Why managers need to stop focusing on consumer KPIs

14 Oct 2009
The need for consumer KPIs has led firms to focus on such things as speed of service, product knowledge of personnel, store ambience, cleanliness and "tick the box" consumer satisfaction surveys. While managers have worked hard to meet, even exceed these consumer KPIs, some seem to have forgotten that consumers are, first and foremost, people. As a result, companies - and front-line employees in particular - are often ill-equipped to respond effectively to service failures. A study I conducted recently (with co-authors Paul Patterson, Amy Smith and Zhi Lu) shows that while existing approaches to the recovery of service failure have been useful, a more person-oriented approach might yield more effective recovery strategies. This approach takes into account both the expectations a person has of a service encounter and that person's more deeply-held needs (self-esteem, fairness, security etc). Understanding how people's needs drive their behaviour enables us to understand why some failed service encounters result in customer rage. In the most serious cases enraged customers can become violent - damaging property and threatening the health and wellbeing of employees. And the 'rage incident' is rarely the end of the matter. Many customers who experience rage go on to entertain a long-term resentment towards the company. Many interviewees were still simmering with resentment days, weeks, even a year after the incident itself. The implications are significant. At one end of the scale are the commercial implications -decreased brand loyalty, negative word-of-mouth, and diminished ROI - at the other is the possibility that an employee may be traumatised or perhaps even physically harmed by an enraged customer. Importantly, few of the people we interviewed were quick to lose their temper. In fact, we found that customers typically gave the company at least five opportunities to fix the situation. But when the customer repeatedly experiences behaviour that violates his or her basic human needs, rage - whether manifest in immediate behaviour or not - is often the result. Most likely to be threatened in a service failure and botched recovery attempt are the need for: Fairness Self-esteem Safety (of self and loved ones) and Control. Of the people we spoke to, 68 per cent claimed to have been treated unfairly, 60 per cent felt their self-esteem had been threatened, and 34 per cent felt a distressing lack of control over the situation. Disturbingly, 14 per cent felt their own security (or the security of loved ones) had been threatened. Although their very sense of self had been violated, anger was not the immediate reaction. In fact, the most frequently mentioned emotions were surprise (initially) followed by frustration and annoyance. Reflecting the multi-national nature of many service firms in today's global economy, the study investigated customer rage in two Western countries (Australia and the USA) and two Eastern countries (Thailand and China). The findings show that customers from an Eastern culture were twice as likely as those from Western countries to exhibit mild manifestations of anger (raised voice, sarcasm etc). Western culture customers were more likely to engage in more extreme behaviours (including slamming a fist on the counter, slamming the phone down, or making threats or otherwise intimidating the employee). However, customers from both cultures were equally likely to engage in potentially damaging retaliatory behaviours including boycotting the brand, negative word-of-mouth, and brand switching. What this means for companies is that front-line staff need to be trained to recognise that milder manifestations of anger may well have a cultural origin and cannot be assumed to indicate a lower level of dissatisfaction - or a less significant downstream risk for the company. It is clear from our research in both Western and Eastern cultures that appropriate action at the right time could significantly reduce, or even eliminate, the incidence of customer rage. Many Fortune 500 companies, for example, are now installing software in their call centres that detect changes in customers' voices so that managers can intervene early to prevent an incident escalating to rage. While complaint handling and service recovery are undoubtedly a part of the strategic plan of most major service firms in today's global marketplace, our findings suggest there are serious implementation issues at the customer-employee interface. It is well known that effective service recovery is inextricably linked to customer loyalty and the lifetime value of a customer. So while it is widely acknowledged that service failure is inevitable, steps must be taken to avoid the initial failure escalating to rage incidents. This means dealing with the person's problem when they first bring it to your frontline employee's attention.