Journée ULB SorbonneIs Customer Satisfaction Theory Relevant in the SME contextPierre-Nicolas Schwabpschwab@ulb.ac.be

Solvay Business SchoolUniversité Libre de Bruxelles16 March 2012

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Customer satisfaction at the interface of three worlds

Marketing theory

Managerial perspective

SME reality

Unity or discrepancies?

RESEARCH QUESTIONSHave CS best practices been disseminated within SMEs?What do SMEs do in actuality to satisfy customers?

Large discrepancies exist between large corporations and SMEs (Carson 1998, Lindman 2004, Perks and Shukla 2008) in terms of CS measurement.No research yet on CS in SMEs.

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Interest of the research question

• 99,5% of firms are SMEs• SMEs account for 51% of GDP

• 50% will cease operations within 3 years• 75% will cease operations within 7 years• 26% of bankruptcies are due to misalignment with market

• Marketing theory + practitioner perspective: customer satisfaction is key to success

Have CS best practices been disseminated within SMEs?What do SMEs do in actuality to satisfy customers?

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Literature review

Oliver (2010) framework of cognitive antecedents (Symanski and Henard 2001)

For each antecedent :1. Review of marketing literature

(based on Oliver 2010 bibliography)2. Review of practitioner’s literature

(HBR from 1990 until 2011 + managerial recommendations of 1)

3. Review of SME / entrepreneurship literature

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Customer satisfaction at the interface of three worlds

•Satisfaction = antecedent of loyalty and word-of-mouth (Oliver 2010)

•Loyalty = antecedent of profits (Hallowell, 1996)

•What are the cognitive antecedents of satisfaction?

Marketing theory

•Profits are what firms are created for

•Profits = Loyalty = Satisfaction (Hallowell, 1996)

•What a business should do to satisfy customers

Managerial perspective

•SME ≠ “Little Big Business” (Hill, 2001)

•Large corporations marketing practices differ from SME marketing practices (Hill 2001, Carson and Gilmore 2000)

SME reality

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The SME realityCustomer satisfaction in actuality

1. Expectancy disconfirmation– Managerial literature. recommends proactive approach to shape

expectations (Prahalad and Ramaswamy 2000)– Nothing found in the SME literature

2. Need fulfillment– driver of competitiveness (Manor, Tatikonda and Sampson 2002).– sales people in SMEs do focus on the needs of the customer (Hill 2001)

3. Quality– SMEs can implement TQM successfully (Gallear 1995) – Drivers for implementation different than large corporations (Sun and

Cheng 2002)

4. Value– SMEs can adopt different value postures (Little 2004)– evolution from dyadic buyer-seller relationships to “value constellations”

(Normann and Ramirez 1993)

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The SME realityCustomer satisfaction in actuality

5. Equity / Inequity– Price fairness: SMEs cope with market practices (Carson & Gilmore

2000)– Complaints management: one case study (Stokes and Lomax 2001)

unlikely to be found important by SMEs

6. Regret– New stream of research (Zeelenberg and Pieters 2007): few

recommendations– Offer should encompass guarantees to avoid regret (Oliver 2010)– Nothing found in SME literature (nor in marketing literature)

7. CS measurement– Morgan, Anderson and Mittal (2005): SMEs in sample collect and use CS

measurement data– CS measurement makes no sense in SMEs (Lindman 2001;Perks and

Shukla 2008)

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Conclusion and further researchStill a lot of knowledge to disseminate

Level of dichotomy found Further research

Quality no -

Regret n/a (lack of research results) Regret management tactics

Needs Techniques and tools to detect unmet needs not used in SMEs rely on intuition

SOCO SME > large firms? Assessment of needs by SMEs?

Expectancies Proactive strategies not applicable for SME

SME tactics to shape expectations?

Complaints management

Best practices not applied B2C≠B2B? Training and empowerment in SMEs? Understanding of complaints consequences?

Value Intuition-guided value creation

Mutations of value postures along with other antecedents?

CS measurement

Rarely applied Makes no sense for SMEs according to some authors

Quantitative study of measurement? Industry patterns?

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4 Current researches

1. Qualitative interviews with entrepreneurs (30)– What do they understand of customer satisfaction and marketing in

general– What do they think they do– What do they actually do for each antecedent

2. Qualitative analysis of actual SMEs answers to customers complaints– Corpus of ca. 15000 complaints from 297 companies– Perceived Justice Framework as coding guide

3. Politeness in actual companies’ answers to complaints (in collaboration with Laurence Rosier, ULB)– Do firms follow managerial recommendations in terms of politeness ?– Speed of answer vs. politeness

4. Long-term impact of marketing on venture success in collaboration with Brussels Enterprise Agency, Brussels Chamber of Commerce