Claes Fornell is the Donald C. Cook Professor of Business Administration and director of the National Quality Research Center at the University of Michigan, Ann Arbor. In 1994, the Swedish native developed the American Customer Satisfaction Index (ACSI), a quarterly indicator based on modeling of customer evaluations of the quality of goods and services purchased. He is the author of “The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference” (Palgrave Macmillan, 2007).

Q. How do you define customer satisfaction?

A. Customer satisfaction is actually a component of a number of things, but primarily two. One has to do with the general notion of expectations: Was the product or service worse or was it better than expected? Another one is the comparison with how things should be ideally: How far away or close [to ideal] is this product? So we measure those two and then we measure in general, considering all your expectations—all shopping and buying experiences—how satisfied are you? We take those three and we combine them in a mathematical formula to come up with a number.

Q. Is there a way to determine whether quality of goods or quality of service is more important to consumers?

A. It certainly differs depending on whether it's a product or a service company [being evaluated], but the quality of the product—meaning both the physical product and the service—is in almost all cases the primary driver, whereas price has much less to do with [satisfaction].

Q. So, generally, quality is more important to consumers?

A Yes, but there's something even more important and that is something we call “matching,” which is the recognition that customers are not the same, that they have different preferences, so the more you can customize your product [to individual desires] without having costs go up too much, the better off you are with respect to customer satisfaction.

Q. Looking at the list of limited-service restaurant brands ACSI tracks, McDonald's had the lowest satisfaction number but is inarguably the most-visited brand. What should we make of this?

A What we should make of it is that McDonald's doesn't need the same level of customer satisfaction that its competitors do. It's so big and available everywhere and it has low prices—not that it's lowest on everything. Smaller competitors, just to stay relatively competitive, need a higher level of customer satisfaction. McDonald's can do quite well with lower numbers.

Q. The ACSI has trended up for the last two years, although it dipped a little in the third quarter of 2007. Does that indicate that companies are doing a better job of satisfying customers or are customers more easily satisfied?

A. Overall, I think this means companies are doing a better job. Consumers are not fools: They're not going to expect too much or too little. Many [companies] get it wrong; they think “Oh, it's a matter of exceeding expectations” instead of meeting expectations. If you exceed expectations, you can do that once, maybe twice, but you can't keep doing that. You're going to drive your employees crazy. In the restaurant business, I think [the goal of exceeding expectations] is often believed. But it's foolish. Trying to increase expectations all the time is not really a smart strategy.

Q. The economic indicators are trending down. In a recessionary economy, is improving customer satisfaction even more important?

A. Yes, much more important. The reason is that in a recessionary economy, everybody has a difficult time, so then it's really about hanging on to the customers you have. Getting new customers is difficult, but it's easy to lose the ones you have. Everybody's fighting for them, and usually on price, so your focus should become defensive. The companies with highly satisfied customers do well—compared to others—in a recession.

Q. If I run a restaurant, what should I do this year to increase customer satisfaction as much as possible?

A. Providing value is certainly an important part, but what I would do is to try my hardest to retain my [best] employees and give them pep talks or whatever you need to do to make them understand that their jobs and the success of the company are going to be highly dependent on what they do and how they serve customers. The name of the game is to retain the customer base you have more than to grow and get more customers. And of course to not increase prices if you can avoid it.

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