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Understanding customer delight and outrage
Article in Sloan Management Review · September 1999
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Understanding Customer Delight
and Outrage
35
Benjamin Schneider • David E. Bowen
Seri'ice businesses
can retain
customers and
achieve profitability by building
reciprocal reUiUons h ips fou nded
on safeguarding
and affirming
customer security,
fairness, and
self-esteem.
Benjamin Schneider is
protessor of psychology and
head of the Industrial and
Organizational Psychology
Progiam at the University of
Maryland. David E. Bawen is
professor ol management,
World Business Department,
Thunderhird.
Sloan Management Review
Fall iggg
Delivering quality to cu.stonicrs in a conijietitive marketplace dictates the need to
conlinLially enliance a ciistonier's experience and .sati.sfaction. H()vve\'cr. evidence
indicate.s that satisfying cLi.stomcrs is not
enough to retain them because even satisfied customers defect at a liigh rate in
many industries. For example, Xerox foimd
that its "totalK' satisfied" customers were
,s"/.v Ittucs more likely to repurchase Xerox
products during the following eighteen
montlisthan its "merely satisfied" customers
were. "Totally satisfied" ranks only two
scale points higher than "merely satisfied."
although it earns six times more loyalty.
Apparently, the scales that researchers
commonly u.se to measure satisfaction dcj
not translate linearly into outcomes such
as loyalty in terms of purchases. This also
suggests that businesses must strive for
1()(J percent, or total, customer satisfaction
and even delight to achieve the kind of
loyalty they desire.'
Current .stutlies attribute a higher degree
of emotionality to the opposite end of the
satisfaction continuum — tliat is, to dissatisfaction — than was tn.ie in the past. For
example, Bell and Zemke suggest that
customers who have experienced service
failures fall into two categories — annoyed
and victimized. They define "annoyance"
as minor irritation associated with a
promise not fully realized; a feeling of
Schneider • Bowen
"victimization" is charactt-rizcci by a iiiaior feeling of
"ire, frii.stration, anci/or pain." In effect, the feeling of
being victimi:^ed is a tleeper emotion than feeling
irritated a n d might lead to outrage, not dissatisfaction.
In the language of recovery, it may be more difficult
to recover from feelings of victitnization than to
recover frotn irritation or annoyance —• unless the latter occurs repeatedly.-
36
These insights suggest that focusing on custotner
delight and outrage — emotions tiiore intense than
sati.sfaction or dissatisfaction — tnay lead lo a better
understanding of the dynamics of customer emotions
and their effect o n custorner behavior a n d loyalty.
Such behaviors include actively choo.sing to purchase
exclusively froin o n e business atid offering \vord-(jtmouth sLippon or unsolicited advocacy of a ser\'ice
business.
In general terms, most cusiomers range from buing
moderately dissatisfieci to moderately satisfied (see
Figure }). We can infer that such a state of moderation means customers are essentially ambivalent in
their loyalty to a particular business. We predict that
these customers would likely "defect"' in the presence
of even a modest motivator — for example, getting a
better prite, finding a more convenient store location,
or trying a new or diffeient tnerchant.
An outraged or delighted CListomer feels far less
ambi\'alent. An outraged customer will almost certainly defect, and is likeiy to become what Jones and
Sa.s.ser call a "terrorist." That is, negative experiences
motivate them to tell others. Consider a customer
who, after reserving a car, arrives in town with his or
Figure 1
Distribution of Customer Loyalty
Outraged
Defection
Schneidei • Bowen
iDissatisfied
Satisfied
Ambivalence
her family to start a vacation a n d discovers that the
rental agency has n o car available. This outraged customer will likely becotne a terrorist telling an e m o tionally charged story that is e.\aggerated with each
retelling! In contrast, a delighted customer is likely to
Jieeome a loyal "apostle" for the fIrEii's good service
deeds. Having e.xperienced (he firm's sLiperior service, an apostle has faith in the firm and will spread
the good word through unsolicited advocacy.^
The challenge for managers of service businesses is
to reduce the number of terrorists a n d create apostles, which requires mastering the factors that protiiote
customer delight a n d avert customer outrage. In this
article, w e present a perspective on customer satisfaction thai addresses in greater detail the emotions of
delight and outrage. This conceptualization is based
on people's needs rather than the more conventional
model that focuses on customer expectations.
Not rneant to refute or supplant the tiiore traditional
models that center on expectations, our proposal
may, howevei", yield additional insight into ihe e m o tional reactions of eustomens to .service experiences.
For instance, the preceding rental car example could
be recast as an instance of unfulfilled expectations.
\'et, the resultant outrage and terrorist tactics engendered later seem incongruous witii mere unmet
expectations. Whereas by recasting the situation as
o n e that violated the customer's fundamental need to
be treated fairly, w e can more readily equate the outrage with a d e e p e r emotional experience. First, w e
briefly discuss the conventional model of satisfacticin
and follow with a fuller treatment of our complementary needs-based model.
Met-Expectations Model
Typically, conventional models of customer satisfaction are implicitly or explicitly variations of the metexpectations model (also called "di.sconfirmation of
expectations" or "gap"). This framework assumes that
customers have .specific expectations about their
interactions with a firm and. by meeting those expectations, the firm can satisfy the customer. Customer
satisfaction models are often cjuite complex. For
example, some models differentiate between perceptions of quality and cu.stomer satisfaction (quality
iieing only one component of satisfaction), and others use various approaches to asse.s,s "expectations"
{what should be, what is ideal, or what is realistically expected). All focus on sati.sfying the customer's
Sloan Management Review
Fall 1999
expectations of the attributes being delivered
whotiiL'r tliose attributes relate to facets nf
quality, ihc core service, or value.'
The met-expectations model extends somewhat into
ihe arena of customer delight. That is. exceeding
CLi.sioniLT expectations causes customer delight.
W lK-rca> tiLialily and satisfaction result from meeting
customer expectations, tlelight may result from pro\iding the customer more than expected. Pleasant
surprises, so to speak, creaie delighted cu.stomers.
More precisely stated, the met-expectations model
proposes tliat tieli^yht is the outcome of the initial
experience of positi\'e surprise. That is. a customer's
expectations are po.sitivuly disconfirmed, which acti\ates an aroused state that is quite positive — or
pleasant. The customer experiences this pleasant state
as the "emotion of delight."'
1 low can a service firm act on this proposal to increa.se
cListomer delight? First, the firm needs accurate data
on its customers' expectations — experience-based
expcctauons. rallier ihan ideal or norniatirt' expectations. That is, eliciting sui'pi'ise requires a firm to know
what its customers expect (experience-based expectalionst or their pretlictions Libout the outctMne of their
next exchange with the firm. Delight is delivered
when the firEii pro\ ides a surprising, positive departure from expectations. For example, it a dry cleaning
custtimer is treated to free service in reward tor loyal
patrc^nage, delight results primarily because the cu.slonier had predicted (expected) the need to pay.''
But achie\'ing delight anti engendering the loyalty that
ostensibK' tbllows in the met-expectations model can
he elusive for se\eral reasons. First, research conductetl at ser\icc firms (insurance companies, car repiiir
shops, beauty parlors) reveals that meeting expectations on the basis of reliahility of performance does
not imprt)ve loyalty beha\'iors beyond a certain point
— ihat is. it (}uickly reaches an asymj^tote in terms uf
loyalty. Research shows that after fulfilling basic reliability expectations, a firm then must meet expectations
related to re.'ipoiisitvttess and assttrance to enhance
loyalty. Thereatter. a fiim must meet expectations for
emjxtlhy to receive yet another boost. Fulfilling
expectations lo promote loyalty is a dynamic rather
than static construct — expectation levels are always
ratcheting upward. The construct is dynamic In the
absolute aDiottiit of the expectation (e.g., the amount
of i-cliabiiity) and the tar,qct of the expectation (e.g.,
assurance, empathy). Second, identifying the specifics
SiDan Managemeni Re
Fall 1999
of the expectations varies from business to business,
that is, in banking, reliability means something different than in retail establishments. Finally, personal
expectations are related to internal standards that lack
absolute frames of reference, making them difficult to
measure Itjr research purposes and also difficult to
manage." Generally speaking, systematically evoking
customer delight by exceeding customer expectations
is a difficult management task.
37
Needs-Based Model
Though useful for understanding customer satisfaction
and dissatisfaction, the met-expectations nuxlel is less
helpful in offering insights about customer reactions
that are more emotionally charged than satisfaction or
dissatisfaction. We bclie\e firms cannot understand or
manage emotionally charged customer reactions, such
as delight and outrage, by merek' meeting or exceeding specific service expectations. The rationality' ot
such an apprcjach seems mismatched tfi the emotionality — even irrationality — of delight and outrage.
Thus, we nec-d another perspecti\'c.
We propose to explain that customer delight and outrage in the service business originates with the handling of the three basic customer needs — security,
justice, and self-esteem. Let's begin with two basic
premises:
• Customers are people first and consumers second.
• People strive to satisfy core needs in life at a level
more fundamental and compelling than meeting their
specific expectations as consuiTiers.
By thinking of customers as consumers, a sen-ice firm
focuses on senice performance attributes and how to
meet or exceed consumer expectations. Thinking of
cu.stomers foremost as people shifts the emphasis to
basic human needs. The impul.se on the part of people to fulfill these basic needs is sacrosanct: violate
these needs and the outcome will be cnitrage; gratify
them and the outcome will he delight.
How Needs Shape Customer Bebavior
Needs :ind expectations sliape cusu^iner heha\'ior. The
desired outcome of expectations is getting what one
anticipates/roDi tt sert'ice encoiniler as a coitsiinter:
needs focus on ohtaining what one seeks from life as
a person. Expectations can he satisfied; needs are such
that continuous gratification yields enhanced states of
well-heing ^ pleasure or delight. Failing to meet
Schneider • Bowen
Needs and expectations are on a continuum that ranges from the specific
(expectations) to the fundamental (needs).
expfctacions tnay yit^kl disappointment, but net^ds artso central to a core state of well-being that failure to
gratify them can yield outrage.
38
sugge.sts that the best way to "manage" security and
ju.stice is to avoid violating thetn. Violation of these
needs will often incite outrage: however, respecting
these two needs seems more likely to produce satisfaction than delight. In contrast, firms that excel in
bolstering the customer's esteem are likely to engender custotner delight. Next, we describe each need and
offer tnore specific managerial tactics about a\-oiditig
outrage and ci'eating delight.
Security
Although it may appear as if needs and expectations
are psychologically distinct, they are not. Needs and
expecUiticins are on a continuimi that ranges from the
specific (expectations) to the fundatnental (needs).
Do people have expectations that their needs will be
gratified? This seems a reasonable a.ssumption. Do
people have expectations that service will be reliable
and delivered with assurance? This also seems reasonable. However, needs center on the customer and
his or her internal state, whereas, in the case of
expectations about .service, the focus is on a delivety
attribute, not the custotner- Hy concentratitig on
needs, we have an opj~K)rtunity to delve tnore deeply
into the custotners internal states to coffer managers
insights about how to create customer delight, as well
as how to avoid citstomer outrage.
Three Needs: An Overview
Personality theori.sts, such as Maslow, and philosophers, such as Aristotle, have described the various
ditnensions of the human psyche. Maslow's needs
hierarchy has a relatively long historv' of applicatioti
to management. Various theories estitnate that the
nutnber of hutnan needs ranges frotn three to more
than fifteen. In our conceptualization, we borrow twci
needs (the needs for security and self-esteem) from
Maslow's five and propose a third (the need for justice) that emerges frotn considerable research in philosophy and psychology and has received increasitig
attention in the services literature:'
• Secttrity: the need to feel unthreatened by physical
or economic harm.
• Justice: the need to be fairly treated.
• Self-esteem: the need tt) tnaintain and enhance
one's self-image.
How well do these three need.s teveai the likelihood
of eliciting customer delight and outrage? Generally,
own experience in stLidying scnice businesses
^hneider • Bowen
Most pe<ipk- do not know when their security needs
have been gratified because they are generalh'
unaware of thetn in the first phKt', At some subconscioLts le\el. tiiost adults ai'e gratified with regard to
security; it is when someone or something violates
their security that their needs typically come into
play, which usually results in outrage. For example,
consider a hotel guest \\ ho is unaware oi the degree
to which his or her security needs (protection frotn
physical hartn) are gratified until fire breaks out in the
hotel. Either the hotel's emergency procedures meet
the security needs, or the customer becotnes cjutraged
by the hotel's failure to ensure his or her safety.
Service businesses must be keenly aware of physical
security issues and should plan for a worst-ca.se
scenario by, among other things, training employees.
Any business ha\ ing e\'en a tniniscule possibility for
physical harm to custotners should be prepared to
deal with the inheretit dangers.
When the potential for financial harm exists, the possibility of cLtstotner gratification is greater; however,
tlie true test siili occurs in a crisis situation. Iti a
volatile stock tnarket era, financial ach'i.sers establish
investment portfolios .suited to their clietits' risk limits
and thus fulfill their security needs. While National
Association of Security Dealers brokers have nti such
formal responsibility, brokers who are nietnbers of
the New York Stock Exchange arc legally responsible
lor ensuring that rhcir recotnmendaiions are consistent
with a client's financial situation. Upholding a customer's need for security, then, also involves the basic
tnental and emotional security concerns of the consumer. That is, can the custotner entrust his or her
well-iieing to the service provider?
We crave stability and seek eciuililirium, especially
when our physical and financial worlds arc invoKfd.
A company's Hrst ritle for gratifying security needs is
to protect stability. This tnean.s never failing to keep a
promise related to security needs. To fulfill this p r o p o
Stoan Management Review
Fall 1999
.sition recjuires tliat the firm know whicli promises its
customers implicitly expect it to honor, .Maintaining
an orderly anci predictable v^'orkl — which is characteristic- of Oisney-ov\necl properties — appeals to
consLiiiiet's because .safety and financial concerns are
minimized and the physical environtnent is spotless.
Di.sney knows that "unLiean equals unsafe" in the
customers mind. Club Med also exemplifies orderliness and predictabilil\-. with prices known in advance.
Why is the Saturn automobile such a winner, despite
ils father modest product attributesr' Custotiicrs \alLie
the pi-edictahility of their financial commitment when
buying a Saturn car; the company protects and honors its customers" security needs.
Customers fear being involved in protecting their own
safety and economic v^'ell-being. althoitgh tnanagers
don't commonly realize this. Customers need fireprotection systems In hotels. They ttcecl monitoring
systems in airports to keep dangerc^Lis people oft airplanes. They )iecci to protect their credit cards trom
unauthorized use. They lU't'ci quick feedback about
their mortgage applications. Customers cannot readily
influence the outcomes at a hotel or airport, which
do or do not pro\-ide appropriate sen'ice. However,
with regard to credit catxls and mortgagees, at the oulset of a relationship, customers and the companies
they patronize tnust know their responsibilities.
Prtibletns emerge when (1) cotnplete information is
una\ailable ot", if fully available, is nearly illegible
(e.g.. the small print of credit card agreements), and
(2) the bank asks repeatedly for more infortnation,
Customets know that their security (e.g.. obtaining
ihe mortgage) depends on their interactions wit!i the
bank, but they may feel threatened and wort^' about
managing their involvetnent properly.
Let's consider whether positive deviatic:)ns from stability,
routine, and equilibrium might yield positive consequences. Eadier. we argued that people seek consistency, equilibrium, and stability in their li\'es and that
tieviation frotn this stable stale can create outrage.
Mut what if the deviation frotn the steady state is a
poslii\-e deviation? For exatnple. what if the mortgage
application prcKX's,s produces a lower-than-expected
inieresl rate? Such a positive outcome can produce
delight, and this is precisely why mortgage application
jifocedures are undergoing radical changes.
So. security needs are also su.sceptible tcj positive delight but, for service busine.'^.ses, such delight is tnore
to secure for iwo reasons. First, when financial
Sloan Management Review
Fall 1999
or economic issues are concerned, delighting a custotner is usually an expensive proposition. Second,
when physical security is at stake, the only way to
delight a customer is to inten'ene in some kind of
crisis involving potential physical harm — a negative
state to begin with. Regarding security needs, "Do not
vicjiate them" is the wisest motto.
Justice
AlthoLigh personality-based needs theories do not discuss the demand tor justice or fairness, considerable
research in philosophy and .social psychology suggests
that iustice is central to relationships within society
and between individuals. Lerner. a social philosopher
and psychologist, proposed that people have a iustice
motive that derives from an itnplicit contract with
otliers and with society, in general, to be treated fairly. This implicit contract has also been called a "psychological contract." an implicit agreement that people
have with others (friends, relatives), with institutions
(the organization fcjr which one works), and with
society at large (the courts).''
Justice issues become salient when
considering the degree of reciprocity
existing between a business and a
customer.
Inlerestingly. the psychological contracts implicit in
relationships between service businesses are u.seful
con.structs for understanding the nature of the interactions between a service business and its custotners.
Berr)- has noted: "The set^ice promise . . . includes
the implicit promise of fair play. Customers expect
ser\-ice companies to treat them fairiy; they become
angr\'- and mistrustful when they perceive otherwise."'" Given the centrality of relationships to service,
in particular, and all kinds of consumer-business dealings, in general, it seems reasonable to consider iustice as a motive extraordinarily relevant to our pre.sent
conceptualization.
Justice needs are not as critical to survival as security
needs; violation of a iustice n'::<^(.\ does not ieopardize
life or financial security. Nevertheless, justice issues
become salient when considering the degree of reciprocity existing between a busine.ss and a customer.
We cf)mnionly recognize the investment that a firm
Schneider • Bowen
39
makes in delivering a sendee, but seldom do we
think of the investment a customer makes in a firm.
Consider an insurance poiicyholder's perspective:
40
——
"T invest time, money, and effort in patronizing this
business and continually demonstrate loyalty to the
business by renewing my policy. Yet. after 1 had one
accident, the company raised my rates, I ha\e been
loyally paying premiums for many years, and now the
company bas been charging me bigher fe^^s for three
years.' What aliout ail tbose years when I paid premiums and nu\er had an accident?"
Studies in the services marketing and organi/alional
behavior literature indicaie that respecting [he customer's need for justice reqLiires delivering justice of
three types:"
1, Distrihutirefustice invokes the customers e\'aluation of the outcome,
2, ProceclKraljustice, in which customers judge the
fairness of rules and procedtires used to determine
outcomes.
3, Interactional justice in\-o!ves how a firm's employees relate, on a personal level, with the firm's customers; interactional justice concerns how employees
relate personally to the firm's clients rather than what
the specific noninterpersonal procedures mighl be.
Interactional justice might be th(jught of as "bedside
manner" compared to the specific prcDcedures or
medications prescribed.
Distributive justice is difficult to manage because customers ti.se some combination of three often internally inconsistent rules (ecjuity, equality, and need) in
determining if a firm fairly distributes outcomes. The
et|uity rule implies that if individuals in\*est a certain
amount of effort, time, or money, a firm should reciprocate proportionately. For example, people who
have paid on insurance policies for years without filing a claim may feel the\' should not experience rate
hikes the first time they have an accident. The equality' rule implies that everyone is treated the same way
(e,g,, charged the same rates) regardless of investment. The needs rule implies that, cjn the basis of
unique, individual requirements, firms may treat people differently,'-' In effect, then, a CListomer may define
justice as being treated the same as some other customers (on the basis of equity), the same as all other
customers (on the basis oi equality), or like iio olher
CLi.stonier (.on the basis of need).
Schneider • Bowen
Airlines have effectively acted on the differences in
these distribution rules. For example, the airlines
employ the equity principle by stating cleady that
first-class service accrues more often to those who
invest (pay, travel) the most. Airlines publicly declare
what they will do for the investment their passengers
make and then deliver it without coach-class pa,ssengers feeling unjustly treated. From a justice perspective, the secret of the airlines' success is that everyone
knows the ground rules of investment for getting
first-class treatment and finds equity in balance,
BLit the airlines respect ecjualily and need, too. All
people in coach class get the same food, regardless
of their fare base. Passengers do not board the aircraft wearing their fare base codes for all to see. In
the absence of public information about a basis or
the bases for differential treatmenf. equality is imperative. How about need? The airlines give additional
boarding time to parents traveling with children.
They also care for children traveling alone and m(jnitor closely their transfer 'irom airport staff to cabin
attendant. The key to success, when need is a basis
for action, is tbe publicly known reason for different
types of treattiient. When differential treatment
occLirs. as in cases of need or equitv', the reason for
that treatment must be public, othci-wise petjple v\ill
expect equality.
The secret to gratifying a customer's need for equit>'
justice is to literally, or at least figuratively, compensate the person for investments of titne. effort, and
money. For example, the insurance actuaries could
be challenged to differentiate long-term policyholdens
Irom short termers when calculating the probabilities
of having a .second accident for the potential assessment of premium increases. The ten-year anniversaries
of instirance policies cotild yield a gift certificate relevant to the policy — perhaps a tankfu! of free gasoline, car wash, or oil change for an auto policy, A
seemingly minor corporate investment in terms of
cost, such a gesture could be a psychologically equitable acknowledgment of customer loyalty. By
demonstrating loyalty to the customer, a firm hopes
for customer loyalty in return.
The importance- of procedural and inicractional justice is evident in recent research on the customers of
several service firms, which reveals the many facets
of the senice experience that have an imjiact on
feelings of justice:'*
Sloan Managemert Review
Fall 1939
Once a company violates trust, it is
difficult to change the resulting outrage
to satisfaction, much less delight.
• Keeping promises anti commitments. Companies
need to keep promises, especially when time is the
issue; people don't want to wait when they have a
reservation or a specific time commitment,
• Flexibility in dealing with untisual requests.
Companies hont)r reasonable yet out-of-the-ordiniir\'
requests.
• Help when needed. Companies are unjust if they
don't help someone who needs help,
• Friendliness, Companies should treat people with
oi")enncss and warmth,
• Honesty, Companies siuuildn't lie to ctistomers.
• Politeness. Companies should treat people C(Uirteously and respectlLilly,
The items listed aliove relate to how a firm treats
people. Fairness and justice can deal with outcomes
and wiih procedures, bui service consists primarily of
procedures that must be masterfully trained, reinforced, and monitored. Of course, the core service
(tbe food, the insurance policy, the surgery, i.e., the
sci-vice outcome that a firm distributes) is not unimportant: bov\'ever, we niList acknowledge the importance of the (k'ltrery (procedural and interactional
justice I.''
tomer informed,
• Recover effectively. Solve the problem the first time:
a firm gets only one chance to recover. If it fails at
service recoveiy, it commits v\hat is iL-rmed a "double
deviation." Tbis invariablv' is associated with cListomer
outrage,
• Leave the customer better off than before ihe error.
Ensure tbat the customer feels safer, feels better about
himself or herself, and feels justly treated.'^
41
Setf-Esteem
Safeguarding or enhancing self-esteem is the key to
creating customer delight, A firm is more likely to
outrage a customer by failing to respect security and
justice needs than it is likely to gratify those needs
and tiitreby create delight. However, service firms do
have an opportunity to create delight. By maintaining
or, better yet, by enhancing a person's feelings ol
self-esteem, a firm can produt e delight he/ore anything ^i>oes urong.' The key is to enhance feelings of
self-woith by acknowledging the customer's perspective, importance, and rights. Also, the more competent
a customer feels, the more delighted he or she will
be. In general, customers like to control a situation, in
the sense that the situation centers around them, when
ihat is appropriate,'"
VC'hat happens when a business does not behave justly? The firm loses its customers' trust and possibly
their loyalty and patronage. Once a company violates
trust, it is difficult to change the resulting outrage to
satisfaction, much less delight. But, as with security
needs, it may be possible to plan for crises and subset|uently recover. How can outrage be turned into
delight? In the services wodd, to recover is to deal
effectively with the problem. Because errors are
inevitable, there will always be disgruntled or angryconsumers. Consequently, well-phmned recovery tactics niList lie in place. In fact, some research suggests
that when a business makes amends, or recovers, a
remarkable kind of customer loyalty may result. Three
rules govern this sort of outcome:
Maintaining and enhancing esteem take many forms.
In presen ing a customer's .self-esteem, the company
may need to enhance his or her sense of self-worth,
so he or she does not feel or appear stupid- For
example, the cachet of a well-known product — the
polo player signifying a Ralph Lauren shirt or the CK
of Cal\ in Klein jeans — reaffirms a consumer's selfimage in some way. Why else would someone spend
S60 for a designer polo shirt when L,L. Bean sells
one of better quality for half the price (at least
according to Consumer Reports)? Maintaining esteem
in a .service scenario consists of interpersonal events
that take place during delivery. The be.st service firms
cjuickly acknowledge the worthiness of the customer's perspective by establishing rapport and .soliciting details about the problem: "I understand that
you are up.set about , , , ," "iMease tell me exactly
v\hat happened so I can fYilly undersiand what made
you so Ujiset , , , ," "I will follow up on this issue
and get back to you within one hour because I know
how important this is to you."
• Recover quickly. Fix the problem immediately with
no questions asked. If it won't be corrected immediately, follow up with the customer, and keep the CLLS-
Top service firms treat the customer as an impoiiant
individual, not just as a member of a certain class of
consLuners, When service providers at least appear
Sloan Management Review
Fall 199S
Schneider • Bowen
In services, we believe that choice is a
secret weapon in efforts to enhance
esteem.
42
!(.) view customers a.s unique people with pmticulaiprohiems :inci personal histories, the customers are
delighted. Patients dearly appreciate the ;ittcn[i\e
physician who listens to a description of their condition. Remembering the names of repeat customers is
invaluable, whereas stereotyping negates a customer's
sense of individuality. For example, some automobile
salespecjple primarily focus their aitetition on the male
when a couple shops for a car. even though women
nlten are equally knowledgeable about aiiios.
A second effective way to reaffirm a cu.stomer's feeling
of confitlence and competency is to arrange environments in ways that permit them to feel in cotitrot. We
suspect that Disney properties are so popular because
visitors never seem to feel lost. Well-designed signage
is ever-present, and knowledgeable, cheerful employees prcnide directions. Parents ne\er appear ignorant
in the eyes of their children — or, more importanily.
parents don't fear loss of face in this milieu.
The need to maintain one's self-esteem can be a factor
in even the simplest of service encoimters. We have
actually heard parents refer to their "performance
an.xiety' when taking iheir children to .McDonald's. As
they approach the service ctjunter, they begin to
wonder; '•Will I get the order right? Will I forget what
the kids want? Will I take too long to order anci
anger the people waiting behind me or the emplo\ ees
serving me?' No one enjoys feeling siupid.
Sharing information also reaffirms customer feelings cjf
competency, whereas being cojidescending to customers clearly challenges their self-percei\'eci level t)f intelligence. Physicians who are unw iliing to explain the
details of a diagnosis to a patient or airline personnel
who dismiss passenger queries about flight delays are
assutning lack of interest or intellect in their •"audience."
[n services, we believe that choice is a secret weapon
in efforts to enhance esteem. Wiiy do people love
supermarkets, •'categor\'' killers" (e.g.. Home Depot
.stores), and department stores? Choice. P.sychologically. choice offers control, which shoppers lo\'e —-
SGhneider • Eowen
especially control over the environment.'" In fact, certain psychologists argue that people create their environments primarily to control them. We organize
and decorate our homes so we can feel in control
there. Some people love suburban utility vehicles
(four-wheel-dri\'e. all-terrain vehicles) because they
offer more options for controlling the "on the road"
experience.
Crestar iiank in the metropolitan Washington. D.C.,
area initiated a successful sales campaign to increase
new checking accounts. Customers could choose
three of six free services when they opened a new
account. The bank did not offer only three services
as part of the tieal: it offered six and the customer
could choose three of them. Tlie campaign was successful because of this clu^ice.
So. how does a firm niaintain and enhance esteem in
services? By making the environment knowahle and
predictable; by creating a customer-friendly em'ironment in wiiich people feel smart, competent, important, and comfortable; and by offering them choices.
However, ser\'ice is not synon\'mous with sen'ility"*
or obsequiousness toward the customer. O\'erdone
efforts to enhance customer self-esteem ma>- insult
their intelligence. (Consider the realtor who tells you
how spectacular your home is when you know it is
below average for the neighborhood.) Providing cuslomers with too many choices may oveiwhelm them
and result in ctimpromised feelings of competency
and control.
Managing Customer Needs
Service c'onsists of an exch;inge relationship; customers
exchange their money and loyalty for what we argue
is need gratification — a psychological contract with
sen-ice firms to ha\-e needs gratified in exchange for
money, time, and effort. We do not claim that CLIStomers seek delight from this type of relationship:
delight is a bonus that "buys" greater depth in the relationship and increased loyalty from customers. We do
claim that custtimers want gratification; failure to gratil>' can lead easily to outrage. The challenge for ser\!ce firms is to gratif>' and perhaps delight customers,
while avoiding the perception that they do not respect
customer needs.
Next, we present a few strategies for managing the
customer's need for security, justice, and self-esteem
in a business relationship.
Sloan Managemeni Review
Full 1999
Human Resources Management
Hinn.s can tk-vckjp :ind iciiilbrce respect for a customer's security, esteem, and fairness needs through
hutnan resources (HK) management practices, .such
as selection, training, peifoitnance appraisal, and
reward systems. First, conipanies must explicitly idenlify employee behaviors associated with the three
needs a.^ a framework for HR practices.
• nirin<;. Gi\e job applicants a realistic job preview.
Outline how they are expected to act in a CListomer
contact position. Identit-y desirable attributes ftjr the
job in order to design inteiviews or behavior .simulalions and e.\erci.ses for effective screening of applicants. For example. ATLS:T hires its telephone contact
employees using a simulation based on a careful
anaK'sis of job competencies required to deli\-er
AT&T's sei-vice quality.
• Designing training programs. List the critical behaviors
ihat new employees must display, and, perhaps more
imjxjitantly, teach them about the firm's service-quality
norms by empliasizing tlie need-gratification beha\'iors.
• Developing and implementing performancemanagement systems. List need-gratification behaviors
and assess Ehe degree to which employees actually
display them in order to reinforce their training
intloctrinaiion. Performance management is ser\'icec|uality management that pro\'ides an t)p|:>oriLinity
tt) recognize and revv'ard employees who accomplish
specific difficult, but attainable, senice goals.''
At a large r.S. day care and preschool provider, regional managers and corporate staff" worked in groups
using a critical-incident technique to specify wliich
staff behaviors were ineffective and which were particularly efYeclive in conveying respect for the customer."' In other words, they categorized behaviors as
likeK' to be associated with customer outrage or likely to be associateti with customer deiight. For example, relative to the need for esteem, an ineffective
e\'ent would be confronting parents in front of their
child about an overdue tuition payment: an effective
e\ent wouk! be telephoning parents a: home unexpectedly to compliment their child's work at .school
that day. Their goal became using these needs-based
identifiers in training and possibly performance
appraisal. The overarching benefit ofthe exercise was
to provide a framework for systematically examining
ihe role of customer emotions, delight, and outrage
in ihc .sen'ice enct)unter.
Sloan Management Review
Fall 1999
Information technologies are central in
catering to and affirming customer needs.
Hiring, training, and jierformance management can
be accomplished in ways that support a servicequality' philosophy, or they can be acctjmplished in
rigiti and/or punitive ways. We recommend a simple
rLile for organizati<.)ns implementing HR practices:
Treat your employees as if they were customers and
focus on gratif^'ing their needs. Creating a climate in
which employees feel capable of attaining their ov. n
goals and tk'sires can tianslate into a milieti conduci\'e to gratifying cListomer needs.
Technology and Personalization
Infortnation technologies are central in catering to
and affirming customer needs. James A. linruh.
chairman and CEO of Unisys CorptJration, obsened
that certain technologies safegLiard physicul security,
such as in-home and car alarm .systems, emergency
dispatch systems, or medical advances.-' Some information .sy.stems prolecl financial security via transaclion processing by banks, mortgage compLinies,
and brokerage firtns. The same systems also saleguard the individual customer's economic well-being
by monitoring for unusual drops or shifts in account
balances.
In relation to esteem, L'nruh emphasized how technology can enhance an individual's feelings of competency and control. Many emergent forms of selfservice devices, such as infortnational kiosks and
\'oice tiiail systems, allow cu.stomers to act on their
own behalf. Internet-based interactive [echnologies
and on-line services, such as Prodigy or America
Online, offer an ever-broadening array of options to
customers for handling their .servke transactions. In
additit)n, information technologies allow companies
to collect demographic, historical, behavioral, and
even psychological data about their customers. This
enables companies to tailor recognition and reward
programs to long-term customers and to identify newcustomers for special attention. These tactics indulge
the customer's need for self-e.steem and justice. In
this sense, technology can greatly enhance a firm'.s
ability to personalize sei^ice. At the satne time, this
personalization must respect the customer's need for
security. As detailed information about indivkluai
consumers becomes widelv accessible via ihe Internet,
Schneidei • Bowen
43
how to protect each person's need for security and
privacy looms LI.S an issue of concern.
Market Research
44
A company may solicit its employees' perceptions
about wiicther customer needs are being gratified or
denied. Alternatively, or in addition, employees can
ask customers to clarify how they feel about the company's products or senices in relation to the three
basic needs. Organizing a focus grtnip tluu consists of
a small group of cListoniers to tiiscLiss needs-based
issues is often productive and can be followed by sur\eying, in real-time, a larger group at a service facility
or polling by mail. When \vv queried people about
their exptrienccs dining a doctor's visit, for example,
we easily codec! their responses according to the
three basic needs (see Tahte 1). This research project
yielded similar observations for restaurant and bank
customers, Hy eliciting customer feedback in ihis
way. it is possible lo monitor efforts to improve the
gratification ot customer needs and assess them as a
basis \'ov acti(Mi,
Aggressively pursuing customers with problems is the
best form of market research. Companies should get
to know the customers who have experienced a
problem or expressed dissatisfaction. Berry describes
how managers at Bank One in Texas teach staff
members to "TLin lo" or fiiibrace a problem and learn
from its solution,'' He also notes that Dell CxMiiputer
holds regular meetings to discuss customer complaints
and solutions to ward off future dissatisfaction, Cisco
Table 1
Patients' Experiences Coded according to the Three
Needs Framework
Need for Security
• The doctor's office staff adapted its procedures to my needs,
• The staff made me feel safe and secure.
• The staff clarified how my insurance would cover my treatment.
Systems encourages customers to help each other by
participating in a Web-based users group for the
posting of problems and solutions, Seivice firms can
benefit greatly from dealing a centralized database of
such information.
tinfortunately, customers do not always clearly know
their needs. Trained researchers often arc better SLiited
to interpret the feelings and emotions associated with
delight and outrage that resuh from seemingly innocuous actions by an organization, I-'or example, why
should someone else's unacknowledged resen-ation
outrage a bystander? Jtistice. 'VC''hy is it important for
financial institutions like banks and insurance companies to appear careftilly tended in terms of the tangibles (paint, carpets, direct mailings, and up-to-date
computers)? Security, Why are some senior citizens
unwilling to use ATMs. Ksteem. They fear losing their
ATM card and feehng stupid.
At the Heart of Customer Relationships
Recent emphasis on relationship marketing — that is.
attracting, developing, and retaining custtnners —
pro\ides a useful framework for summarizing our
perspective.-' Innate liLiman needs dominate much of
our behavior and especially our reaction to the behavior of others, Robert Hogan, a prominent personality
theorist, argued that the fundamental attribute of personality is its rclaiionai nature: people are not islands
unto themseh'es but. for the most part, define themselves in relationship to others,-'
c:onsidcr our earlier arguments about the fundamental
nature of the customer exchange relationship. Companies must manage how they implement concern for
customer needs in all actions that might influence
customer's feelings alxjut their relationship with the
firm. This includes the activities of the back office
(e,g.. billing, shipping), not just front-office personnel
who directly contact the customer.
Need for Justice
• i was charged too much for the procedures.
• The staff upheld its commitment to me.
• The staff made promises and later broke them.
Need for Self-Esteem
• The staff seemed caring and sensitive,
• i was ireated as if I was just another number,
• The staff seemed interested in helping me.
Sowce, Adapted Irom E C ClemmEf art) B. Sclirejder, "Faif Service," ir TA '.Swanz, D E Bowen,
and S W. Bfown, eds,, Advances in Services Marketing and Management, mlume 5 IGfBenwicli,
Connmicuf JAI Press, 19961. pp !Q9-12e.
Schneidei • Bowen
To focus on needs is to concentrate on relationships.
In contrast, a locus on performing well on senice
attribtites reinforces a transactional \'iew of seiTice
deli\'eiy. Building relationships requires that companies
view customers as people first and consumers second. Thoughtful understanding of the three customer
needs presented here, combined with the actions outlined to implement a philosoph\" of ni^cd gratification,
can produce the tyjie u\' relationships that leads to
customer retention and profitability.
Sloan Management Review
Fall tggg
Reterences
• 1. T 0. Jones and W E Sasser, Jr, "Why
Satisfied Customers Defect," Harvard Business
Review, volume 73, November-December 1995, pp
88-99: and
A.S. Dick and K. Basu, "Customer Loyalty Toward
an Integrated Conceptual Framework," Journal of
ttie Academy of Mari<eting Science, volume 22,
Spring1994, pp. 99-113.
• 2. C.R. Bell and R.E Zemke, "Service Breakdown.
The Road to Recovery," Management f^eview.
October 1987, pp. 32-35; and
J.L. Heskett, W.E. Sasser, Jr., and L.A. Schlesinger,
The Service Profit Chain. How Leading Companies
Link Profit to Loyalty, Satisfaction, and Value (New
York. Free Press, 1997).
• 3. See Jones and Sasser 11995); and
M. Christopher, A. Payne, and D. Ballantyne, RM
Bringing Quality, Customer Service and Marketing
Together {0>i\a(d, England; Butterworth-Heinemann,
19911
• 4. For a thoughtful review of the customer satisfaction literature, see:
R.L. Oliver, Satisfaction: A Behavioral Perspective
0/1 rfte Consumer (New York; McGraw-Hill, 1997|,
and
V.A. ZeithamI and M.J Bitner, Services Marketing
(NewYork: McGraw-Hill, 1996).
• 5 R.L Oliver, R.T. Rust, and S Varki, "Customer
Oelighf Foundations, Findings, and Managerial
Insight," Journal of Retailing, volume 73, Spring 3,
1997, pp. 311-336.
• 6. Ibid.: and
V. Liljander and T. Strandvik, "The Nature of
Customer Relationships in Services," in TA. Swartz,
O.E. Bowen, and S W Brown, eds.. Advances in
Services Marketing and Management, volume 4
(Greenwich, Connecticut' JAI Press, 19951. pp 1411B7
• 7. See S.S. White and B. Schneider, Climbing the
Commitment Ladder. The Impact on Customer
Commitment ol Disconfirmation of Service
Expectations (Cambridge, Massachusetts.
Marketing Science Institute report, 1998)
This study used the SERVQUAL five-dimensional
model of service quality — namely, reliability,
responsiveness, assurance, empathy, and tangibles
from.
V. ZeithamI, A. Parasuraman, and L.L. Berry,
Delivering Quality Service: Balancing Customer
Perceptions and Expectations [Hew York; Free
Press, 1990)
For details about the measurement of expectations,
see;
D. lacobucci, K.A Grayson, and A.L. Ostrom, "The
Calculus of Service Ouality and Customer
Sloan Managetneni Review
Fall ]m
Satisfaction. Theoretical and Empirical
Differentiation and Integration," in T.A. Swartz, D.E.
Bowen, and S.W. Brown, eds.. Advances in
Services Marketing and Management, volume 3
(Greenwich, Connecticut' JAI Press, 1994|, pp 1-67.
• 8. Eor application to management, see'
D,M. McGregor, The Human Side of Enterprise
(NewYork. McGraw-Hill, 1960), and for the role of
fairness in service, see'
L L. Berry, Qn Great Service Wew York Free Press
1995),
The discussion of needs is based on:
B. Schneider and D.E. Bowen, Winning the Service
Game (Boston. Harvard Business School Press,
1995).
• 9. M.J. Lerner, The Belief in a Just World. A
Fundamental De/us/on (New York; Plenum Press,
1980): and
D. Rousseau, Psychological Conf'"3cfs(Pacific Oaks,
California: Sage, 1996).
• 10, SeeBerry(1995), p. 108.
• 11. Oiscussion of these three forms of justice
can be found in
D E. Bowen, S W Gilliland, and R. Folger, "HRM
and Service Fairness. How Being Fair With
Employees Spills Over to Customers,"
Organisational Dynamics, volume 27, Winter 1999,
pp. 7-23;
K Seiders and L.L. Berry, "Service Fairness: What It
Is and Why It Matters," Academy of Management
Executive, volume 12, May 1998, pp. 8-20, and
L Bettencourt and S.W Brown, "Contact
Employees' Relationships Among Workplace
Fairness, Job Satisfaction, and Prcsocial Behaviors,
Journal of Retailing, volume 73, Spring 1997, pp.
39-62.
• 12. See Lerner (1980):
Bowen, Gilliland, and Folger (1999);
Seiders and Berry (1998); and
Bettencourt and Brown (1997)
• 13. These findings are from:
E.C. Clemmer and B. Schneider, "Fair Service," in
T.A. Swartz, D.E. Bowen, and S.W. Brown, eds ,
Advances in Services Marketing and Management,
volume 5 (Greenwich, Connecticut JAI Press, 1996),
pp 109-126
Additional recent work on fairness can be found inBowen, Gilliland, and Folger (1999),
Seiders and Berry (1998), and
Bettencourt and Brown (1997).
• 14. C. Gronroos, Sen/ice Management and
Marketing: Managing tfie Moments of Truth in
Service Compeftr^on (Lexington, Massachusetts;
Lexington Books, 1990)
• 15. C.W.L. Hart, J.L Heskett, and W.E. Sasser,
Jr, "The Profitable Art of Service Recovery,"
Harvard Business Review, volume 68, July-August
1990, pp 148-156.
• 16. R.W. White, "Motivation Reconsidered. The
Concept of Competence," Psychological Review,
volume 66, September 1959, pp. 297-333; and
E. Langeard, J.E.G Bateson, C.L. Lovelock, and P,
Eiglier, Services Marketing: New Insights from
Consumers and Managers (Cambridge,
Massachusetts' Marketing Science Institute, 1981).
• 17. Ibid
• 18. B Shamir, "Between Service and Servility.
Role Conflict in Subordinate Service Roles," Human
Relations, volume 33, October 1980, pp, 741-756.
• 19. For a complete discussion of the role of goal
setting in employee work motivation, see
E.A Locke and G P Latham, A Theory of Goal
Setting and Task Performance (Englewood Cliffs,
New Jersey; Prentice-Hall, 1990).
• 20. J C Flanagan, "The Critical Incident
Technique," Psychological Bulletin, volume 51, July
1954, pp. 327-358:
M.J Bitner, J D Nyquist, and B.H Boom, "The
Critical Incident as a Technique for Analyzing the
Service Encounter," in TM. Bloch, G.D. Upah, and
V.A. ZeithamI, eds.. Services Marketing in a
Changing Environment{Chkago: American
Marketing Association, 1985): and
G.P, Latham and K N. Wexley, Increasing
Productivity througfi Performance Appraisal
(Reading, Massachusetts; Addison-Wesley, 1981).
• 21. J.A. Unruh, Customers Mean Business. Six
Steps to Building Relationships That tasMReading,
Massachusetts: Addison-Wesley, 1996)
• 22. Berry (1995).
• 23 For examples of relationship marketing in the
literature, see;
F.R. Owyer, P.H Schurr, and S. Oh, "Developing
Buyer-Seller Relationships," Journal of Marketing,
volume 51. April 1987, pp. 11-27, and
M.J. Bitner, "Building Service Relationships; (fs All
About Promises," Journal ot the Academy of
Marketing Science, volume 23, Fall 1995, pp. 246251.
• 24 R. Hogan, "Socioanalytic Theory of
Personality," in M M. Page, ed., 1982 Nebraska
Symposium on Motivation: Personality — Current
Theory and Research {l\nco\r\, Nebraska. University
of Nebraska Press, 1983), pp. 58-89.
Reprint 4113
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Review Association,
All rights reserved.
Schneider • Bowan
45
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