Experience Management MGM Grand

Designing the Soft Side of Service Richard B. Chase & Sriram Dasu Marshall School of Business University of Southern California

Art and Science of Service Conference San Jose, California June 10, 2011 1

Service Encounter 

An interaction between a customer and an organization.

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Consists of one simple event or transaction, or a series of events or transactions

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A central feature of service businesses as defined in the SIC.

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An important feature of most product business.

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Three Ts of a Service Encounter 

Task – Job to be done

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Treatment – Courtesy and friendliness of server

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Tangible – Physical and sensory features of the service environment

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Service Encounter Inputs and Outputs Customer •Task Needs •Treatment Expectations •Psychological Mindset

Explicit Outputs Interaction Process

Task accomplishment

Server

Task Events

Tangible perceptions

•Task Skills

Psych. Events

•Treatment Skills

Treatment perceptions

Implicit Outputs Memories

•Psychological Mindset

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The Two Dimensions of a Service Encounter

CORE TASK

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Industrial Significance 

The psychological experience plays a major role in… 

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Financial services—trust building, managing waits Call Centers – problem solving, promise making Healthcare – framing diagnoses, gaining compliance Entertainment – identifying high points, creating memories Consulting – managing the flow of an engagement On-line shopping – website design, problem solving After sales service—cars, appliances, dry goods Restaurants, hotels, etc.

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Four factors that shape psychological experience – the ETCs of Service© 1. Emotions 2. Trust 3. Control and choice 4. Sequence and duration of events

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Basic Contention – Understanding the ETCs allows increasing value of an experience at the same or possibly lower cost. 

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Value is increased by making the experience more pleasant Cost is reduced by rationalizing emotional labor jobs Aren’t enough naturally emotionally intelligent workers so we must design work that enables average workers to perform at high emotionally intelligent levels 8

The New Service Design •

In addition to physical or informational outcomes, encounters evoke psychological outcomes or hedonic patterns.

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We want to design (and manage) encounters such that the hedonic patterns are perceived positively while the encounter is taking place and recalled positively after it is completed.

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The overriding goal is to assure that the overall experience created by each encounter enhances the brand image.

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Two dimensions of experiences Explicit – things that the customer can describe Implicit – things that the customer can’t describe but whose presence or absence can affect the customer’s satisfaction with the experience

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1. Emotions 

Emotions influence what we remember

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Emotional memories are distinct

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Emotions influence what we perceive

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Engineering emotional platforms 

Determine the emotions that have to be generated or enhanced.

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Determine the emotions that have to be mitigated.

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Emotional platforms 

The emotional theme or tone you want to engender 

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The attributes that the firm wants to associate with the brand. Most companies view this as a culture issue, but it should cover all of the three Ts.

Examples   

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Harrah’s: Feeling of luck Disney: Delight Joie d’viere Hotel Chain: Edgy (Phoenix Hotel – Rolling Stone magazine); serene (Hotel Vitale– Country Living) McKinsey: Trust

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Process generated emotions 

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Anger, regret, joy, frustration, relief, hope, guilt, disliking, etc. Emotion is stored separately from memory. Emotional triggers: long waits on line, jack-pot at a casino, negative (or positive) diagnoses from doctor, etc.

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Managing process generated emotions 

Anticipate likely emotions at different touch points based on:   

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Product/ Prior history/ Demographics. Current emotional state Highs and lows of the encounter flow

Employ targeted response  Proactive response  Appropriate reaction (sympathy, apology, happiness, recovery action.)

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Classifying process generated emotions:

Appraisal Theory Specifies conditions that result in different emotions. People become emotional when they first discover a change in outcomes. The type of emotion depends on whether: (1)

(2) (3) (4)

(5)

the change in outcome improves our situation or makes it worse The outcome is associated with a penalty or reward The outcome is certain or just a possibility The causal event is significant or powerful and its resultant change difficult to cope with or the event is not very significant and its change is easy to cope with You are responsible for the event and resultant change or an outside agency caused the event and change

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Strategies for managing in process emotions Source of outcome You

Not you, e.g., other company or customer

Positive outcome

Negative outcome

Emphasize [1]

Recovery [2]

Co-opt [3]

Sympathy/ support [4]

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2.Trust 

Two Dimensions: 

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Competence Trust: Do you have the ability to act in my interest although I cannot judge your technical competence? Motivational Trust: Will you act in my interest even when I am vulnerable?  

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Do you have the motivation Do you have the capacity

Legalistic Approach: 

Reduce the need for trust through contracts and incentives – but is this always feasible? 17

Engineering Trust Influence judgments about effort

• Evidence of effort • Evidence of resources deployed • Evidence of goal progress • Evidence of external hurdles Influence judgments about motivation

• Evidence of interest • Evidence of incentive alignment • Make clear limits of empowerment • Make evident conflict of interest • Anticipate potential problems

Affective Trust

• Likeability • Friendliness • Affinity (homophily)

• Familiarity

Influence judgments about skill

• Evidence of experience • Testimonials • Adherence to norms • Tangibles (physical setting, uniforms etc) 18

3. Control and Choice Control shapes perceptions and attribution Two kinds of control – • Behavioral control •

Actual control

• Cognitive control (We feel like we are in control) • • • •

Knowing what is going to happen Predictability of environment Ability to anticipate Ability to navigate the system

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Level of Expertise Required

Engineering Behavioral Control Server

High Client/ Server

Mid

Low

Client

Minor

Some

Major

Significance of Decision 20

Engineering cognitive control in healthcare Information about: • Treatment options • Benefits and risks • Delineation of responsibility • Setting expectations about process steps BUT: Accounting for Individual differences.

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Colonoscopy Experiment:

Redelmeier, D.A., and D. Kahneman (1996) “ Patients’ memories of painful medical treatments,” Pain, no. 3, vol. 8.

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4.Sequence Theory 

We recall encounters as peaks and valleys, and as snapshots, not movies

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The front end and the back end are not created equal

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We like positive trends

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Savviest Film Makers Put Last Things First “If you don’t have a strong finish to a film, you are in serious trouble. It can be explosive. It can be a bang or a whimper, but it better be memorable, or else people will remember very little about the movie. If a movie has a riveting conclusion, audiences are happy to overlook its earlier flaws. By contrast, if the picture has a bummer of an ending, people forget almost everything they liked about the film.” “AI” Review by --Robert Towne, Screenwriter Source: Stephen Farber, L.A. Times, Aug. 27, 2001

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Engineering sequence flows 

Create a distinct high You don’t want to allocate resources to make all events equally good, but pick and choose and drive some much higher.

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Create a positive trend in the process Manage perceptions of duration Manage bad news

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Hedonic State

Emotionprint applied to car repair Joy/ Thrill/ Happiness Provide Positive surprise

Positive Build trust

Neutral

Create feeling of control

Anticipate emotions Anger/ Anxiety/ Stress

Negative

Customer calls

Customer Arrives

Service rep. conversation

Customer approves

Greeting & prelim. Convey quote diagnosis

Car delivered to home

Line of visability Scheduling of job j

Detailed diagnosis

Car repaired 26

Engineering perceptions of duration Duration of an encounter is often the major determinant of its value Little evidence of an internal clock -- Humming birds have one; we don’t.

Judgment of duration of a current experience is affected by the following:  Attention to the clock  Mental capacity utilized during the event  Emotional state  Expectation of the length of wait  To minimize attention to duration - Increase perception of control - Increase perception of goal progress  To make duration seem longer - Break encounter into distinct segments

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Sample service psych principles for encounter design        

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Create a positive trend in each encounter End on a high note (“stick the dismount”) Frame the “sweet spots” Create a feeling of control Evidence trust in capabilities and effort Convey goal progress Proactively anticipate and manage emotions Optimize the number of choices Create positive surprises Understand the time perspective of the customer 28

The Next Steps 

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Refinement of psychological factors for ease of application – A best practices handbook(?) Cost accounting – how to show profit impact of psychology based changes Need to develop satisfaction questionnaires which get at underlying psychology directly, without giving away the magic

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References Dasu, S. and R. Chase, “Designing the Soft Side of Customer Service, SMR, Fall 2010. Chase, R. and S. Dasu “Want to Perfect Your Company’s Service? Use Behavioral Science,” HBR, June 2001. DeVine, J. and K. Gilson, “Using Behavioral Science to Improve the Customer Experience,” www.mckinsey Quarterly.com/Operations, Feb. 2010. Dan Ariely’s papers: http://web.mit.edu/ariely/www/papers.shtm Kahneman, D. and A. Tversky, eds. Choices Values and Frames, Cambridge University Press, 2000.

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