How much dissatisfaction will customers tolerate?

Limit of tolerance to poor quality

Ideally, quality is naturally inherent in the product, in a way that dissatisfaction is simply never an issue. In the real world, however, organisations and their operating environments are dynamically complex. Everything that interacts has variability. The provision of a product or service will rely on hundreds, if not thousands, of small interactions in which unintended variability can creep in. It is utopian thinking that poor quality can never happen. At best, we can maintain variability at such a low level where our customer can easily tolerate the trivial/minor flaws.

I made the following observations some 20 years ago, while being responsible for a company’s quality management system. One my roles was to resolve and measure customer complaints, including compiling 3-monthly reports for management reviews. The particular company produces a complex mix of customisable products, for business-to-business trade, counting about 125,000 units yearly. The production generally operated well, when considering the inherent level of products and process complexity. We were rigorous in soliciting and recording anything that customers said they were unhappy about. Each 3-month period accumulated about 10-20 customer complaints.

Then, one day, a supply difficulty made the order fulfilment time slip from the normal 3 days to 5 days. At one stroke, we suddenly received hundreds of complaints about all manner of variability issues. The same issues would have existed in our products and services when the delivery time was normal, but they had only become a problem now that our delivery time had slipped. In the particular sector at the time there were 3 key competitors. In less than 2 weeks, some customers had become so unhappy that they defected to the competition. They only came back when their collective flight had overloaded the competitors, who eventually also ran into supply problems and started to mess-up on their delivery times. It still took a long time for conditions to normalise again and it proved a very costly experience. For some customers who felt let down, things in fact never again became what they used to be.

The hard lesson learned was that the relationship between quality and satisfaction is dynamic. There can be a fine line between ‘everything good’ and ‘everything bad’. While customers are overall satisfied and while they like the organisation’s people or brand, it can feel as if the organisation can do nothing wrong. Customers can tolerate a small amount of dissatisfiers. As soon as the organisation just once causes a dissatisfaction that peaks above the threshold, however, the tolerance can suddenly shift downwards to reveal a multitude of issues that no-one realised matter much.

The rate of threshold recovery is comparably slow and can risk becoming trapped in a self-perpetuating downwards spiral of dissatisfaction. It takes a long time, measured in months or years, for the limit to return to ‘normal’. Customers who abandon an organisation will usually only come back following a poor experience with the alternative provider organisation that they sought to use. Staying clear of the limit of tolerance threshold will therefore tend to naturally increase customer numbers over time.

It is important to proactively understand any form of perceived shortfall and not just wait for the formal complaints. This enables gauging the limit of customer tolerance to dissatisfiers. When we improve quality, or if our competitor does it, then customers come to expect the new capability and the limit naturally moves downwards. Continual quality improvement ensures that we keep up with expectations and do not suddenly get caught out by a moving threshold limit. If by improving our product we can instigate a downward shift in the threshold limit, while maintaining our own quality level well within it; and if this catches out our competitors, then we can in a relatively small step create a significant competitive advantage. Just beware, our competitor will be forced to respond and may in return do the same to us.

The customer limit of tolerance is never clear cut, but more of a grey area. It is therefore always worth investing a little extra effort on quality, to maintain certainty of a clear margin to where we perceive the limit to be. We would not want to take too much risk with quality, with attitudes such as: “Let’s cut a corner and hope nothing happens”, or “let’s send out the sub-standard production batch, because most customers won’t complain and we can always fix it for those who do”. Playing it too close to the limit of tolerance, and misjudging it, can have potentially catastrophic cost effects.

Note: The exact same tolerance threshold graph holds true for employee satisfaction. In kind of a similar way to its customers, an organisation is under a constant risk of switching off its employees. If this happens then it can result in a significant loss of performance and output, which it can take a long time to recover from.