When, and How, Should Firms Educate Their Customers?

[We’re pleased to welcome author Simon Bell of the University of Melbourne, Australia. Bell recently published an article in the Journal of Service Research entitled “Unraveling the Customer Education Paradox: When, and How, Should Firms Educate Their Customers?,” co-authored by Seigyoung Auh and Andreas B. Eisingerich. From Bell:]

  • What inspired you to be interested in this topic?

We have long been fascinated by service firms’ reluctance to let customers “into the kitchen”. Service firms have traditionally kept customers in the dark. The thinking is that giving cuJSR_16.2_72ppiRGB_powerpoint.jpgstomers too much insight or access to how a firm operates places that firm’s ‘black box’ or proprietary methodologies at risk. Educating customers apparently provides them with the skills to shop around and potentially switch to a competitor. Yet we noticed in our consulting work that some service firms (and even some service employees) were challenging this thinking. They were proactively educating their customers and seeme
d to be the better for it. We were keen to discover what was going on.

  • Were there findings that were surprising to you?

The results of our field study showed that firms were partly right. Increasing customer expertise through proactive efforts to educate their customers actually had an overall negative impact on loyalty. This was because customers build what we call “market-related” expertise – a general knowledge about how markets work – which provides customers with the confidence to shop around. But we also found that educating customers builds “firm-specific” expertise which ties a customer more closely to the firm. It’s just that this positive effect on loyalty did not outweigh the negative. Yet, when we conducted an experimental study we found that the customer loyalty effects of customer education were positive overall. We believe this has a lot to do with the context (i.e., firm and industry) in which customer education programs might be used. Our goal in this paper was to discover whether education did indeed have both positive and negative effects on loyalty, but clearly our next focus should be revealing the different contexts in which the positive effects outweigh the negative (and vice versa).

  • How do you see this study influencing future research and/or practice?

We think our results have some very important implications for managers. We think that, in this “Google age”, customers are already taking responsibility for their own understanding of how services, firms, and markets work. Easily digestible information and knowledge is at everyone’s fingertips so we think it’s risky for firms to keep customers in the dark. Our findings suggest that firms should be proactive in educating customers and pay particular attention to educating them about how their firm operates. Firms need to let customers into the kitchen and provide a greater level of transparency. We showed that it’s impossible to disentangle the market-related education from the firm-specific, but it is perfectly reasonable for firms to craft educational programs around more firm-specific elements. Ultimately, customers that are more competent at consuming your services are better for your business.

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This entry was posted in Customer Engagement, employers, Engagement, Service by Cynthia Nalevanko, Editor, SAGE Publishing. Bookmark the permalink.

About Cynthia Nalevanko, Editor, SAGE Publishing

Founded in 1965, SAGE is the world’s leading independent academic and professional publisher. Known for our commitment to quality and innovation, SAGE has helped inform and educate a global community of scholars, practitioners, researchers, and students across a broad range of subject areas. With over 1500 employees globally from principal offices in Los Angeles, London, New Delhi, Singapore, Washington DC, and Melburne, our publishing program includes more than 1000 journals and over 900 books, reference works and databases a year in business, humanities, social sciences, science, technology and medicine. Believing passionately that engaged scholarship lies at the heart of any healthy society and that education is intrinsically valuable, SAGE aims to be the world’s leading independent academic and professional publisher. This means playing a creative role in society by disseminating teaching and research on a global scale, the cornerstones of which are good, long-term relationships, a focus on our markets, and an ability to combine quality and innovation. Leading authors, editors and societies should feel that SAGE is their natural home: we believe in meeting the range of their needs, and in publishing the best of their work. We are a growing company, and our financial success comes from thinking creatively about our markets and actively responding to the needs of our customers.

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