Should We Focus on Service Quality or Emotions? How to Build Customer-Brand Relationships to Increase Marketing Performance

Portrait_B.NyffeneggerBy Bettina Nyffenegger

Managers often have to decide whether their marketing activities should focus on improved services and functional features or on more emotional content to develop strong customer-brand relationships. That was a challenge that the Head of Marketing of a large European Airline was facing at the time we conducted a research project on brand relationship quality (BRQ), a customer-based indicator of the strength and depth of the person-brand relationship. Should emotions or quality-related, more functional aspects have more weight in the brand’s marketing campaign? How do they affect marketing performance (such as customer’s willingness to pay, word-of-mouth (WOM), consideration set, share-of-wallet, and revenue)? These were some of his questions that we tried to answer in our new research published in the Journal of Service Research (JSR).

Based on a large-scale survey among the frequent flyers of the Airline and objective performance data from the frequent flyer program, we show that service BRQ involves two components, “Cold” BRQ and “Hot” BRQ. We also find important and relevant distinction between the two in terms of both antecedents and consequences.

-             “Cold” BRQ is based on object-relevant beliefs resulting in satisfaction and trust. It is characterized by a high confidence in and a positive evaluation of the service brand’s performance (i.e., it is tied to the quality of the service).

-             “Hot” BRQ reflects consumers’ feelings and emotional connection to the brand. Longing for the brand, feelings of emotional closeness to the brand, and the intention to stay with the brand through good times and bad are crucial elements of the hot component.

Our results reveal that investments in both hot and cold BRQ have an economic impact by influencing customer behaviors. Thus, service providers should cultivate both the hot and cold BRQ of their customers, but for different reasons.

If the main objective is to grow revenues from the existing customer base (i.e., “internal” growth via a higher willingness to pay and a reduced consideration set size of existing customers), managers may want to focus on building hot BRQ with their customers. On the other hand, if their main objective is to expand the customer base by acquiring new customers (i.e., “external” growth via more intense WOM activities of existing customers), cold BRQ becomes more important.

More specifically, hot BRQ has been shown to have a stronger impact on customers’ willingness to pay. Thus, instead of lowering prices (e.g., when faced with high competition and heavy price cutting), it may pay off for service providers to focus on the emotional value they provide to customers and to build up hot BRQ. As an example, Starbucks customers are willing to pay a relatively high price for their coffee due to the emotional brand experience and connections.

In addition, hot BRQ is also more important for a reduced consideration of competitive brands. Thus, those service providers who can establish strong emotional ties with their customers achieve a sound protection from competitive threats and new competitors.

Cold BRQ better helps to attract new customers through positive WOM. While emotions may play an important role, for example, in viral marketing activities, customers need to be convinced about the quality and reliability of the service in order to recommend the service brand to others.

In addition, our research examined how such hot and cold consumer-service brand relationships can be developed. Our results suggest that to increase hot BRQ in early stages of consumer-brand relationships, managers should focus on enforcing consumer’s perception of the fit between his/her self and the brand’s personality (self-congruence).  To create an emotional connection between new customers and the brand, managers should adopt a customer perspective in defining service brand personality. This means, for example that the design of the service environment, marketing communications, and behavior of frontline personnel have to create brand personality associations that foster similarity of perceptions with the customers.

In later stages of the relationship, managers should gradually develop the brand’s partner quality (i.e., whether the brand/company treats the customer well, shows interest in, and cares for him/her) in order to increase hot BRQ. Partner quality is also crucial for the build-up of cold BRQ – in early and even more in later stages of a consumer service-brand relationship. This illustrates the important role of a brand’s representatives. Caring and empathetic service experiences they create reduce uncertainty and increase confidence in the quality and reliability of the brand.

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Bettina Nyffenegger is an Assistant Professor of Marketing at the Institute of Marketing and Management at the University of Bern in Switzerland. Her main research fields are branding, relationship marketing, and consumer behavior with articles published in journals such as the Journal of Marketing, Journal of the Academy of Marketing Science, and Journal of Service Research.

The article Service Brand Relationship Quality: Hot or Cold? featured in the post was co-authored by Bettina NyffeneggerHarley KrohmerLucia Malaer (Institute of Marketing and Management, University of Bern, Bern, Switzerland), Wayne D. Hoyer  (McCombs School of Business, The University of Texas at Austin). It is available ahead of print at Journal of Service Research website. Journal of Service Research is the world’s leading service research journal that features articles by service experts from both academia and business world.

Note: All content within this website is the property of Center for Services Leadership. Any use of materials, except for social media sharing, without the prior written consent of Center for Services Leadership is strictly prohibited.

Bruce Temkin on Service Innovation, New Trends and Challenges Faced by Service Companies.

By Darima Fotheringham

Bruce_Temkin

Bruce Temkin, CCXP, is a Co-Founder &
Chair of the Customer Experience Professionals Association and the Managing Partner of Temkin Group. He is widely viewed as a leading expert in how large organizations build differentiation with customer experience. As the Managing Partner, he consults for leading global companies, is a keynote speaker at top industry events, researches customer experience trends, and is the author of Customer Experience Matters, influential CX blog. Prior to Temkin Group, Bruce spent 12 years with Forrester Research during which time he led the company’s financial services, e-business, and customer experience practices.

I interviewed Bruce Temkin at the 25th Annual Compete Through Service Symposium, where he spoke about Customer Experience and “Tapping Into the Power of Purpose, Empathy, and Memories”.

Q: Today we heard about service innovation from three different speakers. I wanted to ask which of the ideas they shared resonated with you and why?

A: I think a number of them resonated and I won’t go into all of them, they presented great stuff. I think the notion of starting with the customer and working back in was an important theme that showed up across the board. I also really liked the way that Amazon talked about having a very simple metric. They ask: “Were we able to solve your problem?” And I think when you use simplicity in your measurements, it frees up the people in your organization to spend time and feel they can do other things. A lot of the discussion was around how you get that innovation from your employees, because employees are the biggest source of innovation we heard about today. We have to create an environment where they feel comfortable,  and feel they have their time and feel empowered. Those were some key takeaways today.

Q: We also heard about trendsetting and how it’s a lonely business, yet “you have to innovate or die”. What are the new trends that service companies cannot afford to miss?

A: To me one of the key trends is simplicity. In this world of complexity we sometimes add things on and make things harder and harder. But if you look at some of the key new innovations, whether it’s Uber or Airbnb, and you look at the models they have, they are very simple. I think the service models have to follow that and become very simple.

Q: In your opinion, what are the biggest challenges that service companies are facing?

A: They face a lot of problems so probably the biggest to start with is customer expectations are rising. Whether you’re a B2B company or a B2C company, people expect things to happen now, they expect them to be easy. That’s hard to do, especially for companies that are trying to deliver complex services or complex products. I think that’s a challenge. The other challenge continues to be around how you create an environment with your people. I’m a big believer that a lot of the success or failures come not necessarily from the technologies or processes we use but from how we deal with the people we have. How do we get the right people? How do we enable them? And how do we let them loose to deliver the great service we want? To me, the challenge number one is: How do we make sure that we are engaging our people on a path that allows them to deliver the innovations and deliver the service at the level that our customers want into the future.

Q: We hear from companies about a skill gap in the workforce. Is that something that you come across working with different companies? Is there a skill gap and what is it?

A: Well there are lots of skills gaps. One of the key skill gaps that we run into and see all the time is in the area of insights and analytics. There aren’t enough people in what I would consider the hard core analytics. Over the next years many companies are going to increase their use of predictive analytics, text analytics, so we need people who can do that. But the real people we need doing this work are the ones that can balance the analytics with an understanding of the business, people that can bridge the world of deep analytics with the needs and insights of the business. That’s one skill gap.

Another skill gap that people don’t talk about much, but it relates to what I was talking about earlier, is the ability to manage and motivate an employee workforce. Historic of the last several years, we’ve really worked on management skills that are more hard core, people who can manage and drive. But we haven’t created leaders, people who can inspire and people who can communicate, people who can get their people to do better. I think that’s an important skill gap that has to be filled.

What do you think, boss? How to gain board support for your Customer Experience (CX) program (and other marketing-led strategies)

BBS  Philipp Klaus 1A copyBy Phil Klaus

According to our most recent research, CX Management, for better or worse, is firmly allocated in the firm’s marketing function. This association, however, triggers multiple challenges for CX managers, or, to be more precise, CMOs worldwide. The most prevalent challenge is the CEOs’ and boardroom members’ unfavorable perception of both marketing-led strategies and CMOs.(2) For decades, marketers have been trying to be more accountable and elevate marketing from a purely functional and tactical to a strategic level. Yet marketing, once the darling of executives’ strategic efforts, remains heavily criticized for its inability to present compelling evidence of the effectiveness of the huge sums it directs to promotion and brand building. This perceived lack of accountability is reducing marketing’s influence on strategic decision-making, and is a cause of other functions.

In addition, CX is often used in the same sentence with other marketing-driven strategic initiatives, such as CRM, which managers do not see as an investment delivering the value it promised. Paradoxically, despite the increase of CX and the voice-of-the-customer programs, marketing’s strategic role is in decline. Our global study highlights that CEOs do not believe that marketers, and their CX initiatives, can be an integral part of strategy development for three main reasons:

  1. the lack of financial accountability,
  2. marketers’ fascination with and focus on new technologies, tools, and frameworks without establishing that they generate consumer demand for the firm’s offerings in a quantifiable way, and
  3. the resulting lack of trust towards marketers’ capabilities and towards marketing in general.

These themes cannot be viewed in isolation. They reflect the heterogeneous nature of the current status of, or lack of, marketing in the firm’s strategy planning and execution. I could make the point that CEOs and/or the firms’ boards are as responsible for the fall of the CMO and marketing from the strategic agenda as marketers themselves. This discussion, however, will not add any value. CMO/CXOs work for the CEOs, not the other way around. My contribution is to acknowledge and learn from these developments in order to put marketing and CX management back on the CEO’s strategic agenda.(3)

If marketing is disconnected from the firm’s strategy, then the firm’s strategy would be expected to become less adapted to market needs. Taken to its logical conclusion, this should result in eroding profits and vulnerability to competition. Therefore, there is an overriding need for marketing, and, in particular CX, to become a key component of the firm’s strategy. (When we refer to “marketing” we mean what company management recognizes as such, and not what scholars and businesses put forward as part of marketing.)

As a result, in today’s business environment, marketing is relinquishing ground to other functions rather than expanding its role. If CX or VOC are (partially or completely) not under marketing, the CEO and board will never consider it to be marketing. Moreover, the business units that take over these marketing tasks consider them to be part of “their” function (e.g., operations, information systems, etc.) and not part of marketing. Therefore, for marketing to succeed in these efforts, CMOs must garner support from all stakeholders: in particular the CEO and the firm’s board. This can be achieved by converting existing main challenges into opportunities, such as:

  • Augmenting traditional sales indicators presented to senior management (e.g., conversions, revenue, etc.) with clear defined customer demand-related indicators, developing tangible links. For example, by delivering evidence for the positive relationships between abstract constructs such as customer experience5 and word-of-mouth on customers’ buying behaviors, CMOs will have a significantly better chance of demonstrating the strategic impact of their actions. Another way to achieve that is by using mid-range metrics, such as real-time tracking linked to revenue generation, to demonstrate accountability. For example, CMOs can introduce segment level reporting that includes P&Ls by brand, market, product, distribution channels, and end customers.(1)
  •  Take ownership of a variety of activities within and outside of what is considered their core functional area, such as marketing related IT and IS initiatives. This would allow CMOs to demonstrate, for example, the possible impact of new media as a supportive tool (with an emphasis on “supportive”) in crafting winning strategies (and by winning we mean generating quantifiable customer demand).

Thus, the job description of a CMO becomes closer to that of a CEO. In a literal sense, CMOs must see themselves as the Marketing CEO. This means running CX, and all marketing activities in a manner that parallels that of the CEO in the running the firm.  This requires that CMOs shift their perspective to that of a holistic business leader from simply being a manager of the marketing function.  As such, it requires a CEO’s mindset of seeking to maximize value in a tangible way that can garner the support of the board of directors and shareholders.(4)

The following Figure summarizes the main steps that we believe are necessary to put CX on the CEO’s strategic agenda by using actions to convert challenges into results that will be appreciated by the CEO and other board members.(1)

How to gain 'board support' for your CX program In this series we now discussed which CX strategies are most profitable, explored how these strategies are converted into a successful multichannel strategy, outlined the crucial role customer-facing (direct and indirect) employees play in managing the CX, and elaborated on how executives can gain support from the boardroom in order to compete successfully on the new competitive battleground – the customer experience. I hope these series delivers useful insights into how to manage and measure the most profitable customer experiences, and am looking forward to your CX questions that I will answer during the Center for Services Leadership podcast.

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Dtwitterr linkedinPhil Klaus is Professor of Customer Experience and Marketing Strategy and holds multiple visiting professorships around the globe. His multiple award-winning research has appeared in a wide range of academic and managerial journals. Phil is a frequent keynote speaker at public and in-company seminars and conferences around the world. He has an active, international portfolio of Blue-Chip clients, for whom he advises on customer experience strategy and profit enhancement.

References:

  1. Klaus, Ph. (2014), Measuring Customer Experience – How to Develop and Execute the Most Profitable Customer Experience Strategies, Palgrave-Macmillan.
  2. Klaus, Ph., Keiningham, T., Edvardsson, B., and Gruber, T. (2014), “Getting in with the “In” crowd: how to put marketing back on the CEO’s agenda,” Journal of Service Management, Vol. 25, No. 2, pp. 195-212.
  3. Klaus, Ph. and Edvardsson, B. (2014), “The road back to relevance – how to put marketing (and marketing scholars) back on the Top Managements’ agendas,” Journal of Service Management, Vol. 25, No. 2, pp. 166-170.
  4. Klaus, Ph., Gorgoglione, M., Pannelio, U., Buonamassa, D. and Nguyen, B. (2013), “Are you providing the ‘right’ experiences? The case of Banca Popolare di Bari,” International Journal of Bank Marketing, Vol. 31, No. 7, pp. 506-28.
  5. Klaus, Ph. and Maklan, S. (2013), “Towards a better measure of customer experience,” International Journal of Market Research, Vol. 55, No. 2, pp. 227-46.

Examining Amazon.Com’s Relentless Customer Advocacy

Center for Services Leadership:

Bruce Temkin, one of the speakers at the Compete Through Service Symposium, shares his takeaways from the presentation by Mike Gathright, Director of Americas Customer Services at Amazon.com

Originally posted on Customer Experience Matters:

Last week I attended the Arizona State University, Center for Services Leadership (CSL) Compete Through Service Symposium. It was an excellent event. I was impressed by what the CSL is doing to equip future customer service/experience leaders.

One of the speakers was Mike Gathright, Director Americas Customer Services at Amazon.com. He describe Amazon.com as “The Earth’s Most Customer-Centric Company,” or just EMC3. It’s no accident that Amazon.com scores so consistently high in the Temkin Experience Ratings and Temkin Customer Service Ratings. The company works on it.

I really love one of the company’s tenets, Relentlessly advocate for customers. It sounds like something that all companies should strive to do.

Gathright explained that Amazon.com has three key priorities:

  • Empower your people
  • Listen to customers
  • Invent for customers

To deliver on those priorities, the company uses a number of internal quality processes including Kaizen (continuous improvement) and Genba walk (seeing and observing the actual process or…

View original 291 more words

Welcome to Compete Through Service Symposium 2014!

25th Annual Compete Through Service Symposium Recap in Pictures

Thank you everyone who attended the 25th Compete Through Service Symposium and made this event truly great! We’ll be sharing highlights from the event, interviews with participants and speakers on this blog. Make sure to subscribe to our blog to receive these updates. If you missed the event, you can check the event brochure HERE Hope to see you next year!

Meet the Center for Services Leadership Team

To kick off the 2014 Compete Through Service symposium, we would like to introduce you to our team. We look forward to connecting with you this week at the symposium!

Mary Jo PicMeet Mary Jo Bitner:

  1. What is your favorite place to visit in Arizona?  

Flagstaff, in the summer or fall.

  1. Other than ASU, what college team do you root for? 

University of Washington, Huskies, my alma mater.

  1. How long have you been with the CSL and what is your current role? 

I have been with CSL since 1987 and am currently the Executive Director.

  1. What excites you the most about working for the CSL? 

I love working with our member companies and seeing the interaction/shared learning between our board and faculty network.  I love seeing the tremendous growth in knowledge and practice over the years.

  1. What is a great example of customer service?

Amazon in general. And Amazon Prime, specifically – I love it and use it all the time! Continue reading

The Next Wave of Service Delivery: Success Accelerators!

 

randy-wootton-headshotBy Randy Wootton

The Challenge

Today, more and more companies depend on software as a service (SaaS) to operate essential parts of their business, such as managing their relationships with customers, driving sales performance, and maintaining employee communication. As the industry and surrounding ecosystem that delivers these services matures, it faces a growing demand for accountability and results.

This is driven by many factors. As the global economy has emerged from recession, there is an increased focus on cost control and accountability. The shift in accounting for technology spending from capital expenses to operating expenses requires quicker results from technology investments–often within a single fiscal year. And the growing sophistication and utility of the services themselves makes them an indispensable ingredient in any company’s success – shining a spotlight on how they are implemented, deployed and used. Continue reading