Business Psychology - Latest Findings

Article No. 316r
Customer Psychology Findings, by James Larsen, Ph.D.

Knowledge Intensive Service

Research reveals an emphasis in service that strongly impacts customer satisfaction.

Retailers love satisfied customers. Itís easy to understand why. Satisfied customers come back and bring in new customers. They take less of your time and find ways to make your job easier. Theyíre even less sensitive to price and imagine that competitorsí lower prices conceal poor quality. Satisfied customers are valuable, and retailers are interested to learn new ways to create them. Hui Liao, from the University of Maryland, recently discovered one. He calls it knowledge-intensive service, and itís best illustrated with an example.

Imagine that itís 9 P.M. and you have a houseful of overnight guests when one of them calls you to the basement to observe water cascading onto the floor whenever the toilet upstairs is flushed (and itís your only toilet). We all know what kind of water that is, and the thought of water leaving the toilet and collecting on the floor downstairs drives you immediately to the yellow pages. But itís 9 P.M. Fortunately, a few plumbing firms have emergency numbers.

The first person to answer is courteous and reassuring and promises to have a real plumber return your call as soon as she can find one. A thirty-minute wait dictates a renewed search.

The next person to answer knows all about plumbing and asks questions to clarify the problem. She gives it a name - a broken seal, and she explains what needs to be done to fix it. She identifies a plumber by name that she is ready to send to you, and she gives you an estimate of how long it will take and what it will cost. By 11:30 P.M., the plumber has left, and a lot of relieved people get up to go the bathroom. You are one satisfied customer.

The most obvious difference between the two plumbing firms was that one was ready to provide emergency service and the other was not, but letís look a little more closely at the contrast. With the first firm, you could not fault the customer service. The woman was polite, friendly, listened to your problem, and promised a prompt reply. Most retailers expect nothing more from their people. However, the person at the second firm was all that and more. She understood your needs and questioned you about them. She knew her own firmís services that would respond to those needs, and she offered them to you. She even told you what you could expect to pay. Her customer service excelled in knowledge. Liao calls it knowledge-intensive service, and it was the only customer service factor he identified in his study that resulted in significantly higher customer satisfaction.

Liao wasnít expecting this finding, and the obvious conclusion is that retailers should concentrate their efforts to enhance the knowledge of their customer contact employees. Liao suggests several ways to do it.

First, he suggests training. When we invest in our employees, we want to create expertise that will add value to the products and services we offer. Concentrating on knowledge is a very good way to accomplish this, and Liao reminds us that customer needs should drive this training. Our people should become very familiar with the needs our customers bring to us. The products and services we offer to respond to these needs come next. As with the plumbing example, customers who feel understood gain confidence in the products and services that are offered.

A focus on customer needs also allows the identification of new products to offer and the creation of new services. With many minds working, new services can be invented to enhance our businesses. For example, package tracking responds to customersí anxiety (a need) about the progress of items they entrust to delivery firms.

Next is selection. Select for knowledge and experience. Hardware retailers know very well the value of older do-it-yourselfers questioning customers about their needs and directing them to the right products. Customers whose needs are understood are willing to buy.

Next is compensation. ďYou get what you pay for.Ē If we want extremely knowledgeable customer contact people and are willing to train them to be knowledgeable, then we also need to measure this knowledge through tests and reward people for achieving advanced levels of knowledge and for using this knowledge in customer interactions. Weíll need to write some certification tests.

Liaoís final suggestion is flexibility. Customer needs occasionally dictate adjustments, and he recommends that we give our customer contact people the flexibility and the authority to make these adjustments. Very knowledgeable customer contact employees not only earn the trust of their customers, they also enjoy greater trust of their supervisors who reward them with greater flexibility and the authority to make modifications to meet customer needs and resolve customer complaints.

Retailers often search for an advantage that canít be easily copied by competitors. Knowledge-intensive service fills this need very well.

Reference: Liao, Hui, Keiko Toya, David Lepak, and Ying Hong (2009) Do They See Eye to Eye? Management and Employee Perspectives of High-Performance Work Systems and Influence Processes on Service Quality. Journal of Applied Psychology, 94(2), Mar 2009, 371-391.

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