Why service quality is a matter of corporate culture

Dr. Matthias Metje,
Member of the Board for Research

Social scientist Dr. Matthias Metje is a board member of Munich-based company ServiceBarometer AG, where he conducts research into the relationships companies have with their customers. With its customer barometer, which has appeared on a yearly basis since 1992, ServiceBarometer AG has been publishing a benchmarking study comprising more than 80 industries thereby supplying the market with a significant tool for measuring service, which sheds light on the diverse facets of customer satisfaction, quality of customer relations and the impact they have on customer loyalty.

Dr. Metje, let’s start at the beginning, what exactly is service?

We’re also starting with the most difficult part there. Everyone has their own conception of the term ‘service’. We commonly think of traditional customer service, but that’s only a small part.

What definition do you work with?

I would say that service is an added benefit that goes beyond the core benefits and is associated with having specific customer value.

Can you illustrate what you mean with an example?

Off the top of my head, let’s say Wi-Fi on an intercity coach. The core service is transport, free internet is not a necessity yet is a very pleasant benefit for customers.

How does this additional service benefit a company?

As products are becoming progressively similar, their quality is now comparable. Put crudely, lots of things are interchangeable nowadays. For products featuring standardised technology in particular, competitive differentiation is often determined by added benefits, in other words, service. This can be critical when making purchasing decisions.

Is service going to become more important with increasing digitalisation?

Yes, I have the feeling it will.

How come?

We have ascertained that digitalisation has created many benefits for the customer yet it also creates an undeniable need for personal contact in certain circumstances. This trend is increasing.

Can you be more specific?

Take booking flights, for example, which is a completely automated service nowadays. I don’t need to have contact with a person from the booking point of view until the final point of check-in. The system reaches its limits however when the flight is cancelled. In this case, personal contact suddenly becomes very important when individual decisions have to be made.

You’re talking here about the private customer sector, does the same apply to corporate customers?

There are big differences here. Corporate customers have a lot more regular contact. First and foremost, they require a lasting and dependable relationship on an equal footing. If a part is not delivered to the construction site on time, it reveals how quickly and flexibly a company can respond. This is key to corporate customers.

What role does the employee play in these situations?

People are the most important service providers. Of course there are technical solutions, like Wi-Fi on the bus, yet the essential factor is how willing employees are to go all out for the customer. Particularly in stressful situations.

Do you mean non-stop availability?

That alone is not enough. Corporate customers want to see vigour. They want to trigger a reaction at the company. If one of their lorries has come to a standstill somewhere, they need to be able to reach someone quickly who can help. This help should be straightforward and preferably through unofficial channels, so to speak. Customers are enthusiastic when people deviate from standard responses and provide individual solutions.

Are corporate customers more demanding?

In the B2B sector, you mostly deal with customers who have power to make decisions and they expect the same from whoever they are dealing with. It’s important to be willing to pull out all the stops and to make reliable statements. If there happens to be a delay, it helps if you’ve explained beforehand: “…just to let you know, we have a problem here but you’ll have the part in two hours”.

Are corporate customers more exacting?

Not necessarily. They tend to cut us some slack because they know from their own companies that things can sometimes go wrong. They bring a certain level of tolerance to the customer relationship. A longstanding relationship is not immediately called into question because of one slip-up. Private customers can be more ruthless in this respect.

How would you advise companies who are trying to improve their service?

They should under no circumstances neglect their core service. Wi-Fi alone is useless; the bus must also arrive at its destination.

What role does price play?

A huge one. The German drugstore chain dm likes to be presented as a model company. And it is a model company in that it has a deeply ingrained conception of service. It is easy to overlook the fact that dm also places great emphasis on being a price leader, sometimes in the region of five cents per product. Service alone doesn’t work.

Yet it makes a small and subtle difference?

Exactly. When dm keeps its prices the same, it is the soft factors, for example extra services like the changing facilities; this makes a real difference because they are not offered by competitors. Or other things like free water, magnifying glasses on the shopping trolleys, wide aisles and price transparency. These constitute a lot of small and clever details.

What role does corporate culture play?

The most important factor for service is the employee. The employee needs to embody the concept of service. Changing this willingness in retrospect requires a lot of effort.

It requires trust in the employees.

Yes, and autonomy in management. It helps to grant people decision-making powers so that they can respond in an accommodating manner. It’s the whole question of whether a hardware store employee is able to turn a blind eye when the customer wants to exchange a hammer because it wasn’t bought at that particular store.

In what sector are you observing new trends in service?

In the mobile communications sector, there is a new trend afoot in terms of all-inclusive services. Of late, this has not only attracted new customers, but also rewarded existing customers for their loyalty. This is well received, and these customers feel valued in a special way.

Are these customers especially grateful because they hadn’t expected it?

Satisfaction is always the result of a comparison process between expectations and actual services received. When a discount store promises only low prices and keeps this promise, it makes its customers happy. However, there are lots of companies that create expectations they cannot meet. This makes people angry.

To what extent is service a luxury? Do companies also need to provide added benefits?

No, I wouldn’t say that. Many aspects relate to employee behaviour and attitudes. These don’t have to cost money. Although technical solutions come into play, what’s more important is how approachable the company is by way of its employees. How attentive are they? Are they welcoming? Are they aware of my requirements?

Are there regional differences in mentality when it comes to service?

Absolutely. You only have to think about purchasing behaviour in the USA. There it’s good form to package the purchases at the end of the buying process. In Germany this wouldn’t be well received because Germans prefer to package their purchases themselves.

So does this mean service is also a matter of culture?

And a matter of general conditions. Let’s take Switzerland as an example. In my surveys, the Swiss have always been amazed by how often Germans go to DIY stores. This is because in Switzerland renovations are done by the landlord, hence Swiss tenants do a lot less DIY in their homes. You need to know this if you are a DIY store owner and considering opening up a trailer rental service for purchased goods. How successful would this actually be in the country? Or let’s consider mobile communications in Scandinavia. People there are much more open to mobile payment options, whereas people in Central Europe are a lot more sceptical.

Do expectations also differ from country to country?

Yes. The Swiss, for example, have a much greater appreciation of their railway than Germans do. In Germany, the railway service will issue an apology for a five-minute delay on a journey time of five hours, which is crazy. In Switzerland, people are more tolerant. This doesn’t seem to result in fewer delays there, and the railway service has a much better image. The difference in customer satisfaction levels can only be explained by the service.

Most industries seem to be getting wise to this because in your satisfaction rankings almost all curves are trending upwards. Have you also observed any regression?

Airline companies spring to mind. They have possibly now pushed themselves to the brink with their reductions in services. First, we saw seat space get smaller and smaller, then the provision of meals was reduced and in some cases done away with altogether. We observed a clear decline in satisfaction levels as a result. You could say that they have gradually overstepped the mark.

On the other hand, flying is now cheaper than ever. Isn’t that what customers want?

It shows that in addition to a very reasonable price customers also have certain expectations when it comes to service. They perceive not getting anything at all to eat on a four-hour flight as too stingy.

Is the decline faster than the rise?

It takes years to build up trust and minutes to destroy it; there’s really something to that. If a company has an established service culture in place, it is an invaluable asset.