Author Archives: Darima Fotheringham

About Darima Fotheringham

Darima Fotheringham is a Thought Leadership Program Manager at the Center for Services Leadership. In her role, she manages the Center’s Thought Leadership initiatives, working closely with members of the academic and business communities to advance thought leadership in service science and innovation. Prior to joining the Center, Darima worked in IT and Localization Industry in Project Management and Client Relationship Management roles. In her role, she led localization and IT projects, working closely with clients’ marketing, IT and business development units.

Service Excellence: Creating Customer Experiences that Build Relationships. Interview with Dr. Ruth Bolton

Podcast Transcript

This podcast is brought to you by the Center for Services Leadership, a groundbreaking research center in the W.P Carey School of Business at Arizona State University. The Center for Services Leadership provides leading edge research and education in the science of service.

Darima Fotheringham: Welcome to the CSL podcast, I’m Darima Fotheringham. Today I’m talking to Dr. Ruth Bolton, Professor of Marketing at the W. P. Carey School of Business at Arizona State University. She is the author of the new book “Service Excellence. Creating Customer Experiences that Build Relationships.” Ruth, thank you so much for joining me today, and congratulations on the new book!

Dr. Ruth Bolton: Thank you. It’s my first book, so I’m very excited.

Darima Fotheringham: It is very exciting! And I really enjoyed reading your book. It covers a lot of ground but it’s not a textbook. It is a very engaging and informative read that you can finish quickly. And it is the type of book that you want to hold on to so that you can go back to it again and again. Can you tell our listeners about what led you to write this book?

Dr. Ruth Bolton: Markets have been changing very rapidly, and I hear from the managers that there are many new opportunities and challenges. However, amidst all this change, managers kept emphasizing the importance of the customer experience. And I was intrigued that this term came from business not from academics. So what was it that managers were seeing that was so important? After thinking about it for some time, I realized that service researchers have a really important perspective to offer on the customer experience. So I decided to write a book about it!

Darima Fotheringham: Great! And it’s very timely. So as you said, customer experience is a really hot topic these days, and in your book, you emphasize a service-centered view of the customer experience. Can you talk about that? Why is this distinction important?

Dr. Ruth Bolton: Well, managers and academics who have been studying services really have a head start and understanding the customer experience. The reason is that, for many years, services research started from the premise that customer experiences are co-created by participants in a network. The participants, of course, are the company, its customers and other partners, such as suppliers. The key idea is that from a co-creation perspective, the goal of each participant is to use the resources and capabilities to support other actors in achieving their goals. So that’s how companies create value for customers.

In a service-centered view, co-creating customer experiences builds profitable relationships. But the emphasis is on innovating, designing and producing experiences that create value for both. So customer participation and engagement become key. Now if you stop and think about it, it explains the emergence of some of the innovative new business models in many industries such as the entertainment industry which is going through tremendous disruption.

Darima Fotheringham: Most companies are fairly up to speed on topics of customer satisfaction, value, loyalty, word-of-mouth, and so forth. I can imagine these are still very important when we talk about the customer experience, but what’s new today?

Dr. Ruth Bolton: Many people are fascinated by the new collaborative services such as Airbnb and Uber. These companies are co-creating with their suppliers, the people who rent out their homes or cars, and with customers, the people who travel. I think that many of us start by thinking that the technology platform, which enables the service, is important. However, the real challenge is how these three partners share information, develop group norms, and work together to achieve their goals. Uber recently recognized the Drivers Association in New York City to facilitate discussions on workplace issues. And if you stop and think about this from a service center perspective, it makes really good business sense.

Darima Fotheringham: Speaking of technology, as you note in your book, technology and new media enable customers and companies to engage in these new ways. Other than Uber, what other interesting and innovative examples can you share about how companies have been able to enhance customer experience using technology?

Dr. Ruth Bolton: I’m especially interested in how B2B companies have leveraged data driven insights to innovate and create value with customers. DuPont Pioneer was able to leverage its expertise in biotech to identify new services that help farmers map and plan how best to replace nitrogen in their fields. It lead to a new service channel and a new market that provides insights and solutions for land management. And the latest I read in the news is that folks are using drones to look at very large properties.

In China, Alibaba Group has built rural service centers in hundreds of Chinese villages so that people can search for products online and place orders as well as sell products through its online marketplaces. With an economic slowdown in China in 2015, the rural service centers are an important opportunity for new growth. So I really find the data driven insights fascinating. And an interesting feature about both these examples is that they improve societal wellbeing as well as creating benefits for customers and profits for firms.

Darima Fotheringham: Which is really great! In the chapter “the Building Blocks of the Customer Experience”, you discuss practical and emotional motives of the customers as they engage and develop relationships with companies. I think companies are usually well aware of the practical motives of their customers, but emotional motives are often much harder to identify. Why is it important that service experience is designed around both practical and emotional motives? And does this mostly apply to B2C companies or does it also matter in the B2B world?

Dr. Ruth Bolton: Oh, emotions matter for business customers too.  Businesses are composed of human beings, and human beings experience a variety of emotions such as fun, excitement, boredom, and frustration when they interact with companies. The starting point is that the business customer and its supplier are each pursuing their own goals, which may or may not be aligned. And within the business-customers organization, employees have specific roles and identities and they have their own goals.

There’s some really solid research showing that people interact with the company to achieve their goals, and when they do achieve them, they’re happy and feel in control. When they can’t make progress towards achieving their goals, look out for annoyance or even customer rage. Take a simple example, imagine a courier service is late in delivering an important package. The employee receiving the package can’t carry out his responsibilities and then there are ripple effects throughout the organization. Will we see customer rage? Quite possibly!

The effects of emotions can magnify aspects of the customer experience that might otherwise seem like small details. For example, I’ve been participating in research for the global retailer that’s been studying shopper satisfaction with the customer experience. We’ve discovered that people’s feeling of fun and frustration play a big role, no matter whether they are shopping in the store, online, or using a catalog. It’s crucially important to meet shoppers’ goals, say whether they’re browsing, searching, or buying, so that you can satisfy them. Interestingly, despite the fact that there are so many technology-enabled services, people still feel emotions in computer mediated environments.

Darima Fotheringham: I personally found the chapter “Managing Customer Relationships to Achieve Growth and Profitability” packed with great and useful insights. In that chapter, you give an example of IBM, how it successfully used the portfolio approach to managing their customers. Can you talk about that and share what we can learn from this example and this kind of approach?

Dr. Ruth Bolton: Yes, IBM successfully navigated the dot-com crash through better management of its customer portfolio, whereas Sun Microsystems did not. I’m really proud of our work looking at customer portfolios. This was a joint effort with Crina Tarasi and other colleagues at ASU, and it’s won some important awards.

You may have heard people talk about the customer asset and how customers produce cash flow streams over time. However, our research team identified an important issue that’s often overlooked, namely that customers’ cash flows are variable over time and that exposes the company to risk. Just like a stock portfolio, a customer portfolio should be diversified to minimize risk for a desired rate of return, and we were able to identify a number of strategies to reduce risk while maintaining profits.

One way is to manage the mix of customers, which is what IBM did. The general approach is to balance the market segments that your company serves so that its decreases in cash flows over time from one market segment are offset by increases in cash flows from another market segment, so that the average cash flow of the organization remains stable. This insight gives an entirely new perspective on market segmentation strategies. It’s particularly helpful for B2B companies because often they segment their markets by small, medium and large customers who have very different cash flow patterns.

Another approach is to work to increase customer satisfaction with their experiences. It turns out that satisfaction has a double whammy effect, lower cash flow variability and higher cash flow levels. I know it sounds too good to be true, but it’s backed up by solid research by many academics. And surprisingly loyalty programs may not always be the answer. Some loyalty programs lead to more variable cash flows, but not higher average cash flows. So companies need to think about designing loyalty programs to improve the experience or the intangible benefits, for example, membership recognition for consumers rather than offering economic incentives.

Darima Fotheringham: Very interesting! In conclusion, what one advice can you give companies that strive to achieve service excellence?

Dr. Ruth Bolton: I think you’re right that most companies know all about service quality, customer satisfaction, loyalty, and so forth. So my advice is: look forwards not backwards. What does the customer want for the future? Customers have goals they’re trying to accomplish by partnering with you so it’s crucial that companies understand what customers want next. In other words:

  • Understand and align with customers goals.
  • Generate trust that you can deliver experiences that satisfy these goals.
  • Offer products that are relevant to customers’ future needs not what they wanted yesterday.
  • And match the customer’s future circumstances.

Darima Fotheringham: Very helpful! Thank you so much. We were talking to Dr. Ruth Bolton, the author of “Service Excellence. Creating Customer Experiences that Build Your Relationships.” Ruth, thank you so much for your time!

Dr. Ruth Bolton: You’re welcome.

For more information on the science of service visit the Center for Services Leadership on the web at wpcarey.asu.edu/csl

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Ruth_BoltonRuth N. Bolton is Professor of Marketing at the W.P. Carey School of Business, Arizona State University. She previously served as 2009-11 Executive Director of the Marketing Science Institute. She studies how organizations can improve business performance over time by creating, maintaining and enhancing relationships with customers. Her recent research has focused on high technology, interactive services sold in global business-to-business markets. She has extensive experience with survey research design, as well as the econometric analysis of large-scale, integrative data bases. Her research is typically conducted in partnership with businesses, such as the Marriott Corporation, Hewlett-Packard and Schneider National Inc.

Customer Rage Study: Interview With Scott Broetzmann and Mary Murcott

 

Podcast Transcript

This podcast is brought to you by the Center for Services Leadership, a groundbreaking research center in the W.P Carey School of Business at Arizona State University. The Center for Services Leadership provides leading edge research and education in the science of service.

Darima Fotheringham: Welcome to the CSL Podcast. I am Darima Fotheringham. Today I’m talking to Scott Broetzmann and Mary Murcott. Scott Broetzmann is the Co-Founder, President and CEO of Customer Care Management & Consulting (CCMC) and Mary Murcott is the President of the Customer Experience Institute for Dialog Direct. They will share insights from the latest Customer Rage study that CCMC and Dialog Direct conducted and partnership with W.P Carey Center for Service Leadership. Scott, Mary, thank you both for being here today!

Scott Broetzmann: Thank you.

Mary Murcott: Thanks for having us.

Darima Fotheringham: This is the 7th wave of National Customer Rage study. When and how the Customer Rage study begin?

Scott Broetzmann: The concept of the National Customer Rage study goes all the way back to 2002, but it really wasn’t about customer rage at the time. It was much more narrowly conceived as a replication of a very famous study, a notable White House study from the mid-70s that my colleagues, John Goodman and Mark Grainer, did for the White House. It was that seminal piece of work that connected the words “quality” and “profit”. And the study had not been updated in close to 30 years. When we founded CCMC, one of the things we wanted to do was to provide really good actionable information in the marketplace about the customer experience. So we said, why don’t we redo the “White House study”?

Along the way, when we were first conceiving the study, we thought that we ought to put in some new things as well. One of the things that I read in The Washington Post was an interesting article about how local retailers here in the Washington D.C. area were having trouble holding on to their retail staff because customers were so angry and awful to them, and the pay was so low. It struck a chord with me. I did a literature search, looked around and there were all kinds of anonyms or acronyms for rage that were out there. There was software syndrome rage, road rage, and restaurant rage but there wasn’t really any empirical research, anything meaningful that was even quasi scientific with the exception of one study that, I think, was at the University of Buffalo that talked about angry customers.

It left me feeling that people were saying angry customers and customer rage was really the stuff of lunacy. It was a hyperbole, it was an exception. It was just crazy people that painted the car yellow and stood outside the auto companies, lemon laws, that sort of thing. And that didn’t seem right to me. I knew personally, I’ve gone through my own fits of rage from time to time with products or services. Long story short, we added a question or two on rage. The rest as they say is history because the first Rage Study that came out was published in The Wall Street Journal. It continues to enjoy coverage in the popular press and in a lot of other places.

I would also make these other two side notes. First, I think part of the reason that so many are attracted to the Rage Study, outside of some of our friends in the corporate world that manage customer care, is that everybody has their own personal story of rage. A lot of the times, when we present the Rage Study, everybody comes with their own passionate stories about their worst product and service experiences. Everybody gets really jazzed up before we even start talking about data. A part of the reason why the Rage Study is connected is tied to that.

And I would say as well, it’s the only longitudinal study that offers credible trustworthy data about complaining experience. There’s lots of other studies out there, like American Customer Satisfaction Index, J.D. Power, etc. But this is the only study that, over the course of now in effect of a decade, provides a credible view of what it’s like to deal with a company when you have a problem. That’s really an important part of the Rage Study story.

Darima Fotheringham: Right. And looking at the data collected over the years, what can you say about the most common triggers of customer rage, let’s say ten-fifteen years ago and now? Have they changed?

Mary Murcott: Good question. About 10 or 15 years ago we led simpler lives. The cable companies were not in telephone service, were not in security, were not in wireless service. As we start bundling services in the banks and in telecommunications, we’ve seen the complexities rise. Not only has the complexity risen because we have bundled services, but companies that have actually listened to the customers, added a lot of features and a lot of channels in which they can communicate. That’s causing a lot of customer bouncing from one representative to another representative. So I think the common trigger is complexity.

The features have gotten complicated, so customers have more reasons to call because it’s not intuitive how to use a product or service. Secondly, they don’t know who to call within the company and, lastly, the company isn’t really sure if the representatives have been clearly trained or they lack a common database about customers, a common database about knowledge. That’s become a real problem. So, I think, it’s complexity that is driving the rage at this point.

Darima Fotheringham: Going into the latest customer rage study, did you have any predictions about what you’d find? Were the predictions confirmed? Were there any surprises?

Scott Broetzmann: So what’s interesting of sort, turning a lemon into lemonade, is that the rage data, over the course of these seven times we’ve done it, hasn’t really moved very much. Sometimes, the key indicators are sort of static or now we’re starting to see, now that we have a longer term view – that’s why the longitudinal view is so important – things can move just a little bit, but over the course of seven times over 13 years or so, every little bit adds up to a lot. So there’s a slower decline, maybe, but things are in decline for some of these really important measures. Continue reading

Transformative Service Research: A Multidisciplinary Perspective on Service and Well-being

Interview with Laurel Anderson and Amy Ostrom, Editors of the Special Issue of Journal of Service Research, Transformative Service Research: A Multidisciplinary Perspective on Service and Well-being

In August of this year Journal Service Research published a highly anticipated special issue on Transformative Service Research, a Multidisciplinary Perspective on Service and Well-being. The entire issue will be available free of charge till November 2015 and can be downloaded from the journal’s website. We’re very excited to feature the special issue in this podcast and on our blog, where we’ll be sharing posts by the authors of the three finalists for Best Paper Award.

Darima Fotheringham: Today I’m talking to the guest co-editors of the special issue, Professors Laurie Anderson and Amy Ostrom from Arizona State University. Professor Anderson, Professor Ostrom, thank you for talking to us today.

Laurel Anderson, Amy Ostrom: Thank you, it’s good to be here.

Darima Fotheringham: As you mentioned in the editorial, Transformative Service Research is a fairly new research area that’s been gaining momentum. For those who are not familiar with the term, can you start by defining Transformative Service Research, or TSR, and explain why it is receiving so much attention and interest in the research community today?

Laurel Anderson: We define TSR, Transformative Service Research, as focusing on services and well-being, and in particular, as research that has to do with creating uplifting changes. And one of the key things about the definition is that we look not at just individuals but also at collectives like family or communities, ecosystems, society. These aspects are some of the things we found in the papers that came in that were different from a lot of the research in service.

Darima Fotheringham: And going back to the second part of the question, why do you think there is so much interest from the research community in this particular topic?

Amy Ostrom: There’s always been some interest in studying well-being issues in general, but I think we’ve seen an increase interest in the last five or six years. Some of it, likely due to discussions about what should research priorities be in the service field. And as part of some research priority setting efforts, this idea of studying service and well-being really came to the forefront. We’ve seen really a community of service researchers form, who really want to better understand this connection between service and well-being. And as that community has grown, we’ve seen more and more special sessions at conferences, research projects at a significant nature getting started, and it’s really been very exciting to see.

Darima Fotheringham: The TSR special issue includes ten very diverse articles. They’re from around the world and cover different industries, discuss different cultures. In the editorial you identified three big themes. Can you talk a bit about those themes and share a couple of examples that would illustrate some of the new interesting concepts that the readers can take away?

Laurel Anderson: We were just really excited to see the diversity of the papers that came in. That’s part of what we wanted to accomplish also, to indicate how broad this field is both in method, and cultures, and content, and theories conceptually. So the three themes that we found arising from the data were ones that we thought were innovative, and provocative, and had a lot of heft to them. For example one is the de-struction of value. We always talk about the co-creation of it, creation of value, but haven’t really given time to look as much at some of the destruction of value. That is a really interesting topic. And as the papers in this area point out, sometimes it is unintentional, sometimes it’s unknowingly destructive, and sometimes it’s intended.

So for example, the article, the lead paper, which was the award winning article by Per Skålén, Kotaiba Abdul Aal, and Bo Edvardsson, looks at what they call strategic action fields. It looks at the incumbents in that field and it looks at challengers in this service area. This is amazing data because it looks at Syria and how the regime, as incumbents, took away services to many of the population. Then how that population reacted and created new services under the constraints that they had. So the destruction was an important part. That one is a very vivid, kind of unusual example. But sometimes it is also more everyday kinds of things, like chronic illness, where people really don’t want to be in a service. They’d rather not be participating in the service. There are a lot of negative aspects to the chronic part. We want to make sure that we’re looking at some of the negative aspects of services so that we can deal with those, which I think is really important.

Amy Ostrom:  One of the other themes that we highlighted involved co-production or co-creation, which are really looking at the roles and activities that consumers play as part of service. And while questions around co-production and co-creation have been the focus of a lot of research, not much of that work has really looked at well-being. We definitely had some articles where that was the focus, trying to understand how the activities and roles that consumers took as part of the service, how that ultimately impacted their well-being.

So for example, one of the papers authored by Jillian C. Sweeney, Tracey S. Danaher, and Janet R. McColl-Kennedy looked at what they call ‘effort in value co-creation activities.’ So really looking at how much effort consumers, in this case patients who are dealing with chronic illness, what kind of activities are they taking on? The whole idea behind their work was this notion that some of these activities or the roles are actually more effortful than others, and that patients or these individuals dealing with chronic illness will take on the easy activities first and then progress to the more effortful activities. So they were able to really look at the nature of these activities, things that they’re doing for themselves, things that they’re doing related to other people. What’s really fascinating is that they were able to look at the effort that these individuals were expending in terms of these various activities and relate that to things like quality of life. It really highlights, spotlights, how consumers and roles they’re taking on, the activities they are engaging in part of a service, really can impact their well-being.

Laurel Anderson:  We’ve looked at providers before to some extent, and the production, the co-creation, but not emphasized consumers and their well-being as much.

Amy Ostrom: It’s kind of exciting that we’re actually starting to see some research where we’re looking at more innovative measures. Oftentimes some of the research involves more perceptual measures. We are seeing that researchers are starting to use actual behavior measures or maybe more objective measures to really understand the nature of well-being, changes that are happening. So for example Martin Mende and Jenny van Doorn look at co-production in the context of consumers participating in debt management programs, and they look at, over time, the impact of consumers who are in those programs—their co-production and its impact on an objective measure, a change in credit scores, as well as things like increased stress perceptions. So we’re really seeing some interesting relationships between, again, how people are co-producing or their role within the organization and their level of well-being.

Darima Fotheringham: In your editorial you also identified specific areas within TSR that required further research. Can you talk about these areas and share examples of research questions that you personally find especially important or intriguing?

Amy Ostrom: One of the areas that we continue to talk about, and I know that others are really devoted to studying it as well, is what’s called Base of the Pyramid, or studying individuals, really billions of people in the world who are living under a few dollars a day. And a lot of the research that’s done in service work and just academic work in general in any area doesn’t tend to pay attention to individuals living in those particular types of circumstances. So there’s much to learn about consumers living in those situations, and a lot to learn from them, and the creativity that’s demonstrated in individuals that are living in what we refer to as the Base of the Pyramid.

Laurel Anderson: Another area, that we believe is very important, has to do with stress, being really cognizant of stress and the impact of stress on consumers. One of the other methods or approaches that we also feel is very important is an interdisciplinary approach where we’re bringing in knowledge from maybe the biological sciences, neurology, some of the other fields like nursing, or medicine, or law. One of the areas where there’s just fascinating research on stress has to do with the impact of stress on the body of a person. We’ve known for quite a while that stress impacts the well-being of a person, but there’s some very interesting research now that looks at the impact of stress on the body and then on how it’s passed on to the next generation—I think it just emphasizes the importance of well-being for the consumers that are participating in services and incorporating some of the interdisciplinary research that’s out there on the impacts of stress. So it’s a very fruitful and important area to pursue.

Amy Ostrom: The other area that we talk quite a bit about that’s not too surprising is the impact that technology is having in services that are based on technology and the relationship with well-being. And in this day where so much of our behavior can be tracked and monitored, issues around what that means for privacy and service settings and potential harm that can come from that. The fact that service providers now can know information about us and be continually tracking our behavior, the potential that raises for all sorts of potentially harmful well-being aspects, but at the same time a lot of benefits, when you think about monitoring and health related aspects, that can be really empowering for consumers to be able to live their lives knowing that the service provider, a doctor, is able to know at any time if there are any issue. But it does change the nature of the dynamic.

Laurel Anderson: It does, and it raises something we found throughout, which is trade-offs. There are trade-offs in some benefits to well-being and the negative aspects of, for example, technology and monitoring. Those are really important aspects to talk about and to research too. In addition, as far as trade-offs are concerned, sometimes there are trade-offs between the well-being of one group and the well-being of another group. And who decides then which is going to be prioritized in their well-being? So there are some really complex questions around well-being and trade-offs that we saw coming out of some of the research.

Amy Ostrom: I think it highlights the need to look broader than just the dyad, the trade-offs at community levels and service system levels. It is the key to why we have to look at the broader picture than often times we tend to do. It’s hard research to do, and very difficult, but very important given the nature of these kinds of interaction trade-offs that are effecting so many of us on a daily level.

Darima Fotheringham: You conclude the editorial by recommending specific actions that can help TSR make a real impact on society. The call to action is mostly directed to the research community, but as you mentioned we can all benefit from data in the field. Is there anything as consumers, as customers, or as individuals can do to support this research?

Laurel Anderson: I think that one of the areas that is challenging with regards to consumers themselves and well-being is a trend that we’re seeing that’s called responsibilization. What that means is that services, and governments, and policy are putting more responsibility for wellbeing onto the consumers. And it demands a high level of literacy on the part of the consumer, and so for example health—consumers have to know so much more now about the health, and their bodies, and the medical field because the responsibility is being put more on them than in the past. So as far as consumers are concerned that’s one of the issues as far as trade-offs. Yes, more of the choices on the consumers parts, but also more of the responsibility and decision making, maybe without some of the expertise to be able to do that. So things like literacy, having the time to do that, the resources and capacity I think are real challenges for consumers to manage. And if you have to do that in all the different areas of service, from health to legal to financial, it’s a lot to expect of consumers.

Darima Fotheringham: It’s very taxing.

Laurel Anderson: Right.

Amy Ostrom: When I think about what consumers can do, from the research perspective, what I hope is that the consumer would be willing to participate in some of the research that we and academic research, really globally, are interested in doing. The type of work that we do and the questions that we’re trying to answer really require partnerships with consumers to understand how the services they’re using day and day out are in fact impacting their well-being. Whether it’s healthcare, financial services, it requires that kind of participation. So I hope going forward that people will be willing to participate in research and share their thoughts, as I hope that organizations, individuals who work with consumers in different service settings are willing to collaborate with researchers. A lot of the research questions really require partnering with organizations, and one of the real goals of Transformative Service Research is to have impact—to actually improve the lives of consumers, and the only way that happens is really through organizations, companies who are basically effecting consumers day and day out—Learning what can positively impact well-being and doing more of those things, and learning what reduces well-being and stopping doing those things. And it’s those kind of partnerships that are actually going to lead to the impact that we’d want to see in the community and individuals.

Laurel Anderson: And I think it’s so important to listen to the customers in whatever service they’re in—the voice of the consumer. And it’s interesting because when we don’t, now consumers are creating their own research. There are communities of consumers that are doing research on topics that they think are important and that aren’t being followed up on by researchers. For example, a site called Patients Like Me where they’re monitoring themselves, and doing research, and finding significant results because the questions weren’t being addressed. So I think it’s really important to not just look at things from our research point of view, but to be listening to the consumer and to be incorporating those aspects that are frontline to them into our research too.

Darima Fotheringham: Great, thank you so much. We were talking to the editors of a JSR special issue on Transformative Service Research, a Multidisciplinary Perspective on Service and Well-being. You can find the entire issue, including the editorial we talked about on the website. Professor Anderson, Professor Ostrom, thank you for talking to me today.

Laurel Anderson, Amy Ostrom: Thank you, Darima


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Laurel Anderson is Associate Professor of Marketing at Arizona State University. She has degrees in both marketing and community health. She is deeply involved with development of Transformative Service Research (TSR).  In particular, she focuses on creativity and innovation, going between cultural worlds, health well-being, challenges and strengths related to poverty, culture and immigration and services as social structures. Previously, she was Director of the Institute for International Management at Arizona State University. Prior to academics, she developed community health programs focused on children and families, including a crisis intervention center for children.

Ostrom-Amy (Small) 2015

Amy L. Ostrom is the PetSmart Chair in Service Leadership Professor in Services Leadership, Chair and Professor of Marketing at the W. P. Carey School of Business at Arizona State University. She received her Ph.D. from Northwestern University. Her research focuses on issues related to services marketing including customers’ evaluation and adoption of services, customers’ roles in creating service outcomes, and transformative service. Ostrom, who was selected as the 2004 Arizona Professor of the Year and the 2007 ASU Parents Association Professor of the Year, has supervised numerous undergraduate Honors theses. She has shared the service blueprinting technique with small start-ups to Fortune 500 companies to help improve their service processes and develop new service offerings.

Internet-of-Everything and the Future of Service

By Darima Fotheringham

Two weeks ago I attended Frontiers in Service, (#frontiersinservice) a global conference on service research. This year, the conference was sponsored by IBM and a lot of discussion was around the Internet-of-Things (IoT) or Internet-of-Everything, as it was frequently referred to. One of the presentations that I found especially interesting was by Irene Ng, Professor of Marketing and Service Systems and Head of Service Systems Research Group at the University of Warwick. She talked about smart technology, interconnectedness and data in a different context than the one that prevails in the IoT industry discussion. I found her perspective both simple and deeply profound. It highlighted a few important questions that I want share with you.

Technology developers are constantly pushing the envelope of what’s possible. However, it seems that in their fascination with the new technological capabilities, companies sometimes lose track of the most important element; humans as the ultimate customer and consumer of IoT. It is important to bring the human factor front and center into the design and use of smart things. IoT allows smart things to track and make use of large amounts of data, but it’s humans who are the integrators of data. It is not about our smart dishwashers being able to talk to our smart fridges. It’s about how these capabilities of smart appliances, and their “conversations”, can be integrated in our lives in a useful and empowering way.

We are generating vast amounts of data by using smart things, but we also give this data context, without which any data will be meaningless. Currently most of the data that’s being tracked is fragmented and owned by a few big players, such as Google, Facebook, Amazon. Opening access to the data and giving ownership back to the individuals can take IoT to the next level. Think of what you could do if you had access to the insights from the data that’s being collected about you across different service providers, and what new applications, new business models and services could be developed for us and with us. By the way, Irene Ng and her research team launched a project called Hub-of-All-Things, or HAT, to enable just that by creating a new platform powered by the IoT. I highly recommend checking it out. You can even sign up for your personal HAT to try, once it becomes available. Currently, it’s limited to UK and Singapore.

The new technological advances enable smarter things, smart phones, smart appliances, smart homes, which can do amazing things at a speed and accuracy that are outside of our ability. News reports share unnerving statistics about how many of our jobs will soon be taken by robots in the near future. For example, Gartner predicts that about one-third of jobs will be done by smart machines by 2025. Stories about the powers of AI make us believe that we are in direct competition with our smart devices. However, as Irene Ng pointed out in her presentation, a more useful approach is to view these smart things as amplifiers. They amplify and enable us to do more, by extending our capabilities. These smart objects are created by humans, for humans, and ultimately should be used to improve our lives. It brings to mind the example of the electronic spreadsheet invention, which eliminated hours of tedious manual calculations and transformed the industry. As a result some jobs were lost, but even more new ones were created and new horizons opened. NPR Planet Money did a great episode (Episode 606: Spreadsheets!) on this subject.

When you change the lens through which you look at smart things, it becomes clear that these objects are not smart on their own, they need collaboration with humans. It’s us, humans, who breathe life into these inanimate objects and make them smart. As humans, we operate in a complex social world, and it is not enough for the devices and products to be simply smart, they have to be “socially smart”, as Irene Ng puts it. She goes further to explain the meaning of “socially smart” in the context of smart objects:

  • It means co-creation, collaboration with a human. An object cannot be smart on its own, without a human input. Socially smart objects can amplify our abilities by removing or reducing our limitations and opening new possibilities that we co-create together. It is not about simply serving us ready-made solutions based on predictive analytics.
  • It means understanding context. We live complex and unpredictable lives, responding and reacting to a variety of different situations every day. Socially smart objects are able to fit in and amplify our capabilities within the context of each situation or scenario, independent of how consistent or irregular these situations or scenarios are.
  • “Socially smart” does not mean socially responsible. Socially smart objects can amplify to serve a good purpose or a harmful one, all without moral judgment. They have no intentions, positive or negative. The moral judgment is completely in the hands and minds of those who control the smart objects. Take the story about Uber tracking and sharing stats about one-night-stand rides of shame on one hand, and on the other hand, the story of online Syrian activists transforming the media, social movement, healthcare and financial services during the Arab Spring, as two very different examples of data use.

This Frontiers in Service presentation was a good reminder to bring the focus back to the customers, the humans who are the ultimate consumers of the smart IoT.  It also gives a lot of food for thought about the future of the fully connected world and the design of a socially smart IoT that will power new services. You can find more information about the HAT project and Irene Ng’s keynote presentation at Hub-of-All-Things website and watch the video of her presentation on YouTube.

While the Frontiers in Service conference is over, there is another conference focused on services that you may be interested in attending this year. It is the annual Compete Through Service Symposium (CTS) hosted by the Center for Services Leadership. It will take place in Scottsdale, AZ, on November 4-6, 2015. We hope to see you there!

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Darima_headshotDarima Fotheringham is a Thought Leadership Program Manager at the Center for Services Leadership (CSL), W.P. Carey School of Business, ASU.

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Can snooty staff of luxury stores boost sales? What research actually tells us.

By Darima Fotheringham

New research by Darren Dahl,  University of British Columbia, and Morgan Ward, Southern Methodist University, “Should the Devil Sell Prada? Retail Rejection Increases Aspiring Consumers’ Desire for the Brandreceived a lot of attention in the press lately. The research shows that condescending attitude of sales representatives at higher end stores can actually encourage customers to purchase luxury products. Sounds counter-intuitive? Not necessarily if you look closer at specific scenarios the researchers tested.

The reported effect held true when 1) the research participants (customers) aspired to be associated with the luxury brand; purchase in this case was a way to show they belonged, proving they were a part of the “in-group”; 2) the sales associates were an authentic representation of the brand in the customers’ eyes. Snobby treatment did not work on those customers who did not have strong aspiration for the brand or on those customers who shop at luxury brands regularly. It also did not have the same effect when the sales representatives did not seem to fit the brand. Interestingly, the researchers found that positive image of the brand after rude treatment did not last very long. After two weeks, the customers reported that their desire for the brand significantly diminished, which is not surprising. The novelty effect of owning an aspirational brand wears off, while the unpleasant experience leaves much longer lasting memories.

While rude treatment may help boost immediate sales, it can discourage new customers to return, hurting the brand in the long run. Good customer service is still a gold standard. One important implication from the study: customers can tell and respond positively when front-line employees fit the part and appear to be an authentic representation of the brand. While it may be an impossible task to train the front-line employees to treat aspiring and non-aspiring customers differently, it will always pay off to hire and train front-line employees to appear and behave consistently with your brand. To learn more about the effect of brand authenticity in customer interactions check out our blog postBringing Brands to Life“.