Chase Richard - The Customer Service Solution

Copyright 2013 by Sriram Dasu and Richard B. Chase. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

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To Rama and Harri

We wrote this book because we believe that many companies are leaving some valuable service improvements on the table. These improvements derive from a deeper understanding and application of the psychology that underlies how customers experience the service experience. We propose a collection of approaches for designing systems that deliver experiences. This book is about design and management of service operations.

In writing the book, we cherry-picked experimental research findings of the great minds in behavioral sciences and economicsD. Kahneman, G. F. Lowenstein, E. A. Skinner, V. Folkes, D. Ariely, J. Ledoux, C. E. Izard, D. Gambetta, and R. Larsonand translated them into service principles. We have also interviewed numerous executives and consultants from diverse companies and industries to get examples and share ideas about further application of our ideas in their companies.

The seminal book The Experience Economy by Pine and Gilmore ignited a lot of interest in customer experiences. The premise of the experience economy is that customers buy experiences and are willing to pay a steep premium for them, so managers should try to make these experiences more fun. Our book proposes how service operations can be redesigned using psychological principles to deliver good experiences on a consistent basis. Our concepts and methodology can be applied to any type of service, even services that do not readily lend themselves to theatrical experience conceptsthat is, most everyday businesses. These may be primarily hedonic, like rock concerts and tourism, or largely utilitarian, like retirement planning and care for the chronically ill. As a result, the findings in this book are applicable to many different industries, including healthcare, hospitality, financial services, sports, and e-commerce.

We also believe that our solution addresses the major weakness inherent in service quality improvements from the old total quality management (TQM) to new Six Sigma programsthe lack of the psychological tools and concepts necessary for managers to create optimal service experiences. There are several reasons why existing quality approaches fall short. First, they are far more focused on the employee than on the customer; yes, a motivated, trained employee can do much to improve service, but he or she is limited by focusing on explicit customer expectations, not on implicit customer needs. (We have a lot more to say about this throughout the book.) Second, they are often bureaucratic exercises involving more statistics and scorekeeping than explaining how customers experience services at a subconscious level.

Another part of the problem that is endemic to the service industry, and we find in academia as well, is that the two disciplines that traditionally deal with managing customers in service organizationsoperations management and marketinghavent really gotten on the same page about customer experience management. Marketing people know the concepts we are presenting in the book but have never tried to make them readily applicable to real-world service design and operations management.

It is probably safe to say that we are the first operations management specialists to write such a book. Operations management (OM) is above all an applied field. While it draws upon various disciplines and theories, OM is essentially the design and operation of productive processes, be they manufacturing or service. Its prescriptions must be actionable in the real world: The proof of the pudding is in the eating pretty well sums up the practical nature of the field and the goal of this book. Bon appetit!

We owe a major debt of gratitude to researchers in the behavioral science disciplines of economics, psychology, and sociology. Most notable among these is Nobel Prize winner Daniel Kahneman whose studies of how individuals process information at the subconscious level opened up a whole new way for us to think about service design.

We are deeply indebted to the following executives who were kind enough to let us interview them about service management in their organizations: Paul Allman, personnel training consultant; Odmar Almeida; Agatha Areas, Rock in Rio; Dr. Michele Burnison, Cedars Sinai; Gamal Aziz and Corrine Clement, MGM Hospitality; Krishna Ganugapati; Derrick Hall and Josh Rawitch, Arizona Diamondbacks; Stefan Isser, Swarovski; Ali Kasikci, Orient Express; Tony Knopp, Spotlight Ticket Management; Gary Loveman, Caesars Entertainment Group; Chris McGowan, A.E.G. Sports; Marc Mancini, Mancini Seminars and Consulting; Dr. Mildred Nelson, Christie Clinic; John Severini, California Restaurant Association; Rawn Shaw and James Spohrer, IBM; Mike Simms, Simms Restaurant Group; Dr. Chris Ullman; Becky Uzemeck; Lynne Walker and Shahid Moghul, Dell; and Pete Winemiller, Oklahoma Thunder.