How can ser­vice be­come a dif­fer­en­ti­at­or in a highly com­pet­it­ive mar­ket?

Tobias Keil is Head of Vendor Management Operations at Nets Group. He has completed his Master of Business Development (MBD) with a master thesis about service. This is what he discovered. For the project, he won the prize for the semester’s best thesis at MBD.

What did you examine in your master thesis?

Originating from the question how service can become a differentiator in a highly competitive market I looked into two questions:

Do customers perceive value from their interactions with customer service? Customer value is an often used and broadly discussed term, especially in the marketing sphere. However, many companies do not or cannot break down this “theoretical” concept into business relevant perspectives on their actual product characteristics or service deliverables. I researched what kind of value merchants, e.g. restaurants and shops, actually receive from their interactions, what they value and if there are values that are more important or “valuable” as others.

Based on the identified values I then looked into the question to what extend these values influence the decision of a merchant to change, stay or choose a payment provider. In highly competitive markets every company is looking to gain a competitive advantage, and often service is defined as an area of differentiation. Putting the customers and their satisfaction in the focus sounds obvious and there is no shortage in companies claiming to do so. While it is a huge effort to setup efficient processes, supporting systems and hire and develop employees with the right mindset, it all starts with the question: What is it actually the customer values?

Why did you choose that particular theme?

Over 10 years, so almost my entire professional life, I am working in different departments in customer service. Therefore, it was naturally for me to choose a topic in this area, where I also believe a big difference can be made. Despite being a buzzword, I believe that value, or better its generation, is crucial for businesses. In my bachelor thesis I wrote about Economic Value Added as a financial perspective on value and now in connection with my Master of Business Development at CBS it was a great fit to apply the view of customer value. Due to my interaction with multiple stakeholders over the course of my career, it was clear to me that there seldom is a common understanding of what is the most valuable we deliver. Therefore, that was of particular interest to hear the customers voice for such important beacon for direction. I chose dr. Simon Kelly`s framework as I regarded it as a comprehensive overview and summary within the value discussion.

According to Kelly you can categorize value in 4 types:

• Economic Value: Focus on what you get out or what you need to pay for a product or service.
• Perceived Value: This is the most various group, as the spectrum of what customers can perceive as value is basically endless. One can enjoy for example the aesthetics of a phone while another enjoys the easy handling, while another one loves to be seen with an expensive or rare phone.
• Relational Value: representing the win-win perspective of a business relationship, where both sides benefit from the development of the cooperation.
• Experiential Value: The overall experience of the cooperation is in focus, e.g. to what extend is the customer involved in the development of a product.

What can you conclude based on the project?

The project eventually produced the following 4 conclusions:

• Merchants perceive value from their interactions with the customer service. In accordance to the above mentioned categories that could be the customer only wants or appreciates the cheapest offer, while others prefer for example various channels to reach the service, value added services or they appreciate the long lasting relationship with us. All of these value types of the value framework could be found and various “sub-types” of each value be identified, translating the more “abstract” value types into more tangible characteristics. An example of these subtypes for perceived value is psychological safety, the feeling that customer service is always available and takes care of the problem that stresses the merchants.
• None of these values makes a real difference. Even though merchants perceived several characteristics as valuable, none of them was important or strong enough to make a difference in the decision of the merchants. The biggest factor for decisions about a service provider was the price of the solution.
• Service plays a subordinate role or minor part in the considerations of the merchants, because:
  • A product is supposed to function. Contacting the customer service is a (negatively perceived) necessity.
  • Therefore, it is not taken into account at the moment of choice.
  • Customer service is functioning in an asymmetric impact matrix. A good functioning customer service can satisfactorily fix something that is not working as supposed. It can so to say level out the negative experience from the failed product, but only up to the expected level. However, a non-functioning service can amplify the negative experience by not fixing the issue towards the expectations.
  • Service, even though a good perceived one, can barely create a barrier for change.
• Customers gain psychological safety by knowing the service is “always” available. Despite many digital service solutions, such as online self-service, web-portals or FAQs, customers prefer to call. This is because in a situation of distress, they want that somebody takes them by the hand and guides them through the situation, giving them the feeling that the problem is taken from their shoulders.

What significance can your project have for your organisation and possibly other organizations?

As every organisation we are looking into how to gain and maintain a competitive advantage. Naturally, all departments contribute to the success of a company. As primary activity the operations department (where customer service is part of) is an area where a competitive advantage can be suspected and claimed.

My research however shows, that for the very specific customer cluster of small and medium customers, service is a necessity rather than something that can shine above other areas. This is relevant in a corporate world where resources are limited and everyone is fighting for budget and attention.

While it cannot constitute a competitive advantage, the interviews I have made as part of my master thesis revealed that service has a specific importance supporting the product, which is apparently not functioning as expected. In case of customer contact there are a few things that can make a difference for the customer. These need to be taken into account and more importantly, they need to be permanently reviewed and updated. The biggest challenge I see here is to actually ask the customer and not to jump into conclusions based on biased assumptions.

The MBD program develops specialists and managers personally and professionally. How has your master's project contributed to that development?

My focus throughout the MBD programme was digitization and strategy. However, one of the biggest eye-openers and take-away for me was to understand how a company must interact in relation to its everchanging environment, and what needs to be done to use the emerging opportunities, e.g. through digitization of the society.

During the master project I applied theory into the business context to an extend that I have not done before. Of course, one applies models and knowledge, but the application of specific theories to a specific topic showed the challenges and how to overcome them. As interesting and relevant a theoretical model can be, it does not always apply to the corporate world, or let me better say - a way needs to be found to make it applicable to this specific use case. The other way around it showed that a great foundation to solve a business case is to identify the best-fitting theory. This part took me quite a lot of time (and nerves) in the beginning and I was thrown of several times from my supposedly golden path. To see how everything fit together eventually makes me really proud.