Customer Service Science Made Simple
Everyone likes a few good statistics. From presidential candidates, to business meetings, to the guy next to you at Starbucks, there’s nothing like a fact or two to get your point across. The problem is, really high-quality facts tend to come from specialized, peer-reviewed articles. And these tend to be dense, technical, and – at the risk of offending my professional colleagues – can be lethally dull.

Fortunately, individuals who have undergone a grueling form of inoculation (known as psychology graduate school) can digest thousands of pages of this material with very little risk of brain damage. Our job, among other things, is to read the hard stuff so you don’t have to. Which is good, because there’s some very important and relevant information buried in the academic literature.

What follows is an overview of recent work about creating a customer service culture in the organization. The footnotes and most of the jargon have been removed, but the key results are all there. (And if you really want the industrial-strength version, please feel free to call or write me.)

In Search of a Service Culture
In recent years, organizations have been on a mission to improve their service image. Not only is bad service viewed as expensive and uncompetitive, customers view it as a personal insult. They become angry, depressed, or insecure when service employees ignore them, don’t understand them, or hurry to get rid of them.

These efforts have been stimulated by service-related complaints of all kinds, and at a deeper level, by globalization, industry consolidation, and  the continuing long-term shift toward a service-based economy – dramatic changes that are affecting the very nature of work. These changes are manifested in a breakdown of organizational barriers, the sharing of vast amounts of information, and change in the ways organizations service customers and relate to their suppliers and their employees.

People comprise somewhere between 30% and 80% of general and administrative costs in most companies, but in highly labor-intensive service-based organizations the figure may exceed 80%. The Bureau of Labor Statistics expects services to be responsible for all net job growth in the decade through 2010. This growth does not require workers with high levels of education, technical expertise, or experience. It requires people who are resilient, resourceful, empathetic, and enterprising. Unfortunately, these qualifications are not widespread. In one study, as many as 90% of applicants for a guest services position were unable to meet even the basic criteria.

Many organizations succeed in improving customer service behaviors. Employee empowerment programs at one hotel chain were shown to produce employee retention of twice the industry average, and customer satisfaction ratings were positively correlated with employee training and employee satisfaction. In another study, Xerox demonstrated a direct link between customer satisfaction and business performance. Their solution to improving customer satisfaction was to improve employee satisfaction through increased training, improved compensation and benefits, consistent management practices, personal recognition, enhanced work environment, and effective communications.

Not so fast, there
Achieving a service culture is not easy, however. Services are significantly different from products. They are basically intangible, so customers experience rather than use them. They are participatory, making the customer an active part of the service. And they are simultaneous, meaning there is no delay between production and consumption. All these factors make it difficult to control what the customer will actually experience, and involve multiple causes of satisfaction. The unique nature of delivering services make employee relationships critical, makes customer service a complicated process, and encourages logical disconnects between management and customer expectations.

How can organizations improve service behavior? Publishing customer service initiatives and placing posters over the water fountain won’t do it. In fact, maybe nothing will: approximately 50 to 60% of all organizational initiatives fail due to management’s inability to change individual behavior. In turn, much of this may be due to the highly static nature of personality traits underlying that behavior. The amount and quality of customer service provided depends largely on the type of people who are hired in the first place – as well as on the way people are treated by managers, the organizational climate, the amount of training provided, and organizational rewards systems.

Give some, get some
There is plenty of evidence that it can be done. In one study of 23 bank branches, associates who were treated as valuable resources by the organization had higher customer ratings for quality than associates who were treated as “employees.” In a second bank study, there was a strong relationship between the quality of service that employees thought they were delivering and the quality of service customers thought they received; furthermore, employee attitudes about the organization were significantly correlated with customers’ perceptions about the quality of service they received. Many such studies also showed bottom line profitability effects.

Another large survey of an insurance organization found that management expectations and approaches toward service employees had a significant impact on the service employees’ job satisfaction. Job satisfaction, in turn, influenced turnover; turnover was negatively associated with tenure; and job tenure (finally getting to the point) was positively associated with customer satisfaction.

It’s all connected
The overall climate of an organization, as reflected in its policies and practices, seems to matter more than any specific program or initiative. For example, organizations that emphasize profitability are more likely to have systems and controls in place that maximize financial gain; whereas, organizations that promote that values of the individual are more likely to offer wellness programs, childcare, stress reduction programs, and the like. In short, the behaviors that are rewarded, supported, and expected literally determine the climate perceived by employees – and in turn, their customers.

Of course, the people who are hired by the organization become the organization, and go on to hire more people who fit the organizational climate. Organizational culture – whether that of Google or IBM – is thus self-perpetuating, and can be very difficult to change. And while culture can be remarkably homogenous within a group, it’s important to realize that organizational culture can often vary among units within an organization. One study of organizational climate found that behavioral norms vary across organizations and levels in ways consistent with management style. In fact, significant differences exist across sub units and levels that may lead to divergent views regarding acceptable behavior and weak organizational norms.

Begin at the beginning
The logical starting point for promoting a service culture, then, is to address both job skills and cultural fit when conducting a job analysis for selection. This will help assure that people who are hired have both the right skills to perform the job and the right attitude to provide the level of customer service desired.

Hiring the “whole” person makes the issues of personality tests highly relevant to the service sector. Studies have indeed shown that using personality items that are relevant to the work setting; using personality measures to predict global criteria; using personality dimensions that are theoretically associated with work in the organization; and, validating the personality constructs can all contribute significantly toward making the right personnel selection decisions.

Does any of this really work?
Now that the I-O brain trust have got us this far, you’d expect them to be able to prove that a service culture does indeed produce the bottom-line results organizations are looking for. Surprisingly, the evidence on this very important point is quite mixed.

A major review of several studies of organizations with high customer service cultures found that positive employee attitudes and positive customer attitudes are not necessarily related to unit profitability. The author suggested several explanations: a measurement lag between organizational functions and organizational profitability; intangibility between organizational citizenship issues and near-term profitability; the multidimensional nature of organizational performance that might offset profitability; and finally, confusing “focused” customer service directed at a specific market with specific objectives, with “generic” customer service that might be inappropriate for some organizations.

Give the people what they want?
That last point is particularly important. More than one study has questioned the practice of using customer satisfaction measures that are irrelevant for a particular market segment, such as comparing service expectations from expensive restaurants with fast food restaurants. Instead, service quality scales should accurately reflect the real customers’ perceptions about what constitutes quality service.

On the other hand, some experts have suggested paying more attention to organizational needs regarding service. They recommend dividing customers into high, medium, and low value groups to study the customer perceptions of each group and tailor service to the most profitable customer segment. Others have suggested that customers may also find too much service to be just as detrimental as too little. (“Would you like any appetizers? Extra cheese? How about dessert?”) Their analysis involved choosing a range of levels of service based on cost, type of customer, product, and market, then having employees vary the level of service based on accurate perceptions of customer desires.

Given that customers view quality service in terms of a “desired” level of interaction with the provider, organizations should be sensitive to adjusting the level of service depending on individual customer needs. This brings us back to developing a service-oriented culture, emphasizing the need for each employee to adjust to each customer’s unique needs, reinforcing those behaviors, and selecting people in the first place with the attitudes, skills, and flexibility to perceive customer desires and flex accordingly.

Summary
There is much more to customer service than posters, initiatives, and contests – or even service metric dashboards and training sessions. Good customer service begins with choosing people who have the right attitude, skills, and organizational fit. Once hired, managers need to remain attuned to how they manage their employees, being careful to foster and promote an environment that leads to proactive customer service behaviors among the employees. Leaders also need to realize that customer service, as a generic concept, may not provide the degree of service that customers seek – or that the organization requires. Management should seek out customers and inquire about the type and nature of service that differentiates one supplier from another.

Until there is an alignment between selection criteria, management behaviors, employee attitudes, the degree of customer service provided, and the degree and type of customer service desired, even the most well-intentioned customer service initiatives may end up as not much more than decorations for cubicles.

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