Tag Archives: co-creation

The Moment of Truth: A Co-creation Perspective

The term “moment of truth” (MOT) is not new to me and I was happy to learn it was an integral part of the customer-experience community vocabulary.  As I have visited with many in the community, I’ve discovered there are various definitions for MOTs in relation to the customer journey. It is generally agreed that customer interactions are called “touchpoints,” and MOTs are the more significant touchpoints. However, the criteria for what’s “significant” depends on who you talk to. Some say the MOT is at the beginning when the customer decides to accept (or reject) the firm’s offer, while others point to the end of the transaction when they determine whether the whole experience was good or bad. Some identify various touchpoints where significant value is or is not realized. Yet another criteria is a touchpoint that shows the greatest likelihood the customer will “fall off”, or is most likely to end the business relationship. I contend there is too much ambiguity for the term to be useful in the context of a professional discussion.  At a minimum, the customer-experience community needs to agree on a more unified definition. I would go as far as to suggest a slightly different definition – one I think was intended by the first person to use the idiom in these contexts.

Richard Normann (1943-2003) is credited with the first use of the idiom “moment of truth” in a business context. Using the MOT concept, Normann was highly instrumental in the turnaround of Scandinavian Airlines (SAS) in the early 1980s. Jan Carlzon, SAS’s CEO during that time, recounts the turnaround in his book titled Moments of Truth (1987), attesting to the powerful perspective the MOT provides and Normann’s more significant contribution to the effort. By removing MOTs which provided little or no value to their customers, and enabling employees to deliver the best experience possible in those that remained, SAS became profitable again by more than three times the first year target.  They also earned the rank of “top Airline” the same year, and held that distinction for many years.

Normann’s book Service Management: Strategy and Leadership in Service Business, Third edition (2002) gives us the greatest insight to his thought process regarding MOTs. I find it fascinating and affirming that his first reference to MOTs is directly preceded by a discussion about co-creation. Normann says:

“…the customer is often more than just a customer – he is also a participant in the production of the service. A haircut, the cashing of a cheque, education – none of these can conceivably be produced without the participation of the consumer. Thus the service company not only has to get in contact with the consumers and to interact with them socially; it is also necessary to ‘manage’ them as part of the production force.”

Normann is clearly stating that a customer is integral to the value creation process. This is co-creation – the customer and the organization working together to create desired value.  If the customer is not involved, no value is ever created.  No customer, no value.

With this backdrop, Normann introduces the concept of MOTs. He states:

“Most services are the result of social acts which take place in direct contact between the customer and representatives of the service company. To take a metaphor from bullfighting, we could say that the perceived quality is realized at the moment of truth, when the service provider and the service customer confront one another in the arena. At that moment they are very much their own. What happens then can no longer be directly influenced by the company. It is the skill, the motivation and the tools employed by the firm’s representative and the expectations and behavior of the client which together will create the service delivery process. A large service company may well experience tens of thousands of ‘moments of truth’ every day.”

From the very first mention, Normann is clear that when a customer comes into contact with the organization, it is a MOT. The two have come together to accomplish something in relation to creating the value the customer seeks – their job-to-be-done. We know from experience there are often many interactions per customer journey depending on the size of the job-to-be-done.

We also know customers judge the experience of each and every interaction as to perceived quality in relation to its part of accomplishing “the service delivery process”.  Customers have some idea of how much time and effort they should be expending. They have some expectation of how they should feel at a particular point in the process, and they judge the interaction based on whether their expectations were met. The quality of each and every interaction is determined and (either consciously or subconsciously) scored in the mind of the customer. Think of this as a “running score.”

When Normann first introduced the MOT concept, most interactions were face-to-face; but don’t take this too literally.  As technology emerged and matured, Normann realized the potential for applying technology to MOTs.  He says, “…new communication and information technology clearly increase the possibilities to ‘store services’, and to make person-to-person interaction in their provision unnecessary.” Customers understand that automation is still designed and implemented by “faces” in the organization.

Normann also talked about the cumulative and/or knock-on effects of MOTs:

“There is a well-known dynamic in interpersonal interactions whereby positive action creates positive reactions, which in turn leads to mutually positive feelings which in turn leads to mutually positive interaction. Or the reverse can apply. A positive attitude and efficient action on the part of the service supplier will encourage the client to participate more, and more effectively, which in turn encourages the service supplier, and so on. A ‘virtuous circle’ has started.”

Normann continues at length to point out when the interactions are positive and customers feel the experience is valuable, a “virtuous circle” ensues.  Furthermore, the outcome of each interaction or MOT sets up the likelihood of a similar outcome at the next interaction. Good interactions tend to foster more good interactions, while poor interactions tend to lead to yet poorer interactions.

Perhaps Normann is the clearest in defining the MOT when he said:

“The quality experienced by the customer is created at the moment of truth, when the service provider and the client meet in a face-to-face interaction. The most perfectly designed and engineered service delivery system will fail until things work out then. Thus, any enquiry into quality must start from the microsituation of client interaction, the moment of truth (emphasis mine). The important question is: what mechanisms lead to and reinforce the client’s experience of quality and good value in that microsituation?”

In defining what Normann meant by the ‘moment of truth’, focus on the most consistent and defining vocabulary he used throughout: the words “interaction” (used consistently) and “microsituation” (used specifically), and more importantly, the juxtaposition of the two – “microsituation of client interaction.” From my reading of Normann, MOTs are each individual interaction with the customer – not high-value interactions, not high-risk interactions, not just the buy/no-buy interaction, and not the last interaction, which are all macrosituations.

The organization typically dictates the customer’s journey, and therefore, determines the time and effort required from customers. Unfortunately many organizations tend to think of some interactions as trivial and inconsequential. All too often, what the organization considers innocuous, the customer perceives as a waste of time and resources. Furthermore, the cumulative or knock-on effects of multiple or poorly executed interactions could culminate at a relatively innocuous one – the proverbial straw that broke the camel’s back.

From a co-creation perspective, each interaction either increases or reduces value to the customer. In other words, that running score really matters. Is every interaction equal to another? Absolutely not, but they are all weighty! We need to consider each and every interaction and what it contributes to customer value in relation to all other interactions.

Therefore, a co-creation perspective takes into account the value exchange of each and every interaction with a customer.  As the customers navigate their journey, moment by moment they are sizing up how they feel about the potential of achieving overall success, and with a few exceptions, they can drop out at any interaction in the journey. Though the organization may identify a particular interaction in which customers typically drop out of the journey, this doesn’t necessarily indicate that interaction is the culprit. The root problem is just as likely to be poor execution of one or more upstream interactions. The customer journey is part of the co-creation ecosystem and systems thinking needs to be applied.

Please keep in mind my purpose is first: to create a better and more common understanding in our terminology, and second: help us leverage the brilliance of Normann’s work. I’m not necessarily suggesting the customer-experience community change its vocabulary. However, I do recommend we at least apply Normann’s research and concepts to whatever the corresponding vocabulary is. Every organization’s success depends on creating Normann’s “virtuous circles”, yet these are only possible when we acknowledge the full significance of what he called the MOT with their cumulative, knock-on effect in the co-creation ecosystem. Call them what you will, interactions, touchpoints or MOTs, but for the good of the customer give every single one their due consideration.

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

_________________________________________

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.

Hub-of-All-Things: Breaking Data Silos for a Better Service

The advent of the Internet-of-Things (IoT) in today’s world of connected things and connected people has made it possible for firms to harvest lots of real-time customer data – information from people and objects, and indeed everything.

This is compounded by individuals spending much of their time generating data for others about our lives, placing more and more data about ourselves “on the internet” with firms who are providing services to us. Not surprising then, that each of us has a huge digital footprint.

Even as we are becoming increasingly concerned about the privacy, security, and confidentiality of our own data, we also find that we get almost no value from it. Similarly, although firms are able to collect more and more personal data from us, they get relatively little value from it. This data is often of questionable quality and a lot of processing is needed to convert this “big data” into useful insights on customer trends.

So how can we connect our personal data and look at it all together, to give real insight into the way we live our lives, so that we can make better informed decisions as well as enable firms to come up with more relevant and personalised offerings for our lives? And how do we do so in a safe and privacy-preserving manner?

These are some of the key questions addressed by the Hub-of-all-Things (HAT) multi-disciplinary research project, whose researchers, funded by the UK government, have spent the past 2.5 years building a multi-sided platform for personal data. The HAT personal data platform enables individuals to collect our own data through IoT-enabled objects, and to organise, visualise, control, and exchange this data in the context of our lives – managing our digital selves and putting ourselves at ‘the hub of all things’.

By giving individuals the computational ability to organise our digital assets through a secure platform that enables us to retain control of how we share our data with whomever we choose, the HAT allows us to get the best value from our personal data. It helps us to understand our wants and actions in the context of our lives to make better decisions, and by permitting the exchange of this data with firms, to access offerings more suited to how we live our lives.

This data exchange through the HAT allows firms to better understand the context of their customers’ consumption, enabling them to gain greater insights into customer wants. They are then able to offer customers great products or services that support exactly what they want, when they want it; this provides a big market discriminator and opens up new market opportunities. Better still though, by empowering their customers in returning control of their personal data to them, firms are able to build a better relationship of trust with their customers, thus creating goodwill and loyalty.

With the completion of the research project in Nov 2015, the HAT has now been handed over to the HAT Foundation, a social enterprise that will take forward the next phase of the HAT’s technology for its eventual commercialisation and global rollout in 2017. The Foundation’s operational arm, HATDEX, is on track to launch the beta HAT in July 2016, along with the Rumpel hyperdata browser used to view personal data on the HAT, currently being developed through the HARRIET research project.  This has been made possible by HATDEX’s successful Indiegogo crowdfunding campaign, which hit its £50,000 funding target ahead of its end-April deadline. The campaign now goes into In-Demand and will continue to grow the community of HAT users, whose volume is necessary for the development of the HAT Marketplace for the trading of personal data on the HAT.  Meanwhile, ongoing research on the HAT will also continue through the UK government-funded HAT Living Labs (HALL) project, which will focus on Business Model Innovation within the HAT ecosystem.

The HAT enables the forging of an entirely new social and business contract between individuals and firms in the context of the IoT, one that potentially spurs even more innovation because individuals could be private and secure and firms can offer more innovative services around a mix of all sorts of data. The timing can’t be better as industries are beginning to wake up to the Internet ‘jumping out of the box’ into the physical realm through the Internet-of-Everything. Through the HAT, we can see new ways to create new markets and in doing so, help spur greater growth in the digital economy.

___________

Irene Ng is a Professor of Marketing and Service Systems at WMG, University of Warwick, where she is also director of the International Institute for Product and Service Innovation.  She led the Research Councils UK-funded Hub-of-All-Things (HAT) research project as its Principal Investigator, and continues in this role with the HARRIET and HALL research projects.

Irene Ng will be speaking on “Mastering Service for the Future of Things” at Compete Through Service Symposium, October 26-28, 2016, in Scottsdale, Arizona.

2016 cts email header no early bird 950 w b

 

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.

Cloud technology providers, such as Salesforce, have matured to deliver high availability, reliability, and continual improvements in features and performance, alongside quick support response and maturing service options–all with an eye towards long-term customer retention. But the environment in which these services live has changed, and service providers need to change with it.

“Whereas yesterday’s services needed mechanics to keep them running, tomorrow’s services will require a Formula 1 pit crew.”

From Fulfillment to Accountability

The use of cloud services has reached a point where it is possible to begin building robust best practices and centers of excellence whose reach extends beyond the technology implementation itself. Cloud-based software also allows providers to have access to huge amounts of data about how customers are using the technology effectively. As such, providers can learn from the experience of thousands of customers and combine this with direct collaboration to find new and better ways for their customers to achieve success.

As a result, service providers can become more accountable not just for the availability, functionality and reliability of the services they deliver, but also for the business outcomes that those services are targeted to achieve – increased sales performance, better customer service, greater employee engagement, stronger governance and compliance, and so on.

At the same time, to successfully adopt and use these services to their full potential, companies will need to develop the right business skills and experience that they may not have in house. And, as noted above, various macroeconomic and business process shifts are driving business leaders to demonstrate a return on their cloud investments faster than ever before.

All cloud tech providers must first evolve from offering fulfillment services (primarily implementation help and reactive support) to delivering proactive guidance. The leading providers will continue this evolution in accountability by offering  packaged services and long-term engagements that are targeted at delivering specific business outcomes that enable long-term customer value.

The Big Opportunity–Outcomes

According to the Technology Services Industry Association (TSIA), the long-term momentum of the industry is towards “outcome-based services.” Although the financial model for outcome-based services in its truest form – e.g. compensation based on achievement of KPIs or some other measure – has not yet been established, it is clear that the nature of packaged services delivery must shift from technology implementation and support towards being outcome-focused.

In response, cloud providers must respond by providing more personalized and focused service, going beyond even the premium support offerings on offer today.

Salesforce is taking the initiative to transform the industry by announcing its new Success Accelerators–part of the Success Services launched at Dreamforce in October. Complementing the support and training available through our Success Plans, Salesforce’s new Success Accelerators go beyond services and support and dive into outcomes – helping our customers get the most out of their Salesforce implementation. We’ve identified the KPIs that matter to our customers, and we’ve designed programs that help them achieve – and exceed – them. We co-create success plans with our customers that deliver the business outcomes they demand.

The result is a set of engagements that are tailored to their business and context – part of an ongoing relationship that is tuned to what kind of business they are in, where they are in the cloud adoption cycle, and the outcomes they want to achieve. We begin with a close look at what’s unique about a customer’s business, then we work collaboratively towards an outcome-focused implementation plan that spans technology, business practices and culture.

These engagements give customers access to an elite team of specialists that cross multiple disciplines – from technologists to data analysts to change management experts. They leverage the learning and experience of over 150,000 customers who are already achieving success with our cloud services. Our customers can also tap into this knowledge and expertise through a variety of self-guided programs and self-service resources. They offer the right combination of ongoing, personalized collaboration and advice, and the delivery of support at scale. Crucially, they offer the flexibility to choose the approach and level of participation that works best for a customer based on what their ambition and current operating reality.

In the end, we are trying to lead the way by being more consultative and prescriptive in our relationships with customers – to stand by customers long after the initial sale, and to guide them towards the business results they desire. And that consultative relationship needs to extend beyond our market-leading technology itself, and into addressing the business challenges of our customers. If we are able to create close, consultative and long-term relationships with our customers, we believe we will earn a place at their table as trusted advisers, who can help them on their transformation journey and dramatically improve retention year over year.

___________________


linkedinRandy Wootton
has 20+ years of experience leading both small and large teams/organizations, driving results and making money for companies and clients. He is currently the VP of Salesforce’s Customer Success Products focused on accelerating the Service Product Portfolio growth from $300M to $1B. Prior to Salesforce.com, Randy was SVP of Sales, Service and Marketing at AdReady–a ventured-backed advertising technology start up–where he drove adoption of AdReady’s unique display advertising solution in the mid-market. Randy was previously VP of Global Search and Online Marketplace at Microsoft, where he was instrumental in operationalizing  Microsoft’s “Search Alliance” agreement with Yahoo! for the small and medium sized space. Wootton also spent more than four years at aQuantive in product management, marketing and business development roles. Earlier in his career, Randy was a Naval Aviator, flew in A-6E intruders in two Persian Gulf deployments and taught literature at the US Naval Academy. Randy received a BS from the US Naval Academy, an MALA from St. John’s College and an MBA from The Harvard Business School, resides in the Bay Area with his wife and 2 little monsters.

You can hear more of Randy’s insights at the Compete Through Service Symposium on November 7th.

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.

Show you care: initiating co-creation in service recovery

NLP-course-for-customer-serviceBy Dr. Yingzi Xu

Customers are no longer passive receivers of service offerings from companies, but rather value creators themselves. Companies realize that involving customers in service production and co-production is a cost-saving strategy and an effective way to satisfy customers. Co-production expands to co-design of new services as well as to co-recovery, which allows companies and their customers to work together to find a solution in the event of a service failure.
The justice theory, which is rooted in social psychology, has been widely used to explain individuals’ reactions to a variety of conflict situations. In a service recovery situation, customers have to confront what they perceive as an unfair outcome or treatment from a service company. Therefore, customers judge the company’s recovery effort through the “lens” of justice.

The idea of involving customers in the recovery process is to offer customers a certain degree of perceived control and empowerment in a service failure situation. Customers feel a greater sense of control and more responsibility when they are a part of decision-making process to work out a solution after a service failure. Customers perceive a higher degree of justice or fairness when they can influence both how a problem is solved and the actual outcome, than when being presented by a ready-made solution from the service company.

So involving customers in service recovery seems like a good strategy, doesn’t it? Not always! When customers see their co-creative effort as doing the job for the company, co-recovery is harmful. Customers expect the company to provide a larger portion of the joint effort when addressing the customers’ loss and any inconvenience caused by a service failure, especially when the company is responsible for it.

How can we make co-recovery positive for our customers? The key is to let customers feel that the company has done more, so that the joint effort shared between the company and the customer is fair in the customers’ eyes. Here, employees play a crucial role: they must ensure the customer recognizes their effort. A simple and effective way is for company employees to initiate co-recovery with their customers. Such an initiative indicates that the service company is willing to help and that it respects the customers’ opinions. However, if it is the other way around, the customers will perceive that the employees are not keen to help and that they put in less effort toward solving the problem. In other words, the effort demonstrated by the employees influences how customers view co-recovery.

In general, it is a good idea to proactively involve customers swiftly after a service failure. At the same time, effectiveness of the service recovery efforts also depends on how the customers are involved and how they perceive their own and the employees’ effort in the recovery process. In our study, we make a connection between employees’ initiation, perceived effort, and co-recovery effect. When service recovery is initiated by employees, customers perceive that a company makes a greater effort in service recovery; therefore they view the co-recovery as a fair and positive joint work.

So what can service companies do to make their customers happy if a service fails? Service companies can invite their customers to co-create a feasible solution without costly compensations. Service companies can, without much cost, influence perceived effort in the eyes of the customer by taking the initiative in service recovery when a problem occurs. For example, companies can offer customers a few possible solutions to the problem. Customers appreciate if they are given options for a resolution; it also gives them a stronger perception of fairness about the outcome.

Our research suggests that managers should empower and train their employees, especially frontline employees, to equip them with the knowledge and skills to handle service recovery proactively whenever possible. It is not enough to simply wait for customers to ask for help because the customer will perceive that the company is not exerting the effort. Customer-centric recovery management by proactive employees can increase the effectiveness of recovery and will result not only in happier customers, but also in increased customer repurchase behaviour.

___________________

Yingzi XuDrlinkedin. Yingzi Xu is Senior Lecturer of Marketing at Auckland University of Technology in New Zealand. Her research interests include customer satisfaction, service recovery, and customer switching behaviour in service research. She has published articles in international journals such as Journal of Business Research, Journal of Service Management, Managing Service Quality, and the Service Industries Journal.

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.

To learn more about Service Recovery, check the online course How to Profit from Service Recovery.

How Customer Participation in B2B Peer-to-Peer Problem Solving Communities Influences the Need for Traditional Customer Service

Bone_SterlingBy Sterling Bone

Can peer-to-peer interactions in a customer support community reduce the need for one-on-one traditional customer support service? New research sponsored by Arizona State’s Center for Services Leadership and published in the Journal of Service Research (JSR) attempts to address this question. Firms that leverage the collective wisdom and knowledge in their customer communities quickly see how promoting peer-to-peer problem-solving can result in greater operational efficiencies – ultimately driving financial outcomes for the firm.

Providing fast and helpful customer support service is critical for all service firms. To address customer problems, firms offer a range of support services providing customer help needed before, during, and after purchase. For business-to-business (B2B) relationships, many companies are increasingly turning to firm hosted collaborative technologies, like virtual peer-to-peer problem solving (P3) communities, to fulfill some of their customer service needs. For many years, the traditional outlet for support or problem solving has been this one-to-one customer support model in which the customer calls a customer service agent to solve a problem or answer a question.

Technological advances have enabled firms to expand their one-on-one support models to use call centers, email, and web-based support. These support models are expensive for the both the firm and customer. Repetitive costs, suppressed knowledge sharing across customer and service representatives, and the delayed resolution for other customers, are some of the limitations with support models. In response to these shortcomings, many firms are turning to firm-hosted collaborative and interactive P3 communities to fulfill the demand for customer service support. As noted by Kristal Ray, Professor at Utah State and one of the authors of the study, “ROI is always an important consideration for technology implementations. By offering the opportunity to lower service costs, social community interactions can provide the economic justification for these investments.

Our research team used longitudinal clickstream and service support behavioral data from 2,542 B2B customers of a Fortune 100 technology firm to test the effect of customer P3 community (posting questions and responding to others), static knowledge search behavior, community log-in frequency, and the breadth of community membership on the customer’s future use of traditional customer support service.

We found that, problem solving activities of helping oneself (posting questions) and helping others (responding to questions) in a peer-to-peer problem solving community were significant predictors and primary drivers of reducing the customer’s use of traditional customer support service, even after controlling for past traditional support usage behavior and community expertise. Our findings demonstrate that virtual peer-to-peer problem-solving communities not only save the firm resources but also give key customers access to timely problem solving information in a manner not previously possible.

While not as large of an effect, the study shows that customer knowledge searching behavior in “static” knowledge management repositories also reduced the use of traditional customer support service. On the other hand, we found that posting questions and using static knowledge is not always better as when customers combined these behaviors their need for traditional customer support increased. Also the more frequently the customers logged into the community and the larger the number of individual product- or service-specific communities they were members in, the greater was their need for traditional customer support service. The findings suggest that such behaviors, e.g., membership in many communities, use of multiple sources to attempt to solve a problem, or logging in to the community more frequently, may be indicative of an individual customer having difficulty solving a problem, or experiencing role overload.

Our research offers new insights for managers aiming to promote increased problem solving activities among their customers in P3 communities. The research results discussed in the JSR article demonstrate how managers can identify the appropriate combination of customer community participation and static knowledge creation to leverage the efficiencies of a support service community. These efficiencies can reduce the need for traditional support that results in reduced support costs and enables support resources to focus on higher value activities. Gaining insight into the types of interactions in the community that are specifically reducing traditional support service can be leveraged to improve the customer problem solving experience. Community specific knowledge can also be utilized as the basis for static knowledge generation to create impactful static knowledge resources that could extend the service request reduction effect. Finally, the study highlights the need for proper training to increase both the efficiency and effectiveness in navigating and using the community. To quote Katherine Lemon, Professor at Boston College and a co-author of the article, “our findings highlight the exciting opportunities firms have to harness customer knowledge, customer community and customer insights to solve other customers’ problems more efficiently and effectively – clearly a win-win for the firm and its customers.

________

Sterling A. Bone is an Assistant Professor of Marketing at the Jon M. Huntsman School of Business at Utah State University and serves on the Arizona State University Center for Services Leadership research faculty network.  His research has appeared in notable business journals and has been covered by business press including the Washington Post, Business Week, and Market Watch.

The article How Customer Participation in B2B Peer-to-Peer Problem-Solving Communities Influences the Need for Traditional Customer Service featured in the post was co-authored by Sterling A. Bone, Utah State University, Paul W. Fombelle, Northeastern University, Kristal R. Ray, Utah State University, Katherine N. Lemon, Boston College. 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.

How to Influence Patients, and Clients, to “DIY”

kathryn_k_eaton                                      By Kathryn K. Eaton

Over the last year, I have had the remarkable opportunity to work with the Obesity Solutions Initiative, which is a collaboration between Mayo Clinic and Arizona State University.  My work with this outstanding team of people has been varied and challenging, but my background in marketing has been a perfect fit for this endeavor.

When the Center for Services Leadership asked me to write a blog series about my experience working in obesity, I jumped at the chance. I feel that what I have learned here can be translated to many firm activities that take place today.

Obesity is an interesting challenge because I have to sell my “customers” the idea of health, and I have to sell this idea so well that these customers are willing to do something that they don’t really want to do in order to achieve it. This is similar to the research I did for my dissertation, where I worked with an energy company to sell the idea of mindfully reducing power consumption in the home in favor of the greater good. Continue reading