When do customers get what they expect?

The underlying rationale is intuitive: Because customers are more satisfied when their expectations are exceeded, lowering expectations may be a shortcut to improving customer satisfaction. However, a new study shows that the issue is more complex.

Customer expectations influence customer satisfaction in positive as well as negative ways. In fact, customers typically look for confirmation of their preconceived expectations – a phenomenon known as “confirmation bias.” Thus, customers with high expectations are often biased toward perceiving a service positively, whereas customers with low expectations are biased toward perceiving it negatively. This bias is particularly pronounced if customers perceive the service heuristically, that is, without paying close attention to – or evaluating – the service due to lack of motivation or lack of ability.

This bias may be so strong that, quite counter-intuitively, an increase in expectations actually increases customer satisfaction, a conclusion based on a survey of more than 4,000 customers of movie theaters, restaurants, and airlines.

Instead of relying on oversimplifications such as "under promise, over deliver," managers need to evaluate in which situations to increase and in which situations to decrease customer expectations. Specifically, managers should increase customer expectations to enhance satisfaction if customer ability and motivation to evaluate the service is low. In this case, confirmation bias kicks in and customers evaluate the service more positively and are more satisfied. Conversely, if customers are apt and motivated to evaluate the service, managers should refrain from setting high expectations, as mentally focused customers may easily detect flaws, thereby disconfirming their high expectations.

Similarly, managers should track whether customers approach the service delivery with high or low expectations. If customers harbor low expectations, they should foster customer ability and motivation to evaluate the service to prevent these low expectations from spoiling evaluations. For example, managers may provide concrete goals and deliverables for each process step and ask customers to rate the performance against these goals. However, if customers approach the delivery with high expectations, managers benefit if customers do not overly focus on performance. To achieve this, managers may design their services processes to be as fluent and smooth as possible.

The credo in service management should be "under promise, over deliver" only if customers can easily evaluate if you have kept your promise.

This article is based on a study by Johannes Habel, ESMT, and Sascha Alavi, Christian Schmitz, Janina-Vanessa Schneider, and Jan Wieseke, Ruhr University, Bochum.