European Journal of Marketing
Customer Satisfaction — The Key to Successful and Legally Unfettered Trading
Charles Derek MossBill Richardson
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To cite this document:
Charles Derek MossBill Richardson, (1985),"Customer Satisfaction — The Key to Successful and
Legally Unfettered Trading", European Journal of Marketing, Vol. 19 Iss 6 pp. 5 - 11
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8
Customer Satisfaction — The Key to
Successful and Legally Unfettered Trading
by Charles Derek Moss and Bill Richardson
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Sunderland Polytechnic and Sheffield City Polytechnic,
respectively
Introduction
There has been much concern in recent years in the UK about the position of the
consumer in the marketplace. Numerous attempts have been made, by legislative and
voluntary means, to raise trading standards for the benefit of consumers and to
establish adequate facilities to enable consumers to obtain redress for justified
grievances. Successive governments have acknowledged demands [1, 2, 3] for selfregulation to be given a first, and full, opportunity to improve consumer problem
areas. Criticisms — from all sides of consumerism — of the inappropriateness and/or
inefficiency of modern laws such as the Price Marking (Bargain Offers) Order, 1979
and the Consumer Credit Act, 1974, provide substantial support for the anti-legislation
movement[4, 5, 6, 7]. However, the volume of consumer complaints and enquiries
passed to local authority consumer protection departments show that the general state
of voluntary control remains inadequate. For example, the limited resources of the
Office of Fair Trading are being strained by an increasing workload[8] in Consumer
Credit Licensing and Fair Trading Act regulations, and recent research[9] into Trade
Association customer codes of practice reveals that many organisations pay lip service only to code provisions.
The spectre of legislation hovers threateningly as the ready alternative to inadequate voluntary regulation in such diverse areas as motor vehicle pre-sales
information[8], doorstep selling[10], and bankruptcy/insolvency situations[11, 12].
Pressure towards more comprehensive legal change is evidenced by demands for a
legislative-based duty to trade fairly [13, 14], for product liability legislation[10], and
for extensions to the Consumer Safety Act[15].
In sharp contrast many successful organisations are thriving on the premise that
customer satisfaction is not merely a means of avoiding legislation, but, more positively,
is the vital adjunct to effective market positioning, and a cornerstone of continuing
success[16, 17]. The Department of Trade National Quality Campaign[16] promotes
"quality" as an all-embracing concept synonymous with customer satisfaction and
emphasises the positive commercial benefits to be derived from satisfying customers.
So, satisfied customers generate success, while dissatisfied customers, on the other
hand, are disloyal, vociferous in "passing on" their adverse experiences[18], and
generators of the complaints which fuel movements towards legal control.
6 European Journal of Marketing 19,6
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This article examines those aspects of trader/consumer transactions — the quality
of the organisations' goods and/or services, and the quality of its interaction with
customers — which are crucial to customer satisfaction, and considers how companies
are regulating these areas.
Value for Money Concept
Value for money is a function of customer expectations and product/service mix of
quality ingredients such as performance, durability, aesthetic appeal and price. No
two organisations will have the same value for money package. An evaluation of successful organisations, however, shows that behind each package is a general formula
which comprises the following components:
(1) A quality offer. This is produced by:
(a) taking note of what the customer wants and expects from the organisation;
(b) the application of an efficient quality control system geared to giving the
customer what he/she wants.
(2) A quality interaction with the customer. This is achieved via:
(a) pertinent consumer information;
(b) a liberal and fair approach to customers;
(c) an efficient complaints system.
Of course, these factors are interactive. Improvements in one area will generate "knock
on" benefits in others, and, conversely, poor performance in one of these areas will
adversely affect the others.
A Quality Offer
Table I shows that the lack of quality in goods and services is consistently and massively
the greatest single source of customer complaint.
Table I. The Major Consumer Problem Areas
Problem area
(1) Merchantable quality
(2) Lack of information
(3) Unreasonable restrictions
(4) Price problems
(5) Delivery problems
Number of complaints
1980
1981
1982
125,115
37,976
30,501
30,303
26,602
129,337
48,703
38,786
27,021
24,551
127,431
55,019
32,273
29,586
26,169
Source: Office of Fair Trading.
The National Consumer Council reports, Faulty Goods[19] and Service Please[20] confirm the significance of the quality problem in a variety of industries. Of course, as
private consumers we already know that motor cars, three-piece suites, electrical appliances and other consumer goods too often develop faults soon after purchase, and
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Customer Satisfaction
7
that service industries such as the home improvement, car servicing and holiday trades
frequently provide examples of unsatisfactory service, repairs and accommodation.
The macroeconomic cost of faulty goods and services is enormous (estimated at
£10,000 million per annum). In just one retail industry alone — the shoe industry
— for example, it has been estimated that £40 million worth of unsuitable or faulty
shoes are sold annually[21]. Recognition of the costs attached to quality shortcomings, and, conversely, the benefits emanating from the achievement of quality, is growing. The Office of Fair Trading, for example, is seeking to incorporate "quality" provisions within Trade Association Codes of Practice[22] and the Department of Trade's
traditional British Standards approach to quality is now being supplemented by a wider
"National Quality Campaign"[16]. Recent articles[23, 24, 25] confirm and assess the
British awakening to quality.
Listening to the Customer
For manufacturers the task of establishing what the customer wants is comparatively
easy where production to closely defined specification is the norm. Even in such situations, however, progressive manufacturers[26] prefer to contribute to design specifications, rather than merely to carry out contractual instructions, and some, jealous of
the reputation for high quality, will refuse to supply to faulty design, or poor specification. A variety of techniques are used prior to new product launches. However, for
the successful organisation "listening" is an ongoing process. Many realise that
customers "in-store" provide a ready and easily accessible source of information.
Sainsburys' managers[17] make a point of talking to customers as they shop. Customer
discussion groups, store check panels, and a suggestion card scheme, further develop
the Sainsbury approach to "listening". Tesco's[17] consumer panels of volunteer and
invited members, under the chairmanship of senior management, discuss marketing
strategy and new products, and thereby take customer participation a step further into the organisational decision-making process. For William Timpson Ltd[17] in the
retail shoe industry, consumer representation at Board level was made available with
the appointment of Colin Adamson as Consumer Advocate/Adviser. Despite its
acknowledged success this remains a unique appointment.
Firms can learn from their mistakes, too. Direct contact with complainants can provide clear, undiluted views on problem areas and on customer needs and expectations.
In 1980 Jaguar Cars[16] contacted hundreds of Jaguar and rival car owners as a first
step towards isolating and removing the faults which were negating the inherent design,
engineering and price strengths of Jaguar. This communication process continues with
sample new owners being telephoned systematically. Since 1980 dramatic improvements
in quality and productivity have been achieved. Sales levels record the customers' most
honest and significant message. Marks and Spencer[16] reinforces its acknowledged
position for quality, via a communications system which is highly sensitive to fluctuating till receipts. On occasions this ultimate barometer of "value for money" has
triggered swift corrective action in the form of reduced prices.
Quality Control
If a customer responsive attitude is to permeate the organisation, top executives must
take the customer satisfaction concept to the top of the organisational value hierarchy
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8
European Journal of Marketing 19,6
— if top management do not really care about customers then the organisation won't
either[27]. In contrast, people like Sieff (Marks and Spencer) and Egan (Jaguar Cars)
provide important and unequivocal reference points for the staff of their respective
organisations. Whether for reasons of social responsibility, or profit, or both, their
commitments to customer satisfaction set the tone of their organisations' consumer
responsiveness. Research shows clearly that the first, and most important, step towards
organisational "quality" is taken when the chief executive embraces the concept[16,
17]. Having taken the concept "on board" the next step is to ensure that it is transmitted from the strategic nerve centre of the business, through the organisation, to be
achieved operationally. Information and control systems must turn objectives into
reality.
Traditional quality control methods, concentrating on inspection for faults, provide a vital, final safeguard prior to distribution. Business system specialists agree
that generally this remains an area with great scope for improvement and that often,
organisations which need only simple quality control techniques are struggling on with
haphazard, inefficient systems. Progressive companies, already operating efficient control systems actually use them last and least. "Forward control" with the primary drive
towards building in quality, rather than inspecting out faults, is now the province of
people rather than systems.
Transmission of the quality philosophy to all personnel (and to suppliers) is primarily
an exercise in communication and motivation. A variety of techniques are being used
to stimulate adoption of the concept. Trident, the electrical retailers and Jaguar Cars[16]
have found internal promotion campaigns useful in initiating improved consumer
responsiveness in staff and suppliers. Increasing staff/suppliers involvement and responsibility has also produced some effective results. A Watney Mann/Usher project giving telephone sales girls, load planners and draymen team responsibilities for "personal" customers created savings of £50,000 per year. Quality circles have produced
similar financial savings for Cumbria Engineering Ltd and have been important to
Jaguar's US sales growth[16]. Erosion of status symbols, regular "two-way" meetings
and the continuous preaching of the quality gospel by senior management, are further features of successful "forward control" systems.
A Quality Interaction with the Customer
The spectrum of organisational attitudes to customers ranges from positive commitment to apathy, and on to complete hostility[27]. Too often customers are treated as
friends at purchase time, but as enemies in complaint situations. Customer contact
points are crucial to satisfaction. Poor reception can negate all the good work performed elsewhere and, according to Blood [28], create a core of dissatisfaction spreading
out to a wide circle of potential customers. Having "listened" to the customer, and
having employed efficient quality control the next step is to provide a friendly, informative and fair interactive environment. A critical factor in such an environment is
the provision of information to the consumer. The fundamental objective of consumer
information is not "to tell them more", but to help promote better understanding.
If your customer understands what he/she is buying, problems over unfulfilled expectations are less likely. Sophisticated, and useful, attempts to improve consumer
information are evident. For example, many supermarket chains employ specialist home
Customer Satisfaction
9
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economists to staff Consumer Advisory Kitchens, and offer consumer counseIIing[17]
and companies like William Timpson Ltd in the shoe industry provide the Timpson
shoe box package, offering helpful information on aspects such as fitness for use,
material composition, country of manufacture and shoe care details.
However, despite consumerists' continued pressure for the customers "right to know"
— legislation is already applied in the areas of unit pricing, open dating, nutrition
and ingredient labelling — a major source of customer irritation is the lack of information on commodities at purchase point. Adamson[17] suggests that achievement
of the fundamental objective of helping customers to understand depends upon:
(1) the application of information to well defined areas of concern or interest;
(2) the unbiased presentation of information clearly distinct from promotional and
sales material; and
(3) the involvement of operational management in the production of information.
Another aspect of the interactive relationship between company and customer which
is indicative of an outmoded approach to satisfying the customer can be seen in attempts to restrict customers' fundamental Sale of Goods Act and "negligence" rights.
The Unfair Contract Terms Act (1977) has sought to balance more closely the unequal bargaining positions of consumer and trader. Traders who persist with exclusion clause attempts, and other restrictive practices are risking the imposition of
stronger legislation, and are swimming against the tide of liberalism which is slowly
permeating organisational responsiveness[29].
Dealing with Complaints
It is worth stressing that while poor quality is at the root of most of the thousands
of complaints recorded annually by advice centres, the complaints are usually only
recorded after the customer has failed to resolve his problem with the retailer. Enlightened reaction to complaints employs three steps:
(1) avoiding complaints in the first place;
(2) handling them well when they do arise;
(3) feeding the information back to the company to achieve the first step.
Avoiding complaints in the first place means that companies must endeavour to detect
and predict likely areas of basic consumer discontent before the product is launched.
Many companies invite groups of consumers into the company when a new product
is being developed and tested prior to launch in order to assess consumer attitudes
to factors like product design, and to see whether any difficulties might arise in the
actual usage and operation of the product. This type of activity may remove potential problems which, if not alleviated, will become complaints at a later stage and
have a negative impact on the company.
However, the characteristics of competition in some market segments produce consequent demands for "manufacture to a price" proposals which, in turn, stimulate
quality deficiencies and create more significant complaints problems. In such circumstances, organisations must gear themselves up for efficient complaints handling.
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10 European Journal of Marketing 19,6
In price-conscious markets, particularly, higher levels of service, before and after sale,
are the main way of beneficially differentiating image and "clinching" sales. Cavendish Woodhouse, in the furniture industry, and Currys, in the electrical goods industry,
are just two of the companies which have recognised the advantages of a centrallybased consumer relations department to deal with complainants who have failed to
resolve problems at store level, and to "oversee" the complaints situation. Local authority consumer advisors, however, stress that Consumer Relations Departments should
not remove local "on the spot" authority to resolve complaints; should be quickly
and easily accessible to customers; and should provide prompt and efficient attention. Consumer Relations departments should be developing and operating information systems which monitor the extent to which product-class buyers and users are
satisfied with the various elements of product-marketing programmes. Such systems
will be effective only to the extent that the output is interpreted and communicated
to the appropriate management so that product policy implications are highlighted,
follow-up is encouraged, and profit opportunities through new products are identified.
Conclusion
Customer satisfaction is the prerequisite to successful, legally unfettered, trading.
Businesses are recognising that consumerism pressures are going to continue at a high
level in the future. The most successful companies are recognising consumerism as
an opportunity rather than a threat and are realising that responsive programmes are
yielding dividends through increased consumer confidence. A stance of resistance is
likely to be counter-productive in the long term because it increases the likelihood
of government regulation with all the attendant problems of high costs, inflexibility
and uneven administration. The message is clear in the sense that there has never been
a more appropriate time for organisations to embrace consumerism and to satisfy
customers.
References
1. Economist Intelligence Unit, Costs and Consumerism, November 1979.
2. Confederation of British Industry, The Future Development of Consumer Protection Legislation,
May 1981.
3. "No to More Regulations", Fair Trading, January 1979.
4. Richardson, W., "The Unpopular Consumer Credit Act", Banking World, October 1983.
5. Consultation Document on Price Marking (Bargain Offers) Order 1979, Ministry for Consumer
Affairs, December 1982.
6. Young, R., "What is Merchantable Quality", The Times, 1980.
7. Fairlie, D., "What Consumerism Really Costs", Marketing, November 1979.
8. Director General of Fair Trading, Annual Report for 1982.
9. Pickering, J. F. and Cousins, D. C, The Economic Implications of Codes of Practice, UMIST/Office of Fair Trading, 1980.
10. Department of Trade and Industry, Press Notice, Ref. 557, 12 December 1983.
11. Office of Fair Trading, Prepayments, June 1983.
12. South Yorkshire County Council, Company Crash, April 1983.
13. Office of Fair Trading, Home Improvements, 1983.
14. Consumer Association, Internal Report — Code of Practice, September 1981.
15. Institute of Trading Standards Administration, Annual Report for 1983.
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Customer Satisfaction
11
16. Department of Trade and Industry, The Case for Quality — National Quality Campaign, 1982.
17. Adamson, C, Consumers in Business, National Consumer Council, 1982.
18. Technical Assistance Research Programme Inc., Measuring the Grapevine — Consumer Response
and Word of Mouth, 1981.
19. National Consumer Council, Faulty Goods, 1981.
20. National Consumer Council, Service Please, 1981.
21. Shoe and Allied Trades Research Association, Shoes Report, 1979.
22. See OFT recommendations regarding pre-distribution testing and pre-sales information sheets relating
to car industry.
23. Burrell, P., "Design — A Crucial Weapon in the Battle for Sales", Management News, November 1983.
24. Holmes, J., "How Quality Control Made a Comeback", Management Today, November 1983.
25. Bailey, J., "How to Motivate Service", Management Today, October 1983.
26. Cunningham, M. T, "International Marketing and Purchasing of Industrial Goods", European Journal of Marketing, Vol. 14 No. 5/6, 1980.
27. See, for example, Pickering and Cousins' view on apathy towards OFT Codes of Practice in "The
Economic Implications of Codes of Practice", OFT, 1980, or Shanks' views in Consumers in Business,
National Consumer Council, 1982.
28. Blood, P. F., "A Marketing View of the Consumer", in Mitchell, J. (Ed.), Marketing and the Consumer Movement, McGraw Hill, 1978.
29. Office of Fair Trading, Consumer Contracts — Steps to End Void Terms, March 1981.