Armistead - Creating strategies for evolving customer service

1. Creating strategies for
managing evolving
customer service
Colin Armistead and
Julia Kiely
Introduction
Approaches to the delivery of services are
being affected by changes in the business and
social environments. These relate especially
to advances in communications and
information technology (CIT) and changing
customer needs (OECD, 2000; Molitor,
1999). The changing demographics and
lifestyles in western countries are also major
contributing factors. The UK shows typical
projected changes in the percentage of older
and younger people, as life expectancy rises
and the birth rate drops. At the same time, the
way in which people live ± with more people
living alone ± is tending to reduce the effect of
the conventional family. Within this context,
attitudes to time and money are important
indicators of the behaviours of customers. A
convenient contrast is to classify customers
into broad categories of being ``poor'' or
``rich'' in terms of time and cash (Scase,
1999). For example, affluent retirees are cash
and time ``rich''. Higher-paid workers are
cash ``rich'' but time ``poor''. Lower-paid
workers are time and cash ``poor''. The
unemployed and those without adequate
pensions are cash ``poor'' but time ``rich''. We
might expect that richer customers will be
prepared to pay for what they perceive to be
good services, that those with little time will
make their choices on the basis of services that
support them in their busy lifestyles, and that
those with more time and money will exploit
choice. Poorer customers, although wishing
for the best, might be content with either
better self-service provision or effective
limited service.
The precise impact of advances in
technology, and the rate of change it
produces, are not easy to forecast. However
the increasing use of Web-based technology is
altering the expectation of customers on the
availability of services and the nature of the
services provided (Walsh and Godfrey, 2000;
Voss, 2000). Parasuraman (2000) has also
shown that customers vary in their attitudes
to service within a concept of technology
readiness. We might expect this to interact
with the ``rich''/``poor'' attributes to shape
customers' behaviour.
This changing context for service demand is
matched by a change in the delivery of
The authors
Colin Armistead is Professor of Operations Management
and Director of the Centre for Organizational
Effectiveness and Julia Kiely is based at the Business
School, both at Bournemouth University,
Bournemouth, UK.
Keywords
Customer service, Managers, Employees,
Strategic planning
Abstract
This paper reports research that investigates the
perceptions of service managers on the future of customer
service. It provides insight into the evolving managerial
issues through detailed interviews with senior customer-
service directors and managers in different service
sectors. Service organisations that will be successful in
the future will focus the roles and capabilities of their
customer-service staff on customer needs, and support
them through active service leadership. A six-stage
approach to developing the necessary strategies for
managing customer service in this environment is
deduced.
Electronic access
The Emerald Research Register for this journal is
available at
http://www.emeraldinsight.com/researchregister
The current issue and full text archive of this journal is
available at
http://www.emeraldinsight.com/0960-4529.htm
The authors acknowledge the contribution of
Dr Neal Beamish and the support of the Institute
of Customer Service in this work.
164
Managing Service Quality
Volume 13 . Number 2 . 2003 . pp. 164-170
# MCB UP Limited . ISSN 0960-4529
DOI 10.1108/09604520310466860

2. services by service organisations under the
influence of technology. Technologies widen
the richness and reach of service provision
and also offer a ``smartness'' in devices that
will work intelligently, automatically, and
remotely to free customers from tiresome
tasks. The same technology also offers
efficiencies to service providers. For instance,
the cost of Web-based transactions represents
a quantum reduction compared with
telephones. In assessing changes in their
service strategies, service organisations will
need to consider the significance of these
changes for their service products and service
processes (Walsh and Godfrey, 2000; Voss,
2000; Parasuraman, 2000). However, it
remains to be seen whether there will be a
significant change in the general principles of
service, as has been suggested by a number of
authors (for example, Heskett et al., 1994;
Berry, 1999).
Research design
Senior executives and decision-makers in
service organisations are aware of the rapid
changes and challenges faced by their sectors
in the next few years. Intuitively, they know
that the role of service agents will be a key
element in ensuring that service organisations
maintain competitive success. We approached
14 major service organisations to see if they
were willing to participate in our research.
The service organisations were deliberately
chosen to cover a wide spectrum of the service
sector. They included:
. financial services;
. telecommunications;
. retail;
. software technology;
. healthcare insurance;
. public utilities;
. airlines; and
. charity.
All delivered some of their services remotely
through technology and, to a greater or lesser
extent, employed advanced technology.
Representatives from each organisation met
with each other, and with us, to discuss their
shared interest in, and commitment to, the
research. All agreed to participate fully, and
all were keen to share and discuss views with
each other. At that meeting, the research aim
and objectives outlined previously were
drafted and later refined. In each of the
organisations, we were able to interview
senior executives responsible for customer
services. In addition, internal reports were
made available to us.
The focus of the interviews was on
perceptions of customer service in two to five
years, and how changes were likely to impact
on the use of technology and the capabilities
of agents. Interviews lasted approximately two
hours and each was taped and transcribed.
Two researchers were present at each of the
interviews. In some companies we
interviewed two or more senior managers. In
all, 28 managers particpated. Each
transcribed interview was analysed to code
and elicit themes from the data. In some
instances the data were supplemented by
internal information provided by the
participants. Part of the way through the
research, representatives from some of the
companies met together with us to share their
visions and issues for the future, and to
discuss some preliminary findings. For the
most part, those attending this meeting
included the senior executive interviewed
and/or colleagues. Included in the analyses
were data drawn from the interviews and
company documents set against secondary
data analyses of advances in CIT, technology,
and changing demographics.
Findings
From the interviews and other documents,
numerous themes emerged regarding the
nature of services. Most of the managers
talked about the impact of technology on their
ability to gain efficiencies. They also spoke of
the changes in the nature of the role of
customer-service agents, and the capabilities
that they would need. It emerged that a
number of the identified roles related to
technology, the technical aspect of services,
and the emotional needs of customers.
Customer service in the future will require an
increasing degree of professionalism, from
both managers and customer-service staff.
This article develops some of the findings
from a larger research project on the skills for
customer service needed to respond to
changes in the future environment. Details of
the project's aims and objectives and of other
findings can be obtained from one of the
authors. Some organisations are already
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Creating strategies for managing evolving customer service
Colin Armistead and Julia Kiely
Managing Service Quality
Volume 13 . Number 2 . 2003 . 164-170

3. making dramatic changes as technology alters
the nature of their service-delivery processes.
For these findings, it was possible to establish
a taxonomy of service-delivery processes
characterised as:
. personal service;
. self-service; and
. automated service.
Two strong themes about their ability to
deliver effective service also emerged in the
form of:
(1) service culture; and
(2) service leadership.
Service culture
Managers often talked about the culture of
the organisation in relation to service and how
it should affect everyone within an
organisation and everyone who has dealings
with it:
I did a lot of work with the culture of our service
organisation. My guess was completely right,
because they chose to ignore all the
recommendations we made on the cultural
aspects, which is part of what we said they'd do
because of the way their culture was. One of the
major things in the culture was the very
functional view of life, so if you were managing a
call centre, your view of life is that you have to
make this the most efficient call centre that you
possibly can. If you manage the field engineers,
then your focus is purely on field engineering
(telecommunications company).
The internally based culture described here
misses the focus on the customer. It reveals a
failure to appreciate the interconnected
nature of call centres or to question the
various interpretations of the idea of
``efficiency''. Moreover, the existence of a
variety of cultures in different parts of an
organisation potentially leads to differences in
customer experience that can destroy
consistency of service.
If the culture in an organisation has been
authoritarian it can be difficult for
management and customer-service agents to
change. In the example below, the context of
financial services and the attendant
obligations to fulfil statutory requirements
enhance the wish to control:
It's a world where for them to want to work in a
processing centre it's an extremely controlled
environment and always has been. The high style
of the organisation is top-down management and
actually telling people that it's OK to use their
intelligence when talking to a customer is quite
hard (financial services).
We might expect that during the service
encounter the customer must experience a
culture that matches the promises of the
service provider. There are contrasting
approaches to achieving this goal:
We have a corporate template and a corporate
style which they are required to adopt (Internet
investment service company).
This comment implies a fairly structured
approach to the style of service that is
expected.
In contrast, other service managers believe
that the goal can be achieved only through
some shared understanding of the nature of
the service:
The main training I'm interested in is the actual
[Y company] ethos itself. It's not just the
physical ``sitting down with the keyboard'' ± it's
how the whole essence of what [Y company] is.
We are not just concerned with customer care,
we call it internally ``customer delighting'' . . . we
go beyond what you get everywhere else (online
retailer).
The expression of service culture extends to
attitudes to technology and the increasing
variety of modes of customer contact. At one
extreme this might be used to remove a
human interface:
We will try to provide electronic analysis . . .
perform automatically, with no human
interaction all (technology company).
Alternatively, in other companies, the
intention is to enable service staff to gain a
variety of skills and capabilities with evolving
technologies:
We expect service staff to be comfortable with
lots of different methods of communication,
such as email and telephone, helping
[customers] all the time (mail order retailer).
The picture of service culture that emerges is
complex. Technological advances are
influencing both the capabilities of
customer-service agents and the expectations
of customers. Against this backdrop, the work
undertaken and the way in which work has
traditionally been managed, provides a strong
restraining force on change.
Service leadership
Not surprisingly, discussion of service culture
was linked to aspects of managerial
leadership:
We've just been doing work around service
leadership and what managers need to have in
terms of their capability (airline).
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Creating strategies for managing evolving customer service
Colin Armistead and Julia Kiely
Managing Service Quality
Volume 13 . Number 2 . 2003 . 164-170

4. It seemed that there was an association
between leadership culture and the
expectations that management placed on
staff. The expression of capabilities required
for effective service leadership resonated with
the five components of emotional intelligence
in leadership, as identified by Goleman
(1998). The illustrative quotations come from
companies in the study:
. self awareness ± ``the analytical
understanding of how that process needs
to managed better'';
. self regulation ± ``to take that breadth of
view, more of an overview on the
connectivity'';
. motivation ± ``encourages managers to tap
into the positive'';
. empathy ± ``do all of the sort of service
behaviours to us'' (that is, staff), i.e. treat
staff as they would customers; and
. social skill ± ``managers to be human
beings''.
All of the service organisations appreciated
the importance of service leadership and
indicated an association with service
performance as previously identified by other
research (Church, 1995). The need to be
inspired by a manager was paramount in their
thoughts. Some of the language used to
express this was interesting. Terms such as
``making things fun'' highlighted an awareness
of the need to be able to engage, motivate,
and retain service agents. Other phrases, as
used in particular by the airline, such as
``believe in me and inspire confidence and
trust'' showed that service leadership is a vital
ingredient of service culture. Some of the
concepts and actions discussed are generic in
application to most leadership roles. Included
here are ideas such as ``providing
opportunities'', and ``setting consistent and
clear standards and driving you towards
them''. Others, such as ``coaching'', indicate
that those in managerial leadership do possess
the skills and capabilities they seek to
engender in staff. They can lead by example,
and many have, themselves, experienced the
work tasks they manage. Maintaining
appropriate personal credibility is extremely
important for effective service leadership.
Given the importance of communication in
customer service, it is not surprising that
service leadership calls for an ability to
communicate effectively, and thus influence
service delivery. In doing so they are more
likley to engender in service agents the ability
to lead by doing ± the notion of servant
leadership (Lytle et al., 1998)
It is of interest that the question of
risk-taking in leadership arose on several
occasions. ``The manager was brave and felt
able to take risk'' was a phrase used by the
airline. Encouraging risk-taking was seen as
desirable, and reflected an appreciation that
service agents will feel free to act in this way
only if the culture is appropriate. If mistakes
are penalised and a blame culture exists,
initiative will be stifled.
Given the rapid technological advances in
service delivery coupled with changing
demographics and lifestyles in western
countries, it is not surprising that strategic
vision is called for. Ideas of approachability
were subsumed in the general belief that
being able to obtain and use feedback was
important. Service leadership was also
intertwined with the demonstration of
``visionary connectivity'' as suggested in the
excellence model of European foundation for
quality management (EFQM, 2002). Lack of
connectivity, as highlighted in the quotation
pertaining to service culture, can lead to
differences in customer experiences that can
destroy service consistency. It is possible to
conceptualise managerial leadership in the
service sector as creating the service
environment, aiding staff in creating
opportunities and channelling their
intellectual energy, and guaranteeing
continuity of the business.
Creating strategies
Most commercial service businesses accept
that there is a relationship between customer
satisfaction and profitability with customer
satisfaction influencing loyalty which in turn
effects profitability (Heskett et al., 1994).
Customer satisfaction is itself influenced by
the capabilities of customer-service staff and
the way in which they are led (Bowen and
Lawler, 1992; Berry, 1999; McColgan,
1997). The cost of developing service staff
should, therefore, be compensated by
increased profitability. Moreover, the
research we have undertaken has
demonstrated that service agents themselves
are anxious to develop skills and capabilities
to do their job well and help customers. They
want to be coached and want to have
opportunities to enhance their range of skills.
The development of staff might be expected
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Creating strategies for managing evolving customer service
Colin Armistead and Julia Kiely
Managing Service Quality
Volume 13 . Number 2 . 2003 . 164-170

5. to increase both profitability and the retention
of contented high-performing service agents.
In not-for-profit organisations, including the
public sector, customer satisfaction is a
critical component in the achievement of best
value initiatives (a concept for service
excellence in the UK public sector) ± and the
roles played by service agents have a profound
impact on all such activities.
The question thrown up by the managers in
the study is how to develop strategies to
develop service staff and accommodate
changes in service processes with the
introduction of new technology. Managers
cannot absolve themselves of responsibility
for these activities:
This all starts at the top ± it is linked to the
strategy of the company and everything blows
out of that (airline).
However, the results of this study suggest an
approach that might enable managers to gain
a clearer understanding of their present
situation and future needs. This approach can
be summarised as follows.
Understand your changing customers
This study has shown just how important it is
for managers to understand why and how
customers use their services and how these are
changing. Customer groups stated
categorically:
We are fed up with service failure and we expect
technology to be used appropriately.
There are of course many ways in which
managers can gain an understanding of their
customers' wishes including postal and
telephones surveys, focus groups, and
feedback form frontline staff. Such data
tend to express views on present services
rather than expectations for the future.
Projections from secondary data, particularly
those relating to technology and
socio-demographics can be illuminating.
When this knowledge is being used to plan
future strategies managers can also make use
of customer-service scenarios (Kiely et al.,
2005) to increase their understanding of how
different customer segments might react in
typical service situations. Scenarios allow
customers' perceptions to be shared and their
effect on the design of service delivery
processes considered. A point especially
relevant when service technology is being
introduced and questions of technology
readiness are to be addressed.
Consider your balance of technology and
customer-service staff
Service organisations are increasingly using a
combination of technology and service staff in
their customer-service processes. At an early
stage, managers should carefully consider an
appropriate balance between the two. When
and where is it appropriate to use technology
within the service encounter? While
technology may reduce the unit costs of
service it will also affect the level of customer
satisfaction. The impact on customer service
does not have to be negative. Used
intelligently, technology may enhance the
service experience. Managers must bear in
mind the nature of the service, the willingness
and ability of customers to pay for
personalised service and customers' attitudes
to the use of technology. It is in areas such as
this that the importance of fully
understanding the current and future
customer base becomes vital. Once a view is
taken of the appropriate balance between the
use of technology and customer service staff, a
decision can be made regarding choice of
service process. These range from encounters
mainly designed around the use of service
staff in person-to-person encounters albeit
supported by technology through customer
self-service using technology to a fully
automated service process where the
customer would not be directly involved.
Establish your key customer service staff
roles
The roles of service staff in person-to-person
contact are driven to a large degree by a
combination of emotional capacity and
technical interaction. Emotional capacity
ensures that customer service staff use their
emotional intelligence to identify and
understand their own and their customers'
emotional reactions and to be aware of service
issues and the opportunities for interventions.
Technical interactions within the service
encounter demand a competence in the
technical and procedural aspects of the
service process. In the wider study we arrived
at four key roles depending on the dominance
of the two factors. The roles are referred to as:
(1) executor;
(2) technician (strong in technical capacity);
(3) therapist (strong in emotional capacity);
and
(4) advocate (requiring strengths in both
domains).
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Creating strategies for managing evolving customer service
Colin Armistead and Julia Kiely
Managing Service Quality
Volume 13 . Number 2 . 2003 . 164-170

6. Each role is integral to effective service
delivery and we envisage that the capability
for one person to develop a comprehensive
and complex set of service requirements will
grow in response to increased expectations
and managers' attempts to differentiate their
service through personalisation.
Plan to achieve customer-service staff
capabilities
A wider study identified eight capabilities
associated with evolving customer-service
staff roles. These include capabilities to:
. interpret service issues and be proactive
in service enhancement;
. technical capabilities in service
communications technology which
encompasses email;
. the ability to educate and train customers
in the service;
. knowledge behaviours for a member of a
virtual team;
. the ability to understand the
business/organisational perspective of a
service process or sub process.
Individual service processes require specific
capabilities that are needed for effective
customer service. This might be
accomplished by linking customer service
capabilities directly to customer needs. This
suggests a two-stage approach:
(1) link capabilities to customer needs and
customer-service staff roles; and
(2) identify skills, attitudes and behaviours
associated with these capabilities.
The degree of detail required in this analysis
should not be underestimated because it
requires an examination of the requirements
of each service encounter within a service
process. It is envisaged that service
organisations will take two broad approaches
to achieving the skills, attitudes, and
behaviours associated with the capabilities
they want for their service staff. The first is to
recruit people who already demonstrate the
capabilities required. Means of assessing such
capabilities could include greater use of
assessment centres. Recruitment employing
such approaches may be expensive but
effective in terms of matching the
psychological expectations of staff,
organisation and customer. The second is
through training to develop the capabilities.
While it is commonly accepted that
technological capabilities can be enhanced
through training there is debate about the
extent to which training and development can
address the emotional dimension of service
delivery. What does seem to be agreed is that
staff who genuinely ``give from the heart'' and
derive personal satisfaction from meeting the
needs of others are well received and
appreciated by customers. Consequently a
number of factors are considered essential
when customer-service roles require strengths
in emotional capability, and recruitment may
be initially favoured to ensure aptitude in
customer-service staff. Managers will need to
assess where their current recruitment
processes fail to address the emotional and
technical aspects that are required.
Ensure service leadership
Good intentions in developing a service
strategy will be lost if the fundamentals of an
effective service organisation are not present.
It is recognised that there is no single generic
service culture that is always successful, but
all effective cultures place a strong emphasis
on the crucial and developing roles of
customer-service staff. Attributes that
contribute to service leadership include:
. professionalism within customer service
(both among customer-service staff and
in customer-service support roles) builds
trust through dependability, respect,
empathy, and diplomacy;
. inclusiveness in service processes
encourages co-operative teamwork and
mutual support and understanding;
. communication allows expression for the
individual and empowerment in the
customer-service staff role;
. knowledge is shared at all levels and
learning encouraged; and
. technology is incorporated confidently
and appropriately into the service
processes.
These attributes should ensure that the
service organisation is responsive, proactive,
adaptable to customer needs, and
opportunistic.
Summary
Customer service in the future will require an
increasing degree of professionalism from
both managers and customer-service staff.
Some organisations are already making
169
Creating strategies for managing evolving customer service
Colin Armistead and Julia Kiely
Managing Service Quality
Volume 13 . Number 2 . 2003 . 164-170

7. dramatic changes as technology alters the
nature of their service-delivery processes.
However, service organisations that will be
successful in the future will focus the roles
and capabilities of their service staff on
customer needs, and support their staff
through active service leadership.
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170
Creating strategies for managing evolving customer service
Colin Armistead and Julia Kiely
Managing Service Quality
Volume 13 . Number 2 . 2003 . 164-170