Business Psychology - Latest Findings

Article No. 79
Customer Psychology Findings, by James Larsen, Ph.D.

Relationship Signaling in Service Industries

An experiment reveals a strong, unrecognized influence on perceptions of quality.

Imagine standing outside the loan offices of neighboring banks listening to conversations as customers emerge. From one they grumble about poor quality, but from the other, they praise it. Both banks offer identical services.

Knowing no more than this, you'd probably suspect slow, poorly informed, and unfriendly loan officers in the first bank, and bright, warm, responsive people in the second. And if you thought about it a few minutes, you might even sympathize with the executive supervising the employees in the first bank. But that may be a mistake.

Choy Wong and Dean Tjosvold, of Simon Fraser University in Barnaby, British Columbia, recently completed an experiment testing the effect of relationship signaling on perceptions of quality. They compared it to warm, responsive communication styles and found relationship signaling to have the more potent impact.

Theories about relationship signaling have been tossed around for nearly 50 years. They suggest that executives form one of three attitudes toward their customers: cooperative, competitive, or independent, and they signal this attitude to their customers through their employees. Customers sense this attitude and respond appropriately.

If customers sense a competitive relationship, one which seeks to exploit them, they will guard their interests, argue with customer service personnel, and obstruct their efforts to serve them. If customers sense an independent attitude, one which is indifferent to them, they will look for ways to further their interests regardless of the impact on the business. But if customers sense a cooperative attitude, one which seeks to fulfill their needs within the limits of the firm's resources, they will respond cooperatively. They'll look for ways to facilitate the firm's efforts to meet their needs, including helping service personnel deliver services.

Wong and Tjosvold conducted an experiment using a loan office and varied both the kind of relationship loan officers signaled and the warmth of their communication styles. When signaling a cooperative relationship, they told customers they were interested to learn about them, they complimented customers, encouraged them to share their views, and accepted information loan applicants supplied. When using a warm communication style, they spoke with a friendly tone of voice, smiled, kept close to the customer, and kept eye contact.

The highest reports of quality came when loan officers both signaled a cooperative relationship and used a warm communication style. But signaling a competitive or independent relationship lowered perceptions of quality, even when matched with a warm communication style.

So, do your employees signal a cooperative relationship to your customers? Do you signal a cooperative customer relationship to your employees? It is executives who determine the kind of relationship their service employees signal to their customers. You must pay close attention to what you actually say with your words and your actions to answer this question.

Wong and Tjosvold believe their findings have the greatest value for high-involvement service industries, ones which require the involvement of customers to deliver the services, like loaning money in a bank. Low-involvement services, for example, serving customers at the counter of a fast food restaurant, don't require cooperation and service can be standardized and controlled: "Would you like hot coffee with this roll?"

High-involvement services are most efficiently delivered when customers cooperate, when they inform themselves of the services they'll receive, don't need repetitious explanations, and when they actually assist employees delivering the service. Wong and Tjosvold's research demonstrated that by employing a warm communication style and signaling a cooperative customer relationship, you can stimulate customers to react cooperatively and at the same time they'll perceive your firm to provide extremely high quality service. And like frosting on a birthday cake, this cooperation will also allow your firm to operate more efficiently. It all depends upon the customer relationship executives signal to their employees.

Reference: Wong, Choy L. and Dean Tjosvold (1995). Goal Interdependence and Quality in Services Marketing. Psychology and Marketing, 12 (3), 189-205.

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