How service heterogeneity is impacting engagement

Dr Chris Baumann

Dr Chris Baumann is an associate professor at Macquarie University in Sydney, researching competitiveness, education, East Asia and customer loyalty. He has authored more than 50 refereed journal articles and conference papers with more than 350 citations. He has been awarded for his research and teaching, including from the Australian government for enthusiastic approach to education. Dr Baumann is also visiting professor at Seoul National University (SNU) in Korea and at Aarhus University, Denmark. He introduced ground breaking concepts: Competitive Productivity, Latecomer Brand, Premium Generic Brand (PGB) and the ‘country of origin of service staff (COSS)’ effect. He has a long-standing relationship with Simon Fraser University (SFU), Canada, as MBA Alumni and research collaborator.

Marketers have long known the importance of standardising products to assure quality and consistency. For services, however, standardisation is much more complex.

Frontline staff represent your brand to the outside world. But they’re often an unpredictable human factor. Heterogeneity means each and every service experience is by de facto, unique. Managing such variety is not yet fully understood in academia. And with customers sharing countless anecdotes about positive (or not) experiences as individual consumers, we have a lot to learn in practice too.

Heterogeneity is inevitably one of five characteristics of a service. Services are typically intangible and perishable; the customer directly participates and has to be physically present. Just think about a haircut, or going to the dentist: There is often variation from one service encounter to another, as well as in the ‘same’ service within a given timeframe.

At Harvard Business School, Professor Chris Lovelock (1940 – 2008) was one of the first to explore services in a scholarly fashion and, specifically, heterogeneity’s impact. That framework has been the foundation for how to measure service quality, manage it and standardise it, along with what the limitations of ‘standardising’ human factors could be.

Because it’s the human that brings in the complexity, Lovelock explained: A problem and a chance at the same time. Doctors, teachers and professors, cabin crew and retail shop assistants all have moods; they have good or bad days. Throw a friendly or abusive customer in the mix and you add even more complexity.  

The human equation

Rising to this challenge, fresh research between Macquarie University and Osaka University in Japan is exploring a new angle on service heterogeneity. Our key focus is the quality of service and how customers view the rank of a service employee, from trainee to junior and senior.

There’s plenty of evidence pointing to customers and staff ‘bringing’ human selection and judgment criteria into the service environment. For example, classic demographics play a role (age, gender and ethnicity), communication style, friendliness (or not), and whether frontline staff are gentle or not (the first author of this piece once changed their hair stylist after they got ‘cut’ into their ear twice). In Japan, there’s even consideration of whether frontline staff are ‘cute’ (‘lookism’).

Another big one is staff hierarchy. A unique case in terms of visibility of rank exists in the airline industry. Some airlines just have a sticker on the uniform or military style ‘stripe on shoulder’ to denote rank, but some East Asian carriers make rank more clearly visible. Cathay Pacific, for instance, ‘tells’ the customer the rank of cabin crew through a colour scheme: Red is junior, black is senior. Singapore Airlines uses a similar colour ranking: Blue for junior staff, green for more senior, and red for most senior.

By this very logic, one would assume a positive correlation between rank and service quality: The higher the rank, the better the service. Yet anecdotal evidence can point in the opposite direction. Junior cabin crew in fact often try very hard to please the customer, and are ‘keen’ and attentive. To them, the job is still exciting, and each service encounter is relatively new. The customer subsequently perceives that to be a unique (and positive) experience.

In contrast, more senior cabin crew are often assigned a supervisory role. From a customer perspective, however, this can be perceived as being ignored by more ‘decorated’ staff. Senior crew may be ‘patrolling’ the cabin and directing junior staff, but not directly serving customers with food and drinks, for example.

Obviously, on a plane, a passenger does not have a choice in which cabin crew member they want to be served by. It’s also the case at schools, universities and government services such as security checks, immigration and customs inspections, where students and passengers do not have a choice who should deal with them. In contrast, when seeing a doctor, hair stylist or tax accountant, the customer often does have a choice.

There are also non-visible ‘service providers’ behind the scenes. For example, passengers only get glimpses of a pilot when boarding, but certainly have no say in who will take their lives in their hands for the flight. As a passenger, we also don’t actually know when a junior pilot is given their very first chance to take off and land the plane with passengers on-board.

Experience and seniority can play different roles in the eyes of customers, too. For heart surgery, a customer may well prefer the most senior and experienced staff member. With cabin crew, the preference may be the most attentive and most charming crew member, regardless of rank.

Research also suggests humans evaluate performance based on ‘looks’ (for example, cute children get higher grades), and good-looking (service) staff get more compliments for their work (by customers and superiors) and paid more.

Self-evidently, none of this is really fair, but customers are humans and they can’t hide/fade their attitudes and everyday preferences when it comes to service experience. The challenge is how to manage such delicate issues.  

Measuring impact

While fluctuation in a service over time has been acknowledged to lower quality perception, little is known about how to attenuate the negative effect of service heterogeneity. Extant research advocates the adoption of service standardisation or behavioural scripts to make service more predictable to customers.

However, these approaches aren’t applicable in highly interactive industries such as hair styling. What our fresh research on service employee rank suggests is firms should leverage employee hierarchy to reduce any quality uncertainty perceived by their customers.

In other words, rank plays a critical role in influencing customer evaluation of overall service quality and will eventually affect a firm’s performance.

Brand managers know the important contribution frontline employees make to brand quality, value and competitiveness. At the same time, they are yet to better understand and manage the interplay of their ranking system of frontline staff and how that relates to customer satisfaction, and ultimately loyalty and firm performance.

A number of important aspects should be considered for effective brand management:

  1.  How should firms design their employee-ranking system to properly convey different quality levels they provide to the customers?
  2.  Is there any way to efficiently assign employees to different ranks so they are motivated to perform in accordance with their rank?
  3.  What factors should be taken into account when firms decide on the promotion of their employees to a higher rank?
  4.  Given the influence of employee rank on perceived quality, to what extent would it eventually affect customer satisfaction and purchasing behaviour?
  5. Should firms assign employees with different rank to different customers, such as assigning senior employee to VIP customers, and how would this differentiation lead to between-employee conflict and cooperation?

The answers to these questions are critical for managing service heterogeneity, even as they’re challenging to answer with scientific rigour. But we hope combining experimental design and survey methods with purchase history data may take us further towards addressing these issues.  

- This article was produced by Dr Baumann and Dr Wirawan Dahana of Osaka University in honour of Harvard Professor, Chris Lovelock. It originally appeared in CMO's print magazine Issue 1, 2019. 


Tags: customer service, brand strategy

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