What You Need to Know about the Impact of Service Crises

Service crises and their impact on companies

Extreme and massive service failures. They are probably the worst nightmare for any service provider. Such crises have a profound impact on customers as the service they seek becomes simply unavailable. The scope of the problems – thousands, to even hundreds of thousands, of customers being hit at the same time – assures wide-scale media attention, damaging the reputation of the company even more. Vivid examples of such failures include JetBlue’s Valentine’s Day crisis in 2007, when over 130,000 customers got stranded; or the BlackBerry service failures in 2011 and 2012, when Blackberry owners around the globe could not access the Internet or their emails for several days in a row.

Whereas a traditional product-harm crisis still offers the possibility to trace the batches of defective goods and engage in recall actions, a mass service crisis does not have this option. All users are experiencing service failure at the same time. This drop in objective service performance (OSP) has an immediate and strong negative impact on the perceived service quality (PSQ). However, it may take much more time for companies to restore their customers’ satisfaction.


Losses loom larger and last longer than gains

We studied the impact of mass service crises on the perceived service quality for a major European public transport provider. During the observation period, the company experienced several service crises caused by extreme winter weather, which was unprecedented in the recent past.

Consistent with the argument of the Nobel Prize winners Daniel Kahneman and Amos Tversky, we find that negative experiences – drops in service performance – have a much stronger negative impact on perceived service quality compared to improvements in service performance. However, our results also show that the detrimental impact of such crises goes beyond a stronger immediate negative impact. What is even worse for companies is the fact that this negative impact also lasts longer. Losses not only loom larger than gains, but they also linger. Any improvements in objective service performance will only have a short-lived effect on perceived service performance, whereas deteriorations in objective service performance will have a lasting negative effect on perceived service performance.


The role of history

The ultimate impact of a mass service crisis may depend on the history of a company’s service performance. Customers can be more forgiving if the company has a good track record. On the other hand, an unexpected crisis may be of such an extreme disconfirmation of their (high) expectations that it can result in extreme anger. On the other hand, when the company has a history of bad service, customers may already have become cynical. A new crisis would not add any new information: the company is simply living up to the (low) expectations. But it may also become the final drop for these customers, infuriating them even more.

Our results show that, in case of a “business-as-usual” scenario with a relatively stable service performance, the following picture will emerge: improvements will have short-lived positive effects, and deteriorations will have lasting negative effects. In case of “sustained gains”, an upward spiral of ever better service, a new improvement will result in lasting positive effects (customer delight: the customer gets an even better performance than expected), but a sudden deterioration will have a strong lasting negative effect (extreme negative disconfirmation). When the company is already in a downward spiral (“sustained losses”), an additional deterioration will not have much effect anymore; the damage has already been done. A sudden improvement, on the other hand, will not add much either.

So, what to do?

Even though service companies would love to avoid such mass service crises, they often have little real power to do so, no matter how well prepared the companies are. Restoring the customers’ appreciation of the service quality to the pre-crisis level can only be attained by a continued service performance at a higher than pre-crisis level. A crisis will raise the bar for the future, and improving once is not enough. The customer needs to see that the company succeeds consistently in providing a better service. This is all the more important for companies with a good track record who suddenly face a crisis. Such crisis is an extreme deviation of what customers are used to, and has a strong detrimental effect. Getting back to the old pattern of good and significantly better service is crucial. A silver lining is that when one is already in a downward spiral, an additional negative experience will not further decrease the customers’ judgements in the long term.


In sum, companies should focus on a stable (and good) service performance level. Such performance level has the best outcomes for customers’ service assessment, and takes much less effort compared to constant adjustments needed in response to peaks and troughs in service performance. A good and stable performance, in turn, is a strong argument for companies in their communication to customers, as it may engender favorable perceptions of the service quality.

This post is based on the article “Losses Loom Longer Than Gains. Modeling the Impact of Service Crises on Perceived Service Quality over Time” which is co-authored by Maarten Gijsenberg (University of Groningen, The Netherlands), Harald van Heerde (Massey University, New Zealand) and Peter Verhoef (University of Groningen, The Netherlands). It is published in the Journal of Marketing Research (Volume 52, Issue 5, October 2015; ).


MJ Gijsenberg PictureMaarten J. Gijsenberg is Associate Professor of Marketing at the University of Groningen, the Netherlands. He holds an MSc in business engineering, and a PhD in marketing (both from the University of Leuven, Belgium).

His research focusses on the econometric modelling of marketing decisions (timing and size of investments, targeting of actions) and their effectiveness, with special attention to the over-time dynamics of the latter (due to e.g. the impact of both macro-economic and firm-specific crises on consumers’ behavior), and main focus on advertising. His work has been published in the Journal of Marketing Research and the International Journal of Research in Marketing.

He was second runner-up of the 2010 EMAC McKinsey Marketing Dissertation Award, and his research has also been awarded with a Marie Curie Fellowship of the European Commission. Recently, his paper on advertising effectiveness around major sports events was selected by the Marketing Science Institute as one of the “2014 Must-Read Articles for Marketers”.

2015 Compete Through Service Symposium: Recap in Pictures

Thank you everyone who attended Compete Through Service Symposium this year!  You made it another great event!

Mark your calendars for the next year’s Symposium, which will take place on October 26-28th, 2016. We look forward to seeing you there!


Leading a Culture of Service

By: Christine McHugh

My experience in customer service started in middle school, working for my grandparents at their retail gift shop.  Subsequently, a stint as a restaurant hostess and then a receptionist at a hair salon led me to managing a chain of espresso carts in Seattle where I enjoyed making coffee and talking with customers.

When I began to look for another job that provided health insurance, Starbucks was suggested given their reputation as an employer and my background in coffee.  I was hired as a barista 26 years ago when we had just 36 stores.

As a new Starbucks partner (employee), I went through extensive training on product quality, preparation and, of course, customer service.  When I was promoted into management, I received additional training on what it meant to be a customer service leader.  We had mantras like “if you’re not helping a customer, help someone who is”.

Fast forward to present day – I‘m now responsible for customer service at one of the most admired companies in the world.  And while we are often noted for great service, we do not consistently make decisions that protect and enhance the connections our baristas make with customers.

I’ve come to realize that creating a culture of service and leading a culture of service requires a constant focus, organizationally and behaviorally. Organizationally, every decision needs to be scrutinized as to whether or not it elevates the customer experience.  This requires a tremendous amount of cross-functional effort and influencing but also prioritization to focus on what matters most.

Behaviorally, employees must have clear expectations about what service looks like, accountability to those expectations, and celebration when those expectations are achieved.  For an organization and/or leader to really instill a culture of service, four practices need to be in place:

  1. Hiring for a service mentality
  2. Training and setting expectations for service
  3. Creating an environment of service
  4. Growing your business by looking at ways to analyze and improve your service

These four things are not rocket science and they are probably on the priority lists of many organizations but instilling them in the culture is the real challenge.

Hiring for Service

Do you only hire people who can connect in a genuine way?  How do you assess that?  Do they look at things from the customer’s perspective? This should be the first filter in assessing talent, not experience, not availability, not references.  If you don’t feel that a prospective employee can connect with customers, has a desire to understand customers or has a true genuine desire to serve others, then don’t hire them.

Training and Setting Expectations

Does your training plan focus specifically on customer service?  This is so critical because initial training signals what’s important and what’s expected.  Ongoing training investments reinforce concepts and develop new skills.  As a leader, you also need to show that you care about customers by demonstrating how to connect with them and telling your customer stories often.  By modeling service, you are showing what’s expected.

Creating the Environment

People want to work in a fun supportive environment, with each other and with customers. How do you recognize and celebrate customer service behaviors?  Do your customers get involved in recognizing and celebrating your employees for great service? Conversely, when service does not meet expectations, is swift coaching and action taken?

Analyzing and Improving

You probably have a lot of data available to measure the customer experience such as surveys, sales reports and research. This is valuable information but should not be taken on its own.  Analyzing and improving service also requires talking with customers and observing interactions between employees and customers.   Being solely reliant on data and metrics is a limiting perspective of the customer’s experience.

Leading a culture of service means alignment across the organization that customers and their experiences are the imperative.  Having the supporting systems, tools and expectations reinforce that alignment helps everyone understand what matters most –customers.


Headshot_ChristineMcHughChristine McHugh is currently vice president, Customer Service and Operations Services.  Christine oversees the company customer service strategy including the programs and philosophies for our retail stores.  Her team is also responsible for operational planning and implementation of all other company programs and initiatives that are deployed to our to our retail stores in the U.S. and Canada.  Prior to her current role, she was on an 18-month assignment reporting to a member of the senior leadership team to develop and deploy the Starbucks 2014 Global Leadership Conference for 2,000 district managers from around the world.  Previously, she was the vice president, Global Business Optimization, where she was responsible for the company labor investment strategy, work and process improvement using Lean principles and functional store design and engineering.  Christine joined Starbucks in 1989 as a barista and has held a variety of roles during her tenure in the organization including operations, licensed business development, foodservice sales, office coffee, human resources and learning and development.   

Christine is a graduate of Antioch University where she majored in Leadership and Organizational Studies. 

Join the Center for Services Leadership at Compete Through Services Symposium on November 5th, 2015, to hear Christine McHugh, Starbucks speak on Customers at our Core – Leading a Culture of Service.

Capitalize on Annual Planning to Manage Customers as Assets

By: Jeanne BlissAnnual planning customer centered goals

Over the last ten years I’ve become convinced that annual planning is the Achilles’ heel of customer experience. It is at the root of what inhibits the most efficient investment on priority investments in customer driven growth. That is because annual planning usually starts with the silos, not the customer asset, and not the customer journey.

  • Without a one-company review of the customer asset and experience, your company continues to focus only on business outcomes. You stand still regarding customer asset growth without knowing exactly why.
  • Without common accountability targets, actions will continue to be planned tactically, based on the individual annual plans of the silos.

As a result, the customer experience becomes the defaulted outcome of every silo’s budget and projects they plan to spend that money.

Rarely is there a decision making lens in place to identify and drive investment in the most important customer experiences. Companies need an ongoing roadmap to define where they want to make progress in customer profitability, customer loyalty, and customer experience delivery.

Your annual planning customer-centered goals should include:
  • Know volume and value of lost customers and volume and value of new customers required to drive incremental growth.
  • Identify priority customer experiences driving customers out the door.
  • Move customers from one level of engagement to the next.

Join the Center for Services Leadership at Compete Through Services Symposium on November 5th, 2015, to hear me speak on how to Grow Your Business By Improving Customer’s Lives. You will also receive a complimentary copy of my new book CHIEF CUSTOMER OFFICER 2.0: HOW TO BUILD YOUR CUSTOMER-DRIVEN GROWTH ENGINE. See you there!

Republished with author’s permission from original post.


twitterlinkedinJeanne Bliss is the Founder and President of CustomerBliss, and the Co-Founder of The Customer Experience Professionals Association. She is one of the foremost experts on customer-centric leadership and the role of the Chief Customer Officer. A consultant and thought leader, Jeanne Bliss guides C-Suite and Chief Customer Officer clients around the world toward earning the right to business growth and prosperity, by improving customers’ lives. Jeanne Bliss pioneered the role of the Chief Customer Officer, holding the first ever CCO role at Lands’ End, Microsoft, Coldwell Banker and Allstate Corporations. Reporting to each company’s CEO, she moved the customer to the strategic agenda, redirecting priorities to create transformational changes to each brands’ customer experience. She has driven achievement of 95 percent loyalty rates, improving customer experiences across 50,000-person organizations. Jeanne is a highly sought after speaker, keynoting high profile conferences and corporate events. She has spoken for speaking clients such as Intuit, Pella Windows, Staples, Activision, MetLife, Zappos, and AARP, and has appeared in major media outlets such as Fast Company, Forbes, MSNBC, The Associated Press and The Conference Board.

Analytics in Services: Actions versus Talk

The INSIGHT Group / CSL CTS Symposium Survey Panel

Ed Petrozelli - The INSIGHT Group

By Ed Petrozelli

By all accounts, the use of big data and analytics is exploding. Ironically, relatively little hard analysis has been done to assess exactly how it is being applied, and to what effect – especially as it relates to services. So, as has been observed by others, we are left to ponder the balance between talk and action.

Internal Focus

Much of the conversation has been centered on applying analytics to an organization’s internal operations in order to increase efficiency and reduce risk. There are a myriad of case studies in functions ranging from supply chain optimization to new employee candidate screening. There are also numerous examples of leveraging big data and analytics to improve the efficacy of marketing in order to increase yields, extend reach and enhance the target customer experience.

Within the realm of services, there are a growing set of proof points for using analytics in setting and managing service levels.  Examples include: service analytics for internal benchmarking of operations to make improvements; customer analytics to identify changes in service delivery; and financial analytics to determine the relative value of customers and segments.

New Services Revenue

There has been less discussion on the promise of analytics as a new revenue source. The end game should be to apply analytics in expanding the top line as much as reducing the bottom line. Of course, there are the suppliers that are in business to sell analytics software and data management solutions; however, I’m referring to companies that leverage these tools, combined with mountains of data and deep pools of expertise, to deliver new services to customers – often with innovative business models.  A few forward thinking companies are doing just that with leading edge applications such as:

  • Energy Services Companies that provide building analytics as a service to owners/tenants.
  • Learning Companies that are piloting personalized digital learning solutions based on student analytics.
  • Agriculture Companies that are harvesting a storehouse of agronomic data to offer farmers improved yields.

What we learned

To further develop insights into how companies are actually leveraging analytics, we partnered with ASU’s Center for Services Leadership (CSL) to survey member companies and registered attendees of the CSL Annual Symposium. This spans a broad spectrum of industries and services offerings. The objective is to better understand the strategic intent behind the use of analytics and the lessons learned so far. A somewhat surprising picture of adoption is emerging that reflects both potential and confusion. Our research has also yielded an interesting set of issues and critical success factors.

To learn more, join our executive panel at the 26th Annual Compete through Service Symposium on Thursday, November 5th, 2015.  Representatives from IBM, INTEL, DuPont – Pioneer, and Siemens will join with me to comment on these findings and also share their experiences and insights regarding leveraging big data and analytics to grow services revenues. Also check out our article, Generating New Services Revenues through Analytics.

Shared Lessons for Customer Service and Field Service Organizations

Jeff Wartgow

By Jeffrey Wartgow

In preparation for this year’s upcoming Compete Through Service Symposium, I took time to reflect on the trends that will impact field service over the coming years. After sifting through analyst reports, notes from customer meetings, and other industry insights, some major themes kept surfacing – and one overarching idea emerged:  what affects field service ultimately impacts all aspects of customer service. Lessons learned in the field can have major implications for contact center employees, the design of self-service portals, service management, and vice versa. Keeping the concept of the holistic service organization in mind, here are three major themes to monitor.

Self-service is not just for customers

One of the biggest trends impacting service organizations is the customer’s increasing desire for self-service. Whether it’s through a web portal or in a vibrant online community, customers want the freedom to search for answers quickly and efficiently, using methods that give them complete control. This phenomenon includes not only customers, but also actual service providers. Contact center personnel and field technicians prefer to look up the answers on their own rather than call for assistance. In addition, self-service is never a one-time event, and most millennial-aged service providers prefer to look up an answer multiple times before committing that answer to memory. Taking these concepts into consideration, it’s not enough to merely enable customer self service – organizations must also allow agents and field technicians to self-serve as well. This phenomenon is one part of a greater industry concept commonly known as “the consumerization of IT.”  Service providers expect the same level of self-service in their jobs as they do their personal lives.

The closer you get to the customer, the greater the expectations

Today’s customer lives in a world of instant gratification. As a result, they expect each person they interact with in a service organization to play every position. Nowhere is this more apparent than in field service, which is often the last mile of the entire service experience. If your customer wants to use a different credit card than the field service agent has on file, can the field worker update the customer’s profile on the spot? Can your field service representative independently schedule a follow-up appointment for the customer, eliminating the need for another inbound call? Could the field service representative also upsell and offer new products during the appointment? Does he know everything about the customer’s account and their current issue or need? That is the new expectation.

Machines are customers too

What is the difference between man and machine in regards to the impact they have on a service organization? Both can contact your organization by phone, SMS, email or web. Both probably have specific contracts and entitlements. And both can have a detrimental impact to your business if they are not serviced properly. Many of the field service technicians I speak with even go as far as saying every machine they work on has its own unique personality, just like human customers. As a result, whether your customer is a person waiting at home or a gas line running through the middle of the desert, both will require the same levels of attention. Service organizations will need to gather as much information about a machine as possible, pre-diagnosing problems before a field agent is dispatched, just as if that machine reached out to the contact center. In addition, information about the machine, future service requirements, and other critical data, must be gathered by every field service representative. Leveraging technologies, such as the Internet of Things, is allowing your machines to follow similar if not the exact same processes as your human customers.

Field service is just service

In the world of field service, we are constantly looking at the trends that impact the worker of the future. How much power can we give that worker? How easy can we make his job? What kind of customer will he be servicing – a real human being, or temperamental and complex machine signaling that it needs some attention? As we develop the tools to meet these challenges, we can learn how these changes will not only impact the field, but the entire service organization. I look forward to discussing these topics in more detail this November at the Compete Through Service Symposium. Hope to see you there.


linkedintwitterJeffrey Wartgow leads outbound product management for Oracle’s Field Service Cloud. In this role, Jeffrey works closely with both Oracle’s customers and technology teams, helping enable the design products that modernize customer experience. Jeffrey came to Oracle through the acquisition of TOA Technologies, an industry leader in cloud based field service management solutions. Before joining TOA, Jeffrey spent two and a half years as a Director at FTI Consulting in San Francisco, where he was charged with developing the company’s first formal partner program. Prior to FTI, Jeffrey served seven years with Dell Inc. During this time he managed Dell’s Strategic Alliances for Europe, the Middle East and Africa and Dell’s Competitive Intelligence team. With more than 15 years of experience in diverse roles across the technology industry, Jeffrey is an expert on mobility, predictive analytics, enterprise cloud computing, technology ecosystems, partnerships, and the dynamic relationship between hardware, software and service in enterprise IT architecture. Jeffrey holds a BBA from the University of Notre Dame, a MBA from the University of Colorado at Denver, and a MIM from Thunderbird School of Global Management.

Join the Center for Services Leadership at Compete Through Services Symposium on November 5th, 2015, to hear Jeffrey Wartgow, Oracle, speak on The Roadmap to Modern Field Service

A Great Customer Experience Isn’t Something You Can Script

John_Abraham_headshot2By: John Abraham

Several years ago, I met a successful customer service director in a retail bank. She had led the charge to bring customer experience thinking into the bank’s branch operations and call centers, defining how the company’s brand promise should be reflected in customer interactions. In fact, they had developed a specific greeting that employees were supposed to use. Every time a customer entered a branch or called a call center, the bank employee greeted them with exactly the same phrase.

While there is a good reason to set standards for customer experience delivery, this example raises an important question about the best approach to take. When customer experience standards become too rigid and scripted, interactions that should feel personal can lose their authenticity — leaving customers with an awkward feeling at best.

Too much rigidity can also get in the way of basic customer needs being met. Research from McKinsey & Company has found that over 50 percent of customer interactions occur as part of a multi-event, multi-channel journey. When customer experience standards try too hard to script how an individual interaction should play out, they leave less flexibility for employees to deal with the nuances associated with each customer’s unique situation. You can’t predict every customer’s needs — and often, customers won’t distinguish between an employee who is not allowed to adapt their approach and one who is simply unwilling to help.

So how can companies deliver experiences that feel personal without adding harmful inconsistency?

Often, the most impactful strategy is to find small, systematic ways to demonstrate an understanding of each customer’s perspective. Accomplishing this starts with learning more about the underlying needs behind different customer interactions. Digging deeper into the customer’s perspective — often though a journey mapping process — can reveal the higher-order concerns customers bring to individual interactions. It’s also helpful to let employees follow up on relevant customer feedback, so they can learn to spot these concerns in the context of real conversations.

Armed with this knowledge and intuition, employees will be better able to anticipate common questions and sources of anxiety for customers. Being offered the right solution without having to ask can feel almost magical — and shows customers they’re dealing with someone who really understands them.

USAA offers an excellent example of this approach. The company is famous for its military-inspired employee training courses, but its insight into its servicemember customer base extends deeper than knowing the sound of an angry drill sergeant or the taste of an MRE. USAA is committed to learning about the professional and personal events that inspire even the simplest customer requests, so its employees always know how to respond. Wayne Peacock, USAA’s Head of Member Experience, said of this approach, “We’re serving our members from the time they’re teenagers and young adults all the way through the adult years and leaving a financial legacy, so we thought it would make a lot of sense to have them talk to us about what’s going on in their financial lives.”

Of course, even the most perceptive and well-informed employees need the flexibility to do something with their knowledge. This does not have to mean eliminating all customer service rules, or following Ritz-Carlton’s example in giving employees discretionary funds for creating customer delight. Rather, a good approach is to remove specific policies that your frontline knows are getting in the way.

Windstream Communications, a leading provider of voice and data networks, offers an example of this strategy. After noticing frequent miscommunication between customers and servicing technicians, the company decided to allow customers to contact technicians directly rather than going through a scheduler. Windstream found that this strategy helped individual technicians learn specific customers’ needs over time and use that understanding to provide more personalized service. And Windstream’s customers got a dedicated, familiar ally, rather than a sequence of different technicians.

Ultimately, moving away from the script can feel uncomfortable. It puts a heavier burden on front-line employees to know their work and their customers. But don’t underestimate the impact of investing in thoughtful policy changes and customer-oriented training. When you give your employees deeper insight into customer needs — and the freedom do something with that insight — they can move successfully beyond the script to deliver a personalized experience that is consistent with what your brand aspires to be.


John Abraham leads the Medallia Institute, which develops educational programs in customer experience best practices. Prior to joining Medallia, John was GM of Net Promoter Programs at Satmetrix, a consultant with both Andersen Consulting and Booz Allen & Company, and a marketing executive in the software industry for more than 10 years.

Join the Center for Services Leadership at Compete Through Services Symposium on November 5th, 2015, to hear John Abraham, Medallia Institute, and Michael Morton, Best Western International, speak on Breaking Barriers Between Service Metrics and Customer Experiences.