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.
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.