Inconsistent treatment based on certain demographic characteristics is illegal. The Civil Rights Act of 1964 prohibits discrimination in almost all privately owned service industries based on race, color, religion, gender, or national origin. Other industries, such as retail banking, have additional regulatory requirements.
Beyond this legal risk, managers must be aware of the significant risk to the reputation of the brand posed by discriminatory practices.
Managers may seek comfort in the knowledge that their company’s policies and procedures are not to refuse service to anyone. However, this overt discrimination is just a small part of the risk associated with discrimination. Beyond overt discrimination, which is extremely rare, there are two other categories of discriminatory practices: disparate impact and disparate treatment.
Disparate impact is the result of policies or business practices which have an unequal impact. A restaurant with a policy to require prepayment for meals from one demographic group and not another is an example of disparate impact.
Disparate treatment is differences in treatment that originate at the customer-employee interface. Disparate treatment does not necessarily need to be a conscious act. It can be an unconscious pattern or practice of different treatment that the employee is not even aware of. The use of name, offering promotional material to a customer of one group as opposed to a customer on another group are all examples of disparate treatment.
Now, observing differences is treatment is not necessarily proof of discrimination. Human behavior, after all, is variable. There is a certain amount of normal variation in all service encounters. The trick is to determine if disparate treatment observed represents a pattern or practice of discrimination. Fortunately statistics has the answer, we use statistical tests of significance to determine both if observed differences in treatment are the result of actual discriminatory practices and the likelihood that any one member of a protected class will be treated differently than a member of another protected class. It should be noted, however, that regulatory agencies set the bar much higher. Many do not necessarily rely on statistical testing. In their view, any single case of disparate treatment is evidence of discrimination.
In a future post we will discuss the implications for customer experience researchers in testing for disparate treatment.
Inconsistent customer experiences are a significant threat to customer loyalty. In a previous post, we observed the casual relationship between consistency in the customer experience and feelings of trust and loyalty.
Consistency drives satisfaction. It is extremely common to see a correlation between intra-channel consistency and performance. Consider the following scatter plot from Kinesis’ research, which plots bank branch customer satisfaction by the variation in branch customer satisfaction:
As this plot demonstrates, consistency correlates with quality. Branches with higher customer satisfaction ratings are also the most consistent. In our customer experience research proactive we see this time and time again.
Additionally, this plot also demonstrates that top-line averages of customer satisfaction can be misleading. The bank in this plot had an average customer satisfaction rating of 93%. However, many branches fall well below this top-line average, resulting in an incomplete picture of the customer experience. Customers do not experience top-line averages; they experience the customer experience one interaction at a time at the local business unit level.
What are the implications for managers of the customer experience?
The first implication for managers is the above observation that top-line averages can mislead. Top-line averages hide individual business units with both low and inconsistent customer satisfaction. Top-line averages come between management and customers, distancing managers from how customers actually experience the brand.
Secondly, variation must be managed at the cause. Intra-channel variation is almost always at the local business unit level. For example, a store with a high degree of variation in customer traffic will experience a high degree of variation in the customer experience if management does not mitigate the effects of the variation in traffic.
How to manage for consistency:
- Manage inconsistency at the cause
- Write a clear mission statement
- Use appropriate analytics
- Don’t silo analytics by channel
- Meet regularly with employees to share problems and potential solutions
- Focus on customer journey
Intra-channel consistency needs to be managed at the local level – individual stores and agents. Tools need to be available deep into the organization to allow managers at the lowest level of each channel to deliver a consistent experience.
In the next post we will explore demographic consistency, treating all customers the same regardless of their demographic profile.
Business Case and Implications for Consistency – Part 4 – Consistency and the Outsized Influence of Poor Experiences
This post continues to explore the business case for consistency by considering the influence of poor experiences.
To start, let’s consider the following case study:
Assume a brand’s typical customer has 5 service interactions per year. Also assume, the brand has a relatively strong 95% satisfaction rate. Given these assumptions, the typical customer has a 25% probability each year of having a negative experience, and in four years, in theory, every customer will have a negative experience.
As this case study illustrates, customer relationships with brands are not defined by individual, discrete customer experiences but by clusters of interactions across the lifecycle of the customer relationship. The influence of individual experiences is far less important than the cumulative effect of these clusters of customer experiences.
Consistency reduces the likelihood of negative experiences contaminating the clusters of experiences which make up the whole of the customer relationship. Negative experiences, regardless of how infrequent, have a particularly caustic effect on the customer relationship. A variety of research, including McKiney’s The Three Cs of Customer Satisfaction: Consistency, Consistency, Consistency, has concluded that negative experiences have three to four times the influence on the customer as positive experiences – three to four times the influence on the customer’s emotional reaction to the brand – three to four times the influence on loyalty, purchase intent and social sharing within their network.
Though it does not pre-assign seats or provide onboard meals and at times has a lengthy wait and check in process, consumers year in and year out rank Southwest Airlines at the top or near the top of customer service.
Why is Southwest consistently near the top?
There are many reasons. The most significant being alignment of customer experience to both their brand and customer expectations; however, I believe a key component of Southwest success in customer service is the emotional intelligence of their employees.
What is Emotional Intelligence?
Emotional intelligence is defined by four personality characteristics:
- A strong sense of self-empowerment and self regulation;
- A positive outlook;
- An awareness of feelings (both their own and customers); and
- A master of fear and anxiety and the ability to tap into selfless motives.
Each of these characteristics provide a clear benefit to the customer experience:
|Personality Characteristic||Benefit to the Customer Experience|
|Self-Empowerment and Regulation||Make Decisions in the Moment
|Constructive Responses to Challenges|
|Awareness of Feelings||Empathy and Better Communication with Customers
|Master of Fear/Anxiety and Selfless Motives||Express Feelings of Empathy and Caring|
Leading customer experience brands position the employee to constructively respond to challenges, make decisions in the moment, empathize with customers, and perhaps most important, not only feel but express feeling of care, concern and empathy to customers.
Much of the benefit of emotional intelligence is derived in “moments of truth” where some experiences in the customer journey have far greater importance than others. These moments of truth represent increased risk and opportunity to leave a lasting emotional impression on the customer; a lasting impression with significant long-term implications for both customer loyalty and wallet share. Perhaps the most common moment of truth is when something has gone wrong, the customer is unhappy or scared, and the relationship is at risk.
How do we build emotional intelligence?
First of all, emotional bonding cannot be scripted. Attempting to script such a connection will inevitably come off as hollow and insincere lacking authenticity and empathy, completely undermining the desired customer experience. Rather, emotional bonding must be a result of a spontaneous series of events that emerge from the emotional intelligence of employees.
The obvious starting point in building emotional intelligence is hiring frontline employees with the requisite emotional intelligence skills. Emotional intelligence can also be learned. However, it is a “soft” skill, unlike “hard” skills such as math; it can’t be taught in structured sessions. Rather, emotional intelligence is learned like almost all other human behaviors primarily though observation, experience and imitation.
Four Steps to Build Emotional Intelligence
Give people meaning in their work: Inspire frontline employees with a purpose beyond a paycheck. This clarity of purpose should include both what they are supposed to do and why they are supposed to do it.
In empowering frontline employees to serve customers, brands should arm them with statements of general principles and values rather than scripted procedures, which undermine empowerment. Reinforce these principals often so in the instant, when they are in a moment of truth with a customer in need, they have an appropriate framework from which to resolve the issue – and bond the customer to the brand.
Most frontline employees want to help customers; however, their motivations may be varied. Leading customer experience brands allow their employees to discover their own motivations for looking out for the customer’s best interests.
Create learning opportunities through experience: Humans are programmed to learn through self-discovery. Self-discovery reinforces the learning process by instilling a sense of accomplishment or pride. These positive feelings associated with self-discovery are a strong psychological reward, which reinforces the learning process. While self-discovery is not a top-down process, managers can foster self-discovery through feedback, encouraging employees to reflect on their own successes and failures, and anecdotes about other employees. Case studies are not just for MBA students.
Align customer experience systems and processes: It is imperative that systems and processes support the emotional skills desired from employees. Systems and process must constantly reinforce the overall message of emotional intelligence and emotionally connecting with customers. In empowering employees to respond to moments of truth, management must strike a balance between financial considerations and the things that matter to the customer. Good customer experiences are not good because they are good; they are good because they are profitable; however, there is no benefit to being penny wise and pound foolish. Finally, processes need to be streamlined to give employees both the time and ability to rise to the situation.
Enlist leaders and mentors: Emotions are learned through modeling. Children don’t learn to react to certain stimuli just because a parent tells them what to feel. We learn how to react to certain situations through trial and error and observing role models. First, it is imperative that all managers and leadership model appropriate emotional skills. How can you expect emotional intelligence from the frontline if it doesn’t exist in leadership? Second, identify employees with the appropriate emotional skills and position them as role models within the organization.
Key to success of any customer facing brand is alignment of the customer experience to both the brand promise and customer expectations. Most of time, this is not difficult. Appropriate systems procedures and even automated delivery channels can achieve this end. However, in moments of truth, where there is a high degree of risk associated with the outcome of the experience, leading customer experience brands rely on an emotionally intelligent frontline staff to align the experience and bond the customer to the brand.
In an earlier post we explored how customers experience all aspects of their relationship with a brand through the lens of their emotional state, and observed that all brands must be prepared to meet each customer in their specific emotional state – be they happy, excited, depressed or angry.
Research has determined that, not surprisingly, people are motivated to maintain positive moods, and mitigate negative affective states. When feeling good we tend to make choices that maintain a positive mood. Customers in a positive mood are more loyal, and more likely to interpret information favoring a current brand. Meanwhile, people in negative affective states make choices that have the potential to change or, in particular, improve their moods.
A key to maintaining positive moods is arousal, or more specifically, the management of arousal. Let’s take a look at how arousal management influences consumer choice. Consumers in a positive mood prefer products congruent with their state of arousal. Excited or happy consumers want to stay excited or happy, while relaxed and calm consumers what to stay relaxed and calm. Consumers in a negative mood prefer products with the potential to change their level of arousal.
In considering the role of customer emotions in their relationship to a brand, it is important to understand the implications of customer emotions on design of the customer experience. It is impossible, of course, to plan every customer experience or to ensure that every experience occurs exactly as intended. However, brands can identify and plan for the types of experiences that impart the desired emotional state on the customer. It is useful to group these experiences into three categories of interaction with the customer: Stabilizing, Critical, and Planned.
Stabilizing interactions promote customer retention, particularly in the early stages of the relationship.
New customers are probably in a positive state of valence, with either a high state of arousal (happy/excited) or a negative state of arousal (relaxed/calm). Remember, people are motivated to maintain positive moods, therefore, the objective of these stabilizing interactions is to maintain this positive mood.
The keys to an effective stabilizing strategy and maintaining these positive moods are education, competence and consistency.
New customers are at the highest risk of defection. As customers become more familiar with a brand they adjust their expectations accordingly. It is important that expectations be set appropriately to eliminate conflict with reality. Conflict between expectations and reality early in the customer relationship runs the risk changing the customer’s mood from positive to negative. They are more likely to experience disappointment, and thus more likely to defect.
Education influences expectations, helping customers develop realistic expectations. It goes beyond simply informing customers about the products and services offered by the company. It systematically informs new customers how to use the brand’s services more effectively and efficiently, how to obtain assistance, how to complain, and what to expect as the relationship progresses. In addition to influencing expectations, systematic education leads to greater efficiency in the way customers interact with the company, thus driving down the cost of customer service and support.
Critical interactions are service encounters that lead to memorable customer experiences. While most service is routine, from time to time a situation arises that is out of the ordinary: a complaint, a question, a special request, a chance for an employee to go the extra mile. We call these critical interactions “moments of truth.” The outcomes of moments of truth can be either positive or negative – they are rarely neutral.
Because they are memorable and unusual, moments of truth tend to have a powerful effect on the customer relationship. We often think of moments of truth as instances when the brand has an opportunity to solidify the relationship – earning a loyal customer, or risk the customer’s defection. Positive outcomes lead to positive states of valence (excited, happy, relaxed, calm) with greater wallet share, loyalty, and positive word word-of-mouth endorsements; while negative outcomes generate negative states (anger, frustration, depression); and result in customer defection, diminished share of wallet and unfavorable word-of-mouth.
We are in an era of automated channels. Automated channels are essential for meeting customer expectations and reducing transaction costs, but technical solutions are not, by themselves, able to drive an emotional connection between customers and the brand – particularly in moments of truth. Employees, emotionally intelligence employees, empowered to resolve the issue are critical in driving an emotional connection. In a future post, we will discuss the concept of Emotional Intelligence of frontline employees in handling moments of truth.
An effective customer experience strategy should include systems for recording critical interactions, analyzing trends and patterns, and feeding that information back to the organization. Employees can then be trained to recognize critical opportunities, and empowered to respond to them in such a way that they will lead to positive outcomes and desired customer behaviors.
Planned interactions are intended to increase customer profitability through up-selling and cross-selling. These interactions are frequently triggered by changes in the customers’ purchasing patterns, account usage, financial situation, family profile, etc. CRM analytics combined with Big Data are becoming quite effective at recognizing such opportunities and prompting action from service and sales personnel.
Customer experience managers should have a process to record and analyze the quality of execution of planned interactions with the objective of evaluating the performance of the brand at the customer brand interface – regardless of the channel.
The key to an effective strategy for planned interactions is appropriateness. Triggered requests for additional purchases must be made in the context of the customers’ needs and permission; otherwise the requests will come off as clumsy and annoying. By aligning information about execution quality (cause) and customer impressions (effect), customer experience managers can build a more effective and appropriate approach to planned interactions.
Customers experience all aspects of their relationship with a brand through the lens of their emotional state. Be they happy, excited, depressed or angry all brands must be prepared to meet each customer in their specific emotional state. It’s a challenge – but also an opportunity. Ultimately, loyalty is emotionally driven. Brands that can react to and manage customer emotions stand to reap the rewards of customer loyalty.
To understand the role of the customer’s mood in managing the customer experience, it is instructive to consider how two affective states work together to define mood. The following model tracks mood across valence (the extent to which the emotional state is positive or negative) and arousal (the extent to which the energy mobilization of the emotional state is experienced on a scale of active to passive or aroused to calm).
Together, these affective states of valence and arousal can define all human emotions. States of positive valence and high arousal are excited or happy; negative valence and low arousal are bored or depressed. States of positive valence and low arousal are calm and relaxed, and negative valence and high arousal are angry or frustrated.
Here is a detailed map of a variety of emotions across these two dimensions.
Research has determined that, not surprisingly, people are motivated to maintain positive moods, and mitigate negative affective states. When feeling good we tend to make choices that maintain a positive mood. Customers in a positive mood are more loyal, and more likely to interpret information favoring a current brand. Meanwhile, people in negative affective states make choices that have the potential to change or, in particular, improve their moods. For example, researchers have demonstrated a preference for TV shows that held the greatest promise of providing relieve from negative affective states. People in a sad mood want to be comforted, anxious people want to feel control and safety.
Key to maintaining positive moods is arousal or more specifically the management of arousal. Let’s take a look at how arousal management influences consumer choice. Consumers in a positive mood prefer products congruent with their state of arousal. Excited or happy consumers want to stay excited or happy, while relaxed and calm consumers what to stay relaxed and calm. Consumers in a negative mood prefer products with the potential to change their level of arousal. For example, in an experiment, participants were offered the choice of an energy drink or iced tea. The following chart illustrates participant’s preference by the state of arousal and valence:
Participants in a positive mood, preferred the drink congruent with their level of arousal, those in a positive low-arousal state preferred iced tea, and those in a positive high-arousal state preferred an energy drink. On the other hand, those in a negative mood preferred a drink incongruent with their energy state, those in a negative low-arousal state preferred an energy drink, and those in a negative high-arousal state preferred iced tea.
Understanding the role of arousal management in customers’ innate desire to maintain positive moods and mitigate negative moods has far reaching implications for just about every element of the customer experience from sales, to problem resolution, to customer experience design, hiring, training and customer experience measurement. In future posts we will explore these implications for each of these elements of the customer experience.
As we explored in an earlier post, 3 Types of Customer Interactions Every Customer Experience Manager Must Understand, there are three types of customer interactions: Stabilizing, Critical, and Planned.
The third of these, “planned” interactions, are intended to increase customer profitability through up-selling and cross-selling.
These interactions are frequently triggered by changes in the customer’s purchasing patterns, account usage, financial situation, family profile, etc. CRM analytics combined with Big Data are becoming quite effective at recognizing such opportunities and prompting action from service and sales personnel. Customer experience managers should have a process to record and analyze the quality of execution of planned interactions with the objective of evaluating the performance of the brand at the customer brand interface – regardless of the channel.
The key to an effective strategy for planned interactions is appropriateness. Triggered requests for increased spending must be made in the context of the customer’s needs and permission; otherwise, the requests will come off as clumsy and annoying. By aligning information about execution quality (cause) and customer impressions (effect), customer experience managers can build a more effective and appropriate approach to planned interactions.
Research Plan for Planned Interactions
The first step in designing a research plan to test the efficacy of these planned interactions is to define the campaign. Ask yourself, what customer interactions are planned based on customer behavior? Mapping the process will define your research objectives, allowing an informed judgment of what to measure and how to measure it.
For example, after acquisition and onboarding, assume a brand has a campaign to trigger planned interactions based on triggers from tenure, recency, frequency, share of wallet, and monetary value of transactions. These planned interactions are segmented into the following phases of the customer lifecycle: engagement, growth, and retention.
Often it is instructive to think of customer experience research in terms of the brand-customer interface, employing different research tools to study the customer experience from both sides of this interface.
In our example above, management may measure the effectiveness of planned experiences in the engagement phase with the following research tools:
|Customer Side||Brand Side|
Post-transaction surveys are event-driven, where a transaction or service interaction determines if the customer is selected for a survey, targeting specific customers shortly after a service interaction. As the name implies, the purpose of this type of survey is to measure satisfaction with a specific transaction.
|Transactional Mystery Shopping
Mystery shopping is about alignment. It is an excellent tool to align sales and service behaviors to the brand. Mystery shopping focuses on the behavioral side of the equation, answering the question: are our employees exhibiting the sales and service behaviors that will engage customers to the brand?
|Overall Satisfaction Surveys
Overall satisfaction surveys measure customer satisfaction among the general population of customers, regardless of whether or not they recently conducted a transaction. These surveys give managers a feel for satisfaction, engagement, image and positioning across the entire customer base, not just active customers.
|Alternative Delivery Channel Shopping
Website mystery shopping allows managers of these channels to test ease of use, navigation and the overall customer experience of these additional channels.
Employee surveys often measure employee satisfaction and engagement. However, they can also be employed to understand what is going on at the customer-employee interface by leveraging employees as a valuable and inexpensive resource of customer experience information.They not only provide intelligence into the customer experience, but also evaluate the level of support within the organization, and identifies perceptual gaps between management and frontline personnel.
In the growth phase, one may measure the effectiveness of planned experiences on both sides of the customer interface with the following research tools:
|Customer Side||Brand Side|
Awareness of the brand, its products and services, is central planned service interactions. Managers need to know how awareness and attitudes change as a result of these planned experiences.
|Cross-Sell Mystery Shopping
In these unique mystery shops, mystery shoppers are seeded into the lead/referral process. The sales behaviors and their effectiveness are then evaluated in an outbound sales interaction.
|Wallet Share Surveys
These surveys are used to evaluate customer engagement with and loyalty to the brand. Specifically, to determine if customers consider the brand their primary provider, and identify potential road blocks to wallet share growth.
Finally, planned experiences within the retention phase of the customer lifecycle may be monitored with the following tools:
|Customer Side||Brand Side|
|Lost Customer Surveys
Lost customer surveys identify sources of run-off or churn to provide insight into improving customer retention.
|Life Cycle Mystery Shopping
Shoppers interact with the company over a period of time, across multiple touch points, providing broad and deep observations about sales and service alignment to the brand and performance throughout the customer lifecycle across multiple channels.
Comment tools are not new, but with modern Internet-based technology they can be used as a valuable feedback tool to identify at risk customers and mitigate the causes of their dissatisfaction.
Call to Action – Make the Most of the Research
Research without call to action may be interesting, but not very useful. Regardless of the research choices you make, be sure to build call to action elements into research design.
For mystery shopping, we find linking observations to a dependent variable, such as purchase intent, identifies which sales and service behaviors drive purchase intent – informing decisions with respect to training and incentives to reinforce the sales activities which drive purchase intent.
For surveys of customers, we recommend testing the effectiveness of the onboarding process by benchmarking three loyalty attitudes:
- Would Recommend: The likelihood of the customer recommending the brand to a friend relative or colleague.
- Customer Advocacy: The extent to which the customer agrees with the statement, “you care about me, not just the bottom line?”
- Primary Provider: Does the customer consider the brand their primary provider for similar services?
As you contemplate campaigns to build planned experiences into your customer experience, it doesn’t matter what specific model you use. The above model is simply for illustrative purposes. As you build your own model, be sure to design customer experience research into the planned experiences to monitor both the presence and effectiveness of these planned experiences.