Research Summary

How to Manage Customers for Increased Profits and Customer Satisfaction

by Frances X. Frei


For many service firms, the customer plays an important role in contributing to the cost and/or quality of the service. This is very different than many manufacturing contexts, for example, where the firm has virtually complete control over product cost and quality. In these instances, firms need to design and manage customer involvement explicitly. By cultivating the appropriate environment, firms can harness customer efforts to the advantage of both the firm and customer. By not carefully managing this, however, firms can experience escalating costs in the face of eroding satisfaction.