Good service better than cost cutting
The Marketing Science Institute in America gave its 2002 Best Paper Award to Professors Roland Rust, Christine Moorman and Peter Dickson for their paper, "Getting Returns from Service Quality: Is the Conventional Wisdom Wrong?" (MSI Report No. 00-120). The Institute gives this award to research that is of lasting value to corporate marketing executives.
The paper provides empirical and theoretical evidence that efforts to promote cost cutting through efficiency improvements may conflict with efforts to build revenues through increasing customer satisfaction, and that a quality emphasis based on revenue expansion generally produces better financial and business results than a quality emphasis based on cost reduction. The research suggests that the positive financial and business effects of a market orientation can be subverted by too much concurrent emphasis on cost cutting. This paper provides scientific evidence that investing in increased customer satisfaction is better for the health of a business than cutting costs.