Keep 'Em Happy

That's because in the services sector, IT applications let businesses better understand customer needs and provide flexibility in business processes for adapting to individual customers' needs, the researchers say. For instance, hotels use IT systems to track guest predilections so they can fashion new offerings to please customers. Manufacturers, on the other hand, make IT investments mostly to streamline back-end business processes, which aren't visible to customers. And product quality influences consumers' satisfaction, regardless of the quality of those IT systems.

In the later period, overinvestment in IT capital equipment may have contributed to a slide in customer satisfaction in both services and manufacturing. At the height of the dot-com delirium, in 1999 and 2000, companies increased their overall IT investment as a percentage of sales by 57%, compared with the earlier period. But customer satisfaction actually fell 0.35% among services companies and 1.46% among manufacturers. The general decline, Krishnan suspects, may have resulted from the fact that during the Internet boom, services and manufacturing companies alike may have overemphasized IT purchases, acquiring enterprise resource planning and customer-relationship management systems that didn't easily conform to existing business processes that served customers well in previous years.

It takes a thorough understanding of a business and its clients to know how IT can be used to enhance the customer experience, says Rob Carter, CIO and executive VP at FedEx Corp. There's a high degree of collaboration among the CEO, CIO, and marketing chief at FedEx, which aims to use IT to provide seamless integration to customers across various services. FedEx recently expanded its Insight package-tracking service and has found that customers enrolled in Insight are one-third less likely than a control group to switch to a competitor, Carter says. "We believe IT investments directly impact customer satisfaction and service," he says.

Paper-form manufacturer and document-technology provider Standard Register Co. also focuses on giving customers the service they need. The IT department has deployed a Siebel Systems Inc. CRM system that lets salespeople route customer requests for form redesigns directly to available designers. "This makes us more responsive to the customer, so customer satisfaction should be much better," CIO Doug Patterson says.

As IT employees' treks to Southwest's call center show, the airline is committed to understanding customers' concerns before running the risk of investing in technology that doesn't address them. Southwest hasn't even set up a system to accept E-mail from passengers, because messages could be lost or misdirected, says Melanie Stillings, a manager of interactive marketing at the airline. It prefers that customers phone service reps who can personally address the issues. "We're very leery of automating customer service," Stillings says. "We don't want to jeopardize our customer service."

Another example: Some customers tell Southwest they'd like to book flights and check status from wireless devices, but the airline hasn't yet seen a big demand for such a service. So it's staying more focused on keeping customers happy by ensuring that flights arrive on schedule. "Why should we build a technology to tell customers their flights are on time when they already know that?" Stillings says.

Fair enough, the Michigan researchers might say. Having IT personnel who understand what customers want, and then developing systems to meet those needs, is what makes for more satisfied customers. As Krishnan says, "IT has the potential to enhance the customer experience when implemented correctly."