Maximise Service Orientation (Part I)
This blog explores “customer service orientation” and its evolution from satisfying to exceeding customers’ expectations through individualisation of their experiences. It also looks into the impact this shift has on organisational strategy and employee customer service.
The unprecedented current pace of innovation in business has caused disruption both on the supply and demand side and is constantly forcing companies to adapt the way they design, market and deliver products and services. This disruption has greatly affected economic value and accordingly the practice of management. In my December 2018 and January 2019 blogs I looked into how the above shift has influenced leadership.
Today I am going to explore how the ensuing change of economic value has impacted the service orientation landscape.
I reckon this is important as service orientation is increasingly seen as a company’s competitive advantage. As a matter of fact, the World Economic Forum (WEF) in its 2018 “The Future of Jobs Report” predicts that “service orientation” will be one of the competencies demanding proactive development within the accelerating transformation of the labor market by 2020. Specifically, “Service Orientation” is placed 8th in the top 10 skills list and “Customer service representatives” 4th in the 10 most-in demand job lists for 2020 (1).
“Service Orientation” is the ability and desire to anticipate, recognise and meet others’ needs, sometimes even before those needs are articulated; where others are service consumers, service producers and service intermediaries, alike (WEF definition)
In order for an enterprise to become service oriented it needs to evolve the business ecosystem, change a number of business processes, and address organisational issues.
Customer service orientation is a set of basic individual predispositions and an inclination to provide service, to be courteous and helpful in dealing with customers and associates at work .
Customer service orientation focuses on the service consumers. (2) It can be a competitive differentiator, esp. for organisations where sales and marketing are more important than the product specifics. In brands whose products are easily replicated by others (e.g. milk, socks), customer service orientation can be the “wrapper” around the product that justifies the purchase.
All this is true and clear but it is half of the “evolutionary” journey of customer service orientation
Until recently it was enough for a company to choose employees with positive natural disposition (eg. extrovert, sociable, agreeable), train them to be polite, knowledgeable and alert so that they can satisfy their customers’ expectations (3) but not any more.
Employees were expected to respond satisfactorily to a number of issues related mainly to unavailable service, unreasonably slow service, core service failures, “special needs” customers and customer preferences. “Out-of-the ordinary employee behaviour” was praised but was not expected. For instance, in a study conducted on service encounter (4) 700 incidents were collected and categorised to distinguish very satisfactory service encounters from very dissatisfactory ones. One of the categories was “out-of-the ordinary” service. A participant described as truly out-of-the ordinary employee behaviour the following: “We always travel with our teddy bears. When we got back to our room at the hotel we saw that the maid had arranged our bears very comfortably in a chair. The bears were holding hands” .
What makes an employee behaviour seen as extraordinary?
It exceeds customers’ expectations
If we closely examine the example above, we will notice that this service created a customer experience. The customer reacted emotionally to the individualised attention.
Pine & Gilmore in the Handbook on the experience economy talked about the emergent “experience economy”; where experiences are the predominant form of new economic output, the foundation of growth in GDP and the source of new job creation (5). In the same vein, Prahalad & Ramaswamy in The Future of Competition argue that “value in now centered in the experiences of consumers” and is not just embedded in products or services” (6). Holbrook & Hirschman analyzed the same phenomenon from a consumers’ perspective. In “The Semiotics of Consumption”, they explicate that value resides not in the object of consumption but in the experience of consumption which includes fantasies, feelings and fun (7).
Here are some examples of service and manufacturing companies that have turned customer service into customer experience: The Ritz-Carlton, Singapore Airlines, IKEA , Nike, Walt Disney World, Zappos, Starbucks. The Ritz-Carlton invites its guests to co-create a lasting memory in a treasured destination. Starbucks is not selling coffee but offering a coffee-drinking experience by creating a place in which people want to spend time. Manufacturers do not any more focus on how their product performs but on how the individual performs or feels while using the good. Think of IKEA or Nike, for example. IKEA adds customer value through the concretion of personalised customer experiences in stores where the company encourages customers to see, test, and enjoy (test-drive) home design solutions(8). Nike has emphasised the experience customers can have surrounding the purchase, use or ownership of a pair of shoes
HOW DID WE GET TO THAT POINT?
Economic value is the maximum price a customer is willing to pay for a product or a service. The consistent, high level of product and service quality has reduced their economic value as quality can no longer be used to differentiate choices for consumers easily. Companies are always in the lookout for new and better ways to create extra value that will allow them to sell at a premium. The concept that is increasingly guiding their service orientation is “individualization”, or the creation of more value for individuals by getting closer to their true needs and desires. Experiences, similarly to services, are customized- done on behalf of an individual customer and are intangible.
However, they have three important differences:
Their value lies within the customer as it encompasses sensations, impressions and emotions.
An experience is experienced at the moment of creation not afterwards, and depending on its “wow-ness” it can even even become a life-transforming experience that changes the customer in some way.
Experiences require customer participation (co-creation) and create connection. Think of the Walt Disney World. Parents visit with their children not just to see what it is like but to live the experience together. This shared experience can be re-experienced in family conversations and its memory can bring a feeling of joy and excitement months and even years afterwards. In fact, research has shown that consumers value experiences more than goods and services and that experiential purchase decisions are more conducive to well-being(8).
This leads to two questions:
HOW DOES THIS EXPANSION OF CUSTOMERS’ EXPECTATIONS IMPACT EMPLOYEE SERVICE?
HOW CAN AN ORGANISATION MAXIMISE THEIR CUSTOMER SERVICE ORIENTATION?
I will explore both in my next blog.
-STAY TUNED-
Selective Bibliography
(1) WEF (2018) The Future of Jobs Report 2018.
(2) Cran, D. J. (1994, p.36). Towards validation of the service orientation construct. Service Industries Journal, 14(1), 34-44.
(3) Hogan, J., Hogan, R., & Busch, C. M. (1984). How to measure service orientation. Journal of Applied Psychology, 69(1), 167.
(4)Bitner, M. J. (1990). Evaluating service encounters: the effects of physical surroundings and employee responses. Journal of marketing, 54(2), 69-82.
(5) Pine, B. J., & Gilmore, J. H. (2013). The experience economy: past, present and future. Handbook on the experience economy, 21-44.
(6) Prahalad, C. K., & Ramaswamy, V. (2004, p. 137). The future of competition: Co-creating unique value with customers. Harvard Business Press.
(7) Holbrook, M. B., & Hirschman, E. C. (2012). The semiotics of consumption: Interpreting symbolic consumer behavior in popular culture and works of art (Vol. 110). Walter de Gruyter.
(8) Edvardsson, B., & Enquist, B. (2002). 'The IKEA Saga': How Service Culture Drives Service Strategy. Service Industries Journal, 22(4), 153-186.
(9) Carter, T. J., & Gilovich, T. (2010). The relative relativity of material and experiential purchases. Journal of personality and social psychology, 98(1), 146.