The "marketing concept" often studied in business schools today argues that customer needs must be the central focus of the firm's definition of its business purpose, and that profits are produced through creating customer satisfaction. Therefore, winning business strategies should start with an analysis of the company's actual performance compared to customer expectations of performance, especially in service industries. Unfortunately, the focus of most American colleges today is still on short-term performance--on productivity and efficiency--and not on student (customer) satisfaction.
As pointed out by Shim & Morgan (1990), "faculty and administrators can no longer ignore the need to view students as consumers of educational services with specific needs and wants and corresponding satisfactions" (p. 29). This is mainly because the need for marketing in institutions of higher education is greater today due to factors such as decreased funding, increased program and service demands, and increased competition from other academic institutions. However, the "selling orientation" in higher education is "still prevalent today because institutions seem to focus on their own needs first and consider students only as an input to satisfying the institution's needs" (Shim & Morgan, 1990, p. 29).
There are several possible reasons for the lack of focus on customer satisfaction in higher education. One reason may be that the economic returns from improving customer satisfaction are not always immediately realized. Research suggests that because efforts to increase current customers' satisfaction primarily affect future behavior, the greater portion of economic returns from improving customer satisfaction also will be realized in subsequent periods (Anderson, Fornell & Lehmann, 1994).
Another reason for the lack of focus on customer satisfaction may be because the concept of service quality, although deemed important, has been difficult to define, measure, and maintain. Most researchers agree that service quality is an elusive and abstract construct that is difficult to define and measure (Cronin & Taylor, 1992; Carman, 1990). The customer's perception of service quality is not necessarily the same as the company's perception of its service quality, which is one reason it is difficult to measure. For many companies, quality is simply the absence of things gone wrong and is measured by looking at the production process (Gronroos, 1990). In the past, quality was defined in terms of measures associated with internal operations. However, companies are now beginning to realize that internally generated measures of quality often do not match customer perceptions of quality. Ultimately, it is the customer, not management, whose perceptions really count in the increasingly competitive marketplace. Customer satisfaction and the voice of the customer have become a new thrust of the quality movement.
Some marketing researchers have proposed that the benefits of increased customer satisfaction come in two basic forms: the improved ability of the firm to attract new customers, and the ability of the firm to maintain repeat customers (Rust, Zahorik, & Keiningham, 1995). Fornell (1992) suggests that the following benefits are associated with high customer satisfaction:
* Increased loyalty for current customers from competitive efforts;
* Lower costs of future transactions: a firm with high customer retention does not need to spend as much to acquire new customers each period;
* Reduced failure costs: high customer satisfaction reduces resources devoted to handling returns, reworking defective items and complaints;
* Lower costs of attracting new customers: because satisfied customers are more likely to engage in positive word of mouth and less likely to engage in damaging negative word of mouth;
* Reduced price elasticities: because satisfied customers are more willing to pay for the benefits they receive and are more likely to be tolerant of increases in price. …