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Customer Requirements

The recent issue that surfaced here in Ontario with incorrectly prepared chemotherapy formulations raises the issue of dealing with customer requirements in supply chains.

Customer requirements can be both explicit (stated requirements) and implied. To ensure fitness for purpose in the final offering, it is necessary to ensure that both types of requirements are well-understood. Too often, suppliers rely only on what the customer tells them. In these cases, only the stated requirements will be captured. Implied requirements are those types of requirements that are implied by how the customer is intending to use the product. By their nature, implied requirements can vary from customer to customer and application to application. Unless firms become adept at uncovering implied requirements, an information asymmetry is likely to exist which has the potential to cause failure when the product is actually used.

Information asymmetries often exist between suppliers and customers. The supplier knows the product, the customer does not; and the customer knows the application, while the supplier does not. These asymmetries become particularly important as the degree of product customization to customer needs increases. Unless these asymmetries are closed, the potential for significant economic loss and harm exists.