The Road to Quality Management: Understanding Your Customers

In the exchange process an organisation offers a product or service and the customer offers a sum of money in return. The amount of money is nearly always determined by the organisation, and the customer must decide whether they think the product or service is worth what is being asked.

​The same is true when someone is offered a job. An organisation specifies an amount of money it is is prepared to pay to obtain that person’s services, perhaps after negotiation, and they must decide if they are willing to provide their services for that sum.

The assumption is that both the customer and the organisation value what the other has to offer. If they did not, then one or other would go elsewhere, if they could. The essence of the exchange is mutual value; there must be a belief on both sides that the exchange is fair and equitable.

If the customer does not perceive it as such, they are unlikely to take part in the exchange. It is also possible that a customer will take part in the exchange but decide later that it was not fair or of mutual value, in which case they will be unlikely to come back to the organisation in the future.

Customers need not give money to an organisation; instead they may provide time, skills or other resources. Volunteers can be seen as customers of a charity organisation. They may perhaps give their time to provide a service or lend their skills in organising a fundraising event. In some circumstances goods may be bartered rather than exchanged for money.

There is inevitably a tension in this exchange. The organisation will try to provide what the customer wants and values at the lowest cost to itself. It will not try to provide more than it needs to, as this will be likely to cost it more for no greater return.

If the customer will buy something without any extra features, there is little point in the organisation adding them. However, the customer will always look for better value, and if another organisation offers it, the customer may be encouraged to change supplier.

So an organisation must always try to keep the exchange balanced, but also make sure that the exchange it offers is better than any offered elsewhere. This idea of mutual value, or balance and equity, in the exchange is likely to lead to customer satisfaction and possible repeat purchases.

However, many organisations recognise that they may need to do more to encourage customers to buy from them on a regular basis. If your customers are internal and are obliged to use your services, you may think that this idea of an exchange does not apply to you. How often have you heard people at work complaining about the service offered by another department?

Often these conversations end with someone saying, ‘we'd be better off doing it ourselves’. The same principle of exchange is at work here. If you are not providing something of value, and your customers do not perceive that there is a fair exchange, they may look elsewhere.

If you work in a public sector or non-profit organisation, you may think that customers will continue to come to you and your organisation because they have no choice. However, the government, or whoever funds your service, may decide that you are not delivering what they want. They could choose to stop funding your service or pay some other organisation to provide it.

​Thus the principle of an exchange process remains valid: in this case it is between those who hold the resources and those who provide services that meet the needs the resource providers identify. ​