Why Value is More Important than Satisfaction

R. Eric Reidenbach, Ph.D. Reginald W. Goeke, Ed.D.

An MVS Position Paper

Central to the stated or postulated discipline of Six Sigma, as opposed to the current practice of the discipline, is the role and importance of the VOC (voice of the customer) in driving the application of Six Sigma principles and methodologies. For many practitioners within the Six Sigma community, that voice is based on the metrics of “customer satisfaction.” But is the conventional wisdom correct or, is it value – customer value -- that is the better voice to listen to? How can we reconcile these two concepts? Which is the proper voice of the customer?

Satisfaction versus Value: A Distinction of Importance

Let’s start with some definitions and properties of the two concepts. Value is the relationship or the interaction between the quality of a product or service and the price that the customer pays to obtain that product or service. In a simple example, one quality beer costing $1 is of greater value than the same beer costing $2. This is a cognitive calculus of the interaction between quality and price. It is a thinking evaluation. Most rational buyers would opt for the beer costing $1 – all other aspects of the beer being equal – thereby making a cognitive decision. In more complex situations, it is important to understand value from the point of view of the customer – one that encompasses all aspects of the quality side of the equation, from order to delivery of the product, including any service, repair, parts, or informational needs, as well as the price. However, the same premise holds. Customers evaluate the trade-off between the quality of the benefits they are acquiring and the price that they are paying for those benefits. The precise nature of this trade-off can be empirically modeled on the basis of those customer evaluations. Models of customer value have been generated within and across many industries, from consumer packaged goods to heavy earthmoving equipment, from serviced offices, to financial services to the generation and distribution of electricity.