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THE CUSTOMER SERVICE SOLUTION
Managing Emotions, Trust, and Control to Win Your Customer's Business
By Sriram Dasu, Richard B. Chase
McGraw-Hill EducationCopyright © 2013 Sriram Dasu and Richard B. Chase
All rights reserved.
CUSTOMER SERVICE SOLUTIONS LEVERAGING CUSTOMER PSYCHOLOGY TO DESIGN SERVICE OPERATIONS
I know what I have given you. I do not know what you have received. —Antonio Porchia, Voces
Many service firms advocate the mantra TLC—think like a customer—in designing their service interactions. The problem is that they don't have a good handle on how customers really do think and as a result miss opportunities to become truly excellent. Indeed, while most successful service companies address the obvious things that affect customers' psychological attitude toward the service, such as courtesy and responsiveness on the part of their employees, they could do much more if they understood customer psychology at a deeper level.
The developed world's economies are dominated by service firms. This has come about not because of their excellence, but rather through a combination of market demand and creative development of new services. While the technologies that underlie service have evolved at a rapid rate, the approaches to designing and managing how the customer experiences the everyday delivery of service remain almost primitive.
Typical approaches to improving the service experience include analyzing customer satisfaction surveys, engaging in mystery shopping, and conducting focus group feedback sessions. These are all good, of course, but unfortunately customers cannot always articulate what shapes their perceptions and judgments, nor can company experts read between the lines to find out what drives customers. The result is often disappointing levels of customer satisfaction in general, even for companies that by all the standard criteria seem to be doing things right.
IMPLICIT OUTCOMES ARE IMPORTANT FOR YOUR CUSTOMERS
The first step in raising customer experience levels is recognizing the importance of implicit outcomes from a service encounter. The focus of service organizations is often on explicit outcomes, such as on-time flight arrivals or the time to resolve a customer's call. However, subjective or implicit outcomes, like emotions and feelings generated by a service encounter, are rarely considered. Did the passenger walk out of the airport happy? Did the customer trust the advice received by the service agent? Does the patient feel motivated enough to comply with the doctor's recommendation? At the end of the baseball season, is the fan sufficiently excited to renew her season tickets? When an accident victim calls his automobile insurance agent, does he feel more in control of his life?
A common assumption is that as long as the explicit outcomes are well managed, the customer experience will be great. Consider the following examples:
Think about two rounds of golf in which your overall score is par. In one round on the eighteenth hole you shoot a double bogey, and in the other round you shoot a birdie. The outcome was the same, but wouldn't how you feel at the end, what you would recall about each experience, and how you summarize these experiences be very different?
Jim and Mary are two longtime customers of a catalog retailer. The last purchase made by Jim was a bad experience, while Mary's was unremarkable. The next time Jim and Mary call the retailer, would they be paying attention to the same elements of the conversation?
At the core of our idea is that similar service encounters with identical explicit outcomes can be perceived very differently.
TYPES OF KNOWLEDGE NEEDED FOR DELIVERING IMPLICIT OUTCOMES
Explanations abound for why the delivery of service has not really moved beyond explicit outcomes. The most common explanation is that service encounters are intangible and that people-intensive processes are inherently unpredictable and hence uncontrollable. Thus by extension they are "undesignable." This view has been accepted and abetted by management books and articles that discuss service management as an art. Our current system of service delivery also has been allowed to prevail because a few exemplars have excelled at creating positive service cultures: friendliness and helpfulness at Apple Stores, the "everybody is a cast member" joyfulness of Disneyland, and the "ladies and gentlemen serve ladies and gentlemen" decorum of Ritz Carlton.
We hasten to point out that this cultural imprinting is no mean feat. Rather it is the bedrock of any effective service business. Unfortunately, most service executives don't recognize that what has been seen up to this point as the entire service experience is merely the platform, the necessary context for handling behavioral aspects of service. Getting to the next level calls for an understanding of service interactions that matches in depth and rigor the underlying goods production, or in the service sector, something akin to a medical procedure.
Carefully reengineering processes using techniques such as Six Sigma and lean enables firms to improve explicit outcomes and reduce costs. In other words, firms can achieve better quality at a lower cost. Those of us who have been in the quality business for many years no doubt recall the phrase "quality is free." Just as deeper understanding of systems dynamics and process analysis forms the bedrock of traditional process engineering techniques, findings from behavioral decision making, cognitive psychology, and social psychology can point service providers to ideas for redesigning the psychological or implicit aspects of service encounters.
Fortunately, we don't have to start from scratch. We have a virtual treasure trove of behavioral research findings. In this book we take these findings and for the first time discuss how firms can apply them systematically to the design and management of service processes.
The flavor of what we are talking about is captured in the following example. Danielle, a pediatric dental hygienist, has almost finished cleaning Spencer's teeth. Spencer is a skittish six-year-old who suffers from a mild form of gingivitis and has several cavities. He is a frequent visitor to the clinic. Danielle suddenly finds that she has scraped a particularly sensitive spot. She still needs to clean two more teeth, which she is sure are not as sensitive. She could either terminate the procedure and resume on the next visit or complete the cleaning today. If she were to continue, she would subject Spencer to more discomfort, although significantly less than what just transpired.
In addition to medical concerns, there are other factors Danielle must consider in making her decision. How will this decision influence Spencer's perception of the cleaning experience and his behavior on subsequent visits? Wouldn't continuing increase the total pain and therefore render the experience even more unpleasant?
Findings in behavioral research suggest that continuing the procedure at lower levels of pain may actually cause people to have a less negative recall of the experience. In this case, Spencer would remember the little incident, of course, but also that the pain "wasn't so bad at the end." If Danielle applies these counterintuitive findings in behavioral science to shape the service encounter—lengthen the experience and end with less pain—she will improve Spencer's perception of the appointment.
This brings us to the issue of why understanding customer psychology helps managers deliver better service. First it helps them understand what shapes customers' perceptions and how customers summarize and recall experiences. As we see in the example above, customers employ heuristics and rules that they cannot always articulate. Second, in other cases the feelings and emotions that drive a customer's perceptions might be obvious if the firm had processes in place to detect them. Take for instance the example of Jim and Mary, who had different prior experiences with a catalog retailer. If the customer representatives were aware of the caller's history, they could adapt their responses accordingly. This could make a difference to Jim in particular because his previous call did not go well. Even the customer service agent will benefit if he or she knew before answering the call that Jim may be angry or annoyed. The third reason is that managing service interactions can be very complex because of the large number of employees involved in delivering a service or because there are seemingly too many factors that may shape the implicit outputs. MGM Grand and Farmers Insurance each employs tens of thousands of employees, and these employees interact with millions of customers in a wide variety of situations. In other settings, such as healthcare, the customer often enters the system highly flustered with a complex set of emotions. The employees are trained to focus on taking care of the explicit concerns, in this case health-related issues, and may not have the skills, knowledge, or motivation to address the implicit concerns, such as the anxiety and stress of the customer.
The purpose of this book is to identify the rules that customers employ to summarize experiences—the factors that shape their perceptions—and present methods for systematically designing service processes to deliver implicit outcomes. We accomplish this by leveraging findings in social sciences, cognitive sciences, and behavioral decision making.
PARSING THE SERVICE ENCOUNTER
A service encounter consists of a customer interacting with an organization for the purpose of achieving some goal. The interaction may be either face-to-face or through telecommunications. It could be a single interaction, such as buying an airline ticket, or one of a series of interactions that is required to complete the service, such as airline check-in, flying, retrieving luggage, and so on. Encounters also occur over extended periods of time, such as multiple visits with a real estate agent when people are buying a new home or meetings with an obstetrician during various stages of a woman's pregnancy.
The issue is how to improve such encounters. A major inhibitor to achieving this goal is the lack of precision in scientifically defining the fundamental elements that take place during the encounter. The problem lies in the word service itself. It is a blanket term that means different things to different people. If we say we had great service at a bank, it doesn't tell us what was great about it. Usually it is a combination of things working well together, but without further analysis, the term service fails to make the important distinction between the work required to provide the service and the attitudes of service personnel who deliver it. To address this problem, as well as others surrounding services, we need to do what every other science does: establish operational definitions that permit focused analysis of cause and effect. A useful such categorization is the three Ts (see box).
IT IS ALL ABOUT YOUR CUSTOMERS' PERCEPTIONS
Ultimately what matters is how customers perceive a service encounter. Each service consists of a core task. How this task is executed shapes our perceptions of the encounter. We want to reemphasize that the core task can almost always be accomplished in multiple ways and that the perceived experience can be very different from customer to customer. In the foregoing example, Danielle could have achieved the same medical outcome in a number of ways. She could have, for example, deferred the most painful part of the procedure to the end, assuming that she could let the child go immediately after. But whatever her choice, it would have had considerable bearing on little Spencer's perceptions of the experience. Even though it doesn't seem like extending pain would be better for the customer, this is just another nonintuitive rule for summarizing experiences.
Obviously positive recollections of past experiences encourage customers to come back. Therefore, the more managers understand the science behind how we evaluate experiences, why we attribute blame or credit, and how memories are created and recalled, the better they know what constitutes a positive experience and the more effective a job they can do in the design and management of service encounters. In the design area, for example, such knowledge is useful for planning the number of stages of the service, the sequence in which events occur, the duration of the events, the frequency of "touching" customers as service unfolds, the types of information shared, the nature of the interpersonal interaction, the layout of service facilities, and the technology requirements. In the management area, this knowledge, coupled with behavioral findings on communication and culture, can help managers with staff selection and training.
FACTORS THAT SHAPE YOUR CUSTOMERS' PERCEPTIONS
We have identified six closely interrelated factors that shape perceptions. The first is the sequence in which the events unfold; the second is the duration of different events and our perception of time; and the third is the degree of control and choice given to the customer. These first three factors can be directly incorporated into the design of the service system. These influence the next three factors, trust, emotions, and the attribution of blame or credit for a bad or good experience (see Figure 1.1).
Often the customer and server have to work together to create the output. What each player observes and how he or she reacts and cooperates depend on the degree of trust they have in each other and on their emotional states. The outcome of each event in turn influences trust and emotions. These two factors can be thought of as platforms on which the service encounter takes place.
Once the service is completed, customers attribute success or failure. The final factor we explore is the heuristics used by consumers to lay blame or give credit.
Factor 1: Sequence of Events
All service experiences consist of series of events that occur over time. The tendency of laypeople is to focus on a strong start and assume that things will subsequently take care of themselves. At the other extreme we have service folklore that suggests that every minute is significant. Neither belief is accurate. In fact, a few pivotal moments have a disproportionately large bearing on how we summarize and recall an experience; one of those pivotal moments, as we have seen above, is the end of the transaction.
To illustrate this idea, consider a 7-hour drive from San Francisco to Los Angeles, during which the first 45 minutes are in stop-and-go traffic and the rest of the journey is at the speed limit. Compare this to another 7-hour journey between the same cities, during which only the last 45 minutes are in stop-and-go traffic. Are the two journeys perceived the same way? The person hitting traffic at the end of the journey will likely have stronger memories of the negatives of the trip, while the person who got the pain out of the way first will come away with stronger feelings that the overall trip went well because it ended well.
Does this mean the start does not matter? Take, for example, a third 7-hour trip from San Francisco to Los Angeles that begins with 25 minutes of bad traffic, the middle of the journey at the speed limit, and the last 20 minutes of bad traffic again. The initial 25 minutes set the precedent for the traveler to possibly add stronger negative feelings to the traffic at the end of the trip.
The main point is that the sequence in which events unfold and the key moments such as highs, lows, and endings have a bearing on how we perceive an experience. We find that managers rarely pay attention to the sequence effects, in particular the role of the ending. In the chapter on sequence effects, we delve into the following questions:
How can firms alter the sequence of events to improve perceptions of an experience?
Does the sequence effect apply to all types of services, including grocery stores, retail banking, rock concerts, and obstetrics? Or is it only limited to some types of services?
How important is a peak event? Should firms ensure that all moments are equally good, or is it optimal to invest in a unique highlight?
Factor 2: Duration of Experiences
Time is an integral part of any service, and service managers do worry about duration. Much of traditional process improvement efforts are directed at reducing processing and waiting times. Nevertheless, waiting is unavoidable. Not every chore can be done instantly, and all good things do come to an end. This brings us to perception of time. To illustrate the psychology of time, consider two situations. In the first, you wait 20 minutes for a radiology report, and then have to wait another 20 minutes for a blood analysis report. So you experience a combined wait of 40 minutes for both reports. The two situations would likely generate different levels of dissatisfaction. Further, how would your perception of time be affected if patients who arrived after you were served before you?
Excerpted from THE CUSTOMER SERVICE SOLUTION by Sriram Dasu, Richard B. Chase. Copyright © 2013 Sriram Dasu and Richard B. Chase. Excerpted by permission of McGraw-Hill Education.
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