Continuing to migrate answers away from Quora. This post was a response to the question, “Should customer satisfaction be maximized or optimized?” Original
I think this question boils down to the difference between two theories on the purpose of business in society: does business exist to serve the financial interests of it’s owners and investors or does it exist to satisfy a void in society?
Conventional theories suggest business exists to make a profit, though personally my views on that slightly differ. Do the best interests of business owners and customers compete with each other? In the short term, yes — and as such it makes sense to optimize the satisfaction of customers to a level that yields the greatest profit for the business. Though in the long term I think business interests very much align with customer interests and if a business exists because it believes in it’s product and believes it will benefit society it should maximize societal satisfaction to a point where the marginal benefit to society is zero, or in other words no further satisfaction can be attained without detracting from the satisfaction of other stakeholders.
The maximization of stakeholder satisfaction is what is key here. A business cannot operate successfully in the long term if it compromises the livelihood of its customer base. Nor can it sustain growth if it does not satisfy its investors. It can’t attract talented and innovative people if it doesn’t satisfy its employees. The idea of competing interests is a myth — maximizing benefit to all produces the greatest probability of sustained long-term success.
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