Managing Customer Relationships

Published Categorized as Project Manager
managing customer
managing customer

In previous articles I have emphasized that ultimate success is not determined by weather the project was completed on time, within budget, or according to specifications, but whether the customer is satisfied with what has been accomplished.

Customer satisfaction is the bottom line. Bad news travels faster and further than good news.

For every happy customer who shares his satisfaction regarding a particular product or service with another person, a dissatisfied customer is likely to share dissatisfaction with eight other people.

Managing customer satisfaction models

Project managers need to account customer satisfaction in their objectives. Obtaining a positive customer satisfaction is not that simple as it is a complex phenomenon.

One simple but useful way of viewing customer satisfaction is in terms of met expectations.

According to this model, customer satisfaction is a function of the extent to which perceived performance (or outcome) exceeds expectations. Mathematically this relationship can be represented as the ratio between perceived performance and expected performance. When performance falls short of expectations (ratio <1), the customer is dissatisfied. If the performance matches expectations (ratio =1), customer is satisfied. If the performance exceeds expectations (ratio> 1), the customer is very satisfied or even delighted.

High customer satisfaction is the goal of most projects. However profitability is another major concern. Exceeding expectations typically entails additional costs.

For example, completing a construction project two weeks ahead of schedule may involve significant overtime expenses.

Similarly, exceeding reliability requirements for a new electronic component may involve considerably more design and debugging effort.

Under most circumstances, the most profitable arrangement occurs when the customer’s expectations are only slightly exceeded. Returning to the mathematical model, with all other things being equal, one should strive for a satisfaction ratio of 1.05, not 1.5!

The met-expectations model of customer satisfaction highlights the point that whether a client is dissatisfied or delighted with a project is not based on hard facts and objective data but on perceptions and expectations.

For example, a customer may be dissatisfied with a project that was completed ahead of schedule and under budget if he thought the work was poor quality and that his fears and were not adequately addressed.

Conversely, a customer may be very satisfied with a project that was over budget and behind schedule if she felt the project team protected her interests and did the best job possible under adverse circumstances.

Project managers must be skilled at managing customer expectations and perceptions. Too often they deal with these expectations after the fact when they try to alleviate a client’s dissatisfaction by carefully explaining why the project cost more took longer than planned.

A more proactive approach is to begin to shape the expectations up front and accept that this is an ongoing process throughout the life of a project. Project managers need to direct their attention both to the base expectations, the standard by which perceived performance will be evaluated, and to the customer’s perceptions of actual performance. The ultimate goal is to educate clients so that they can make a valid judgment as to project performance.

0.90 ———————Perceived performance———————– 1.10
Dissatisfied ———— Expected performance —————— Very satisfied

By Alex Puscasu

I am a Project Management practitioner with more than 5 years experience in hardware and software implementation projects. Also a bit of a geek and a great WordPress enthusiast. I hope you enjoy the content, and I encourage you to share your knowledge with the world.