Higher prices and customer satisfaction are not mutually exclusive


—By Jenni Chase, editor, AutoGlass Magazine

With the cost of everything from gasoline to coffee to stamps on the rise, the thought of spending money on retail glass services may be less than appealing to many of today’s consumers. Let’s face it, it’s more fun to spend that economic stimulus check on a new TV than a shower door.

But before you lower prices in an attempt to attract customers, consider the following statement from the National Quality Research Center at the University of Michigan: “Quality plays a more important role in satisfying customers than price in almost all … industries. Price promotions can be an effective short-term approach to improving [customer] satisfaction, but price cutting is almost never sustainable in the long term.”

Companies that focus on quality tend to fare better over time in the American Customer Satisfaction Index than companies that focus on price, according to the research center.

And it’s OK to charge a premium for that quality service. Higher prices and customer satisfaction are not mutually exclusive.

Take supermarkets, for example. Food prices rose at twice the rate of overall inflation in 2007, yet customer satisfaction with supermarkets reached its highest level in 14 years, according to the most recent American Customer Satisfaction Index results.

On the flip side, low-price provider Wal-Mart saw customer satisfaction rates slip to an all-time low in fourth quarter 2007, trailing all other department and discount chains in the ACSI, said Professor Claes Fornell, NQRC director, in his fourth quarter commentary.

“With quality lagging, low price in town is not enough to keep Wal-Mart in the middle of the pack in customer satisfaction," Fornell says.

“As customer satisfaction improves, the demand curve shifts upward, making room for more pricing power," he explains. "It is not that higher prices lead to higher satisfaction, but higher satisfaction makes it possible to charge higher prices."

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