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Service Skills in the Workplace

Introduction

Customer Service: Who Needs It?

We live in an era of increasing customer sophistication. While most people expect product quality—that the product performs as advertised—today’s customers are seeking and demanding excellent service quality as well.

Dynamic organizations already recognize the need to differentiate their products from those of their competitors. But in many competitive markets, the distinguishing feature between organizations has become the quality of service, or how employees interact with customers to satisfy their needs.

A study by Technical Assistance Research Programs (TARP, 1994) revealed that many consumers who experience problems with service do not complain. For small-ticket products, this number is as high as 96 percent. Of these individuals, a large number choose not to buy again. And even though they might not complain to the organization, dissatisfied customers often tell 10 to 16 other people about their experience.

In comparison, many studies (e.g., Albrecht and Bradford, 1990; Stamatis, 1996; TARP, 1994) prove that customers who are treated well:

  • Perceive the provider more favorably.
  • Complain less.
  • Are more loyal.
  • Behave cooperatively.
  • Perceive higher quality.

Heskett, Jones, Loveman, Sasser, and Schlesinger (1994) called the lifetime value of a loyal customer “astronomical,” especially when the impact of referrals, retention, and repeat purchases of related products is added into the equation. Reichheld and Sasser (1990) estimated that a 5 percent increase in customer loyalty can produce a 25 to 85 percent increase in profit.

The Service Success Loop

There is little question that customer loyalty leads to improved business performance. However, it’s not always clear what an organization can do to increase customer loyalty and retention. Certainly, if customers are satisfied and see value in the service an organization provides, they are more likely to become repeat customers. The question then becomes, “What factors contribute to customer satisfaction?”

Recently, discussion has focused on how employee satisfaction and loyalty affect customers’ perceptions of an organization (Heskett et al., 1994). When employees are more satisfied and committed, they tend to have more satisfied and committed customers. The relationship between employee satisfaction and retention and customer satisfaction and loyalty is summarized in a causal model called the Service Success Loop.

Following are the components of the Service Success Loop.

  1. Leadership: Leaders select the right employees and provide them with the systems and resources they need to do their jobs effectively. The organization promotes a service culture by clearly identifying service as a company value.
  2. Employee Satisfaction and Retention: Organizational systems and support mechanisms enable employees to do their jobs well. Employees are satisfied with their jobs; they become more productive and less likely to leave the company.
  3. Customer Satisfaction: Customers perceive value in the services offered by capable,experienced, and satisfied employees.
  4. Customer Loyalty: Customers are so pleased with the value and quality of service that they choose a company over its competitors. They give repeat business and provide referrals. Over time, a relationship develops between the customer and the organization.
  5. Business Success: Profitability, market share, and other measures of success increase, thanks to satisfied, loyal customers. Successful businesses have more resources to reinvest in the organization, which leads to greater employee satisfaction and retention.

This model implies that to increase customer satisfaction and loyalty and promote growth and revenue, we must start with the service provider. Bowen and Lawler (1995) identified empowerment, or the authority/power to meet needs, as the primary factor behind employee satisfaction and loyalty. Service providers must have the skills, knowledge, and organizational support necessary for creating a perception of service value.

Service Encounters: The Point of Contact

The “service encounter” is the moment when customers directly interact with the service provider. In their study of service encounters, Bitner, Booms, and Tetreault (1990) observed a general decline in service quality—even as the importance of service industries continues to grow in the U.S. economy. Often, frontline employees are not trained adequately or empowered to meet customer needs and ensure effective service.

The service encounter has been called a “rite of integration” between the service provider and the customer (Siehl, Bowen, and Pearson, 1992). During the service encounter, providers and customers achieve a temporary sense of closeness that facilitates communication and collaboration. This closeness is especially important when the service provided is somewhat intangible and difficult for the customer to evaluate (e.g., legal counsel). Ideally, the service encounter involves “deliberately planned, carefully managed, and often rehearsed sets of behaviors” (p. 543). Using an established “rite” helps the interaction achieve consistency and predictability. Understanding which parts of the service encounter are most important and which are performed most proficiently helps identify areas for improvement.

To make the Service Success Loop work, organizations must do everything they can to make sure their employees are completely prepared for customer interactions. As frontline players, customer contact employees play a key role in the organization. A service provider might be the first, last, or only person who comes in contact with the customer. This person creates customers’ perceptions of the organization. Employee skills and organizational support systems determine how well service-related needs and problems are addressed.

Creating a Service Culture

Today’s customers want service that delights them, and that’s becoming the baseline for earning their loyalty. In a total service culture, providing extraordinary service is the job of every individual in the organization, from the top down. Senior executives must become advocates of a culture in which the customer is at the center of every decision. Service leaders need to support and empower their people to take ownership of their jobs. Frontline service providers learn specialized skills for handling customer problems, getting customer feedback, and ensuring service that consistently exceeds expectations. In short, the heart of a service culture is a total commitment to delighting customers.

Organizations with a strong service culture enjoy increased employee job satisfaction and retention, increased customer loyalty, noticeable behavior changes throughout the organization, and an improved overall customer service image.

Intervening for Effective Customer Service

After a service encounter, an organization can do little to alter customer perceptions. However, organizations can ensure that they have done everything possible to promote a positive service encounter by preparing their employees and changing the work environment. This study examines the factors preceding a service encounter and the possible outcomes.

Study Purposes
  • Job Requirements and Competencies:What skills and competencies are essential for effective customer service performance, from the viewpoint of both customers and customer contact personnel? How well are they currently performed?
  • The Service Encounter: What are the most important steps in a service encounter? In which behaviors do service providers display the highest proficiency?
  • Service Recovery: What are the most critical steps for handling a customer’s problem? What impact do these steps have on customer loyalty and retention?
  • Links in the Service Success Loop: What support is there for the Service Success Loop? Do the hypothesized relationships actually exist?

Methodology

Participants and Data Collection

Fourteen organizations participated in an international assessment of service skills in the workplace. These included manufacturing and service organizations, such as hotels, retail stores, utilities, a casino, and an educational institution. A summary of the characteristics of the participating service providers and their customers is in the appendix.

Organizations were recruited by telephone to participate in this study. Each organization was asked to administer a minimum of 30 customer surveys and 30 service provider surveys. Customers rated their perceptions of a particular organization's service providers. In this way, their ratings were based on actual experiences and were probably more meaningful than if they had rated all service providers “in general.” Service providers were defined as those people who interact directly with the organization’s customers, either face to face or over the phone. The resulting sample consisted of 129 customers and 452 service providers. Three of the participating organizations chose not to provide customer data. Organizations were recruited by telephone to participate in this study. Each organization was asked to administer a minimum of 30 customer surveys and 30 service provider surveys. Customers rated their perceptions of a particular organization's service providers. In this way, their ratings were based on actual experiences and were probably more meaningful than if they had rated all service providers “in general.” Service providers were defined as those people who interact directly with the organization’s customers, either face to face or over the phone. The resulting sample consisted of 129 customers and 452 service providers. Three of the participating organizations chose not to provide customer data.

Measures

To assess customer service skills and competencies and the impact that customer service has on an organization, two similar versions of the same survey were developed. One was given to the customer population, and the other to customer contact personnel. The wording of the instructions and rating scales was designed with each population in mind. Both versions of the survey contained the following sections.

Section I: Customer Satisfaction Builders and Reducers

The first part of the survey addressed a service provider’s interpersonal behaviors that are likely to either build or reduce customer satisfaction. A list of 11 satisfaction-building behaviors was developed from a review of literature, customer input, and job analysis of customer service positions. (The 11 satisfaction-reducing behaviors were simply negative versions of the building behaviors.) Customers were asked to rank the behaviors “in order of effectiveness in building your satisfaction as a customer.” Service providers ranked behaviors “in order of effectiveness for building customer satisfaction.” For each version of the survey, behaviors were listed in two different orders to make sure that the order did not influence rankings.

Although other important behaviors exist, this list focused on the content of a single service encounter. To further understand behavior important for the service encounter, an openended response section asked both groups to write in their own words what behaviors were most likely to build or reduce customer satisfaction.

Section II: Customer Service Skills and Competencies

In this part of the survey, respondents rated the importance and proficiency of several competencies and skills. An extensive literature search of books and journal articles produced an initial list of competencies. This list was further refined by comparisons to job analyses of service positions conducted with several Development Dimensions International (DDI) clients. Based on this information, 17 service skills and competencies were identified. The skills and competencies rated in this study are listed on page 6. Table 1 on page 7 displays the rating scales.

Customer Service Skills and Competencies

Communication—Clearly expresses self (verbal and written). Keeps customers informed.

Customer Sensitivity—Shows concern for customers' feelings and viewpoints.

Decisiveness—Makes decisions to take action aimed at meeting customer needs.

Energy—Appears alert and attentive.

Flexibility—Changes style based on customer needs and personalities.

Follow-Up—Fulfills promises and commitments in a timely and responsive manner.

Impact—Maintains neat appearance and positive impression.

Initiative—Takes action that meets or exceeds customer needs.

Integrity—Maintains high ethical standards.

Job Knowledge—Understands organization's and customers’ policies and procedures.

Judgment—Develops effective approaches using available information.

Motivation to Serve Customers—Derives satisfaction and fulfillment from dealing with customers.

Persuasiveness/Sales Ability—Gains customers’ acceptance of ideas, products, and services.

Planning—Organizes work and prepares for customer interactions.

Resilience—Handles problems, unpredictable events, and other job pressures while serving customers.

Situation Analysis—Gathers and analyzes information about customers’ situations.

Work Standards—Has high standards for customer service.

Section III: The Service Encounter

A list of nine behaviors that could be displayed during a single service encounter was rated for importance and proficiency (see description of rating scales in Table 1 on page 7). This list, like the skills and competencies, was drawn from a literature search and review of job analyses. In this order, the behaviors represent the logical progression of an effective service encounter:

  • Preparation (knowledge, access to resources).
  • Acknowledge the customer.
  • Clarify details about the situation.
  • Listen and respond to the customer’s feelings.
  • Make the customer feel important.
  • Ask for ideas and offer suggestions.
  • Meet (or exceed) customer’s needs.
  • Make sure the customer is satisfied.
  • Follow-through.
Section IV: Service Recovery

Customers were asked, “Have you ever had a problem with this organization that required you to interact with a service provider?” If they responded “yes,” they were then asked to rate the importance of and proficiency in six service recovery behaviors. All service providers were asked to rate the importance of and proficiency in the same list of six behaviors, but not in the context of a specific customer or problem.

Customers also rated their satisfaction with the provider’s reaction to their problem by answering the question, “Compared to your feelings before the problem occurred, how would you rate your current satisfaction with the organization's performance?” Finally, customers indicated the impact of the service recovery effort by rating their agreement/disagreement with the statement, “The way the organization handled my problem makes me want to do business with them again.”

Section V: Attitudes

Customers were asked to rate their agreement with seven statements measuring general satisfaction and commitment in relation to the service organization. Service providers rated 14 statements related to their job satisfaction, organizational commitment, and work environment. Measures from this section were used to test the relationships represented in the Service Success Loop.

 

Scale

Customers

Service Providers

Rating Scales

Importance

How important do you feel the skill or competency is for effective customer service?

How important do you feel the skill or competency is for effective customer service?

5 = Extremely important

4 = Very important

3 = Important

2 = Somewhat important

1 = Not important

N = Not sure

Proficiency

How well do you feel that customer service providers use the skill or competency when they interact with you*?

How well do you feel that customer service providers in your organization use the skill or competency when they interact with customers?

5 = Extremely important

4 = Very important

3 = Important

2 = Somewhat important

1 = Not important

N = Not sure

*Customers were asked, “When rating proficiency, please rate service providers from the organization that gave you this survey.”

Table 1. Rating scales.

Results

Links in the Service Success Loop

Based on customer and service provider data from 11 organizations, correlations were computed between the critical links in the Service Success Loop. (Correlations show the degree to which two things are related.) Correlations from the analysis show support for the Service Success Loop. All of the hypothesized relationships are positive and in the expected direction.

Increasing Employee Satisfaction and Retention

When employees perceived a strong service culture (i.e., emphasized through leadership, empowerment, and organizational values) and saw good opportunity for personal development in their organizations, they were more likely to be satisfied with their jobs and committed to the organization. Service culture also showed a weaker, but still positive, relationship to customer satisfaction and loyalty. This lower correlation should be expected because service culture has its most direct impact on how employees view their jobs. The link between a strong service culture and customer perceptions is more indirect. Customers probably aren’t aware of the level of empowerment and leadership in an organization and the degree to which it emphasizes service as a value.

The Employee–Customer Link

Analysis of the most important relationship in the Service Success Loop showed encouraging results. Organizations with satisfied employees tended to have satisfied customers.

Customer Satisfaction and Loyalty

As hypothesized, a strong relationship appeared between customer satisfaction and customer loyalty. The most satisfied customers also expressed the highest levels of loyalty. Satisfaction does not always lead to increased loyalty, but it does have a notable impact.

Customer Loyalty and Business Success

It was not possible to test the final link in the model because a common measure of organizational performance was not available.

The data from this study supported the relationships hypothesized in the Service Success Loop. Certainly, more data needs to be collected to better substantiate the results. Nevertheless, these results show encouraging trends in the expected direction. The link relating employee satisfaction to customer satisfaction was the most critical and received solid support from the findings. How employees felt about their jobs was related to customers’ satisfaction levels. Customer satisfaction was in turn related to customer loyalty.

Figure 1. Key relationships in the Service Success Loop.

Top Customer Satisfaction Builders

  1. Listen carefully to what customers have to say.
  2. Interact with customers in a warm and friendly way.
  3. Take immediate action to meet customer needs or requests.

Respondents ranked a list of 11 behaviors. Both customers and providers agree that Listening carefully and Interacting in a warm and friendly way are critical behaviors for building customer satisfaction (see Table 2). In fact, Listening carefully (average rank = 3.54) stands out as notably more important than Interacting in a warm and friendly way (5.28). The third-most important behavior, Taking immediate action, was not emphasized equally by both customers and providers. Providers saw it as significantly more important than customers did. Nevertheless, the combined customer/provider rankings placed this behavior third.

Differences in Perception

Customers and service providers did not always agree about rankings. On average, customers ranked these behaviors significantly higher than service providers did:

  • Go beyond customers’ expectations when meeting their needs.
  • Ask questions to better understand customers’ situations.

On average, providers ranked these behaviors significantly higher than customers did:

  • Take immediate action to meet customer needs or requests.
  • Follow through on promises or commitments.

Customers

Providers

Average
Difference

Average
Rank

Satisfaction-Building Behaviors

3.35 (1)

3.72 (1)

0.37

3.54 (1)

Listen carefully to what customers have to say.

4.98 (2)

5.58 (3)

0.60

5.28 (2)

Interact with customers in a warm and friendly way.

6.33 (7)

4.60 (2)

-1.73*

5.47 (3)

Take immediate action to meet customer needs
or requests.

5.59 (4)

6.26 (6)

0.67

5.93 (4)

Appear knowledgeable and well informed.

6.45 (8)

5.89 (5)

-0.56

6.17 (5)

Show sensitivity to customers’ feelings and viewpoints.

5.53 (3)

6.84 (8)

1.31*

6.19 (6)

Ask questions to better understand customers’ situations.

5.96 (6)

6.51 (7)

0.55

6.24 (7)

Express thoughts clearly and in a way that customers
can understand.

6.79 (9)

5.70 (4)

-1.09*

6.25 (8)

Follow through on promises or commitments.

5.64 (5)

7.05 (9)

1.41*

6.35 (9)

Go beyond customers’ expectations when meeting
their needs.

6.93 (10)

7.06 (10)

0.13

7.00 (10)

Keep customers informed about new developments
that might affect them.

7.64 (11)

7.39 (11)

-0.25

7.52 (11)

Respond to unusual customer requests with creative
and flexible solutions.

*Statistically significant difference

Average Difference: Negative values indicate that customers thought the behavior was less important than
service providers did.

Table 2. Satisfaction builders—average ranks (final ranking in parentheses).

Top Customer Satisfaction Reducers

  1. Interact with customers in a cold and aloof way.
  2. Fail to follow through on promises or commitments.
  3. Do not listen carefully to what customers have to say.

Customers and service providers were in complete agreement about top satisfaction reducers (see Table 3). Two of the same behaviors that build satisfaction also reduce satisfaction when they appear in a negative form. The second-ranked behavior, Failing to follow through on promises and commitments, was ranked eighth when worded positively as a satisfaction builder. Therefore, following through on promises and commitments has a bigger impact on customer satisfaction when it appears in a negative form (failing to follow through) rather than in a positive form. Stated differently, customers assume that promises or commitments will be kept. When they are not kept, the impact is very negative.

Differences in Perception

Only one significant difference appeared between customer and provider rankings of satisfaction-reducing behaviors. Providers were more likely to emphasize the damaging effects of Showing little sensitivity to customers’ feelings and viewpoints (ranked fourth of 11). Customers ranked it eighth.

Customers

Providers

Average
Difference

Average
Rank

Satisfaction-Building Behaviors

3.51 (1)

3.58 (1)

0.07

3.55 (1)

Interact with customers in a cold and aloof way.

3.53 (2)

4.33 (2)

0.80

3.93 (2)

Fail to follow through on promises or commitments.

4.98 (3)

4.42 (3)

-0.56

4.70 (3)

Do not listen carefully to what customers have to say.

6.04 (5)

5.87 (5)

-0.17

5.96 (4)

Express thoughts in an unclear and confusing way.

6.24 (7)

5.87 (6)

-0.37

6.06 (5)

Appear uninformed or lack important knowledge.

6.20 (6)

6.25 (7)

0.05

6.23 (6)

Take too much time responding to customer needs
or requests

5.80 (4)

6.92 (8)

1.12

6.36 (7)

Make assumptions about customers’ situations.

6.92 (8)

5.85 (4)

-1.07*

6.39 (8)

Show little sensitivity to customers’ feelings and
viewpoints.

7.60 (11)

7.27 (9)

-0.33

7.44 (9)

Fail to keep customers informed about new
developments that might affect them.

7.26 (9)

7.71 (11)

0.45

7.49 (10)

Become “bogged down” or unable to respond when presented with unusual customer requests.

7.40 (10)

7.65 (10)

0.25

7.53 (11)

Do only the absolute minimum required to meet
customer needs.

* Statistically significant difference

Average Difference: Negative values indicate that customers thought the behavior was less important than
service providers did.


 

Table 3. Satisfaction reducers—average ranks (final ranking in parentheses).

Customer Service Skills and Competencies

(See page 6 for the complete list of skills and competencies. Table 1 on page 7 explains the rating scale.)

Highest Importance

  1. Work Standards: Has high standards for customer service.
  2. Follow-up: Fulfills promises and commitments in a timely and responsive manner.
  3. Integrity: Maintains high ethical standards.
  4. Job Knowledge: Understands organization’s and customers’ policies and procedures.
  5. Communication: Clearly expresses self (verbal and written). Keeps customers informed.

When choosing the 5 most important skills and competencies out of the 17 choices, customers and providers showed a large amount of agreement (see Table 4). Although the rankings between the two groups differed somewhat, their importance ratings were fairly consistent. Providers were more likely than customers to give higher importance ratings to Customer Sensitivity, Persuasiveness/Sales Ability, and Flexibility. This tendency probably can be explained by providers’ unique perspective on their job requirements. Service providers tend to deal with many customers, each with different interaction styles and needs.

Customers

Providers

Average
Difference

Average
Rank

Skill/Competency

4.20 (1)

4.41 (1)

-0.23

4.31 (1)

Work Standards

4.17 (2)

4.29 (2)

-0.11

4.23 (2)

Follow-Up

4.15 (3)

4.05 (8)

0.03

4.10 (3)

Integrity

4.01 (5)

4.18 (4)

-0.17

4.10 (4)

Job Knowledge

3.95 (8)

4.20 (3)

-0.27

4.08 (5)

Communication

4.06 (4)

4.06 (7)

0.02

4.06 (6)

Initiative

3.99 (7)

4.04 (9)

-0.11

4.02 (7)

Resilience

3.88 (10)

4.07 (6)

-0.19

3.98 (8)

Decisiveness

4.01 (6)

3.93(10)

0.06

3.97 (9)

Motivation to Serve Customers

3.59 (15)

4.14 (5)

-0.58*

3.87 (10)

Customer Sensitivity

3.90 (9)

3.78 (15)

0.12

3.84 (11)

Judgment

3.75 (11)

3.82 (12)

-0.08

3.79 (12)

Energy

3.66 (12)

3.82 (13)

-0.14

3.74 (13)

Planning

3.61 (13)

3.84 (11)

-0.23

3.73 (14)

Impact

3.61 (14)

3.81 (14)

-0.27

3.71 (15)

Situation Analysis

3.38 (16)

3.71 (17)

-0.29*

3.55 (16)

Persuasiveness/Sales Ability

3.31 (17)

3.73 (18)

-0.40*

3.52 (17)

Flexibility


* Statistically significant difference
 

Table 4. Skill/Competency importance ratings, rankings (in parentheses), and differences.

Highest Proficiency

  1. Job Knowledge: Understands organization’s and customers’ policies and procedures.
  2. Impact: Maintains neat appearance and positive impression.
  3. Work Standards: Has high standards forcustomer service.
  4. Integrity: Maintains high ethical standards.
  5. Communication: Clearly expresses self (verbal and written). Keeps customers informed.

The skills and competencies given the highest proficiency ratings were almost the same as those with the highest importance ratings (see Table 5). However, the second-most important skill, Follow-Up, did not appear in the top five proficiency ratings. Instead, Impact, one of the relatively less important competencies, appeared in second place.

Customers

Providers

Average
Difference

Average
Rank

Skill/Competency

3.81 (1)

3,44 (4)

0.40*

3.63 (1)

Job Knowledge

3.77 (2)

3.49 (2)

0.31

3.63 (2)

Impact

3.64 (4)

3.53 (1)

0.14

3.59 (3)

Work Standards

3.64 (3)

3.48 (3)

0.13

3.56 (4)

Integrity

3.60 (6)

3.38 (7)

0.25

3.49 (5)

Communication

3.61 (5)

3.32 (10)

0.34

3.47 (6)

Decisiveness

3.60 (7)

3.34 (9)

0.24

3.47 (7)

Resilience

3.51 (9)

3.43 (5)

0.13

3.47 (8)

Follow-Up

3.56 (8)

3.36(8)

0.21

3.46 (9)

Energy

3.42 (14)

3.43 (6)

-0.02

3.43 (10)

Customer Sensitivity

3.51 (10)

3.23 (13)

0.33*

3.37 (11)

Planning

3.48 (12)

3.23 (14)

0.26

3.36 (12)

Judgment

3.47 (13)

3.24 (12)

0.22

3.36 (13)

Situation Analysis

3.49 (11)

3.17 (15)

0.33

3.33 (14)

Motivation to Serve Customers

3.35 (15)

3.28 (11)

0.10

3.32 (15)

Initiative

3.25 (16)

3.08 (16)

0.21

3.17 (16)

Persuasiveness/Sales Ability

3.18 (17)

3.06 (17)

0.21

3.12 (17)

Flexibility


* Statistically significant difference

Table 5. Skill/Competency proficiency ratings, rankings (in parentheses), and differences.

The Service Encounter

The analyses identified nine important components of a service encounter (see Tables 6 and 7). Listed below are the three most important and three most proficient behaviors (determined by averaging ratings given by customers and service providers).

Highest Importance

  1. Make sure the customer is satisfied.
  2. Meet (or exceed) the customer’s needs.
  3. Follow-through.

Highest Proficiency

  1. Acknowledge the customer.
  2. Meet (or exceed) the customer’s needs.
  3. Listen and respond to the customer’s feelings.

The most important behaviors dealt with outputs, or the end results of the service encounter (e.g., satisfaction, follow-through). The most proficient behaviors were those dealing with the interaction itself (e.g., acknowledging, listening). The only behavior appearing on the top three of both lists was Meet (or exceed) the customer’s needs. It is also important to note that Make sure the customer is satisfied dropped from a #1 ranking on the importance list (Table 6) to a #7 ranking on the proficiency list (Table 7).

Service providers rated the importance of the nine behaviors somewhat higher overall than did customers. On average, neither group rated any of the behaviors less than “important.” Even so, customers and providers did not always agree about importance and proficiency ratings. Providers rated the following behaviors as significantly more important (compared to customers’ ratings).

  • Make the customer feel important.
  • Acknowledge the customer.
  • Listen and respond to the customer’s feelings.
  • Preparation (knowledge, access to resources).

In terms of proficiency, only one significant difference appeared. Compared to providers, customers gave a significantly higher rating for Follow-through. In addition, customers tended to rate providers somewhat higher overall in terms of proficiency than did the providers themselves. However, both customers and providers rated all of the behaviors higher than “often done well.”

Customers

Providers

Average
Difference

Average
Importance

Service Encounter Behaviors

4.13 (3)

4.34 (1)

0.26

4.24 (1)

Make sure the customer is satisfied.

4.20 (1)

4.26 (2)

0.12

4.23 (2)

Meet (or exceed) the customer’s needs.

4.14 (2)

4.23 (3)

0.09

4.19 (3)

Follow-through.

3.97 (4)

4.10 (7)

0.14

4.04 (4)

Clarify details about the situation.

3.70 (6)

4.23 (4)

0.55*

3.97 (5)

Listen and respond to the customer’s feelings.

3.77 (5)

4.09 (8)

0.33*

3.93 (6)

Preparation (knowledge, access to resources).

3.61 (7)

4.19 (5)

0.64*

3.90 (7)

Acknowledge the customer.

3.39 (9)

4.14 (6)

0.79

3.77 (8)

Make the customer feel important.

3.47 (8)

3.69 (9)

0.23

3.58 (9)

Ask for ideas and offer suggestions.

*Statistically significant difference

Table 6. Service encounter importance ratings, rankings (in parentheses), and differences.

Customers

Providers

Average Difference

Average Importance

Service Encounter Behaviors

3.54 (3)

3.62 (1)

0.10

3.58 (1)

Acknowledge the customer.

3.63 (1)

3.45 (4)

-0.21

3.54 (2)

Meet (or exceed) the customer’s needs.

3.48 (4)

3.51 (2)

0.02

3.50 (3)

Listen and respond to the customer’s feelings.

3.46 (5)

3.42 (6)

-0.08

3.44 (4)

Clarify details about the situation.

3.35 (8)

3.50 (3)

0.12

3.43 (5)

Make the customer feel important.

3.58 (2)

3.27 (8)

-0.37*

3.43 (6)

Follow-through.

3.40 (7)

3.43 (5)

0.02

3.42 (7)

Make sure the customer is satisfied.

3.46 (6)

3.34 (7)

-0.15

3.40 (8)

Preparation (knowledge, access to resources).

3.19 (9)

3.09 (9)

-0.14

3.14 (9)

Ask for ideas and offer suggestions.

*Statistically significant difference

Table 7. Service encounter proficiency ratings, rankings (in parentheses), and differences.

Service Recovery

Many organizations pride themselves on their ability to turn dissatisfied customers into satisfied customers, knowing that properly resolving customer problems can lead to higher customer loyalty than if there had never been a problem in the first place. The customer service operating mantra for high-performing organizations should be, “Do it right the first time. If it ever fails, fix it fast, and fix it right.” Customers allow, even expect, mistakes, but they also expect problems to be handled correctly. Many customers won’t allow even one mishandled mistake before deciding to defect to another organization (Heskett et al., 1994). In a study of 700 provider–customer interactions drawn from the airline, restaurant, and hotel industries, 43 percent of the dissatisfactory encounters described by customers were linked to employees’ inability or unwillingness to respond in service failure situations (Bitner et al., 1990). Close examination of the interactions revealed “that it is not the initial failure to deliver the core service alone that causes dissatisfaction, but rather the employee’s response to the failure” (p. 81).
 

Customers

Providers

Average
Difference

Average
Importance

Service Recovery Behaviors

4.31 (1)

4.44 (1)

0.15

4.38 (1)

Took time to “hear them out” and fully understand the customer’s situation or problem.

4.12 (2)

4.30 (3)

0.20*

4.21 (2)

Took responsibility for solving the problem.

4.06 (3)

4.19 (4)

0.11

4.13 (3)

Effectively overcame the problem.

3.98 (4)

4.11 (5)

0.11

4.05 (4)

Followed up to make sure the customer was satisfied.

3.59 (5)

4.41 (2)

0.59*

4.00 (5)

Showed empathy and caring for the customer.

3.56 (6)

4.02 (6)

0.50*

3.79 (6)

Apologized for the problem.

*Statistically significant difference

Table 8. Service recovery importance ratings, rankings (in parentheses), and differences.

In this study, 43 percent of the customers (55/129) indicated that they had experienced a problem that required them to interact with a service provider. The most important behavior for a provider to display in this kind of a service encounter was Take time to “hear them out” and fully understand the customer’s situation or problem. The secondmost important behavior involved Taking responsibility for solving the problem. All of the behaviors rated by customers and providers were given high marks for importance and proficiency (see Tables 8 and 9).

While service providers rated the importance of all service recovery behaviors higher than customers did, they put a significantly greater emphasis on Taking responsibility, Showing empathy, and Apologizing. Because these behaviors are initiated by the provider, their value is probably more easily recognizable.

Customers

Providers

Average
Difference

Average
Importance

Service Recovery Behaviors

3.88 (1)

3.66 (1)

-0.25

3.77 (1)

Took time to “hear them out” and fully understand the customer’s situation or problem.

3.69 (3)

3.62 (2)

-0.07

3.66 (2)

Apologized for the problem.

3.58 (4)

3.59 (3)

-0.01

3.59 (3)

Took responsibility for solving the problem.

3.73 (2)

3.43 (5)

-0.32

3.58 (4)

Effectively overcame the problem.

3.55 (5)

3.51 (4)

-0.05

3.53 (5)

Showed empathy and caring for the customer.

3.53 (6)

3.17 (6)

-0.47

3.35 (6)

Followed up to make sure the customer was satisfied.

Table 9. Service recovery proficiency ratings, rankings (in parentheses), and differences.

Attitudes: Customers and Providers

Both customers and providers were asked to provide ratings of overall satisfaction and loyalty. Customers rated their satisfaction and loyalty regarding how well the organization provided them with a service. Providers rated their job satisfaction and loyalty to their organization. In addition, providers rated the level of developmental opportunities in their organizations and the degree to which a service culture was emphasized.

Overall, customers indicated a moderate level of satisfaction with the organizations in this sample (Mean = 3.81). However, loyalty was rated not quite as highly (Mean = 3.58). This difference in ratings illustrates the common research finding that satisfaction does not necessarily imply loyalty. Even so, correlational analysis showed that satisfied customers also tended to be more loyal (r = 0.72).

When rating their jobs, service providers also indicated a moderate level of satisfaction (Mean = 3.88). Like customers, their overall level of loyalty was somewhat lower (Mean = 3.73). The correlation between satisfaction and loyalty was also very much in line with the trend observed for customers (r = 0.80). Satisfied providers also were more loyal to their organizations.

Examining the providers’ organizational work environment provided some insight into ratings of satisfaction and loyalty. When organizational emphasis on development and service culture was high, employees tended to be more satisfied and loyal. Emphasis on a service culture showed notable correlations with providers’ satisfaction (r = 0.59) and loyalty (r = 0.32). Developmental emphasis also showed a positive but weaker correlation with providers’ satisfaction (r = 0.21) and loyalty (r = 0.25). In general, ratings of developmental emphasis (e.g., growth and developmental opportunities, planning) indicated that providers in this sample did not perceive a very strong developmental focus (Mean = 3.13). However, organizational emphasis on a service culture (e.g., empowerment and leadership) did receive moderately good ratings (Mean = 3.74).

Satisfaction and Desire to Repurchase

Customers were classified into groups based on their responses to the question, “Compared to your feelings before the problem occurred, how would you rate your current satisfaction with the organization’s performance?” and their agreement with the statement, “The way the organization handled my problem makes me want to do business with them again.” Figure 2 depicts the relationships between employee behaviors and satisfaction/desire to do business again.

When customers’ problems were handled with a high degree of effectiveness, they indicated greater satisfaction and desire to do business again. (All differences were statistically significant.) These findings show that a well-handled service recovery encounter can have a strong positive impact on customers’ perceptions.
Figure 2. Effective service recovery skills can increase customer satisfaction and loyalty.

Discussion

The findings from this research illustrate the exceedingly complex nature of customer service and the many influences and differences in perception that affect it. The most important skills, behaviors, and competencies are not always the ones demonstrated with the greatest proficiency. Service providers focus primarily on the process for delivering good service, while customers emphasize the final outcomes of the interaction. The challenge centers on integrating service processes and outcomes to produce a seamless model of service interaction.

Meeting (Or Exceeding) Customer Needs and Expectations

The key to service quality exists in the customer’s perception of value. No matter what skills, competencies, interaction guidelines, or services a company offers, everything must be directed toward meeting or exceeding the customer’s expectations for service. As seen in ratings of service encounter behaviors, Making sure the customer is satisfied and Meeting or exceeding the customer’s needs were the two most important behaviors. However, individual customers have unique needs, and the needs of the same customer vary from interaction to interaction. The system or approach for meeting customer needs must be flexible and universal enough to address a multitude of customer needs and styles. The ability to treat each customer individually will develop the relationship required to create customer loyalty, which is so critical to business success.

Listening To and Understanding Customers

One of the primary methods for making sure that customer needs are met relates to listening to and understanding customers. Undeniably, it is impossible to provide quality service and meet expectations unless you find out what customers want or what their problems entail. Listening carefully to what customers have to say appeared as the top satisfaction builder. During the service encounter, it appeared as one of the most proficient behaviors. Finally, Taking time to “hear them out” and fully understand customers’ situations or problems was the most important behavior in service recovery situations.

Empowerment and Responsibility

The need for empowerment and the authority to take action is one of the most consistent findings in this study. Even if providers listen to and understand customers, they cannot meet needs unless they are given the authority to take action. There is support for the value of empowerment in this study’s conclusions about job knowledge, job satisfaction, customer satisfaction, and service recovery.

First, it is difficult to assume responsibility and take action without having sufficient job knowledge. Job Knowledge was rated among the five most important and proficient service provider competency areas. Second, providers’ degree of empowerment on the job was significantly correlated to job satisfaction. Empowerment (part of the service culture) predicts employee satisfaction/loyalty (part of the Service Success Loop). In turn, employee satisfaction/loyalty predicts customers’ level of satisfaction.

One of the primary customer satisfaction builders was Taking immediate action to meet customer needs or requests. Providers need sufficient authority and empowerment to take immediate action. Finally, in service recovery situations we noted the importance of Taking responsibility for solving the problem.

Follow-Through

The last major finding in this study illustrates the importance of follow-through. Following through on promises and commitments appeared as a "top five" competency and as a key service encounter behavior. It also appeared in the top five customer satisfaction reducers when worded negatively (i.e., failing to follow through).

Implications

Monitor Customer Needs and Perceptions

For customers to perceive value in the services an organization offers, an accurate understanding of their needs, expectations, and perceptions is required. Some of this information can be gathered through market research. Even so, regular systems for collecting customer feedback will be invaluable for monitoring your performance. If customers are not completely satisfied, find out why. Put a system in place for collecting ongoing feedback from customers. For example, collecting feedback during the service interaction itself provides quick and meaningful information about how well customer needs are being met and what can be done to continuously improve the quality of service.

Promote an Empowering Environment

Organizational Values

Development of a service culture requires the support and involvement of senior leaders in the organization. A clearly stated set of organizational values, including Customer Focus, helps define what leaders and employees should emphasize in their everyday activities. Empowered leaders can use information about organizational values to make clear objectives for their particular work groups, considering unique customer and employee needs.

Providing Resources and Information

Make sure that service personnel understand and have access to all the information and solutions customers might request. Customers should not have to hear a provider say “I don’t know,” “I don’t make the rules,” or “Someone else handles that.” Many organizations are beginning to offer their providers the power to solve problems without having to go through layers of approval. Providers should be able to respond to customer needs immediately with a solution. Doing this requires skills and knowledge, customer-focused processes, strong internal partnerships, and the authority to take action.

Empowering Leadership

Leaders in the organization should promote a sense of job ownership among their direct reports. They can do this by first operationalizing the organization’s service vision, and then coaching, developing partnerships, building trust, and managing the performance of their service providers. Leaders can help meet customer expectations by ensuring that organizations’ systems and processes align with the service vision and by identifying and removing barriers that are keeping service personnel from doing their jobs.

Provide Training and Integrate Skills and Competencies

Training

It is a safe bet to assume that the skills of service providers need to be strengthened and reinforced. Although many providers are strong in some skill areas, they do not always focus on the behaviors that customers find important. All organizations interested in creating a service culture should have ongoing skills training to develop these critical competencies: managing the customer interaction, turning dissatisfied customers into satisfied and loyal customers, and improving processes.

Integration

The skills and competencies measured in this study can serve as the basis for an integrated human resources system for service providers. For example, many of the competencies can be used as criteria for selecting new service employees. Similarly, these competencies can be incorporated into an appraisal and performance evaluation system. They also can serve as the basis of a powerful needs analysis process for service personnel, allowing organizations to focus valuable training dollars and time.

In summary, customer-contact employees are the most important, yet often forgotten, employees in the organization. This research and other studies have demonstrated the importance of supporting service providers and promoting their satisfaction and loyalty. They can and will make a difference in building customer satisfaction and loyalty. Whether this difference is positive or negative depends on an organization’s ability and willingness to manage, develop, and motivate those who serve their customers.

Changes in Service Skills and Competencies: 1988 to 1996

In 1988 Wellins and Becker conducted a study of service skills and competencies much like the current study. By comparing changes in importance and proficiency ratings, we can see how service skills and competencies have evolved during the past eight years.

The five most important skills and competencies have remained almost exactly the same during the past eight years. Only Work Standards has entered the top five to replace Customer Sensitivity. This does not mean that Customer Sensitivity is no longer important. Rather, it shows a relative increase in the emphasis on providing the highest standards for customer service.

The top five skills and competencies demonstrated with the most proficiency have remained almost the same during the past eight years. Similar to what was seen in the importance ratings, Work Standards rose to the top five (this time, to replace Judgment).

In general, average importance ratings did not differ very much between the two studies. However, average proficiency ratings have changed noticeably for the customer sample. In 1988 customer ratings of proficiency were consistently below a 3.0 (Often done well). In 1996 they were consistently above a 3.0. Two possible explanations can account for this effect. First, service proficiency could have increased overall due to an increased market emphasis on quality customer service. Alternately, the nature of the rating task could have affected the findings. In 1988 customers rated service “in general.” In 1996 they rated proficiency for a specific organization.

Even though the two studies of customer service are separated by eight years, the results are surprisingly consistent. The critical issues are still the same, with a noticeable increase in the focus on providing the highest work standards for customer service.

Appendix

Characteristics of Participating Service Providers and Their Customers

Demographic Information: Customers

Which of the following categories best describes the nature of your relationship with this organization?

51.8% I represent only myself
40.7% I represent an organization/group
7.5% Other

About how long have you (not your organization) done business with the organization that gave you this survey?

4.3% Less than 6 months
10.5% 6–11 months
34.4% 1–3 years
12.8% 4–5 years
38.1% More than 5 years

How frequently do you interact with service personnel at the organization that gave you this survey?

23.3% Very frequently
33.1% Fairly often
21.6% Sometimes
13.7% Once in awhile
8.3% Rarely

Demographic Information: Service Providers

Hours of service skills training (problem solving, listening, communication, stress management, etc.) during the past year:

18.5% None
18.4% 1–5 hours
15.6% 6–10 hours
12.1% 11–20 hours
9.9% 21–30 hours
25.5% More than 30 hours

Position or level

61.3% Management
38.7% Non-management

Percentage of work time spent in direct contact (face-to-face, on the telephone) with external customers?

Average = 46%

Tenure at this organization:

Average = 9.4 years

Tenure in a customer service-related position (in any organization):

Average = 12 years

About the Authors

Paul Bernthal, Ph.D., Manager, Center for Applied Behavioral Research

Paul Bernthal is the leader of DDI’s Center for Applied Behavioral Research (CABER). He works with internal and external clients to conduct benchmarking research, implement evaluation and validation research designs, and provide ongoing measurement consulting.

Some of his training evaluation clients include Ford, Eli Lilly, Motorola, Eastman Chemical, GMAC Mortgage, Hughes Aircraft, Bellin Hospital (Ontario), Presbyterian Hospital (Albuquerque), and International Paper. In addition, he has conducted evaluations of selection, assessment, and organizational change interventions at organizations such as Unisys, Sprint, PPG, General Motors, Northern Telecom, and Baptist Health Systems.

In the past seven years, Dr. Bernthal has conducted more than 50 large-scale program evaluations for DDI.

James H.S. Davis, Vice President, Workforce and Service Development

A recognized expert in combining selection, development, and senior management support to create high-performing organizations, Mr. Davis has helped many organizations succeed in today’s highly competitive global business environment.

Mr. Davis consults with numerous organizations throughout the world and is sought after as a consultant and speaker. Some of his clients include American University, Coca-Cola, Delta Airlines, HCA, Hyatt Hotels & Resorts, Tenet Healthcare, Toyota, and Warner Bros.

Mr. Davis coauthored the book The Service Leaders Club: Dazzling Your Customers Through Service and Service Skills in the Workplace, a report based on an international study of service skills.

About DDI. Since 1970 Development Dimensions International has worked with some of the world’s most successful organizations to achieve superior business results by building engaged, high-performing workforces.

We excel in two major areas. Designing and implementing selection systems that enable you to hire better people faster. And identifying and developing exceptional leadership talent crucial to creating a workforce that drives sustained success.

What sets DDI apart is realization. We focus on the needs of our clients and have a passion for their success.

The outcome? You bring the best people on board, who get up to speed faster, contribute more, and stay longer—giving you the ultimate competitive advantage.

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