What Drives the Quality of Customer Experiences in Service Marketing — Employees or Corporate Brands?
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In today’s increasingly technology-based soci-
ety, consumers have discovered the convenience and benefits of shopping online. However, this
has left a gap in personal interactions between conSpring 2011
sumers and companies. Despite this fact, there is still
a need for high-quality customer service when those 26
Customer Care News
interactions
do
take place. The
following report
from the Forum for
Pe o p l e
Performance
Management and
Measurement examines how a
customer’s business relationship
with a company as a whole may be influenced by per-
service encounters and relationships. A key aspect of that
a study by Dr. Frank Mulhern, academic director of the
involve personal connectivity. Oddly, the popular focus on
sonal contact with an employee. The report is based on Forum and associate dean of research at Northwestern
University’s Medill School, titled, “The Employee or the
Company: The Relative Importance of People Versus the Company Brand on the Customer Experience.” When business was indeed “personal”
Long before Internet commerce and “big box” retail-
ers came to the retail scene, commercial transactions involved personal relationships between buyers and sellers. Merchants such as mom-and-pop grocers, tailors and shoemakers knew their customers personally. Buyers and
sellers enjoyed ongoing interpersonal connectivity that spanned their personal and business lives.
The rise of modern business brought with it a de-
personalization of retail commerce as large corporations supplanted small enterprises. As a surrogate for personal relationships and what they embody, including
trust, authenticity and personality, corporations turned to branding. Brands, largely through non-personal media communications, fill in the gap created when business
distinction is that relationships matter most when they
relationship marketing over the years has been far more about data and software systems than the most important element of relationships — people.
While research has identified business character-
istics and attributes that establish a strong bond with
the customer, at the heart of these relationships is “treating customers as valued individuals”
(Bhatty,
Skinkle
and
Spalding
Ultimately, employees
2001). it ’s
who
can improve cus-
tomer satisfaction
In today’s increasingly technology-based society, consumers have discovered the convenience and benefits of shopping online. However, this has left a gap in personal interactions between consumers and companies.
in their roles as
the living brand of the organization, and display strong,
positive
interaction
established customers.
with
potential
and
No matter the type of business, employee perceptions,
transactions take place between customers and large de-
attitudes and behaviors are central to the customer’s expe-
This report addresses the distinction between busi-
of the chief shortcomings that undermine a company’s
personalized businesses.
ness-as-brand and business-as-people. It evaluates, from the consumer’s perspective, the relative importance of
people versus the corporate brand in a service-marketing context. The study explores the idea that consumers may
be more interested in personal relationships than the corporate brand.
In the book, A Brave New Service Strategy by Barbara
Gutek and Theresa Welsh, a distinction is made between
www.customercarenews.com
brand and reputation. In one example, during the early
2000s, The Home Depot, in a cost-cutting move, termi-
nated many of its full-time home improvement experts/
sales people and hired in their place less experienced, part-time staff. During that time period, customer service and sales plummeted, and the value of Home Depot
stock slipped eight percent while its rival Lowe’s saw its
stock price climb 180 percent. Acknowledging its mistake,
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The role of people in service relationships
rience with a company. Poor customer service, then, is one
Home Depot reinstated many of those full-time positions, and sales ultimately recovered.
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Insurance industry as a model for service industries
The Forum’s study focused on the personal insur-
levels of individual sales agents for a national insurance
However, the experiences discovered through the course
to the company overall. A key element of the analysis is
ance industry (life, health, auto and property insurers). of the research and the findings themselves are central to
many service industries including health care, financial services and education, as well as smaller personal services, such as home repair.
The insurance industry in the United States is highly
fragmented, and comprised of more than 100 brands, with few of those brands reaching top-of-mind (first recall)
awareness, according to a study by Branding Strategy Insider.
Having a network of knowledgeable, helpful and trustworthy sales agents is crucial to customer satisfaction and financial success.
In
addition,
the emotional connection to
that the customer perception metrics are aggregated by
sales agents, allowing for precise assessment of the relationships between sales agent engagement metrics and customer perceptions.
Data collected for the research consists of three major
components. They are:
• Customer Satisfaction Survey: The insurance company conducted a customer satisfaction survey, administered online, that included questions about the quality of the experience with the sales agent and the quality of the experience with the company overall.
• Employee Engagement Survey: All sales agents were
low, with pre-
administered online as part of a series of admin-
brands is very
considerations, suggesting that the category is commod-
asked to complete an employee engagement survey istrative tasks that agents are required to conduct online.
ity-like for many consumers. The very nature of buying
• Employee Performance: A limited set of individual
task by the consumer since he or she usually doesn’t see
tomer retention rates and the change in the number
insurance may be viewed as a rather negative “must-do” an immediate benefit to the purchase. The buyer’s interactions with the company — carried out through a personal
performance standards were used to measure cusof outstanding insurance accounts over time.
connection to an agent — then become very important in
Results — experiences with agent versus company
ance companies have an opportunity to set themselves
asked to rate their overall experience with the sales agent
ceed. Having a network of knowledgeable, helpful and
on a scale ranging from “extremely positive” to “extremely
how the company is viewed overall. This is where insurapart from their competition in order to grow and suctrustworthy sales agents is crucial to customer satisfaction and financial success.
The insurance industry is an excellent arena for inves-
tigating the role of front line personnel in the customer
experience because insurance is a significant high-involvement purchase that can result in long-term, customer-to-company
relationships. Meanwhile, the insurance industry is struggling
with whether to maintain networks of independent sales agents
In the customer satisfaction survey, customers were
and, separately, their overall experience with the company negative.” The mean rating for the agents was signifi-
cantly higher than the mean rating for the company. This result shows that on average customers rate their agents
How the research unfolded
higher than they rate the company with respect to the quality of their experience.
Evaluation of the scores on an agent-by-agent basis
shows that more than 90 percent of the agents scored
The key implication is that the agent is the “public face” of the company, and plays a positive, measurable role in the customer experience.
higher on customer satisfaction with the agent than with
the company itself. There are a number of possible reasons why
a customer would rate an agent higher or lower than the com-
versus selling through their own sales force. Direct selling
pany overall. Customers interact with agents differently
required), but eliminates the opportunity for the personal
insurance product, filing a claim or any other transaction
allows for lower premiums (no sales commission payments
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company to the ratings customers gave to the agents and
insurance
mium prices/rates ranking as one of the top differentiating
relationships between the company and the customers.
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The analysis performed matched the engagement
than they do with the company. When purchasing an
with an agent, customers have a personal interaction with
Customer Care News
the agent either in the agent’s office or the customer’s
a strong, positive brand reputation, it may have more to
the company is limited to a website visit or contact with
in the company’s reputation.
home, or by phone. In contrast, customer interaction with
a customer call center, whose representatives are likely to
gain by investing in its employees than in investing more Investments in employees could include sales and
be different each time a customer phones.
product information training, meaningful incentives and
advertising used by an insurance company compared with
opment, extension of
It’s interesting to note the differences in the types of
its agents. The company advertisements are generally
expensive (network television and magazines) but impersonal. However, the agent ads generally appear in local
newspapers and weekly “shopper” publications, usually with a photo of the agent. Agents earn additional goodwill through community involvement such as board memberships and sponsorships. The key implication is that
the agent is the “public face” of the company, and plays a positive, measurable role in the customer experience. The engaged, high-performing agent
Research results from the employee engagement sur-
vey and employee performance standards showed that the customers’ rating of the agent is closely associated with
the performance of the agent. The study found that the agents in the top quartile
in terms of both engagement and customer satisfac-
tion had significantly higher levels of account growth and
customer retention. In other words, when an employee had
a strong relationship with the
company, and the customer similarly had a strong rela-
rewards, career devel-
benefits, and improved
compensation. Interestingly, a Mintel Comperemedia online survey of 275 insurance
agents
found
When an employee had a strong relationship with the company, and the customer similarly had a strong relationship with the employee, the organization realized the greatest performance results
that a majority of
agents (63 percent) prefer web-based sales and product training that allow them to learn in their offices while
continuing to serve customers and build their businesses. This suggests that insurers should recognize the prefer-
ence and provide agents with support and incentives that simplify their efforts, rather than distracting them from their core goals.
It also suggests that all companies should look for
Companies that truly care about their employees and customers and constantly change their products and services to meet changing consumer needs will succeed at the expense of companies that are purely sales driven. This represents a true peoplefirst approach to business.
tionship with the employee,
creative and sensible ways to
engage
employees
in
an effort to enhance the joint
employee-customer
experience.
Companies
that
truly
care about their employees
and customers and constant-
ly change their products and services to meet chang-
ing consumer needs will
the organization realized the greatest performance results.
succeed at the expense of companies that are purely sales
the best performance is achieved by both having highly
business. CCN
This represents a very large effect and underscores that engaged employees and satisfied customers. It also shows
driven. This represents a true people-first approach to
that focusing on employee engagement is not enough.
The Forum for People Performance Management and
employee engagement is paired with a high-quality cus-
Marketing Communications (IMC) graduate program at
Performance improves the most when a high level of tomer experience.
What it means for business and steps for improvement
A key conclusion of the insurance study, as it applies
build relationships with individual employees more than
a corporate brand. This suggests that when a company has
www.customercarenews.com
Northwestern University. A central objective of the Forum is
to develop and disseminate knowledge about communications,
motivation and management so that businesses can better design, implement and manage employee engagement both inside and
outside an organization. To view the full text of the research
Spring 2011
to other service-oriented businesses, is that customers
Measurement is a research center within the Medill Integrated
paper, please visit the Forum website at www.performanceforum.org/research. Contact the Forum at 630-369-7780.
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