Understanding The Concept of Customer Value and Customer Satisfaction

Companies today have to deal with customers who are more aware of their options and their choices as well as the recourse they must take if their expectations are not met. Since customers pay good money to avail of amenities like power supply, they expect good value in return. Customers are value maximisers. For any consumption, they would like to maximize the value that they can get subject to their knowledge of available alternatives, the cost of effort in accessing these alternatives and the cost of information.The perceived consumer value is the difference between the sum total of all the perceived benefits received by consumers in a given transaction and the sum total of all costs incurred by them in availing the benefits. For the power utility service, the total customer value is the perceived monetary value of the economic, functional and psychological benefits that customers expect from a particular service and service provider minus the costs incurred in evaluating, obtaining, utilizing and maintaining the power connection.The customer’s perceived value is thus a function of what they have to give in comparison to what they receive as a result of becoming the customers of a particular power supplier. Companies have a strong stake in keeping a positive perceived value level in the consumers’ eyes; the moment this valuation turns negative, the consumer starts feeling trapped in a losing transaction and would defect the moment s/he has a viable alternative.

Though power supply has long been a monopoly situation in India, competition is now being encouraged in the power distribution sector. This means that customers may have alternative choices available which could offer them a better perceived value proposition than their existing provider. Customer satisfaction, therefore, has to be one of the top priorities for a power utility. Customer satisfaction is the outcome of a positive and fulfilling experience with a product or service. It has been defined variously as customer fulfilment response, a pleasurable feeling after drawing the conclusion that the product is capable of meeting all expectations reasonably well or the customer evaluation that the product or service has the required attributes which enabled it to fulfil customer expectations. Customer satisfaction results from the comparison between his/her expectations from the product or service and the actual performance of that service. To put it simply, customer satisfaction results when service performance meets or exceeds customer expectations(Fig).

Customer Satisfaction

To take an example, customer’s satisfaction from their electricity service can be assessed by comparing the actual service delivery or service performance with the expectations that they had when they got into a service relationship with the service provider. These expectations could relate to billing, breakdown in supply, consistency of voltage or the handling of complaints. If the service performance by the provider equals or exceeds customer expectations, the customer gets a favourable fulfilment response outcome and is satisfied. On the other hand, if the service performance falls short of their expectations, the customer is dissatisfied. The company’s task of generating satisfaction therefore is a function of managing excellent service performance as well as customer expectations. Let us try to understand how consumers form their expectations and how public utility organizations can hope to fulfil or manage these expectations so as to generate customer satisfaction.Customer expectations are formed on the basis of their past buying experiences, their experiences of substitutes or similar services, experiences of other consumers, information coming from friends, relatives and other users, information provided by the providers themselves and information from the competitors. Years of deficient provision and supply constrained circumstances have left Indian consumers in a situation where most of them have fairly low expectations from the power companies. Yet, in order to be able to create reasonable levels of customer satisfaction, companies must have a clear idea of what these expectations are and how the company must seek to fulfil most of them. This basic assessment of consumer expectations and keeping a track of how expectations change is the first requirement of a serious orientation towards customer satisfaction.

The best way to understand and anticipate what the customer is expecting from the utility is to put oneself in the shoes of the customer and think what you would expect from any service provider. As the competition in the power distribution sector increases, it is often the quality of customer service that would make or break a service provider. If a customer is able to buy the same
amount and quality of service/product for a similar amount of money frommore than one service provider, s/he is likely to go to the one s/he has had the most pleasant communication experience. It is, therefore, imperative to consider the numerous aspects that are related to customer service, and the various forms of customer service a customer may come into contact with the utility.

Most typical top priorities and expectations of the customer seem very simple and self evident (see Fig.). Yet, they are not to be taken lightly and are often difficult to follow.

Customer Priorities and Expectations