Customer Expectations

Updated on March 26, 2024
Article byRutan Bhattacharyya
Edited byRutan Bhattacharyya
Reviewed byDheeraj Vaidya, CFA, FRM

What Are Customer Expectations?

Customer expectations refer to a set of actions or behaviors consumers predict when interacting with a business. The ability to fulfill such expectations directly influences a business’s sustainability and success. This, in turn, builds trust and ensures customers will return to make a purchase or avail of a service.

Customer Expectations

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When a business does not succeed in meeting a customer’s expectations, the latter often looks for competitors who will. In fact, customers might not return after a single negative experience. This means businesses typically have one chance to leave a positive impression. Such expectations are of different types, like implicit and explicit.

Key Takeaways

  • Customer expectations refer to the assumptions of customers before, when, or after they buy something from the organization. Fulfilling such expectations is vital for any business to retain customers and be successful over the long term.  
  • There are five kinds of these expectations. They are implicit, explicit, digital, interpersonal, and dynamic performance. 
  • Fulfilling such expectations can help businesses drive business growth, get a competitive advantage, increase brand loyalty, and improve long-term sales and profits. 
  • A noteworthy way of exceeding the expectations of customers for businesses is by training all employees to ensure they serve customers better.

Customer Expectations Explained

Customer expectations refer to an accumulation of behaviors anticipated by customers from any business during every interaction. Generally, customers’ previous experiences form the basis of such expectations. Meeting such expectations is essential for a business to become successful. If a business cannot fulfill them, they fail to retain the customers. This inevitably results in reduced sales and a negative impact on the overall operations over the long term.

Moreover, failure to meet expectations can also affect a brand’s reputation, as consumers are likely to share their negative experiences with family members and friends. Over time, accumulating negative opinions and reviews damages the brand image, making it challenging for a business to gain new customers.

Some key factors influencing the expectations are as follows:

  • Price: The price of services and products usually sets the bar for expectations. The higher the price, the higher the expectations.
  • Service Or Product Quality: It refers to the performance level that a business’s customers expect from the organization on the basis of their previous experience with its services or products.
  • Brand Reputation: This refers to how customers perceive the brand based on individuals’ opinions of it and any past experiences.
  • Customer knowledge: It refers to the knowledge customers have regarding a business. They utilize this knowledge to make predictions regarding what it is offering.
  • External Communications: A customer may form expectations regarding a business based on how it communicates to them. There might be different communication methods, for example, blog posts, online reviews, etc.

By comprehending and fulfilling the expectations, organizations are able to stand out in the market and form longstanding customer relationships. Moreover, by prioritizing the expectations of customers, organizations can adapt to the changing requirements and stay relevant in a competitive market.

Types

The expectations of customers can be of different types. Let us look at them in detail.

  • Implicit: Implicit expectations are customers’ basic assumptions regarding a service, product, or business. People do not define such expectations consciously. Generally, the assumptions are based on what people have heard regarding the brand from their friends or family or what they read about the organization before interacting.
  • Explicit: These expectations are easily understood and clearly stated desires. Customers explicitly communicate their requirements, for example, a certain feature, product, service, or delivery period at the time of interaction with the business. Past experiences with the business might also form the basis of such expectations.
  • Dynamic Performance: These expectations are assumptions that change as customers have more interactions with a business or make more purchases from the organization. Usually, such expectations depend on the changes taking place in the market or business environment and how the peers are making improvements to their offerings.
  • Interpersonal: These expectations or assumptions revolve around how customers anticipate that a business will treat them during any interaction. This may include active listening, courteous behavior, and empathy from a customer service executive.
  • Digital: These expectations are customers’ assumptions when they interact with any organization online through the business’s website, social media channels, mobile-based applications, etc. Note that they expect a website to be user-friendly and offer transaction security.

How To Meet?

Businesses can implement the following strategies for customer expectation management:

  • Know The Audience: Businesses must identify their target audience first and learn about their interests, requirements, and factors impacting their buying decisions. This requires organizations to go beyond the basic demographic details, such as gender, age, and location.
  • Ensure Exposure To The Right Buyers: After conducting market research, a business needs to understand how it can reach its target audience and do what is necessary to have exposure to the right consumers.
  • Set Clearly-Defined Standards: Since a business’ team members have a vital role in fulfilling expectations, an organization needs to hire and train support agents efficiently, and they can do so by setting clear standards.
  • Adopt A Customer-Centric Approach: The most vital thing to do to meet the expectations of clients is to establish a customer-focused culture. In other words, businesses must encourage employees to keep all customers at the center of all decisions.
  • Accumulate Customer Feedback: Another way to meet expectations is by collecting feedback regularly and making the necessary changes to ensure customer satisfaction or an improved customer experience.
  • Assess Competitors: If customers have purchased similar products from another brand, they will most likely compare the two organizations. The only way an organization can find out whether it is being able to meet the expectations is by spending time evaluating the competitors.
  • Transparency: Lastly, businesses must be transparent to ensure efficient customer expectation management.

How To Exceed?

Let us look at various ways to exceed the expectations of customers.

  • Anticipate and figure out the requirements of the customers.
  • Ask questions and listen to what customers have to say
  • Make an apology if something goes wrong
  • Remember to give the unanticipated and more than what customers expect
  • Ensure that team members are appreciative and polite
  • Fulfill customers’ requests if they are reasonable
  • Personalize products and services to build a connection with customers
  • Train employees to serve every customer better
  • Highlight the best product feature multiple times

Examples

Let us look at a few customer experience examples to understand the concept better.

Example #1

Suppose a t-shirt manufacturer, Company XYZ, promotes its products through different social media platforms. The advertisements highlight features like premium fabric, long-lasting prints, etc. Hence, before interacting with the business, customers assume that the products are of high quality.

However, after using it for a few days, the products turn out to be ordinary and not worth the price. As a result, the business fails to meet customer expectations. This negatively impacts the organization’s reputation and affects its sales and profits.

Example #2

According to a study conducted by Red Hat, the IBM Institute for Business Value and Banking Industry Architecture Network or BIAN, there are significant gaps between surveyed banking executives’ stated priorities and their customers. It reveals that banks are now facing various challenges with the big tech fins and other non-conventional competitors setting new standards concerning customer expectations.

Moreover, these competitors are looking to strengthen their relationships with customers as the regulators keep pushing to introduce pen banking standards in an attempt to drive competition and establish a level playing field.

Importance

Individuals can understand the importance of the expectations of customers by going through the following points.

  • A key advantage of meeting customer expectations is that it improves brand loyalty.
  • The anticipated behavior and actions of a company directly influence product sales. Hence, if a business can fulfill the expectations of its customers consistently, it can improve its product profits and fulfill sales goals.
  • When expectations are met, customers recommend the products and services to others. This enables the organization to gain a competitive edge in the market.
  • Meeting customers’ expectations allows businesses to build trust and increase client retention.
  • Meeting the expectations leads to an emotional connection between the business and the customers. This leads to longstanding customer relationships and improved lifetime customer lifetime value (CLV).
  • Lastly, consistently meeting customer expectations results in business growth over the long term. This is because loyal customers and word-of-mouth marketing contribute towards a strong market position and stable client base.

Frequently Asked Questions (FAQs)

1. What is the difference between customer expectations and perceptions?

The expectations refer to beliefs or assumptions concerning service delivery that function as the reference point or standards against which the organization’s performance is judged. On the other hand, customers form their perceptions when evaluating the product’s equality.

2. How have customer expectations shifted?

In the last few years, expectations have been subject to significant shifts. This is because of different factors, for example, changing social dynamics, technological advancements, and changing market trends. Customers now assume to have personalized experiences for their specific preferences and requirements.

3. How customer expectations are related to customer satisfaction?

People have specific expectations when they interact, for example, make a purchase from a business. If the business fails to meet these expectations, customers will not want to make another purchase from the organization in the future. Hence, businesses must know clearly what customers’ requirements are.

4. How does Tesco meet customer expectations?

Tesco PLC builds mutually beneficial, close relationships with its supplier partners. This allows them to procure the best possible products that can fulfill customers’ requirements and expectations. Moreover, the organization understands the needs of its customers first to serve them better.

This article has been a guide to what are Customer Expectations. We explain its examples, how to exceed it, types, how to meet it, and importance. You may also find some useful articles here –

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