CHAPTER 1

CUSTOMER SERVICE SOLUTIONS LEVERAGING CUSTOMER PSYCHOLOGY TO DESIGN SERVICEOPERATIONS

I know what I have given you. I do not know what you have received.—Antonio Porchia, Voces

Many service firms advocate the mantra TLC—think like a customer—in designingtheir service interactions. The problem is that they don't have a good handle onhow customers really do think and as a result miss opportunities to become trulyexcellent. Indeed, while most successful service companies address the obviousthings that affect customers' psychological attitude toward the service, such ascourtesy and responsiveness on the part of their employees, they could do muchmore if they understood customer psychology at a deeper level.

The developed world's economies are dominated by service firms. This has comeabout not because of their excellence, but rather through a combination ofmarket demand and creative development of new services. While the technologiesthat underlie service have evolved at a rapid rate, the approaches to designingand managing how the customer experiences the everyday delivery of serviceremain almost primitive.

Typical approaches to improving the service experience include analyzingcustomer satisfaction surveys, engaging in mystery shopping, and conductingfocus group feedback sessions. These are all good, of course, but unfortunatelycustomers cannot always articulate what shapes their perceptions and judgments,nor can company experts read between the lines to find out what drivescustomers. The result is often disappointing levels of customer satisfaction ingeneral, even for companies that by all the standard criteria seem to be doingthings right.

IMPLICIT OUTCOMES ARE IMPORTANT FOR YOUR CUSTOMERS

The first step in raising customer experience levels is recognizing theimportance of implicit outcomes from a service encounter. The focus of serviceorganizations is often on explicit outcomes, such as on-time flight arrivals orthe time to resolve a customer's call. However, subjective or implicit outcomes,like emotions and feelings generated by a service encounter, are rarelyconsidered. Did the passenger walk out of the airport happy? Did the customertrust the advice received by the service agent? Does the patient feel motivatedenough to comply with the doctor's recommendation? At the end of the baseballseason, is the fan sufficiently excited to renew her season tickets? When anaccident victim calls his automobile insurance agent, does he feel more incontrol of his life?

A common assumption is that as long as the explicit outcomes are well managed,the customer experience will be great. Consider the following examples:

• Think about two rounds of golf in which your overall score is par. In oneround on the eighteenth hole you shoot a double bogey, and in the other roundyou shoot a birdie. The outcome was the same, but wouldn't how you feel at theend, what you would recall about each experience, and how you summarize theseexperiences be very different?

• Jim and Mary are two longtime customers of a catalog retailer. The lastpurchase made by Jim was a bad experience, while Mary's was unremarkable. Thenext time Jim and Mary call the retailer, would they be paying attention to thesame elements of the conversation?

At the core of our idea is that similar service encounters with identicalexplicit outcomes can be perceived very differently.

TYPES OF KNOWLEDGE NEEDED FOR DELIVERING IMPLICIT OUTCOMES

Explanations abound for why the delivery of service has not really moved beyondexplicit outcomes. The most common explanation is that service encounters areintangible and that people-intensive processes are inherently unpredictable andhence uncontrollable. Thus by extension they are "undesignable." This view hasbeen accepted and abetted by management books and articles that discuss servicemanagement as an art. Our current system of service delivery also has beenallowed to prevail because a few exemplars have excelled at creating positiveservice cultures: friendliness and helpfulness at Apple Stores, the "everybodyis a cast member" joyfulness of Disneyland, and the "ladies and gentlemen serveladies and gentlemen" decorum of Ritz Carlton.

We hasten to point out that this cultural imprinting is no mean feat. Rather itis the bedrock of any effective service business. Unfortunately, most serviceexecutives don't recognize that what has been seen up to this point as theentire service experience is merely the platform, the necessary context forhandling behavioral aspects of service. Getting to the next level calls for anunderstanding of service interactions that matches in depth and rigor theunderlying goods production, or in the service sector, something akin to amedical procedure.

Carefully reengineering processes using techniques such as Six Sigma and leanenables firms to improve explicit outcomes and reduce costs. In other words,firms can achieve better quality at a lower cost. Those of us who have been inthe quality business for many years no doubt recall the phrase "quality isfree." Just as deeper understanding of systems dynamics and process analysisforms the bedrock of traditional process engineering techniques, findings frombehavioral decision making, cognitive psychology, and social psychology canpoint service providers to ideas for redesigning the psychological or implicitaspects of service encounters.

Fortunately, we don't have to start from scratch. We have a virtual treasuretrove of behavioral research findings. In this book we take these findings andfor the first time discuss how firms can apply them systematically to the designand management of service processes.

The flavor of what we are talking about is captured in the following example.Danielle, a pediatric dental hygienist, has almost finished cleaning Spencer'steeth. Spencer is a skittish six-year-old who suffers from a mild form ofgingivitis and has several cavities. He is a frequent visitor to the clinic.Danielle suddenly finds that she has scraped a particularly sensitive spot. Shestill needs to clean two more teeth, which she is sure are not as sensitive. Shecould either terminate the procedure and resume on the next visit or completethe cleaning today. If she were to continue, she would subject Spencer to morediscomfort, although significantly less than what just transpired.

In addition to medical concerns, there are other factors...