Business Psychology - Latest Findings

Article No. 249
Customer Psychology Findings, by James Larsen, Ph.D.

The Contribution of Social Regard

Research reveals a contribution to customer satisfaction that can exceed the core service.

In service businesses there are three elements that owners combine: 1) the core service, e.g. a restaurant meal, a haircut, etc., 2) service delivery, e.g. full service or self service, and 3) price. Managers have choices with each one.

The core service can vary in quality. One restaurant may choose food with more expensive ingredients than another restaurant and select better trained chefs to prepare it. Such businesses would have a quality advantage over competitors.

Service delivery can also vary. One styling salon may emphasize personal attention. Stylists may keep notes on regular clients and refresh their memories before appointments so they can ask about family news and follow up on previous conversations. Patrons and stylists in this business are on a first-name basis, and customers often think of their stylists as friends.

Businesses such as these have an advantage of high switching costs over competitors, that is, customers would have difficulty replacing the personal relationships they enjoy, so they are inclined to remain loyal to the business.

Finally, owners must price their product. Generally, businesses try to provide the best value possible, but unfortunately, this requires that profit margins be slim, and this makes businesses vulnerable to fickle customers flocking to the nearest bargain. Businesses that manage to price their service lower than competitors have a value advantage.

Core service, service delivery, and price impact each other, and they pose dilemmas for managers. For example, the best service delivery is called relationship marketing, and it is illustrated in the styling salon example used earlier. It poses a dilemma for owners because, even though it's the most effective, it's also the most expensive. It is labor intensive, so owners who chose this form of service delivery sacrifice any chance of also having a value advantage.

Ken Butcher, from Charles Sturt University, recently wondered if the advantages of customer loyalty offered by relationship marketing might be gained without incurring their high costs. He reasoned that customer feelings lead to the relationships that in turn lead to customer loyalty, so he wondered what happens when these feelings are the focus of service delivery rather than relationships.

Butcher investigated a customer service approach named "social regard." This approach targets specific feelings in customers and then empowers employees to devise their own strategies to achieve them. Butcher studied four of these feelings: 1) feeling valued in the transaction, 2) feeling important, 3) feeling respected, and 4) feeling the employee has a genuine concern for his/her well being.

Butcher investigated several service settings and found when social regard is done well, it made a substantial contribution to overall customer satisfaction. It rivaled the core service in importance, and in small restaurant settings - cafes - it actually exceeded the core service in importance. That is, in cafe settings, overall customer satisfaction was impacted more strongly by social regard of the employees for the customers than by the quality of the food.

Butcher believes we should train our employees to focus on social regard when interacting with customers, and he explained that employees would know when they were performing well by watching customers' reactions. He believes employees will be able to observe the appearance of these feelings and know that they have reached their social regard goals.

Butcher also offered some tips that are useful for carrying out social regard. Greeting customers with a glance, a smile, or a nod when they first enter a business signals employees' special interest. Customers already being waited on understand and tolerate these nonverbal gestures, he says. Valuing customers' knowledge communicates respect. And lingering a few seconds after the transaction is complete to give a relaxed farewell tells customers they are special.

Finally, Butcher reminds us that it isn't enough merely to train our employees about social regard. If we want them to excel at it, we must notice when they do it and let them know that we appreciate their efforts. He thinks a little social regard by us for our employees might pay dividends in how they treat our customers.

Reference: Butcher, Ken, Beverley Sparks, and Frances O'Callaghan (2003) Beyond Core Service. Psychology and Marketing, 20 (3), 187-208.

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