The Customer May Not Always Be Right: Customer Compatibility and Service Performance

Ryan W. Buell; Dennis  Campbell; Frances X. Frei

Article | Management Science | Forthcoming

The Customer May Not Always Be Right: Customer Compatibility and Service Performance

by Ryan W. Buell, Dennis Campbell and Frances X. Frei

Abstract

This paper investigates the impact of customer compatibility – the degree of fit between the needs of customers and the capabilities of the operations serving them – on customer experiences and firm performance. We use a variance decomposition analysis to quantify the relative importance of customer, employee, process, location, and market-level effects on customer satisfaction. In our models, which explain roughly a quarter of the aggregate variance, differences among customers account for 96-97% of the explainable portion. Further analysis of interaction-level data from banking and quick service restaurants reveals that customers report relatively consistent satisfaction across transactions with particular firms, but that some customers are habitually more satisfied than others. A second set of empirical studies provides evidence that these customer-level differences are explained in part by customer compatibility. Customers whose needs, proxied by differences in demographics and product choices, diverge more starkly from those of their bank’s average customers report significantly lower levels of satisfaction. Consistently, banks that serve customer bases with more dispersed needs receive lower satisfaction scores than banks serving customer bases with less dispersed needs. Finally, a longitudinal analysis of the deposit and loan growth of all federally insured banks in the United States from 2006-2017 reveals that customer compatibility affects a firm’s financial performance. Branches with more divergent customers grow more slowly than branches with less divergent customers. Institutions serving customer bases with more dispersed needs have branches that exhibit slower growth than those of institutions serving customer bases with less dispersed needs.

Keywords: customer compatibility; Satisfaction; profitability; Service Operations; Customer Relationship Management; Customer Satisfaction; Performance;

Format: Print

59 pages

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Citation:

Buell, Ryan W., Dennis Campbell, and Frances X. Frei. "The Customer May Not Always Be Right: Customer Compatibility and Service Performance." Management Science (forthcoming).

Working Paper | HBS Working Paper Series | 2020

Can Shared Service Delivery Increase Customer Engagement? A Study of Shared Medical Appointments

Ryan W. Buell, Kamalini Ramdas and Nazlı Sönmez

Customers and providers alike often consider one-on-one service delivery to be ideal, assuming –perhaps unquestioningly – that devoting individualized attention maximizes customer engagement and improves outcomes. Alternatively, shared service delivery, in which customers are served in batch, may, through the dynamics of group interaction, lead to increased customer engagement. On the other hand, the loss of privacy and personal connection in shared delivery models may undermine engagement and performance. To explore this tradeoff, we conducted a randomized controlled trial with 1,000 patients who were undergoing glaucoma treatment over a three-year period at a large eye hospital. Using verbatim and behavioral transcripts from over 20,000 minutes of video recorded during our trial, we examine how shared medical appointments (SMAs) – in which groups of patients with similar conditions meet with a doctor simultaneously, and each receives one-on-one care in turn – impact patients' engagement during their appointments. Patients who experienced SMAs asked 37.2% more questions per minute, made 8.2% more comments per minute, answered 3.6% more questions per minute, and exhibited higher levels of non-verbal engagement across a wide-array of measures (attentiveness, positivity, head wobbling or ‘talai taḷḷāṭṭam’ in Tamil – a South Indian gesture to signal agreement or understanding – eye contact and end-of-appointment happiness), relative to patients who attended one-on-one appointments. We further find that patients in SMAs went on to report higher levels of satisfaction and exhibit greater levels of learning and medication compliance. These results shed light on the potential for shared service delivery models to increase customer engagement and enhance service performance.

Citation:

Buell, Ryan W., Kamalini Ramdas, and Nazlı Sönmez. "Can Shared Service Delivery Increase Customer Engagement? A Study of Shared Medical Appointments." Harvard Business School Working Paper, No. 21-001, July 2020. View Details

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The Customer May Not Always Be Right: Customer Compatibility and Service Performance

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