Assessing Value from Business-to-Business Services Relationships

[We’re pleased to welcome authors Paul Lyons and Louis Brennan of Trinity Business School. They recently published an article in Journal of Service Research entitled “Assessing Value From Business-to-Business Services Relationships: Temporality, Tangibility, Temperament, and Trade-Offs,” which is currently free to read for a limited time. Below, they reflect on this research:]

The word value permeates through academic literature and practitioner vocabulary alike, and references to concepts such as value realization, value-add, and value proposition are commonplace. Although the widespread usage of such terms implies that their meaning is intuitive, studies have repeatedly found that our understanding of what constitutes value is limited. B2B relationships are formed with the specific objective of developing sources of value that cannot be achieved when acting alone. However, understanding value from B2B relationships is particularly complicated given the complexities of the intra- and inter-organizational governance processes that apply, and the numbers of managers whose perceptions influence these processes. Drawing on 30 years of experience as a practitioner working with customers and suppliers of services, Dr. Paul Lyons (corresponding author) observes: “The most effective B2B relationships are those where both parties collaborate to achieve shared benefits. The challenge is often in achieving a consistent appreciation of these benefits across complex organizational structures.”

Based on the premise that value “is in the eye of the beholder”, this study explores the assessment of value by managers closely engaged in B2B services relationships. It analyzes these assessments to develop new insights into how value is assessed, and how these assessments may be influenced. The study longitudinally explores three services outsourcing relationships through in-depth interviews with 38 managers representing both the customer and supplier organizations. The findings enable the development of a framework, detailing four concurrent dimensions of assessments of Relationship Value:

– Temporality: Value assessments consider past, present, and future sources of value, but vary between assessments that are made on an ongoing basis (continuously), and those that are more periodic (intermittent).

– Tangibility: Assessments of Relationship Value consider quantifiable outputs such as financial benefits (tangible), and these which are more subjective (intangible).

– Temperament: Some assessments were found to be logical and structured (systematic), whereas others were based on feelings and senses (emotional).

– Tradeoffs: Assessments varied between those comparing returns achieved relative to costs incurred (benefits vs sacrifices) and those comparing experiences to what was anticipated (perceptions vs expectations).

The study also revealed that each of the above dimensions was evident to varying degrees across different constituencies that formed value assessments. The customer and supplier organizations as Institutions were identified as key constituencies, but the study also revealed the importance of value assessments formed by informal Collectives in both organizations. A central finding reveals the critical role of Relationship Leaders in influencing assessments. The study makes five recommendations to partnering firms seeking to better understand and optimize assessments of value by stakeholders in their B2B services relationships.

Prof. Louis Brennan (co-author) summarizes the contribution of this study, saying “To optimize the value of B2B services relationships we need to better understand how it is assessed by those most closely involved. This study provides new insights into how these assessments are formed and provides recommendations to managers on how to monitor and influence these assessments.”

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Gaining Customer Experience Insights That Matter

[We’re pleased to welcome authors Janet R. McColl-Kennedy the University of Queensland Business School, Mohamed Zaki of the University of Cambridge, Katherine N. Lemon of the Carroll School of Management, Florian Urmetzer of the University of Cambridge, and Andy Neely of the University of Cambridge. They recently published an article in Journal of Service Research entitled “Gaining Customer Experience Insights That Matter,” which is currently free to read for a limited time. Below, they reflect on the motivation and impact of this research:]

What motivated you to pursue this research?

Customer experience is central to marketing. Providing a meaningful customer experience is viewed as essential to achieving competitive advantage and satisfied customers.
Customer experience management is listed in the top ten priorities of CEOs around the globe.
Organizations that carefully manage the customer experience reap rewards such as increased customer satisfaction, revenue growth, increased customer loyalty and greater employee satisfaction.

But to date knowing what to measure and how to gain rich insights that matter through multiple data sources, especially what to do with open-ended feedback has not been clear. Often open-ended feedback that firms receive is ignored, or simply categorized broadly as a complaint or a compliment.
We show that this rich feedback can be used to identify previously unrecognized, critical touchpoints in the customer experience and to take specific actions to strengthen the customer experience, thereby enhancing revenue growth, customer loyalty and employee and customer satisfaction.

In what ways is your research innovative, and how do you think it will impact the field?

This is the first empirical study of customer experience.
Large amounts of data, including textual data such as verbatim comments from customers, are now generated at many touchpoints in the customer journey. Text mining is well suited to extract customer insights from unstructured comments and customer satisfaction data. However, text mining is not yet mainstream in marketing. Text mining and other emerging technologies offer potentially better ways to measure and manage customer experience. In our model, we connect qualitative data and quantitative data with a text analytics approach. We show that customer experience analytics that apply big data techniques to the customer experience can offer significant insights that matter.

We identify seven root causes for the complex B2B service. Each of these represent opportunities for improving the CX.
Our model is also able to uncover customers who are at risk of leaving the firm, even customers who give high satisfaction scores (or NPS scores). Customers with high satisfaction scores would be seen by the firm as “satisfied”, or those with high NPS scores would be deemed “very likely to recommend”, and therefore not identified by the firm as requiring attention; yet we find that these customers are clearly voicing their concerns in the comments, and may be at higher risk of churning than traditional measures may suggest.

We uncover an entire “hidden” segment of supposedly highly satisfied customers who voice significant concerns. 42% of customers who give scores of 9.5 and above (out of 10) actually complain, as do many who give scores between 7 and 9.4 (44%). Complaints made by customers who gave satisfaction scores of 7 or greater were often ignored, despite these customers being worth over $250,000 on average and accounting for a significant portion of sales. Sales figures shows that when these customers’ concerns were not addressed sales went down significantly. For instance, one such “satisfied” customer reduced its purchases from over $200,000 to less than $2000. The key insight? Ignoring the small details that can be identified through the authors’ text analytics model can mean big losses for firms.

Our approach enables firms to link customer-centric CX elements from the conceptual framework (identified as potential pain points) to specific firm functions and jobs (identified as root causes) to take specific actions to strengthen the customer experience. We provide a step-by-step guide for implementing the approach highlighting what really matters to customers and what actions are needed by managers

What advice would you give to new scholars and incoming researchers in this particular field of study?

This is a very exciting time to be investigating customer experience with new data mining tools available. Learn new tools and apply them to make important contributions to theory and practice. Collaborating with a company that is interested in improving its performance through new approaches can yield innovative insights – both for the firm and for scholarship.

Contact:
Professor Janet R. McColl-Kennedy, PhD, FAMI, FANZMAC, CPM
Professor of Marketing I UQ Business School The University of Queensland l Brisbane QLD 4072 l AUSTRALIA
P: +617 3346 8178 | E: j.mccoll-kennedy@business.uq.edu.au
W: https://www.business.uq.edu.au/staff/janet-mccoll-kennedy
W: http://researchers.uq.edu.au/researcher/284
Google Scholar https://scholar.google.com.au/citations?user=VLX4hYgAAAAJ&hl=en

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Understanding Customer Forgiveness of Service Transgressions

[We’re pleased to welcome authors Yelena Tsarenko of Monash University, Yuliya Strizhakova of Rutgers University, and Cele C. Otnes University of Illinois at Urbana-Champaign. They recently published an article in Journal of Service Research entitled “Reclaiming the Future: Understanding Customer Forgiveness of Service Transgressions,” which is currently free to read for a limited time. Below, they reflect on the motivation and impact of this research:]

When customers are wronged, a diverse array of emotional, cognitive, and behavioral responses can result. Noticeably absent in prior marketing research, however, is the study of customer forgiveness as a viable response to transgressions. Forgiveness, a moral concept with religious overtones, has not been perceived as relevant to the secular world of business and marketing. However, business transgressions are inevitable and, just like human transgressions, customers apply forgiveness to these transgressions. Business success further hinges on understanding customer forgiveness and its impact on subsequent customer-provider relationships. Grounding our investigation in interdisciplinary research on forgiveness and self-determination theory we analyze 34 in-depth interviews with customers who experienced transgressions in the healthcare, financial, and retailing sectors. Our findings show that forgiveness is both internal and intrinsically driven process that releases the emotional burdens weighing on consumers after they experience a transgression by a service provider. Furthermore, businesses can foster forgiveness through service-recovery efforts, and seek to restore customers’ violated needs for autonomy, relatedness and competence.

We demonstrate that the interplay between customers’ motivation to forgive and their internal reconciliations of the transgression supports four pathways to forgiveness: transgressor’s atonement (driven by feelings of justice and the transgressor’s repentance and service-recovery efforts), disillusionment (driven by (in)equality and marketplace constraints), self-healing (driven by personal growth and the customer’s desire to heal), and grace (driven by humanity and empathy). Whereas some pathways of forgiveness offer the potential to restore damaged relationships and enable continued patronage, others require transgressor efforts that extend beyond compensation, to open an avenue for relational repair. However, other cases of forgiveness may never result in relationship restoration, but nonetheless can improve customer well-being, and even positively impact consumers’ mental, physical, and relational states. We further encourage future research on this transformative concept of customer forgiveness.

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How Does Innovation Emerge in a Service Ecosystem?

[We’re pleased to welcome authors Jennifer D. Chandler of California State University, Fullerton, Ilias Danatzis of Freie Universita¨t Berlin, Carolin Wernicke of CRM Solutions GmbH, Melissa Archpru Akaka of the University of Denver, and David Reynolds of the University of Warwick. They recently published an article in Journal of Service Research entitled “How Does Innovation Emerge in a Service Ecosystem?,” which is currently free to read for a limited time. Below, They reflect on the motivation and impact of this research:]

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

We wanted to study how a divisive or hostile idea could possibly evolve into an innovation. The timing was good to investigate online privacy and personal data issues because the Facebook / Cambridge Analytica scandal had just occurred. We were intrigued by the struggles of the developers and engineers as they went about their everyday tasks; we saw how they negotiated with one another regarding their personal opinions regarding privatization of the internet. We knew that managers in many other companies and industries struggled with these same issues in the massive move toward online cloud computing and service innovation.

In what ways is your research innovative, and how do you think it will impact the field?

This research is innovative because the topics of online privacy and data monetization are controversial, intense, and timely. Also, the theoretical idea that innovation is a nonlinear systemic process that can sometimes breakdown is thought-provoking. We are trying to emphasize that, no matter the outcome, innovation is about stimulating discussion and creating feedback loops so that the next time a good idea comes around, it can prosper. To explain this, we bring in the concepts of plasticity and institutional reconciliation to explain why ideas do not always emerge as innovations. Furthermore, we discuss that some ideas may not flourish simply because of timing and/or the contexts in which they are originated. Our findings suggest that innovators shouldn’t spend all their time on product development or in labs; rather, innovators should be out there cultivating their service ecosystems and nurturing shared norms and meanings.

What advice would you give to new scholars and incoming researchers in this particular field of study?

We would like to share that this manuscript is based on 4 years of data collection and that the authors were strewn across 3 different countries. Collaboratively, we went back and forth between the data analysis and theoretical development many, many times before we were satisfied. The attention to detail required to generate the theoretical framework stemmed from tenacity and persistence. At times, some of us on the team wanted to give up while others wanted to continue pushing forward to an “A” level journal. It was truly a team effort.

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Hyperbolic Perceptions of Black-White Tipping Differences

Jar_for_tips_at_a_restaurant_in_New_JerseyDr. Zachary Brewster and Dr. Gerald Roman Nowak III of Wayne State University recently published an article in Cornell Hospitality Quarterly, which is entitled “Racial Prejudices, Racialized Workplaces, and Restaurant Servers’ Hyperbolic Perceptions of Black-White Tipping Differences.” We are pleased to welcome him as a contributor and excited to announce that the findings will be free to access on our site for a limited time. Below Dr. Brewster reveals the inspiration behind the research, as well as additional information not included in the final publication.

cqx .jpgWhile a fair and growing number of studies have observed statistically significant Black-White differences in tipping, the size of the estimated difference has varied greatly across studies. As such, it is not readily clear how much less Black customers on average actually tip their servers when compared to Whites. Further, there have been no studies published that have seriously interrogated the accuracy of servers’ perceptions of the Black-White tipping differential.  In fact, the existence of a Black-White difference in tipping is often taken as prima facie evidence that servers’ perceptions are generally accurate. Moreover, studies that aim to identify and test for individual and/or environmental factors that encourage the development and sustainment of exaggerated perceptions of Black-White tipping differences are lacking. These shortcoming in the literature on interracial differences in tipping motivated us to pursue this particular piece of research.

More generally, we were motivated to advance this line of inquiry because of the many implications surrounding servers’ perceptions of interracial differences in tipping practices—not the least of which is the threat that such differences pose to customer service. The majority of times that Black consumers visit a full-service restaurant they are likely to receive good service. However, when this is not the case, when Black customers are given a level of service that is less than should reasonably be expected, or even outright poor, it will inevitably sometimes stem from servers’ negativity towards these customers’ tipping practices. To curtail this threat to Blacks’ dining experiences scholars have advocated for initiatives that aim to increase Black Americans’ awareness and adherence to the U.S. norm prescribing that customers leave a tip that is equivalent to 15% – 20% of their bill if the service was acceptable. If Black Americans were as familiar with the 15% – 20% tipping norm as Whites, racial tipping differences would logically be attenuated.

However, our findings indicate that any initiative that is intended to curtail race-based customer service will necessarily have to be targeted towards changing servers’ perceptions as much as, if not more than, changing consumers’ tipping behaviors.  For instance, while a Black-White tipping difference does appear to exist (as a percentage of the bill we estimate the difference to be about 3.3 percentage points) our results underscore a segment of the population of restaurant servers who cognitively exaggerate the magnitude of this difference. Racially prejudiced servers as well as those who work in racialized workplaces are, in particular, likely to overstate the difference between Black and White customers’ actual tipping practices. Thus, to curtail the industry challenges that stem from Black-White tipping differences (e.g., service discrimination, lawsuits, etc.) we encourage restaurant operators to devise strategies to attenuate the individual and environmental manifestations of the racial prejudice that underpins servers’ stereotypic perceptions of Black customers’ tipping behaviors.

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Tip Jar photo attributed to Free-Photo (CC)

 

Diversification, Branding, and Performance of Professional Service Firms

[We’re pleased to welcome authors Carolina Castaldi of the School of Innovation Sciences, Eindhoven University of Technology and Marco S. Giarratana of the Department of Strategy, IE Business School, IE University. They recently published an article in the Journal of Service Research entitled “Diversification, Branding, and Performance of Professional Service Firms,” which is currently free to read for a limited time. Below, Dr. Castaldi reflects on the inspiration for conducting this research:]

02JSR13_Covers.indd

What motivated you to pursue this research?

We have been interested for a while in figuring out how service companies manage to grow despite the absence of clear economies of scale/scope. Management consulting firms are an example of firms that define themselves as providing high-end customized services to organizations. If this is the value added that they propose, how can they manage to expand beyond simply hiring more professionals to deliver those specific services? The answer had to be found in the specific way in which these professional service firms diversify.

In what ways is your research innovative, and how do you think it will impact the field?

There is already extensive research on how diversification is at the core of companies’ growth. In this paper we are looking at a very specific type of diversification, namely the transition from offering only services to adding products. In the case of management consulting firms, several new business models are appearing that are based on ICT solutions embedded in software and other tools. These solutions offer clear economies of scale but they change the very nature of the service being offered to clients. What our results suggest is that diversification only translates in economic benefits when it is bounded to services. Moreover, it appears important for these firms to opt for branding strategies based on specialized narrow brands developed for each new service segment.

What advice would you give to new scholars and incoming researchers in this particular field of study?

We would like to encourage more scholars to exploit trademarks data in empirical research at the firm level. In this study we have used trademarks to capture both the product diversification of professional service firms and their branding strategy. Trademarks are registered for specific product and/or service classes. Here we have captured the transition to products by looking at companies shifting their trademark applications towards including service classes. One can also use trademarks to capture the opposite process, namely servitization, i.e. adding services next to products. Trademarks are used extensively across all economic sectors, including service sectors. They are also used by firms of all sizes. These are two properties that make them salient data for constructing novel indicators of market strategies. For more ideas, check out our other papers as well.

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Journal of Service Research Call for Papers: Customer Engagement through Automated Service Interactions

02JSR13_Covers.inddMake an impact on service research and submit to the Journal of Service Research’s upcoming Special Issue,  which will seek to explore ways in which automated service interactions engage customers and create customer and firm value!

Journal of Service Research (JSR), peer-reviewed and published quarterly, is widely considered the world’s leading service research journal. It is a must read to keep up with the latest in service research. Practical and readable, JSR offers the necessary knowledge and tools to cope with an increasingly service-based economy. JSR features articles by the world’s leading service experts, from both academia and the business world.

For more details click here.

Manuscripts should be submitted electronically to http://mc.manuscriptcentral.com/jsr.

You will need to create an account in order to submit your manuscript. The system will notify you once we receive the manuscript and have sent it out for review.

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