Customer-induced variability

I’ve been trying to figure out more about how customers co-create services.

So far, I know that people say it happens. And that the value that people derive from co-creation happens when they interact with the service and that value arises from the interaction, and alignment, between the customer’s practice and the service script.

But how does that alignment occur?

Frances Frei‘s article from the Harvard Business Review “Breaking the Trade-Off Between Efficiency and Service” (preview then paywalled) seems to get most of the way to answering that question, at least from the point of view of the organisation providing the service. This article is one of the best I’ve read about how co-creation of service actually occurs.

Frei’s research “has been aimed at helping service organizations overcome the challenge of customer-introduced variability” and in this paper she outlines a framework for understanding that variability. For my purpose in understanding co-creation of the service experience this is great because it’s a way to understand the different ways that a particular customer’s practice aligns, or fails to align, with the service script.

Frei’s framework has five types of variability:

  • Arrival variability (ie customers show up at their own schedule)
  • Request variability (customers may ask for things outside the range of what’s allowed in the service script)
  • Capability variability (customers may not know a lot about how to engage with the service)
  • Effort variability (customers may not care to put enough effort in to engage with the service)
  • Subjective preference variability (people “vary in their opinions about what it means to be treated well in a service environment.”

Frei says that these can be thought of as sequential and that “any of these points, life is easier for a service provider if it is dealing with a narrow band of variability. Where the band is wide, service quality and efficiency are at risk.”

Variability in service was the focus of a recent article by Dave Gray for Dachis Group, “Can’t get no satisfaction: Why service companies can’t keep their promises“. Dave Gray’s article touches all parts of Frei’s framework, but does so from the point of view of customers, rather than companies. As a consequence, where Frei argues that companies need to figure out how to reduce all kinds of variability, Gray argues for absorbing that variability because:

Customers have a tendency to resist standardization. The more you try to standardize their service requests, the more you will piss them off. Not a good recipe for customer satisfaction or long-term business growth.

Frei does more than simply identify five types of customer variability, she shows how the different types of variability affect service quality and efficiency. She also shows that responses that target one type of variability may adversely effect another. Or that an improperly targeted solution to a mis-identified kind of variability can also be disastrous.

However, Frei’s article is framed from the perspective of reducing costs for the business while maintaining service quality. Most of Frei’s suggestions involve reduced staffing, increased reliance on self-service and adjusting customer’s expectations. As I said, Frei is focussed on the service provider. The types of variability are all on the customers side — though Frei is clear that variability is to be expected and accommodating variability can actually improve service experience.

customers judge the quality of their experience in large part by how much of the variability they introduce is accommodated, not how sternly it is denied.

And,

customers are themselves key inputs to the production process. That form of input is, by its nature, capricious, emotional, and adamantly disinterested in the company’s profit agenda.

So, now I know that co-creation always happens when customers interact with a service. Value from that co-creation happens when customers align their practice with the service script or, I guess, when the script has enough variability to align with the customer’s practice. Frei shows that the alignment can happen in a variety of ways, all of which introduce different problems or opportunities for service experience. And Gray argues that variability is an opportunity to take advantage of, not something to engineer out.

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