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ETCs of Service: Engineering Psychology into Service

Encounters

Richard B. ChaseMarshall School of Business

University of Southern California

BYU Seminar, Oct. 8, 2010

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Service Encounter An interaction between a customer and an organization.

Consists of one simple event or transaction, or a series of events or transactions

A central feature of service businesses as defined in the SIC.

An important feature of most product business.

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Three Ts of a Service Encounter Task – Job to be done

Treatment – Courtesy and friendliness of server

Tangible – Physical and sensory features of the service environment

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Service Encounter Inputs and Outputs

Interaction Process

Task Events

Psych. Events

Customer

•Task Needs

•Treatment Expectations

•Psychological Mindset

Server

•Task Skills

•Treatment Skills

•Psychological Mindset

Explicit Outputs

Task accomplishment

Treatment perceptions

Tangible perceptions

Implicit Outputs

Memories

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CORETASK

CORETASK

The Two Dimensions of a Service Encounter

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Industrial Significance The psychological experience plays a major role in…

Financial services—trust building, managing waits Call Centers – problem solving, promise making Healthcare – framing diagnoses, gaining compliance Entertainment – identifying high points, creating

memories Consulting – managing the flow of an engagement On-line shopping – website design, problem solving After sales service—cars, appliances, dry goods Restaurants, hotels, etc.

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Four factors that shape psychological experience – the ETCs of Service©1. Emotions

2. Trust

3. Control and choice

4. Sequence and duration of events

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Basic Contention – Understanding the ETCs allows increasing value of an experience at the same or possibly lower cost. Value is increased by making the experience more

pleasant Cost is reduced by rationalizing emotional labor jobs Aren’t enough naturally emotionally intelligent workers so we

must design work that enables average workers to perform at high emotionally intelligent levels

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The New Service Design• In addition to physical or informational outcomes, encounters evoke

psychological outcomes or hedonic patterns.

• We want to design (and manage) encounters such that the hedonic patterns are perceived positively while the encounter is taking place and recalled positively after it is completed.

• The overriding goal is to assure that the overall experience created by each encounter enhances the brand image.

• Two dimensions of experiences

Explicit – things that the customer can describe

Implicit – things that the customer can’t describe but whose presence or absence can affect the customer’s satisfaction with the experience

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1. Emotions

Emotions influence what we remember

Emotional memories are distinct

Emotions influence what we perceive

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Engineering emotional platforms

Determine the emotions that have to be generated or enhanced.

Determine the emotions that have to be mitigated.

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Emotional platforms

The emotional theme or tone you want to engender The attributes that the firm wants to associate with the

brand. Most companies view this as a culture issue, but it should

cover all of the three Ts. Examples

Harrah’s: Feeling of luck Disney: Delight Joie d’viere Hotel Chain: Edgy (Phoenix Hotel – Rolling

Stone magazine); serene (Hotel Vitale– Country Living) McKinsey: Trust

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Process generated emotions

Anger, regret, joy, frustration, relief, hope, guilt, disliking, etc.

Emotion is stored separately from memory. Emotional triggers: long waits on line, jack-pot at

a casino, negative (or positive) diagnoses from doctor, etc.

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Managing process generated emotions

Anticipate likely emotions at different touch points based on: Product/ Prior history/ Demographics. Current emotional state Highs and lows of the encounter flow

Employ targeted response Proactive response Appropriate reaction (sympathy, apology,

happiness, recovery action.)

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Classifying process generated emotions: Appraisal Theory

Specifies conditions that result in different emotions. People become emotional when they first discover a change in outcomes.

The type of emotion depends on whether:

(1) the change in outcome improves our situation or makes it worse

(2) The outcome is associated with a penalty or reward(3) The outcome is certain or just a possibility(4) The causal event is significant or powerful and its resultant

change difficult to cope with or the event is not very significant and its change is easy to cope with

(5) You are responsible for the event and resultant change or an outside agency caused the event and change

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Strategies for managing in process emotions

Emphasize [1]

Recovery [2]

Co-opt [3] Sympathy/ support [4]

You

Positive outcome Negative outcomeSource of outcome

Not you, e.g., other company or customer

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2.Trust Two Dimensions:

Competence Trust: Do you have the ability to act in my interest although I cannot judge your technical competence?

Motivational Trust: Will you act in my interest even when I am vulnerable? Do you have the motivation Do you have the capacity

Legalistic Approach: Reduce the need for trust through contracts and

incentives – but is this always feasible?

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Engineering Trust

Influence judgments about effort

• Evidence of effort

• Evidence of resources deployed

• Evidence of goal progress

• Evidence of external hurdles

Influence judgments about motivation

• Evidence of interest

• Evidence of incentive alignment

• Make clear limits of empowerment

• Make evident conflict of interest

• Anticipate potential problems

Affective Trust

• Likeability

• Friendliness

• Affinity (homophily)

• Familiarity

Influence judgments about skill

• Evidence of experience

• Testimonials

• Adherence to norms

• Tangibles (physical setting, uniforms etc)

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3. Control and Choice

Control shapes perceptions and attribution

Two kinds of control –

• Behavioral control • Actual control

• Cognitive control (We feel like we are in control)• Knowing what is going to happen• Predictability of environment• Ability to anticipate• Ability to navigate the system

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Engineering Behavioral Control

Significance of Decision

Leve

l of E

xper

tise

Req

uire

d

Low

Minor

High

Mid

Some Major

Server

Client

Client/ Server

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Engineering cognitive control in healthcare

Information about:• Treatment options• Benefits and risks• Delineation of responsibility• Setting expectations about process steps

BUT: Accounting for Individual differences.

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Colonoscopy Experiment:

Redelmeier, D.A., and D. Kahneman (1996) “ Patients’ memories of painful medical treatments,” Pain, no. 3, vol. 8.

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4.Sequence Theory

We recall encounters as peaks and valleys, and as snapshots, not movies

The front end and the back end are not created equal

We like positive trends

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Savviest Film Makers Put Last Things First

“If you don’t have a strong finish to a film, you are in serious trouble. It can be explosive. It can be a bang or a whimper, but it better be memorable, or else people will remember very little about the movie.If a movie has a riveting conclusion, audiences are happy to overlook its earlier flaws. By contrast, if the picture has a bummer of an ending, people forget almost everything they liked about the film.” “AI” Review by --Robert Towne, Screenwriter Source: Stephen Farber, L.A. Times, Aug. 27, 2001

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Engineering sequence flows Create a distinct high

You don’t want to allocate resources to make all events equally good, but pick and choose and drive some much higher.

Create a positive trend in the process Manage perceptions of duration Manage bad news

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Emotionprint applied to car repair

Positive

Neutral

Negative

Hed

onic

Sta

te

Joy/ Thrill/Happiness

Anger/ Anxiety/Stress

Customer Arrives

Service rep. conversation

Customer calls

Scheduling of job

j

Greeting & prelim. diagnosis

Detailed diagnosis

Convey quote

Customer approves

Build trust Create feeling of

control

Provide Positive surprise

Car delivered to home

Car repaired

Anticipate emotions

Convey goal

progress

Line of visability

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Engineering perceptions of durationDuration of an encounter is often the major determinant of its value

Little evidence of an internal clock -- Humming birds have one; we don’t.

Judgment of duration of a current experience is affected by the following: Attention to the clock Mental capacity utilized during the event Emotional state Expectation of the length of wait To minimize attention to duration - Increase perception of control - Increase perception of goal progress To make duration seem longer - Break encounter into distinct segments

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Sample service psych principles for encounter design Create a positive trend in each encounter End on a high note (“stick the dismount”) Frame the “sweet spots” Create a feeling of control Evidence trust in capabilities and effort Convey goal progress Proactively anticipate and manage emotions Optimize the number of choices Create positive surprises Understand the time perspective of the customer

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The Next Steps

Refinement of psychological factors for ease of application – A best practices handbook(?)

Cost accounting – how to show profit impact of psychology based changes

Need to develop satisfaction questionnaires which get at underlying psychology directly, without giving away the magic

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ReferencesDasu, S. and R. Chase, “Designing the Soft Side of

Customer Service, SMR, Fall 2010.

Chase, R. and S. Dasu “Want to Perfect Your Company’s Service? Use Behavioral Science,” HBR, June 2001.

DeVine, J. and K. Gilson, “Using Behavioral Science to Improve the Customer Experience,” www.mckinsey Quarterly.com/Operations, Feb. 2010.

Dan Ariely’s papers: http://web.mit.edu/ariely/www/papers.shtm

Kahneman, D. and A. Tversky, eds. Choices Values and Frames, Cambridge University Press, 2000.