Net Promoter Score® (NPS®) and service delivery styles

Transactional Net Promoter Score (NPS), where you ask customers to indicate their willingness to recommend your processes rather than their overall relationship with your organisation, inevitably leads you to review your service delivery mechanisms – and perhaps it even leads you into the exciting world of Customer Experience Management, CEM.

Service delivery strategies are often focused on the Taylorite-stopwatch, as most organisations assume that for customers, faster and more efficient equals to better service experience. While we sometimes wish this were true, unfortunately, it is not.

The Dynamics of Service

I read one of my career ‘epiphany’ books way back in 1995, as a young relationship marketer. Written by Barbara Gutek, The Dynamics of Service introduced me to the idea that there are two distinct types of customer service delivery. Gutek described them in terms of the experience each delivers to the customer; the Relationship and the Encounter. Her follow-up book in 2000, Brave New Service Strategy is easier to obtain if you are interested.

Relationship Service Delivery

Relationship service delivery, is typically associated with ‘Practices’ of physicians, lawyers, accountants, even (ahem) consultants.

Encounter Service Delivery

On the other hand, Encounter service delivery, is associated with ‘fast’ – food, banking, ticketing, on-line quotes. The differences between the two are pretty fundamental for customer experience designers.

I suspect that the general move to service encounters through automation and even outsourcing is driven by the difference highlighted on the last row of this table… a distinctly un-customer centric motive.

But as we are talking about measuring customer satisfaction with service, it is important to consider their perspective. For customers, the distinction is really ‘does the service provider know me as an individual or not and vice versa?’ In a McDonald’s encounter you do not really care who hands you the hamburger and, frankly, they don’t care who takes it. Try the same approach as a lawyer or GP and see how your business goes.

Nailing down the difference between relationship and encounter

So when is it important (for the service experience to be good) that I know the provider and believe they know me?

• When the transaction is really important to me. We just sold our house, the relationship with our realtor had to be personal
• When I am inexperienced in the transaction
• When it appears complicated and the risk of failure or embarrassment is high
• When the consequences of failure could be dire

And when is knowing the provider not just unnecessary but a frustration in an experience that I just want to be fast and efficient?

• When the transaction is routine – like withdrawing cash – we want ATMs not teller queues
• When I am expert and experienced at the transaction
• When the perceived risk of failure is low
• When the consequences are well understood and predictable

Case-by-case Interactions

But here is the rub. At the extremes, it is easy to see which style of service delivery will be preferred by customers; cash withdrawals versus divorce settlements. But in the very large grey area in between it is not so clear-cut.

And we, as service providers, cannot easily tell which will be preferred by only examining the transaction; a great service experience also depends on the characteristics of the individual customer.

An illustration; one of the early telephone stock trading companies found that to be successful they had to recognise novice and expert traders (by their trading patterns, not their value), and

1. Have an experienced broker answer the calls of ‘indecisives’, to reassure and answer questions. This led to high levels of customer satisfaction, loyalty and increasing trading volumes.
2. Removed the human interaction from experienced day traders who wanted to get on with the transaction, leaving interaction to the IVR or web site, with brokers available on request. Get out of their way was the name of the game. This led to high levels of customer satisfaction, loyalty and increasing trading volumes.

Some customers transitioned from 1 to 2, some never did.

We sometimes forget that a similar evolution occurred in banking when ATMs were introduced, with many customers persisting with tellers until fees drove them, begrudgingly, out of the branch. Banks are now, belatedly and expensively, trying to tempt them back into the branch because selling and buying personal banking products are still human interactions.

Encounters are generally cheaper for the service provider, but they may not be more profitable, if the lifetime value of your customers is the measure you use to gauge success.