Using behavioral science to improve the customer experience

Here is a brief excerpt from an article written by John DeVine and Keith Gilson for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

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Human behavior is no closed book—behavioral science shows that it’s quite predictable. During interactions with customers, for example, a company should get anything unpleasant out of the way at the start, so the experience ends on a positive note that increases their loyalty.

This is a powerful insight for any service business, yet relatively few of them take it into account in designing their interactions with customers. Here is “Using behavioral science to improve the customer experience,” a classic 2010 article explaining this simple, low-cost approach.

By guiding the design of customer interactions, the principles of behavioral science offer a simple, low-cost route to improved customer satisfaction.

Service operations seem a natural setting for the ideas of behavioral science. Every year, companies have thousands, even millions, of interactions with human beings—also known as customers. Their perceptions of an interaction, behavioral scientists tell us, are influenced powerfully by considerations such as its sequence of painful and pleasurable experiences. Companies care deeply about the quality of those interactions and invest heavily in effective Web sites and in responsive, simplified call centers.

Yet the application of behavioral science to service operations seems spotty at best. Its principles have been implemented by relatively few companies, such as the telecommunications business, which found that giving customers some control over their service interactions by allowing them to schedule field service visits at specific times could make them more satisfied, even when they had to wait a week or longer. Many more companies ignore what makes people tick. Banks, for example, often disturb the customer experience by altering the menus on ATMs or the interactive-voice-response (IVR) systems in call centers. They fail to recognize the psychological discomfort customers experience when faced with unexpected changes.

Likewise, for every restaurant that surrounds a bill’s arrival with a succession of complementary desserts—thereby capitalizing on the customer’s preference for service encounters that end positively—there are a lot of call centers that ignore the importance of a strong finish. Indeed, many companies actively work against one by placing so much emphasis on average handling times that they inadvertently encourage agents to end a call once its main business is complete, leaving customers with memories of brusque treatment.

It doesn’t have to be this way. Academics such as Professor Richard Chase at the University of Southern California’s Marshall School of Business have used research on how people form opinions about their experiences to design actual services. In a 2001 Harvard Business Review article, Chase and his team even laid out principles for managers to consider when designing any customer interaction. Get bad experiences over early, so that customers focus on the more positive subsequent elements of the interaction. Break up pleasure but combine pain for your customers, so that the pleasant parts of the interaction form a stronger part of their recollections. Finish strong, as the final elements of the interaction will stick in the customers’ memory. Give them choice, so they feel more in control of the interaction. And let them stick to their habits rather than force them to endure the discomfort and disorientation of unexpected change.

Here we review the experience of an insurance company that used those principles to improve its customers’ satisfaction significantly, with no incremental costs or fundamental changes in people or infrastructure. A systematic approach like this one is needed to counteract the natural tendency of service operations to focus on the needs of IT systems and work flows, not to mention the preferences of employees, managers, and service providers, largely ignoring the way customers perceive their service interactions. If companies in a broad range of service industries—including banking, telecommunications, and retailing—applied a rigorous approach, they would reap significant economic benefits, ranging from reduced churn to greater cross-selling to additional customer referrals.

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Here is a direct link to the complete article.

John DeVine is a principal in McKinsey’s Miami office, and Keith Gilson is a consultant in the Toronto office.

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