Improving Customer Satisfaction, Loyalty, and Profit

“It’s a simple equation,” says the blurb on the back cover of this book. “Customers equal profits. So how can you ensure that your customers keep coming back for more?” Not an encouraging start – it seems that we are faced with a book that sounds the same as hundreds of others, most of which have been responsible for the death of countless trees for no good purpose. Further, readers’ customers are “guaranteed” an excellent experience if the plan outlined in the text is followed, a big promise for $25. To the well‐read browser in the management bookshop, disappointed many times by overblown claims of instant success, this promotional copy may signal that this is another quick‐fix title for the insecure executive and therefore not worthy of serious attention. But this would be unfortunate, because this is a book well worth reading by the intelligent manager or executive who is seeking a new way of linking quality, customer satisfaction, loyalty and financial performance.

The authors are experienced and well‐credentialled academics and the irritatingly grandiose statements of the cover text are not repeated in the contents. Johnson and Gustafsson propose a complex model and describe it in considerable detail. The essence of the book is encapsulated in a short paragraph from the introduction: “This book will show you how to create an integrated customer measurement and management system that will help you allocate resources and increase profits. To create such a system, you must first understand your company’s entire system for generating profit, from internal quality through to business performance. A systems approach acts on the basis of collected and interpreted customer data – but then you have to use the data to allocate resources and create change in the system or else you merely waste time and money” (p. 3).

The initial chapters provide support for the model from a number of practical examples, including the experience of various American retailers’ work on customer satisfaction and also from the Volvo car company in Sweden (before its takeover by Ford). It is good to see an international perspective in a book such as this.

The authors pragmatically ignore the academic debate that has been continuing for some years about the strength of the link between customer satisfaction and the financial performance of the firm. They appeal to intuition in asserting that most companies understand that customer satisfaction and loyalty are vital to their success, and the target audience will have no difficulty with that. The executive or manager of an area that obtains and manages customer data to improve quality, customer satisfaction, and loyalty will find the prescriptive model that takes up most of the book of interest and potentially useful. It doesn’t show exactly how to set up such a system in practice ‐‐ those details are necessarily company‐ and industry‐specific ‐‐ but it provides a clear and very detailed framework on which to build one’s own systems.

The framework is divided into five stages. The first stage identifies the purpose of the exercise and provides suggestions for segmentation of customers. The second stage shows how to use qualitative research to understand the customer view of the products and services provided by the business, called here the “lens of the customer.” Stage three, a handy summary of market research techniques, outlines the principles of customer survey development. The fourth stage shows in some detail how to use principal‐components regression analysis as a means of quantifying the results (or at least providing numerical output), and the fifth and final stage, importantly, provides an introduction to using the information thus generated for decision making. This stage introduces a tool the authors call quality function deployment (QFD), a technique familiar to new product managers. QFD is to be the subject of their next book, one of a series emanating from the University of Michigan Business School.

The book is well‐written and edited – the only serious concern this reviewer has is the comment on page 76 that Internet‐based surveys provide exactly the same questions to all respondents, thus eliminating interviewer bias. One of the great strengths of Internet‐based surveys is that they can self‐adjust, presenting only questions that are relevant to the individual respondent, based on that respondent’s answers to previous questions. Nonetheless, they are correct that interviewer bias is absent in Internet surveys (as in all self‐administered surveys).

Johnson and Gustafsson’s work is not airport bookstall reading. It is a detailed proposal for action, one that demands careful consideration from its target market in the same way that a consultancy proposal should be carefully considered. It will not suit those who do not wish to use quantitative methods in their customer satisfaction and loyalty management, but for those to whom the quantitative approach appeals the book will be a valuable resource. This book will please those who fear that academics and practitioners are growing further apart; it is a good example of the way in which successful professors can translate their academic skills and experience into practical advice for managers and executives. It’s not a book of general advice – it proposes a specific, prescriptive, and detailed program of measurement and management of customer satisfaction. If the approach appeals to you and your business, it will be an invaluable management tool.