Monthly Archives: April 2016

Co-creating the Arab Spring

skalen_webOn December 17, 2010, Mohamed Bouazizi, a Tunisian street vendor, set himself on fire as a protest against the autocratic regimes in his Arab country. Bouazizi’s act was captured on film and quickly spread throughout the world. The images and film clips of Bouazizi triggered protests and demonstrations against regimes in other Arab countries. Bouazizi set in motion an uprising against Arab regimes that is known as the Arab Spring.

In a study of the Arab Spring, our team spotlights how activists transformed service systems to protest against the autocratic regimes. In many Arab countries press was censored. Through the use of social media platforms, such as Facebook, activists were able to freely share information with each other and with the public. The international media used this information to report on the uprisings that were taking place in the Arab countries. By transforming the media service system, the activists were able to bypass the censorship and report in real time about the acts of oppression by the autocratic regimes and injustice experienced by the greater Arab population.

In addition to the reform of the media service system, the activists also created a service system for the social movement. They used this system to coordinate and organize demonstrations and other protests against the autocratic regimes. When the protests escalated to armed conflict, the activists used the social media channels to arrange access to healthcare therefore transforming the health care service system. The activists transformed these three service systems by co-creating value in advancing democratic ambitions. This was in sharp contrast to the service systems established by incumbents in support of the oppressive regimes.

Value co-creation has become a key focus for service research in the last decade. Previous service research primarily focused on economic value co-creation (i.e., firm profit), but service research can also examine social and cultural value co-creation (i.e., connecting people and educating people about democracy). Our team’s project illustrates how these three types of value co-creation are not only interconnected but also enhance one another. For example, during the Arab Spring the activists informed each other by sharing information about protests and demonstrations via social media. Their main intention was to increase participation and the impact of the protests (social value co-creation). At the same time, the international media was able to use this information as a part of their operations (economic value co-creation) to report about the uprisings in Arab countries capturing the historic event, informing public (cultural value co-creation) and generating social support for the activists.

Value co-creation takes place in service systems constructed by different types of actors and resources. In the Arab Spring case, the actors of service systems are activists, journalists, doctors, etc. The resources they use are smart-phones, social media platforms and knowledge about technology. But it was the conflict between the activists and the regime that triggered the transformation of the service systems. Conflict and contention have not been in the center of either business research or service research, which adopts a more harmonious view of the world. We use social movement theory to argue that the transformation of service systems is always driven by a latent or overt conflict between incumbents who want to preserve status quo and challengers who want change.

The Arab Spring teaches us how service systems, including business systems, transform and work. Although conflicts appear to be negative, the Arab Spring proves that conflict may spark positive transformation. For instance, Tunisia has embarked on a democratic path since the Arab Spring of 2011. The actors behind this positive development, the so-called National Dialogue Quartet, received the Nobel Peace Prize in 2015. However, it also needs to be acknowledged that conflicts may have severe negative effects, best exemplified by the current situation in Syria.

The transformation of the music industry and service systems for distributing music is an example of how conflicts between incumbents and challengers can play out in the business world. The conflict between record companies that wanted to keep distributing music in traditional ways and so-called web-pirates that distributed music for free, but illegally, through the Internet lead to the creation of legal music streaming service firms such as Spotify. By studying what appears as negative events we can learn more about the positive transformation these negative events can lead to.

The research paper “Cocreating the Arab Spring Understanding Transformation of Service Systems in Contention” discussed in the post was published in Journal of Service Research August issue of 2015,   vol. 18 no. 3 250-264. It was the winner of the Best Paper Award for the Special Issue on Transformative Service Research.

ANY WAY GOES: IDENTIFYING VALUE CONSTELLATIONS FOR SERVICE INFUSION IN SMES

Any Way Goes: Identifying Value Constellations For Service Infusion In SMEs

Christian Kowalkowski, Hanken School Of Economics

Lars Witell, Linköping University

Anders Gustafsson, Karlstad University

In competitive markets, firms seek new ways to differentiate their business, including an increased focus on service, often referred to as service infusion. Of the studies that seek to understand this phenomenon, most focus on large multinational firms; little is known about service infusion in small and mediumsized enterprises (SMEs). This study adopts an explorative approach to investigate how SMEs construct new value constellations that enable value creation through services. The findings, based on in-depth interviews with key informants from 13 SMEs, suggest that there is no predefined transition process for service infusion in SMEs.

  • SMEs seldom have the internal resources to build new organizational units or create new specialties.
  • We identify nine generic value constellations that can be used to operationalize different service strategies.
  • Many SMEs provide services through multiple value constellations that coexist in the same business network.

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How to Create Brand Advocates and Avoid Brand Terrorists

Customers interact with your firm in more ways than ever before. You recognize that each of these encounters is an opportunity to influence the customer, so you spend time and resources tracking, journey mapping, and capturing their every touchpoint. Yet determining which of these events will pass unnoticed and which will dramatically impact your relationship with that customer is challenging. How can a single encounter turn a once beloved customer into a brand terrorist? What sort of event transforms a low value customer into a brand advocate? Through a series of studies spanning multiple industries (banking, hospitality, B2B/manufacturing), our research team examined more than 5,000 encounters with customers to identify what made some events forgettable and others really critical, or what we call transformational relationship events (TREs).

What we found was that people form two distinct types of expectations regarding any encounter, product and relational. This distinction turns out to be vital, because breaking a relational expectation has a vastly different impact on the customer than breaking a product expectation. Product expectations are what you are probably focusing on right now (e.g. service satisfaction, product quality). They are what the customer expects to get from you in exchange for what they give (money, time) – the core aspects of your exchange. However, people are naturally inclined to form relational expectations in any social encounter (i.e. an interaction with your firm). These expectations are less focused on the transaction and are framed more in terms like friendship, trust, interpersonal sharing, and solidarity. Breaking these relational expectations triggers intense social emotions (betrayal, gratitude) that cause customers to redefine the entire relationship and change its future course. Compared to feeling disappointed (as when your service is simply slow), betrayal sparks a much more visceral reaction (and desire for retaliation, distance, etc.); on the positive side, gratitude is similarly more intense than general satisfaction.

We also found, and what makes this more challenging, is that relational expectations evolve as the customer repeatedly interacts with you. Early on, a customer’s relational expectations range from very negative to very positive because they are uncertain of your intentions. With each positive encounter, they learn more about you, their relational expectations increase and become more narrowly defined. This had two relevant repercussions on the customers we studied. First, customers who were early in their relationship development were more likely to experience dramatic positive change in response to a generous act from the firm versus customers for whom the relationship was more fully developed. Second, although we observed that strong relationships insulated the firm from bad customer responses to product failures, in the face of a relational failure, these same strong relationships amplified the effects (highlighting a potential risk to strong relationships). Thus, large violations (either positive or negative) of relational rather than product expectations sparked dramatic change in the customer’s relationship with the firm, B2B and B2C. Knowing this can help you improve your relationship marketing strategies.

  1. Find the ideal window for transforming customers.

A typical loyalty program will provide its best rewards to the most “loyal” customers. However, we find that this might not be money well spent. Instead, our research suggests that generous acts are significantly more impactful early in the customer’s relationship when their expectations are still pliable. This window of opportunity suggests that customers have an onboarding stage where your interactions with them can evoke more gratitude and more thoughts about their role in the relationship (relational sensemaking), dramatically impacting the future trajectory of their relationship with you.

However, we offer a word of caution. In our research, events that were considered “too good to be true” prompted suspicion. Thus, it is key to calibrate relationship marketing initiatives to identify the ideal window in which they exceed the customer’s expectations, but do not go so far as to trigger undesired responses. Further, while research identifies “pleasant surprise” as a desirable outcome of relationship-building efforts, our research suggests that the type of surprise (e.g., product versus relational) is critical to the longevity of its effects. Thus, first impressions can have a lasting impact—so going out of your way on that first encounter or sending a heartfelt thank you early on can be worth the investment.

  1. Change the way you segment your customers.

Like most firms, you are probably segmenting your customers on static descriptors such as demographics, psychographics or firm size. However, TREs produce customers with unique emotional and psychological connections to you who will likely respond to marketing initiatives differently than customers whose relationships evolved incrementally.

By collecting customer feedback over time (even using current satisfaction metrics), you can identify these highly active customers based on the degree of change in their ratings. Marketing strategies that depend on customer implementation (e.g., referral programs, pass-along coupons, user-generated content) may be effectively targeted at customers with dramatic positive changes in their ratings (indicating a recent positive TRE). For flatter trajectories, customers’ potential value could be assessed to identify candidates for a spontaneous experiential reward that could induce a positive TRE. Steep negative trajectories could be a sign of a recent negative TRE that requires careful action to mitigate damage and potential brand terrorism.

  1. Run a new kind of customer health check-up.

You are probably running product and service quality checks regularly with your customer, which are great sources of insight. However, our research suggests that you must also understand how the customer views you from a relationship standpoint. In our study, we offer a metric for capturing these relational expectations that can compliment current metrics used in customer health checkups. The key to these measures is to ensure alignment between the way you view your relationship with a customer and the way they view their relationship with you; misalignments can be the root of negative TREs.

The research paper Transformational Relational Events featured in the post was co-authored by  Colleen M. Harmeling, Florida State University, Robert W. Palmatier, University of Washington, Mark B. Houston, Texas A&M University, Mark J. Arnold, St. Louis University, Stephen A. Samaha, California State University Northridge. It is available on the Journal of Marketing website.

Services Leadership Institute

Stacy P“The exposure to the speakers and having access to their expertise has been beneficial. Each of them is an expert in different areas of service… I am coming out with a larger appreciation of service and how it applies to what I do.” – Stacy Polonicoff, Sr. Manager of Client Solutions, The Co-operators

 

 Karen J“The high caliber of individuals who attended the event this year allowed for many conversations centering on real world experiences. It was great to learn from professionals in other service industries.” – Karen Johnston, Contact Center Director, The Lighthouse for the Blind, Inc.

 

 Kevin C“My role at State Farm is to recruit potential employees. A large aspect of my work is focusing on the applicant experience… the employment brand is very important. All of the information discussed at SLI pertains to what State Farm is currently working on.” – Kevin Cote, Recruiting Manager, State Farm.

 

 Katherine J“Blueprinting was new to me. That exercise was a great team exercise that I can get people back at Cox involved in. I loved the process.” – Katherine Jimenez, Customer Care Manager, Cox Communications.