Professors Agree: The Right Service Enhances the Customer Experience

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Imagine that you manage a customer service center for a mobile service provider. Four different customers call in, their two- year contracts about to expire. Their service was fine; none plan to switch providers. However, they are thinking of buying new phones and changing plans. How should your customer service agents treat them?

This may seem like a simple question, but the relationship between the customer and an organization is anything but simple. Customer satisfaction, loyalty, and lifetime value depend on a complex relationship between customer characteristics and customer service representative characteristics. In this article, I’ll review some of the latest academic research and explain how they view this delicate interplay.

(Note: this article by Dr. Charles Law of Penn State University is an excerpt from the coming 200-page book: Managing the Customer Experience: How to Maximize the Lifetime Value of Your Most Precious Asset. Get your free copy by signing up for the Thursday, Aug 1 webinar, “Five Essential Ways to Boost Your Customer’s Experience.”)

Customer Satisfaction and Lifetime Value: Not Directly Related

Traditionally, researchers and practitioners believed that customer satisfaction and customer loyalty were both positively related to customer lifetime value (CLV).  If customers are satisfied and loyal, shouldn’t CLV increase? Recent research suggests that increasing CLV may be more complex. Qi, Zhou, Chen, and Qu (2012) surveyed mobile data service users in the United States and China. They found that being a satisfied customer had no effect on how much money customers spent or how long they remained with their mobile service provider.

Interestingly, the more satisfied customers were more loyal to their mobile service provider. Thus, it appears that while customer satisfaction itself does not directly affect CLV, satisfied customers are more likely to be loyal customers, and loyal customers lead to increased CLV. (See Figure 2.6.)


While it is important to understand how customer satisfaction and customer loyalty affect CLV, for customer service managers, it may be more important to understand how to increase customer satisfaction. As mentioned, both customers and customer service representatives have unique characteristics that they bring to every interaction. An understanding of how those characteristics affect customer satisfaction is therefore important.

Customer Characteristics: Widely Varying

According to Puccinelli and colleagues (2009), customers have different goals. First, some customers have a relational orientation (i.e., they want to establish a relationship with organizational members), while others have a task orientation (i.e., they just want to get the information or product and get out). Second, customers have previous positive or negative experiences that affect how they interact with the organization.

Third, they have different levels of involvement. Some customers thoroughly research the product and are very involved in their purchase, while others go into the interaction with very little preparation. Fourth, customers often have either positive or negative opinions toward the organization even before being involved in the transaction. Finally, customers have feelings that might affect how they interact with an organization.


Personality is another relevant actor. Homburg, Muller, and Klarmann (2011) suggest that customers and customer service representatives have specific and preferred communication styles. Some customers have an interaction orientation, which means they enjoy a sociable, personal approach. In contrast, customers with a task orientation prefer to focus on the task at hand, rather than engaging in extraneous personal conversation.

These customer characteristics are clearly beyond the control of a customer service representative. However, the way that customer service epresentatives react and interact with the customers is key. A one-size-fits-all approach is not only ineffective, but might actually decrease CLV through decreased customer satisfaction. With that in mind, we now turn our attention to an area that is controllable: customer
service representative characteristics.

Customer Service Representative Characteristics: Under Your Control

Research shows that customers are more likely to buy a product from an attractive alesperson than an unattractive salesperson (DeShields, Kara & Kaynak, 1996). Being friendly (e.g., smiling) also increases a customer’s purchase ntention and their willingness to return (Oliver, 1993; Tsai, 2001). Helpfulness is also very important–more important than physical attractiveness or friendliness (Keh, Ren, Hill & Li, 2013). While this may seem intuitive, it does provide a framework for successful customer interactions.

Perhaps most important is how representatives communicate with customers. Homburg et al. (2011) identified two ways in which service representatives might interact with the customer: relational versus functional. A customer service representative who uses a relational orientation is more likely to build a personal relationship with acustomer.

This person will be helpful and friendly, often engaging the customer in small talk as they establish a personal relationship. On the other hand, a customer service representative who uses a functional orientation employs a set of behaviors that is designed to get the job done. They may still be helpful and friendly, but they do not engage in relationship- building behaviors.

Putting It All Together
Figure 2.7 provides a comprehensive model for the relationship between customer experience and CLV. According to Homburg et al. (2011), customer characteristics and service representative characteristics are both related to customer experience. A positive customer experience will increase customer loyalty, while a negative customer experience will decrease loyalty. However, customer satisfaction, which depends on more than just their experience (e.g., product performance), affects this relationship. High customer satisfaction facilitates more loyalty, while low customer satisfaction attenuates the relationship between customer experience and customer loyalty.

Let’s revisit the earlier scenario (mobile consumers seeking customer service). There are four possible outcomes:

1. Jamie does a lot of research online to find the phone and the service plan that best fit his lifestyle. When Jamie calls the service center, he has a task orientation. He knows the phone and the service plan that he wants and he just wants to get it done. The representative who answers the call senses that Jamie is task oriented and establishes a functional orientation. Customer loyalty increases, boosting CLV.

2. Evelyn also knows what she wants when she calls the service center to order her phone. However, this time the customer service representative adopts a relational orientation and tries to establish a more personal relationship. Evelyn, who just wants to buy the new phone and change her service (task orientation), is annoyed by the small talk. She mistrusts the rep, suspecting him of trying to sell her a service she does not need. Evelyn decides to go with another carrier. CLV goes down.

3. Charlie does not really know much about phones. He has a very basic phone with a limited plan. He wants the sales representative to educate him about different phone features and engage him socially, too. Charlie has an interaction orientation. The sales rep senses Charlie’s orientation and adopts a relational orientation. Both parties are on the same page. Having enjoyed his purchase experience, Charlie’s loyalty increases, causing CLV to rise.

4. Melanie is also unsure of her phone needs when she calls the service center. The customer service representative establishes a functional orientation and tries to help Melanie without establishing a personal connection. Melanie, who is very social, was hoping for the same (interaction orientation). Although the sales representative is very efficient in helping Melanie buy a phone, Melanie felt he was rude, which decreases her loyalty (she decides to go with another carrier) and her CLV.

Conclusion and Recommendations

Good customer service can increase CLV, while poor customer service can decrease CLV. However, the effect is indirect and heavily influenced by other parts of the customer experience. There is no template that can be applied to these interactions. Instead, customer service representatives should be trained to recognize customers’ needs early in the interaction so that they can tailor their communication style appropriately. If a customer is interested in establishing a personal relationship, the representative should be able to become more friendly and engaging. If the customer is purely task oriented, the service representative should focus on being businesslike and helpful.

Training can be accomplished in two ways. First, representatives can be screened for emotional intelligence. There are many personality measures that can measure the degree to which people can pick up on interpersonal cues to help adjust their behavior. Second, representatives can be trained to better understand a customer’s preferred communication style and adapt accordingly.

Organizations are starting to employ the latter method. BASF, a global chemical company, has developed six different customer interaction models (CIMs). For example, a supplier purely interested in the transaction needs a low-intensity interaction. On the other hand, customized solutions require a higher-intensity interaction. The customer service representatives identify the appropriate CIM for each interaction. Indeed, multiple scripts might be one way to enable customer service representatives to better communicate with customers. Regardless of the approach, customer service managers should understand that the relationships between customers and customer service representatives are dynamic and require more than a one-size-fits-all approach.

Dr. Charles Law is an Assistant Professor at Penn State University and President of SMART Consulting. He received his bachelor’s degree in psychology from the United States Air Force Academy and his Ph.D. in industrial/organizational psychology from RiceUniversity.

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Brand-loyal to a fault: Brainwashing or persistently positive customer experience?

I was on a call the other day when my husband, a once avid runner looking to get started again, texted me a picture from the shoe store. He had dropped in to browse running shoes from his favorite manufacturer and wanted my opinion on the style and color of one particular pair.

Now, I’m no running shoe snob, but these were the ugliest shoes I’ve ever seen. They just screamed “NOTICE ME!!!”—not my husband’s style at all. Trying to be positive, I texted back that they were okay, but that he might want to consider another shoe or even another brand. Interestingly, he declined and said he would wait for his favorite manufacturer to issue another new shoe—he has bought the same brand for years and wouldn’t even consider another one.

That got me thinking about brand loyalty. Was my husband just being stubborn, or did he really feel he had no other option beyond his favorite brand? That, in turn, got me thinking about the customer journey, customer lifetime value (CLV) and where a company can capture a customer’s interest—and loyalty—across that journey (yes, I am a geek for this stuff!). My husband has bought the same brand of shoe for years. When he originally selected this brand, like many others who shop for new running shoes—or any other product—he typically checked out reviews in the running magazines, did online research to see what other runners were saying, and talked to his running buddies (in person, by phone and through social media). Only after all that, did he finally go to the store to actually look at and try on any shoes of interest.

Think about all those opportunities for the manufacturer to make an impression on a potential customer—advertisements and reviews in running magazines, social media presence, information and reviews on its website, other marketing outreach such as e-mails, the contact center (should he have questions or a customer service issue), and in-store promotions and interactions with sales associates. For some of those interactions, like my husband’s discussions with his running buddies and visits to other forum sites, the company can only be an indirect influence at best. But all the others are opportunities to directly interact with a possible customer to create and reinforce a favorable impression—and to build on established brand loyalty.

Brand-loyal to a fault: Brainwashing or persistently positive customer experience?

Given all those opportunities, I began to wonder what communications tools that shoe manufacturer uses to engage its customers and enhance their experience. Does it use something like Avaya Customer Engagement solutions, for example, which enable our clients to deliver a true omnichannel experience by supporting all types of customer interactions more efficiently and having the right resources, with the right tools ready to service consumers? Does the company contact its customers when it’s time for a new pair of shoes based on its knowledge of their running goals to grow CLV? Whether it’s enriching the customer experience at the point of interaction, orchestrating interactions between channels and resources, or optimizing engagement by capturing, analyzing and applying vital intelligence about customers and interactions, the technology is available today to take customer engagement and the customer experience to entirely new levels.

Brainwashing? I don’t think so. Informed and educated customers who are treated well and consistently are given products of sufficient quality for a reasonable price will gravitate toward and stick with a brand. Even a brand that every once in awhile lays a big fat goose egg (like a shoe that shouts “NOTICE ME!!!”) can recover quickly by having established, and by persistently reinforcing, the qualities that lead to brand loyalty. Customer engagement technologies can play a big role in that process.

Are your customers brand-loyal to a fault? Have you walked in your customers’ shoes to know the experiences they get and if that differs from what they want? How does your company build and maintain customer loyalty? I’d love to hear from you.

In the Digital Economy, the Human Touch Still Matters

According to Gartner, by year-end 2018, a customer digital assistant will recognize individuals by face and voice across channels and partners. Gartner predicts that the last mile for multichannel and exceptional customer experiences will mimic human conversations, with both listening and speaking, a sense of history, in-the-moment context, and the ability to respond, add to, and continue with a thought or purpose at multiple occasions and places over time.

The digital era has made it possible for many customer service functions to be automated, alluding to a possible future where customer service representatives could be replaced by robots. However, the human touch still has incredible value to the service experience. Customer service representatives (CSRs) have the deepest insight into customer likes and dislikes and are most likely the closest to the ground when it comes to customer sentiments—a variable that cannot be measured by robots. This is where companies need to move service reps from mere dispensing of services to customer engagement.

Today, communications must be centered on improving human connections, delighting customers, and energizing employees. This context-aware communication and collaboration is known as engagement—the active connection between team members and customers to the information, experts, and decision-makers they need to complete the task at hand. As the pace of business accelerates in the digital economy, employees need to have critical information at their fingertips at all times—making engagement experience more crucial than ever.

The true value of engagement is only realized when meaningful, communications-empowered connections among individuals, teams, contacts, and customers are formed. Supporting participation across time and space on any device, engagement will lead to better business outcomes; more productivity, loyalty, enthusiasm, customer satisfaction, and customer advocacy.

It’s no secret that loyal, returning customers have a higher customer lifetime value (CLV) than new ones. They spend more money and are more likely to recommend businesses to their friends and across social media. According to a SumAll survey, businesses with 40% repeat customers generated nearly 50% more revenue than similar businesses with only 10% percent repeat customers. And every time customers return, they become more valuable to the business.

Engaging Customers in the Digital Era

To drive engagement, businesses need simple, human-centric communication and collaboration built deep into business processes. Tight business application/process integration ensures customer data is always updated and CSRs have the latest knowledge about their customers—allowing businesses to provide more personalized customer service standards.

To truly empower the CSRs of the future, companies can, and need to, integrate all of their customer channels—web site, mobile apps, call centers, brick and mortar locations—to create a seamless experience, regardless of how the customer moves through the system. Whether the customers are on your web site, app, or service line, customers today expect brands to instantly recognize who they are, what they purchased, and where else they have engaged with the brand. An integrated service approach will not only eliminate time wasted gathering data you already have, it will also allow the rep to immediately focus on the customer’s needs, which directly impacts customer experience.

With Gartner predicting that 90% of companies will compete almost entirely on the basis of customer experience in 2016, there is no room for siloed business practices and protocols that get in the way of good customer service.

In a digital economy, human interactions will continue to play a crucial role in customer retention. CSRs need to be aided with the right tools and intelligence to deliver even more superior customer service that doesn’t just solve customer issues but also anticipates company needs to surge ahead of the competition.

Customer Lifetime Value: The End Goal Guiding Your Digital Transformation

What percent of companies consider customer lifetime value (CLV) as a measure of business performance?

A. < 40%
B. 41% – 60%
C. 61% – 80%
D. >81%

Answer: C. A recent Frost and Sullivan report shows that 70 percent of companies surveyed use CLV, which is the present value of all the future cash flow attributed to a customer relationship. Of these companies, 67 percent consider it to be an essential measure of their business strategy. If you want to learn more about how to improve customer lifetime value in your company, read on…

The strategic value of service reps

Customer service representatives know more about your customers than anyone else, so why aren’t you harnessing this treasure trove of data?

It’s no secret that loyal, returning customers have a higher customer lifetime value (CLV) than new ones. They spend more money, are more likely to sing your praises to their friends and across social media, and, if you have enough of them, they can help you weather even the most brutal economic storm.  According to a SumAll survey, businesses with 40 percent repeat customers generated nearly 50 percent more revenue than similar businesses with only 10 percent repeat customers. And every time they return, they become more valuable to the business and, in turn, increase their projected CLV. A customer who has only made a single purchase has a 27 percent chance of returning, while someone who’s made three purchases has a 54 percent chance of coming back.

One of the best ways to increase CLV is by providing customers with a more seamless, communication experience, driven by content optimization capabilities that focus on connecting the customer to the right channel at the right time. “Every interaction with a customer is an opportunity to create a brand advocate or a raving-mad critic,” says David Rodnitzky, CEO of 3Q Digital, a Harte Hanks company.

That includes human interactions, says Lauren Edvalson, CEO at Edvalson Marketing in Sacramento, a marketing consulting firm.. While some companies think digital transformation means eliminating the need for customer service reps (CSRs), you have to first consider what your customers want.  “We would never eliminate our CSRs,” she says, noting that many customers prefer to interact with a live person, especially when dealing with complicated issues. “They are incredibly valuable to the service experience, and they know better than anyone what customers like and don’t like about the company.”

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CSRs can no longer operate as isolated entities within the company. Digital transformation means companies can, and need to, integrate all of their customer channels–website, mobile apps, call centers, brick and mortar locations – to create a seamless experience, regardless of how the customer moves through the system. CSR’s play a vital role in this process – both in recognizing customers as they enter the system, and capturing valuable data about their experience to shape future customer engagements. But none of that can happen if the rep doesn’t have access to the right information.

No matter how charming your reps are, if the customer has to rattle off their name, billing address, email, and credit card number before they can even ask a question, you’ve already lost the opportunity to wow them. Customers today expect to be recognized instantly, whether they are on your website, app, or service line. To do that reps need to be able to know who they are, what they purchased, and where else they have engaged with the brand before picking up the phone. This integrated service experience not only eliminates time wasted gathering data you already have, it allows the rep to immediately focus on the customer’s needs, which directly impacts their experience.

Don’t be a fool

Providing great service is the first half of the equation. Companies also need to make sure they understand and leverage the vast amount of data these services reps are gathering. From trending complaints, to surges in product requests, and even customer demographics, the feedback CSRs get should directly inform how you connect with and better meet your customer needs. “When a customer visits your site, your online analytics tool follows their every move,” says Rodnitzky. Combining this data with the feedback collected through the call center, you can reverse-engineer why customers contact you. “All of this information can be mined to create additional FAQs and resources to resolve future customer needs.”

You can also use the data to inform communication and marketing efforts, Edvalson says. She uses center data to make media buying decisions and to determine how best to engage with customers, i.e. to send an email scheduling a system tune-up, or a phone call to address a repair problem.  “Understanding their needs helps us decide the best way to communicate with them.”

Edvalson admits that figuring out how to use all of this data to better engage with customers has been difficult but absolutely worth the effort. “As we grew we realized that we are capturing so much information about our customers through our service centers,” she says. “We’d be fools not do something with it to make our company better.”