The University of Arizona

New Book on Customer Service Among '30 Best Business Books of 2000'

September 18, 2000

The book, "The Brave New Service Strategy," reflects the ideas of author Barbara A. Gutek, who in an earlier publication, first suggested a basic dichotomy in service delivery between real relationships, where the customer always deals with the same provider, and the more familiar encounter format, where customers see whoever is available.

Gutek is McClelland Professor in the department of management and policy, Eller College of Business and Public Administration, at the University of Arizona in Tucson. She teamed up with writer Theresa Welsh, who with more than 10 years experience in the business world, is familiar with the e-commerce business model through her work as a technical writer and IT newsletter editor.

The Book's Concepts
Satisfied customers are important to any business owner or manager, but how do customers really feel? Unlike the "good old days" when small business owners knew their customers personally, today's service is delivered in a high tech world of standardized processes and automated delivery. But customers still value relationships and businesses still claim to have a relationship with their customers. Gutek and Welsh take a hard look at the meaning of "relationship." Can an organization truly have a relationship with someone? Or do relationships only exist between persons, one-on-one? The changing nature of service has complicated the matter.

"The Brave New Service Strategy" makes a case that relationships are between people, and only businesses in which the customer sees the same provider each time truly deliver service in relationships. All other claims are bogus. Does that mean this is the only way to deliver service that satisfies customers? No! Customers merely want what they expect and service organizations make a mistake setting up expectations they cannot meet. Customers know when they have a relationship and when they don't. They know the difference between buying stocks from a discount broker who's just a voice on the phone or a name on a web site and a personal visit with a trusted investment counselor who's given them good advice over the years. They know the difference between going to a chain haircutter and visits to their regular hairstylist who knows exactly how to cut and color their hair.

The important thing to remember is that businesses do not need to make every service into a relationship, nor would it be cost-effective to do so. Businesses offering service in a standard way are here to stay, and they have made an amazing array services available to people who could not afford them before. The "chaining of America" is not a bad thing for customers, it is just a different thing and customers have been quicker to understand this than organizations. Gutek and Welsh argue that service businesses can be more successful if they drop the pretense of having a relationship with customers and work on enhancing the strengths of their business. In the case of chains, that strength is convenience, low cost, fast service and a good reliable product.

Most service businesses today are set up so that both providers and customers are interchangeable. That means the customer has no guarantee of which staff members will be on duty when they come in and staff is not scheduled to service any particular customers. At the chain hair salon, for example, the customer walks in at his convenience and sees whichever hairstylist is free. This enables the business to provide the service at a low cost and convenience for both the business and the customer, but it eliminates the relationship between the hairstylist and the customer. Walk-in urgent care medical clinics do the same thing, as do chain eyewear stores, drive-up oil changes places and many other kinds of service businesses. The fact that these businesses prosper shows customers like what they offer. Gutek and Welsh call this type of service encounter service, as opposed to relationship service.

Businesses offering encounter service need to steer clear of a strategy that makes the service sound like a relationship -- what Gutek and Welsh label a pseudo-relationship. Here are some indicators of a pseudo-relationship:

  • A policy requiring employees to call customers by their first name
  • A policy requiring employees to smile at customers
  • Calling accumulation of data about a customer a relationship
  • Providing "smile-training" instead of skill training

Encounter service organizations should have well-designed processes for providing service and a method for customer feedback, none of which is needed in a relationship business. When the provider and customer know each other through repeated transactions together, the "process" is one of normal interaction and feedback is naturally given in conversation. But encounter businesses have managers who must provide substitutes for what comes naturally in real relationships. The process must give customers what encounter services do very well: deliver service that is uniform, fast, convenient and low cost. McDonald's is a good model for encounter service: customers know what to expect when they come in and they can count on getting the same burger, delivered in the same way each time.

The service process can be thought of as a triangle between customer, organization, and provider (the COP Model). In a true relationship, there may be no organization, or the organization may be weak. The strong link in the triangle is the one between the customer and the provider. While this is a highly desirable model and works very well for many kinds of service, it is not the norm. Today customers have neither the time nor the money to receive all their service in the form of relationships. The more common model is one in which the organization directs its efforts at building a strong link with the customer, hoping for loyal satisfied customers, while acknowledging a weak link between the customer and provider. Encounters are successful when the process ensures that any provider can satisfy any customer.

With so many businesses going online, it is more important than ever to understand the encounter model. Online business gather data about customers, then target those customers with products and services the data indicate would be of interest. But having data does not create a relationship. If it did, there would not be the big concerns about privacy that are now surfacing. Companies selling on the Internet can certainly use technology to make a better experience for customers, but they go astray when they think they are building relationships. By responsible use of customer data, businesses can create what Gutek and Welsh call an "Enhanced Encounter."

Five characteristics of a successful encounter business:

  1. Trust in the Organization - customers have repeated good experiences
  2. Convenience - wait time is minimized and customers have easy access to the business either through walk-in, phone, or online
  3. Customized Service - cannot be truly personal, but the service process can make use of data, responsibly gathered, to offer a customized service experience
  4. Uniform and Unique Service - is reliably the same each time, but offers an experience different from competitors
  5. Quality Encounters - don't equal poor quality; by designing a customer-centered process and heeding feedback, encounters can deliver top quality