Customer-Firm Interactions

cup-2884023_1920[We’re pleased to welcome authors Jesús Cambra-Fierro of the University Pablo of Olavide, Iguácel Melero-Polo of the University of Zaragoza,  F. Javier Sese of the University of Zaragoza, and Jenny van Doorn of the University of Groningen. Wakefield. They recently published an article in the Journal of Service Research entitled “Customer-Firm Interactions and the Path to Profitability: A Chain-of-Effects Model,” which is currently free to read for a limited time. Below, Dr. Melero-Polo reflects on the theories and implications of this research:]

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This study investigates a chain of effects to understand the causal path from customer informational inquiries (CIIs) and firm-initiated contacts (FICs) to customer profitability. Customer–firm interactions are the starting point of the relationship between these parties, and contribute to determining the relationship’s future (Dwyer, Schurr, and Oh 1987; Anderson and Weitz 1992). These interactions can be initiated either by firms or by customers. Although companies have traditionally taken the initiative to contact customers (FICs), nowadays, the growing importance of the customer in value-creation processes has changed the rules of the game. Thus, there has been a significant increase in the number of CIIs that companies have to properly manage. However, despite the importance of this topic, more research was needed to clarify the effectiveness of FICs and CIIs (Hennig-Thurau, Gwinner, and Gremler 2002; Hogan et al. 2002; Palmatier et al. 2006).

Drawing on social exchange theory, our framework identifies a set of attitudinal (perceived relationship investment and relationship quality), behavioral (customer cross-buy and service usage), and financial (customer profitability) consequences of CIIs and FICs, and also explores the extent to which customer-perceived financial risk and customer involvement shape attitudinal reactions to CIIs and FICs. We follow Bolton, Lemon, and Verhoef (2004), who propose a causal sequence of the effects of marketing instruments (FICs): (1) FICs influence relationship perceptions, (2) which influence customer behaviors, (3) which, in turn, affect financial outcomes. However, we go a step further and empirically analyze the chain of effects following FICs and CIIs. Furthermore, we include two contingency variables that can help in understanding how these customer–firm interactions (FICs and CIIs) contribute to building stronger relationships.

Through our analysis of this chain of effects, we are able to propose specific guidelines for managers in order to improve customer–firm relationships and increase the value that each customer can provide to the firm.
Our contingency framework reveals that the impact of FICs and CIIs may vary between different customers depending on their levels of perceived risk and customer involvement. Specifically, FICs and CIIs are a particularly valuable tool for strengthening the relationship with customers with a low level of involvement, but high perception of financial services risk. For highly involved customers, FICs and CIIs are not very effective; CIIs can even backfire if the customer also perceives the risk to be low. Our results highlight the importance of market segmentation for marketers to more effectively manage when and to whom they should target marketing activities (FICs) and steer CIIs.

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Interaction photo attributed to rawpixel. (CC)

The Impact of FSMA on Restaurants

restaurant-2623071_1920[We’re pleased to welcome author Mark Johnson of Michigan State University. He recently published an article in Cornell Hospitality Quarterly entitled “An End User Perspective: The Impact of FSMA on Restaurants,” which is currently free to read for a limited time. Below, Dr. Johnson talks about the background of this research:]

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On January 4, 2011, President Obama signed into law the Food Safety Modernization Act (FSMA or P.L. 111-353). This act may be the most far-reaching food safety legislation since the Food, Drug and Cosmetics Act of 1938 (FDCA). FSMA aims to ensure that the U.S. food supply is safe by shifting the focus of regulation from contamination response to prevention. This legislation imposes administrative costs on the food supply chain in the U.S. by requiring additional record keeping and safety procedures.

The law created record keeping requirements for firms. These requirements are often referred to as one-up-one-down. This nickname emphasizes the fact that the act requires grocers, wholesalers, and food processors to keep track of the immediate parties that they buy food and food products from as well as the parties that they sell food and food products too. This ensures that any contamination problems in the U.S. food supply chain can quickly and efficiently be traced to its source and aid in the rapid response to foodborne illness before it becomes widespread. The Congressional Budget office (August 12, 2010) estimated that FSMA would directly cost taxpayers $1.4 Billion through federal administrative costs. However, attempts to measure the costs imposed on businesses by the legislation were largely ignored until we reported, in a previous study, that expected costs to food processors, wholesalers and grocers was approximately 10% of equity value (Johnson and Lawson 2016). This represented a market value cost of $33 Billion. This previous result encouraged me to consider that others in the food supply chain, end users, such as consumers and restaurants may bear some of these supply chain costs.

The surprising evidence from my current article indicates that restaurants lost approximately 5% of firm value. In this case of restaurants this represents approximately 7.5 billion dollars of lost value. These equity costs represent expected future cash flow and risk effects for the firms studied. These costs, 1.4+33+7.5= $42B, should be weighed against the potential benefits to consumers that the act brings. These benefits may be directly measurable in a potential drop in food borne illness cases over the next 5-10 years as the act is fully implemented.

Previous article:
The Impact of the Food Safety and Modernization Act on Firm Value,” M. Johnson and T. Lawson, Agricultural Finance Review, 2016, 76(2): 233-245.
Current article:
An End User Perspective: The Impact of FSMA on Restaurants,” M. Johnson, Cornell Hospitality Quarterly, Forthcoming

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Kitchen photo attributed to StockSnap. (CC)

The Bias of Size in Gambling Decisions: Evidence from a Casino Game Hierarchy

backgammon-2488089_1920[We’re pleased to welcome author Lawrence Hoc Nang Fong, Davis Ka Choi Fong, Robin Chark, Peter Man Wai Chui of the University of Macau. They recently published an article in Cornell Hospitality Quarterly entitled “The Bias of Size in Gambling Decisions: Evidence from a Casino Game,” which is currently free to read for a limited time. Below, Dr. Wang reflects on the inspiration for conducting this research:]

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What motivated you to pursue this research?
This study stems from the authors’ observations of Cussec players in casinos. As gamblers strive to predict the outcome based on previous outcome pattern shown on the screen which is attached to the table, is there any other hint they are trying to locate? While the Chinese characters “Big” and “Small” are clearly displayed on the screen, they can be the hint. Our feeling is that gamblers would incline to bet on “Big” as it sounds more positive than “Small” and they may intrinsically link “Big” to win which is the positive outcome in gambling. Given this speculation, we’ve tried to find whether there had been a study about the said phenomenon, but we got nothing. We think this topic deserves documentation in the literature and thus initiated this research.

In what ways is your research innovative, and how do you think it will impact the field?
Cognitive bias has been a popular research agenda for decades. The bias of size, to our best understanding, remains unexamined. We believe that this study opens a new research stream of cognitive bias in gambling. Future research may examine the questions that we raised at the end of the paper:
“Is the bias maintained if the cue is physical size? In the gambling context, will an outcome option with a larger area on the table layout signal a higher chance of winning?”

What is the most important/ influential piece of scholarship you’ve read in the last year?
Peetz and Soliman’s (2016) paper entitled “Big money: The effect of money size on value perceptions and saving motivation” is an importance piece of work that sheds light to our study. They found that a picture of money with larger size was perceived as more valuable. While gambling is an activity overwhelmed by monetary reward, the mental link between “Big” and win (money as reward) is not unreasonable. We felt blessed to discover and read Peetz and Soliman’s paper.

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Service Employee Responses to Angry Customer Complaints

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[We’re pleased to welcome authors Christina Jerger of the Catholic University of Eichstaett–Ingolstadt and Jochen Wirtz of the National University of Singapore. They recently published an article in the Journal of Service Research entitled “Service Employee Responses to Angry Customer Complaints: The Roles of Customer Status and Service Climate,” which is currently free to read for a limited time. Below, Jerger reflects on the inspiration for conducting this research:]

 

 

It is not uncommon that customers behave aggressively in service encounters, especially after experiencing a service failure. In turn, front line service employees should not retaliate this customer misbehavior to not jeopardize effective service recovery. Furthermore, service employees are requested to not discriminate customers and to treat them equal in terms of their displayed emotions as well as offered restitution in the service recovery encounter. The equal customer treatment becomes even more important in our increasingly diverse societies but is scantly researched.

This research gap spans many fruitful avenues for the research I have conducted as part of my PhD thesis. This current study examines whether a customer’s status determines how well service employees respond when they get confronted with an angry customer complaint, and whether a firm’s strong service climate can help to reduce customer status effects. Specifically, to assess employees’ emotional (i.e., expressed anger) and behavioral (i.e., restitution offered) service recovery responses, we had to develop an innovative field experimental design: We conducted role-played complaints in fast-food restaurants and observed and coded employees’ actual responses. In addition, we conducted scenario-based experiments with restaurant waiters to find out more about how the employees’ background and their personality might influence their responses to angry customers of different status.

The studies’ findings confirm that in weak service climate conditions, employees treated low-status customers significantly worse; they expressed more anger and they were less likely to offer restitution. In contrast, a strong service climate moderated the effects of customer status on employees’ response behaviors in both studies. As a result, employees’ service recovery behaviors converged at what is generally considered good practice in customer service. The strong organizational rules, routinization of recovery processes, better employee skills and knowledge, and guidance by leadership meant that employees knew what is expected from them and led to better service recovery outcomes. Importantly, employees did not treat low-status customers worse than high-status ones.

Interestingly, although it didn’t reach statistical significance in both studies, we found a tendency that low-status customers were more likely to receive restitution in a strong service climate than high-status customers. It seemed that employees made an effort to not treat low-status customers worse than high-status customers, and in the process, they overcompensated low-status customers.

Furthermore, our findings show that service climate governs both employees’ immediate affective and delayed conative recovery responses. This suggests that a strong service climate is authentic, internalized, and on a level of deep acting. Therefore, it is effective in governing employee responses in difficult situations, including in establishing emotional display rules.

One major input to building a strong service climate is training. A strong service climate seems a necessary requirement for effectively dealing with angry customer complaints. Employees should be trained in handling their feelings and how to use emotional displays in an appropriate manner. Especially for organizations with a weak service climate, this training needs to include on how to treat customers equally and independent of potential biases employees may have.

Overall, this paper offers highly valuable insights for service theory and management and helps understanding how service employees respond to angry customer complaints.

 

Christina Jerger, July 18, 2017

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Customer Service photo attributed to PublicDomainPictures. (CC)

Webinar Highlights: Presenting Data Effectively

[The following post is re-blogged from Social Science Space. Click here to view the original article.]


Crystal clear graphs, slides, and reports are valuable – they save an audience’s mental energies, keep a reader engaged, and make you look smart. This webinar held on June 6, 2017, covers the science behind presenting data effectively and will leave viewers with direct, pointed changes that can be immediately administered to significantly increase impact. Guest Stephanie Evergreen also addresses principles of data visualization, report, and slideshow design that support legibility, comprehension, and stick our information in our audience’s brains.

Evergreen’s presentation was followed by an audience question-and-answer session, which is included in the recording. Not all the questions were answered at the time, and Evergreen answers some additional session questions below.

Evergreen is an internationally recognized speaker, designer, and researcher best known for bringing a research-based approach to better communicate through more effective graphs, slides, and reports. She holds a PhD from Western Michigan University in interdisciplinary evaluation, which included a dissertation on the extent of graphic design use in written research reporting. Evergreen has trained researchers worldwide through keynote presentations and workshops, for clients including Time, Verizon, Head Start, American Institutes for Research, Rockefeller Foundation, Brookings Institute, and the United Nations. She is the 2015 recipient of the American Evaluation Association’s Guttentag award, given for notable accomplishments early in a career.

She is co-editor and co-author of two issues of New Directions for Evaluation on data visualization. She writes a popular blog on data presentation at StephanieEvergreen.com. Her books SAGE Publishing books Presenting Data Effectively and Effective Data Visualization both reached No. 1 on Amazon bestseller lists. A second edition of Presenting Data Effectively was published in May.

  1. When is it best to place the data information (e.g. 20 percent) on a bar or lollipop vs. using a scale on the side or bottom of a chart?

If people will want to know the exact value, add the data label. If the overall pattern of the data and estimated values are sufficient, use a scale. But don’t use both – that’s redundant.

  1. How do your clients and colleagues respond to the ‘flipped report,’ in which research findings and conclusions are presented before the discussion, literature, methodology, and background sections?

With a “duh” as in “Why haven’t I thought of that before”? Generally, clients appreciate how a flipped report values their time. On occasion, you and I will find audiences who really bristle at the idea, usually people steeped in the academic culture, so check first if a flipped report structure would be okay.

  1. Any tips for the converted about changing resistant organizational culture to data visualization? “You need to use our template!”

Culture change is slow, so the first tip is to be patient. After that, try remaking one of your own old (bad) slides or graphs to show what an overall would look like. See if you can get a friendly client or customer you know to give you feedback on it. Then report on the redesign and the feedback to others in your organization. Try getting someone from senior management on board. Leave a copy of my book in their mailbox or in the break room. And hang in there.

  1. How do we report small numbers? Without percentages?

I would report small numbers as raw numbers, not percentages. Try an icon array for a visual.

  1. Where is the best place to get report templates?

In your imagination! Any report template is going to look like a report template, not like something that fits your own work. Look around for inspiration, for sure, like on my Pinterest boards, but create your own style that fits you and your work.

  1. What program do you use to create dashboards or infographics? We’ve used Piktocharts…. are there others?

I work within the Microsoft Office suite. I make dashboards in Excel and infographics in PowerPoint. This way I have total control over the design and everyone on my team can make edits. A quick Google search of either dashboard or infographic programs will give you hundreds of choices you could work with. If you want something from that list, look for maximum flexibility, low learning curve, and reasonable expense.

  1. Each chart can have multiple findings; are we skewing the results when we highlight certain findings over others using color and data?

“Skewing” sounds like we are manipulating, but that’s not the case. Using color to highlight a certain part of the graph still leaves the rest of the graph completely intact and able to be seen. Adding color does, however, reflect an interpretation we have made of the data. But that isn’t “skewing” – it’s telling people our point and that’s why they are listening to us in the first place.

  1. Can you please explain the difference between your two books? Thanks!

Sure! Effective Data Visualization walks you through how to choose the right chart type and then how to make it in Excel. Presenting Data Effectively talks about formatting graphs well with consideration of text and color and broadens that discussion to address dashboards, slides, handouts, and reports.

  1. One challenge I face is presenting nuanced findings in an accessible way. For example, when there are limitations to the data or subgroups that need to be acknowledged or findings need to be interpreted with caution. As a researcher, it worries me that the client might put tentative findings “out there”, misrepresenting them (to a degree).

This makes your title and subtitle ever more important. Be very clear in your wording that the findings are limited. You can also add things like confidence intervals to your graph if you are confident that the reader will know how to interpret them. If it is still going to be a concern, don’t make a graph of the data. People are drawn to graphs because we look at pictures so don’t put the data in a picture if you are worried people won’t read the nuanced narrative.

Understanding Customer Barriers and Barrier-Attenuating Practices in Access-Based Services

[We’re pleased to welcome authors Simon Hazée, Cécile Delcourt, and Yves Van Vaerenbergh who recently published an article in the Journal of Service Research entitled “Burdens of Access: Understanding Customer Barriers and Barrier-Attenuating Practices in Access-Based Services.” Below, the authors share more insight on their research in the service industry:]

What motivated you to pursue this research? JSR_16.2_72ppiRGB_powerpoint.jpgWe are witnessing a global rise of what’s been called ‘the access economy’. This growth is yet mainly driven by an increasing supply, with lots of companies—including manufacturers like BMW or Daimler AG—offering services that grant customers limited access to goods. Although these services offer several potential advantages, convincing customers to use them remains challenging. Service innovation failures represent potential losses of revenues that can even endanger firms’ competitiveness; indicating the pressing need to understand the barriers that keep customers from participating in the access economy.

Were there any surprising findings? Customers face several important barriers for why they don’t participate in the access economy, and these barriers do not always have rational grounds. For instance, one striking observation is that customers are afraid of contamination. After all, when accessing goods, you know for sure that someone else—whom you do not know—has touched the product; this may create disgust and avoidance responses. Another surprising finding is that customers believe they must engage in a bunch of practices to attenuate the barriers themselves. For example, customers must be ready to alter or postpone their needs to counter the fact that goods might not be available when needed, an important barrier perceived by customers.
Interestingly, although engaging in such practices helps attenuating barriers, customers also consider them as burdensome.

In what ways is your research innovative, and how do you think it will impact the field?Our findings suggest that customers reject service innovations not only in response to numerous perceived barriers associated with the innovation but also out of consideration of the practices in which they must engage to attenuate those barriers. Prior research shows customers typically adopt and use access-based services to avoid the burdens of ownership. We show that they reject these services due to the burdens of access, which include the barriers to access and the barrier-attenuating practices. Understanding both the barriers and the practices in which customers engage is critical for theory and practice; it can reveal new ways to see, examine, and manage service innovations. In sum, the success of access initiatives is not necessarily for those service providers that show the benefits of using the service, but might be for those who are best at overcoming the barriers as well as facilitating and limiting the practices in which customers engage.

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Customer misbehaviour in the collaborative economy: Is it contagious or not?

Co-authors Tobias Schaefers, Kristina Wittkowski, Sabine Benoit, and Rosellina Ferraro recently published an article in the Journal of Service Research entitled “Contagious Effects of Customer Misbehavior in Access-Based Services.” Below is their informational video as a supplement to their article, which helps analyze how connections to a person’s community can influence behavior in the given shared space.

 

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