By J. N. Halm
Without exception, every customer comes into an interaction with expectations. Even if the customer has absolutely no idea of what to expect—even if it is the first time the customer is encountering the product or service—there is always an expectation in the customer’s mind. Even first-time customers still find a way of setting certain expectations about the service they will experience.
If you were to visit a foreign country and you were offered a meal made out of the meat of an animal you have never consumed before, you would still manage to form an idea of what you are about to consume.
This is actually why some vow never to consume the flesh of certain animals, even though they have had no prior taste of that particular meat. It is their expectations that are working against them, forcing them to not even give that meat a try.
Customers always come into an interaction with a forecast expectation. The impressions a customer walks away from would therefore be based on what happens during the interaction as compared to what the customer’s expectations were. In other words, customers’ impressions of an interaction are not based solely on what happens during the interaction but also on what happens before the interaction—the expectations they had before the interaction.
The impressions customers form after an experience are therefore made in comparison to what the customer expected to happen. In other words, there is nothing like a customer with absolutely no expectation. If there were, then there will never be a disappointed first-time customer.
Positive impressions are formed when the customer’s true experience meets or even exceeds the pre-interaction expectations. If, however, it turns out that the customer’s actual experience falls below, or is worse than, the forecasted expectations, then customer dissatisfaction is what ensues. This could result in several post-purchase actions such as badmouthing the business or even the return of a purchased product.
This means that for a business to consistently offer great customer service, that business must also be interested in what happens in the minds of customers before the interaction even takes place. This is where the idea of under-promising and over-delivering comes in. To excite customers, many organisations have gone ahead to make promises they know they cannot fulfil.
Brands must ensure that they control the narrative when it comes to customer expectations. It is of utmost importance that brands have a handle on the kinds of promises they make.
One of the key duties of every business is therefore to ensure that the expectations of its customers are always kept below the actual performance of the business. The understanding is that if the customer has low expectations of the experience, even an average performance by the service provider would be rated high by the customer.
Managing expectations can be done in several ways, most of which would involve the kinds of communications that accompany the product or service offering. The kind of packaging and quality of marketing communications materials are all communicating a message to would-be customers about what to expect.
Advertising messages are very important in this regard. This is why in some industries, organisations tend to advertise heavily. The businesses in that industry want to ensure that they control the narrative around their brands.
The downside to engaging in heavy advertising is that it creates high expectations in the minds of customers. Setting high expectations means it becomes more difficult for the performance of the business to meet the high expectations it had set in the minds of customers. This could lead to more dissatisfied customers.
Word-of-mouth (WOM) messages are also very crucial to helping customers form impressions about the brand in question. Some have even argued that WOM might be the most powerful form of brand messaging.
Many brands are resorting to several channels to combat negative communication associated with the brands which were first generated via word-of-mouth communication. A single customer’s experience, or those of just a few customers, can initiate such a negative barrage of negative impressions that would take years to erase.
What has even made WOM so powerful these days is the ability of the Net to help customers express their views on the performance of particular brands as well as the introduction of online review platforms. In times past, a customer had only a few means to share his or her experiences. Times have changed, drastically. Now, with the click of a button or the press of a key, the customer’s experience can be all over the world.
Online reviews have become a very important means of setting customer expectations. A prospect who is considering the purchase of a particular service only has to go searching online, and the experiences of other customers would be available for the would-be customer.
It is entirely possible that those reviews might not paint an accurate picture of the performance of the brand, but the customer might not be able to tell the truth from a lie. There are many cases of review fraud, where people fabricate outright lies just to make a particular brand look bad.
The power of the expectation-versus-reality gap on customer impressions is not lost on businesses. Businesses understand the concept of what is known as the Expectation–Reality Discrepancy (ERD). This is defined as what customers expect based on their forecast (Expectations) minus what they believe they experienced in reality (Reality).
[ERD = Expectations – Reality]
From the above equation, it is clear that a positive ERD will leave a customer very frustrated. In other words, the customer’s expectations were higher than the reality. A negative ERD is good for the organisation since it means that the reality was better than the expectations.
Numerous businesses rely on this discrepancy to make critical decisions. One area in which the expectations-reality divide comes into play is in crafting service contracts. In business-to-business interactions, businesses sign agreements with their customers regularly.
Customers are given contracts by service providers as part of the terms and conditions accompanying the product-service offering. Within these contracts, there are expectations of performance. Indeed, many customers do not take the time to read these contracts. But there are business-customer contracts anyway.
In a report of a study published in the November 2021 edition of the Production & Operations Management journal, researchers sought to study the divide between customer’s forecasted expectations and the actual realisation. The report was titled “The Role of Expectation-Reality Discrepancy in Service Contracts”.
One of the key points of study of the research was the effect of ERD on the switching behaviours of customers. As to be expected, a positive ERD would more likely cause customers to switch from a particular service provider to the competition.
Businesses, being fully aware of the possibility of customers switching to the competition, resort to the use of various strategies to ensure that customers incur a cost if they attempt to switch. This is what is referred to in many literature sources as Switching Costs.
These costs are embedded in the service contracts that service providers give to their customers upon signing them up, such as is common with my telecommunications service providers. In other words, a customer who is not too happy with a service can switch, but that would come at a cost to the customer. Some service providers would prefer not to enforce these contracts when customers decide to switch. However, some would enforce these contracts.
The aforementioned study found that in a market where competitors operate similar strategies concerning the enforcement of service contracts, the ERD becomes the determining factor in the switching decisions of customers. When a provider’s discrepancy is higher than the competitor’s, that provider loses more market share to the competition.
To help fight the loss, some providers provide contracts where customers end up paying a little more when they attempt to switch. This leads to a case where some customers just stay put with the service provider, although they might not like the provider’s services.
The takeaway from all of this is that businesses should not take the pre-interaction expectations for granted. It does not matter how well the business performs. If the expectations are too high, it becomes almost impossible for the business to match up to those expectations. Businesses must be interested in the impressions customers have of its offering. In other words, businesses must engage in expectations management. Anything other than that and the reality might not be too pleasant.
