The traditional view of the relationship between a company and a customer is based on the premise that a company has a product to offer and that the customer has a demand for this product and is willing to pay for it, presumably for the most competitive price. We go to the hairdresser’s because we need a haircut or to a garage because our car needs to be fixed and we pick the company that can provide us the offer we consider optimal.
Seen as such, the company-customer relationship is very simple and straightforward. In reality, however, it is more complex and can take on several other forms.
Some people may enjoy other aspects of their visit to the hairdresser’s, such as expert advice or a pleasant social and caring experience. Sometimes the customer might even take over the role of the company: if my neighbour’s car is broken, what he may be seeking from the garage is perhaps just a set of tools because he actually has the skills and desire to repair the car himself.
A team of researchers from the Service Science Factory and the School of Business and Economics at Maastricht University, together with colleagues from the EBS Business School and the WHU – Otto Beisheim School of Management in Germany decided to investigate the different possible types of company-customer relationship, taking the customers’ perspective as a starting point. They were specifically interested in finding out which benefits customers hope to gain from this relationship, which activities they take over from service providers and why, which skills they possess or need to develop to undertake these activities and which challenges they face in the process.
“What really counts in the end is the service”
For Sabine Moeller, Robert Ciuchita, Dominik Mahr, Gaby Odekerken-Schröder and Martin Fassnacht, the goal was to identify customer role patterns that would enable companies to improve their offerings, by better meeting their customers’ needs and expectations, not so much in terms of product improvement but more in terms of how the two parties interact to deliver service.
“If you consider the company-customer relationship from an abstract perspective, what really counts in the end is the service provided by the company,” explains Robert Ciuchita. “Though there is still a heated academic debate on the subject, a product can eventually be seen as a means to deliver a service.”
Dominik Mahr outlines why the customer-centric approach, rather than the traditional product-centric approach, required companies to operate a shift in mindset: “It is important for companies to define themselves as service providers rather than traditional product sellers. By identifying their customers’ needs and adjusting their offerings in terms of service, they are not viewing their customers as targets of the firm offerings but treating them as partners in value creation.”
What is Collaborative Value Creation?
The research team defined this new way of looking at the interaction between companies and customers as collaborative value creation, because it is a collaboration that not only creates value, but also involves different intensities of participation for and from both parties.
The main purpose of the research was to analyse how customers create value for different types of service offerings and to devise a framework that would help companies to better identify the various types of benefits sought by customers. Such a framework, the researchers thought, would allow companies to segment their customers, tailor their offerings and provide a personalized match between segments and offerings.
“Often, it is not the lowest price that the customer is looking for in the first place but another type of benefit, such as empathy, feeling of control or a special type of environment,” comments Mahr. “This is something that can be useful for companies to be aware of.”
“The customer can even behave in an irrational way,” he continues, illustrating his statement with an example from the company Nike.
“Most people don’t want to buy Nike shoes at the regular price, because they are too expensive. But Nike came up with the idea to let customers design their own shoes and to charge them a higher price for the customized shoes. And it worked! It’s very puzzling to see that a company can outsource work to customers and that customers are willing to pay more for a final product that is a result of their own work.”
An innovative, interdisplinary approach
The team took an interdisciplinary approach by using a management model as research basis and by transferring it to the field of marketing.
The researchers started off their study by performing a qualitative analysis of data from 35 interviews collected earlier by their colleague Sabine Moeller among people in Europe, Asia and the US.
“The data consisted of 105 types of collaborative value creation incidents,” Ciuchita says. “Our task was to first look at the different types of benefits sought by customers from their relationship with the service provider and to explore what activities customers were willing to do, which skills they needed and which challenges they faced to obtain those benefits.
“A person who goes to a travel agency and asks for a complete pre-arranged holiday package has different expectations from a person who wants to actively engage in the organization of the holiday,” explains Mahr. ”But which different benefits do these two people seek and which activities are they willing to undertake? The first person might not feel experienced enough (might not possess the skills) to organize the holiday alone and feels much more comfortable with the service provider coming up with options. The second person however, might have lot of experience and hence would prefer to be in control of the process and make the choices (flight, accommodation, shuttle etc.) that he or she considers optimal.”
Next, the team developed a coding scheme and applied it to the data provided by the interviews.
“This was a turning point in our research,” says Ciuchita. “It was the moment when our co-author Gaby Odekerken proposed to use an analysis technique to run statistical tests on the qualitative insights we had gathered.”
Brief descriptions of the five roles in collaborative value creation
“Here we touch upon an aspect of our research that was later seen as innovative, because it combined qualitative and quantitative analysis,” says Ciuchita. “By going back and forth between the two forms of qualitative and quantitative analyses and integrating them into the final model, we were able to overcome their respective downsides.”
Are you a bargain-hunting independent or a self-reliant customizer?
The research team distinguished five roles played by customers when interacting with a service provider and assigned a descriptive label to each role: bargain-hunting independent, comprehensive help seeker, engaged problem solver, technology-savvy networker, and self-reliant customizer.
How do these roles manifest themselves concretely? Mahr gives some examples: “When I go to the hairdresser’s, I only want to get a decent haircut, so I put myself entirely in the hands of the hairdresser, which would make me a comprehensive help seeker; a person with no money might be more interested in just getting the cheapest haircut, without a hair wash, which would make him a bargain-hunting independent. My wife on the other hand is an engaged problem solver, as price is less important and she is much more willing to engage in collaboration (she knows the specific details of what she wants from the hairdresser and how to communicate them).”
“But when it comes to preparing a conference trip, I would probably be a self-reliant customizer because it’s a process I have experience with and want to feel in charge of.”
As these examples illustrate, the same person can perform various customer roles depending on the type of service offering he or she is interacting with.
The five roles in collaborative value creation as defined by the different levels of activities undertaken, benefits sought, challenges faced and skills required
The researchers submitted the result of their findings to the Journal of Service Research and were proud to see it accepted. Their paper is already available online but will be officially published in the November issue of the quarterly peer-reviewed academic publication.
For Mahr and Ciuchita, one of the main contributions of their study to the field of service research is that it offers a methodology that allows raw qualitative data to be visualized in an understandable way.
“Our approach was very well received and it was also seen as managerially applicable because it covered various types of service offerings,” says Mahr.
“The final framework we were able to design was based on an innovative combination of qualitative interviews and statistical analysis,” adds Ciuchita. “Usually, with a qualitative approach, researchers try to find emerging themes in their interview data and interpret these themes based on theory. What was novel in what we did is that after establishing the themes, we used a quantitative technique (CATPCA) to interpret them. By assigning numbers to the qualitative insights, we let the quantitative method determine an optimal solution and interpreted this solution by going back to the theory and to our interviews. The numbers validated our research; they made it more solid, more sound.”
Ultimately, the value of the research paper is that it delivers an insightful and usable framework for companies to offer a better, more personalized service experience to their customers.
“In the end, it’s really about service,” says Ciuchita.
By Sueli Brodin