INTRODUCTION
ADDING EMOTIONAL VALUE TO YOUR CUSTOMERS’ EXPERIENCE

Janelle’s dentist recently moved to another town some distance from her home. Nonetheless, she travels to see him because of how she emotionally feels under his care. His rates are higher, and she has to drive almost fifteen miles farther to his office. Does the emotional connection that Janelle feels to her dentist and his assistants contribute to his bottom line? It is difficult, if not impossible, to exactly measure the monetary worth of emotional value, but it is definitely part of what service providers and organizations offer—and it is one of the largest drivers of customer loyalty. The ability to retain customers and sell more to them is, according to many business experts, the single most important predictor of economic success today.

Why does Nordstrom, the big Seattle, Washington–based department store chain, do so well, even with higher prices and fewer special sales, earning more per square foot than other similar operations? Talk with “Nordies” and they will tell you that it is not just their liberal return policy. Actually, many department stores have copied the Nordstrom guarantee on 2returned merchandise. It’s the way customers feel when they return items to Nordstrom. There are few hassles and limited negative emotions.

We define emotional value as the economic value or monetary worth of feelings when customers positively experience an organization’s products and/or services. Emotional value, as much as quality or any other dimension of an organization’s worth, can make or break a business. It is as concrete as that. Cathay Pacific, the Hong Kong–based airline, found that the specific words used to settle lost luggage claims or handle other complaints were more important than the timeliness, accuracy, or compensation of the settlement in determining whether passengers would fly with the airline again.¹ This is a finding that should make everyone involved in business sit up and pay attention.

Emotional value refers to the feelings that customers experience or anticipate experiencing when they deal with organizations and their representatives. These feelings create a desire in customers to want to return to a place of business or go away and never come back. Emotional value is a concept that is ultimately more connected to customer retention than anything else. It is also the value that a company possesses when staff prefer to stay with their employers because of the feelings they have while working. Both staff and customers tend to stay with organizations that enable them to experience positive, meaningful, and personally important feelings, even if the organizations cannot always provide everything they want or solve all their problems.²

Most customers know instantly how they are emotionally impacted and how they feel about that, if not precisely, then generally, from the moment they walk into a place of business until they leave—with or without a purchase. In order to match the growing and inherent emotional sophistication of customers, service providers must upgrade their own emotional offerings to maintain a distinct competitive advantage.

The Experience Economy

Within easy historical memory, we have seen an evolution from an agricultural to a manufacturing economy. The manufacturing economy, still 3struggling with quality issues, has given way to the service economy. The service economy is in its early phases, and as we look closely at the service economy and its implications, we see that there are levels and nuances of service that most businesses have yet to attain. These include the careful introduction of competent emotional sensitivity. At one extreme end, service will have to support the orchestrated theatrical experiences referred to by Joseph Pine and James Gilmore in their new and groundbreaking book, The Experience Economy. One of the major characteristics of the experience economy, according to Pine and Gilmore, is that customers become engaged in a “personal way,” requiring high levels of emotional competency from experience providers.

Pine and Gilmore distinguish the products of the different types of economies in the following way: “While commodities are fungible, goods tangible, and services intangible, experiences are memorable.” ³ They make a compelling case that more and more of today’s customers want and expect to be positively, emotionally, and memorably impacted at every level of their commercial existence. Whether or not most products or services in the future will be offered as themed experiences, as Pine and Gilmore use the term, a higher level of emotional competence will be required for the service economy also.

Pine and Gilmore argue that the shift to the experience economy is happening, in part, because large numbers of products run the risk of becoming “commoditized,” and commodities in a free-market economy do not enjoy high profit margins. To prevent products from becoming commodities, they contend, it is not enough for an organization to focus on products or services alone. In this book, we suggest that most companies haven’t yet fully taken advantage of the power of emotionally sensitive service, let alone evolved to themed productions for customers. Perhaps it will be to an organization’s advantage to create themed experiences for its customers, but it first needs to master service that is emotionally competent. It is our assessment that most companies have not 4taken full advantage of the economic possibilities stemming from retaining customers by adding emotional value.

Customers always form judgments when they interact with organizations and staff. By filtering and processing sensory information, customers form emotional impressions (popularly referred to as Moments of Truth [MOTs]) that help them to remember and distinguish one experience from another.⁴ These sensory service clues, many of which have a strong emotional component, need to be understood, managed, and ultimately delivered by individuals. This book focuses on the role of emotions in the customer experience and how individuals can provide emotional value to their customers so they are inclined to return. We assert that adding emotional value to customers’ experiences is one of the strongest competitive advantages and requires not only upgrading staff emotional competency but also upgrading business operations so they positively impact emotions within organizations.

If we are to move to an experience economy for customers, we have to create an “experience” work environment for staff. In the 1980s, the quality concept quickly included personal quality, once organizations understood it was very difficult for workers to produce high quality goods if they did not have high personal quality standards. Likewise, service, as a concept, dramatically shifted once the concept of “customer” included both internal and external customers. Once businesses understood that external customers were treated pretty much the same way as internal customers, they began to focus on “internal service.” Retention of external customers has a lot to do with retaining internal staff.

Most jobs in the developed world today are service positions. By the early 2000s, a stunning 80 percent of jobs in the United States will be service related—from fast-food workers, support staff, retail workers, and hospitality and travel employees to highly trained professionals—all demanding huge numbers of staff who can positively impact customers or clients memorably. We are aware of the confusion regarding service job statistics, some showing very high percentages and others much lower. Part of the disparity 5in these numbers depends on how broadly “service” is defined. The U.S. government tends to define service more narrowly than some; even so, U.S. government projections are that the highest job growth is expected in four sectors: retail trade, business services, health services, and educational services. These sectors will account for two-thirds of the total number of created jobs in the first five years of the new millennium. At the turn of the twenty-first century, nine of the top ten job prospects in Minnesota will be found in the service industry. In the heavily industrial states such as Ohio and Michigan, the economy is also diversifying and shifting to service, moving away from manufacturing. The farming states are also seeing the creation of more service positions.⁵

No longer can service providers and service systems merely perform functions for customers. To be competitive in today’s economy, businesses need to produce a distinctive personal and emotional experience for each of their customers. As a result, staff need to know how to interact in an emotionally intelligent manner and must possess a knack for listening to people, for showing empathy, and for “owning the problem” of enabling customers to feel positive emotions while using their products and services. They must be competent in delivering the highest quality of emotional interactions and feel good about the time they spend with their customers—whether the experience is a short-lived encounter, such as purchasing a hamburger at McDonald’s, or a long-term relationship, such as buying insurance from an agent.

When service positions were fewer in number it was easier to hire personality types best suited for the unique demands of people-related work. Just as it once used to be that relatively fewer jobs required workers who could read and write, today most jobs require at least some level of literacy. If literate workers are not available for hire, then organizations must educate for the levels of literacy they require. This is also true for information technology skills. Likewise, with 80 percent of jobs projected to be service related, and many of these forced to support experience-based firms, organizations no longer have the luxury of being 6able to pick from a huge service pool to hire only the best-suited personality types. They must train, coach, and energize staff once they are hired.

Ari Weinzweig, cofounder of Zingerman’s, a $10-million-a-year delicatessen in Ann Arbor, Michigan, describes the positive emotions he wants his staff to create with customers.

The kinds of emotions recommended by Weinzweig are not achieved by simple scripting of how staff should address customers or perform their functions or by staff who would rather be anyplace else but at work. As a result of these considerable emotional demands, memorable positive experiences in the service industry are infrequent. Research tells us that over 60 percent of customers have switched service providers, but not because of the quality of products they have pur-chased—only 14 percent do that. Customers leave because of the way they are treated, or you might say, they leave because of how they feel.⁷

The Emotional Sting of Poor Service

All too often, negative interactions fill customers’ emotional memory banks. The emotional sting of poor customer service—especially acute during complaint handling—stays with customers much longer than most service providers realize. We believe these memories of negative interactions stay with staff as well, making it easy to develop an attitude that says to customers, “I’d rather be anyplace else than here serving you, but I need the money.” No one benefits in that situation. To quote Harvey Miller, co-owner of Quill Corporation, “People basically 7want to do a good job. I have never heard anybody walk out of this building and say, ‘Boy, I feel great! I did a lousy job today.’”⁸

In the past ten years, we have seen a great deal of public interest focused on positive and negative service delivery. Because of this widely publicized attention on customer service, consumers have an increasingly sophisticated understanding of service and are judging businesses by higher standards than ever before. Annual surveys are now available in many countries for all consumers to scan. According to these surveys, regrettably, businesses seem to be getting worse at customer service, rather than better—at least in consumers’ eyes.

The University of Michigan’s Customer Satisfaction Index’s (CSI) annual service score has consistently dropped across all sectors—with the exception of the U.S. Postal Service, where competition has definitely inspired improved offerings. A closer look at the CSI suggests a problem with the people side of service. Year after year, Michigan’s CSI finds that the products ranked highest are those that have the least amount of person-to-person delivery contact. For example, soft drinks are consistently ranked at the top of the CSI. Soft drinks are consumed daily by hundreds of thousands of people around the world, yet almost no one has any direct contact with the soft drink companies themselves. When consumers purchase a six-pack of Diet Coke from the grocery store and the checkout clerk is surly, they won’t blame the Coca Cola Company for that lapse in customer service.

We summarize it this way: “When people are involved, things tend to get screwed up.” This undoubtedly explains why automatic teller machines (ATMs) are so popular. Many customers, anticipating arguments, long waits, and hassles, prefer to limit their exchanges with service providers. The Wall Street Journal cites a poll suggesting that with each passing week as Christmas approaches, salespeople report getting “closer to the edge” of losing their tempers at customers, jumping from 18 to 24 percent in just one week’s time.⁹

And this seems to be true around the world. Customer Service Benchmarking Australia does “mystery shopping” on 1,300 Australian help line numbers, measuring waiting periods and behavioral patterns. Its 8findings? A few call centers did well, but most were not inspiring. A worst-case scenario: one company was defensive 50 percent of the time, showed empathy only half the time, listened carefully and understood complaints half the time, and offered solutions none of the time!¹⁰ E-commerce seems to face the same challenges. A recent survey of on-line customer experiences suggests that 67 percent of customer purchases are not completed largely because of lack of customer service.¹¹ These findings tell us that there is tremendous room for improvement, and the companies that treat customers right will stake out a strong competitive position.

The Human Aspect of Customer Service

Because of the emotional focus of this book, we are primarily concerned with the human or personal aspect of customer experiences. This is the part of the service Herb Kelleher, CEO of Southwest Airlines, is committed to:

We do not dismiss the importance of the tangible, or material, side of service. We know the tangibles are critical: the highest product quality, the most appropriate physical environment, and the best technology available to help customers. But, so are the intangibles: the smallest number of communication errors, the highest speed, the best reliability, and the most empathy. We are firmly committed to the notion that all of these factors make a competitive difference.

Nonetheless, research also tells us that organizations are almost always better at the material side of service than at the human side of service9.¹³ Furthermore, we know that both the “tangible” and the “intangible” sides of service are intertwined with emotional experiences. When a product does not perform, the system that produced it is at fault, and this system is influenced by human and emotional factors—as well as technical factors. It is not a question of focusing on one aspect at the expense of others, though certainly it does not benefit a company to teach staff how to create strong emotional links if none of the material basics are in place.

After some combined forty years in the customer service business, the authors know that far too many companies put the bulk of their money, time, and effort into upgrading the material side of service. We think this happens because the tangibles, the goods used to deliver the total service experience, are easier to measure and manipulate. This must not lead to the faulty conclusion, however, that the material side of service is more important than the personal and emotional.

The Starting Point

Building emotionally competent relationships with customers starts with love, caring, and respect. Love obviously has different meanings to different people, depending upon the type of love to which they refer: self-love (self-esteem), sexual love, or maternal love. While some people might balk at the notion of using love in a business setting, we think Peter Senge’s definition of love, presented in The Fifth Discipline, suggests a helpful basis for the relationships among organizations, staff, and their customers.¹⁴

Senge defines love as a commitment to someone else’s growth and development. In a commercial relationship, this would mean that companies focus on how their products or services positively impact their customers. Since businesses receive payment for their services and because exchanging money for goods and services has a significant emotional component 10to it, we contend that love—commitment to the betterment of customers— is a desired basis for that exchange. Defined in Senge’s terms, love can serve as the support that takes the powerful emotional component of the service experience into account.

Some cynics might call it hokey, but putting “heart” into customer service is not only good business, it is a necessary, competitive strategy in today’s service/experience economy. Love, as defined by Senge, can also serve as the basis for an organization’s standard of ethics. Robert Rabbin in his book Invisible Leadership, Igniting the Soul at Work puts it this way: “As we open to and embrace this power, this presence of love, we forge a new alliance with life and with work. We can depend upon that power to help us make clear and impeccable decisions.”¹⁵

Even so, love by itself is not enough. Staff need to understand how they interact with and shape customer emotions. They also need practical skills in changing negative emotional states. They need persistence in not succumbing to their own negative judgments of customers, and they need to know how to read emotions in both themselves and others. Finally, staff must know how to tie together the material, personal, and emotional dimensions of the service experience. One could say these are the delivery mechanisms of love.

At its most fundamental level, this book is a call for civility, empathy, and authenticity when interacting with customers. In this regard, we draw from modern commentators such as Harvard Professor Sara Lawrence-Lightfoot, who in her latest book, Respect: An Exploration, explores why respect is the single most important ingredient in relationships. Lawrence-Lightfoot sees respect as capable of providing symmetry in unequal relationships, so relevant in the service industry.¹⁶

We, like Professor Lawrence-Lightfoot, propose that defensiveness, lack of forgiveness, resentment, and a desire for revenge lead to escalations in anxiety, hostility, wasted energy, and a lack of respect on everyone’s part. This book takes into consideration that both customers and service providers have long memories for rudeness or poor treatment. While forgiveness, empathy, and respect can lead to better relationships with customers, these same responses in difficult service encounters can 11also create heightened self-esteem, a more hopeful mood, and more positive experiences for service providers. Finally, if customer service is to be delivered effectively, the attitudes and tools in Emotional Value must positively add to both customer and staff experiences.