Self-service technologies should benefit customers, not just bottom lines

Companies like to implement self-service technologies because of the potential cost savings and the appeal of the cutting-edge. But a surprising number of managers fail to implement their own SSTs effectively, according to a study by several professors of marketing at the W. P. Carey School of Business. "The companies that plan their strategies well, and the ones that integrate their customers into the equation, are the ones that will succeed," says Mary Jo Bitner, director of the school's Center for Services Leadership.

Self-service technologies have changed the way people shop, do their banking and check in at the airport. They have helped Amazon.com grow from struggling startup to dominant retailer, and allowed companies across all industries to streamline their processes and save money. But not all self-service technologies (SSTs) — essentially, technologies such as online banking or money machines, that allow customers to literally help themselves — are winners.

And a surprising number of managers still fail to implement their own SSTs in the right way. Fancy technology and potential cost savings make SSTs attractive to companies. Recent research from the W. P. Carey School of Business, however, suggests that success belongs to companies that go beyond technology flash and bottom-line business to be sure their SST initiatives actually make sense — both for the business and, especially, for their customers.

Plan with customer needs in mind

"The companies that plan their strategies well, and the ones that integrate their customers into the equation, are the ones that are going to succeed," said Mary Jo Bitner, a professor of marketing at the W. P. Carey School of Business and academic director of the school's Center for Services Leadership.

Bitner, working with W. P. Carey marketing colleagues Amy L. Ostrom and Stephen W. Brown, and Matthew L. Meuter of the California State University-Chico marketing department, pulled together a series of SST studies, dating back to the pre-dot-com bust years, to find out why companies have put SSTs to use and, more importantly, what customers have liked and disliked about the results. Using that data, the researchers have created a road map of sorts to guide managers and companies working to integrate SSTs into their business plan. And if one thing is certain, Bitner said, it's that more and more companies are looking to do just that.

"SSTs are here to stay," said Bitner.

"We're going to see more and more of them." Companies typically utilize SSTs for three reasons: to reduce costs, to increase customer satisfaction or to expand their customer base. Of the three, however, cost-cutting heads the list. The researchers found companies often have a "strong financial incentive" for launching SSTs — in short, they see SSTs as a way to reduce staff and save money.

Sometimes, the savings can be huge: One study found the per-call cost of using a Web-based or automated telephone customer service system was just 45 cents; the average cost of an interpersonal phone call, by contrast, is $7.60. But cost savings alone don't make for great SST systems, the research team found, and for an obvious reason. Customers don't particularly care about a company's savings. They want good service.

The researchers concluded, "While the ways in which firms interact with customers have changed dramatically and will continue to evolve, the customer's desire for good service has not changed." They added "Those firms which successfully compete through SSTs will in the long term provide the level of excellent service that customers demand and be able to adapt to changes in the environment."

Taking care of customers would seem to be common sense — but the service element is exactly where many companies have slipped up in their SST programs, Bitner said. "Customers have very high expectations for SSTs," Bitner said. "They're not willing to accept failures and poor designs and unresponsive companies just because it's a tech-delivered service."

Just make sure it works

What do customers want from an SST? Excellence would be nice, the researchers found, but basic effectiveness is also a big winner. While the team found customers were impressed with SSTs that offered a level of service beyond personal assistance or SSTs that were able to bail them out of trouble, many customers were just as thrilled when the technology simply worked as promised.

"Some customers are still in awe of what technology can do for them," the researchers wrote. "In our research, one customer told us of being extremely impressed when the cheese he ordered from a Wisconsin Web site actually arrived as promised and he was billed accurately. It is amazing that something so mundane could be so impressive."

Among the companies that have successfully put SSTs to use are: Wells Fargo Bank, which boasts an online banking system customers adore; FedEx, whose Web-based package tracking system is simple and efficient; and Cisco Systems, which has created such a well-planned online troubleshooting system that 80 percent of all customer service issues are now handled online. But the most prominent case of SST excellence, Bitner said, may be Amazon.com.

After a rough start, the company has grown into a highly successful, if not dominant, Web-based superstore, selling everything from books to music to toys — and leaving much of the competition in its wake. The surprising thing about Amazon's success, Bitner says, is that it's a success that many probably once thought impossible. For years, Amazon failed to turn a profit, leading many critics to believe Amazon would join other high-profile Web retailers in the dot-com graveyard. Still, Amazon hung on.

They hung on, Bitner says, because they provided great service. Amazon not only offered the convenience of their Web-based shopping interface, but the logistical and service know-how to get their products delivered on time. Other Web retailers couldn't do the same, and customers took notice. "People had their doubts, but in terms of customers, customers always liked Amazon," Bitner said. "For a lot of the companies that went under, many found that their tech interface wasn't the big problem — it was the logistics, the follow-through."

Not surprisingly, the researchers found customers are more than likely to disapprove of SSTs when they don't work properly, when they're poorly designed and difficult to use, when they create opportunities for the customer to make mistakes or, especially, when there is no "backup" plan in case of SST failure. This is one area, the researchers said, where many companies continue to struggle.

"A major finding of our research is that service recovery systems are almost nonexistent for SSTs," they wrote. "In most cases, when the process of technology fails, there is no way to recover on the spot. Typically customers are forced to call or to come in person to have their problem dealt with. They hate this because it exactly what they were trying to avoid."

Dot-com bust cleared the way

The good news for consumers, Bitner said, is that most of the really bad SSTs have been phased out. The dot-com bust, especially, helped in that regard, as it taught companies that flashy technology alone can't win customers, and that the same basic business principles that are so important for brick-and-mortar companies are every bit as important in e-commerce. "Companies understand it better than they did eight years ago," Bitner said.

"I think many companies realized that in order to be successful, and for people to use the technologies, they needed to design with customer service in mind." So how can a company looking to integrate SST into their business plan avoid a disaster? Bitner offers some simple advice. "They should first decide why they're doing it," she said. "What's the purpose? Why are they introducing the technology? If it's just for cost savings, they're going to have to figure out how to pass that along to their customers in a real and physical way, or the customers won't go for it."

Then, Bitner said, companies must help their customers understand why they should use it: These businesses are essentially asking their customers to change their behavior, but customers won't change unless there is an obvious benefit for them to do so. That's where planning is so essential. Ideally, SSTs should be built specifically with the customer in mind. Finally, the technology must operate well. And if it doesn't, it must be fixed immediately.

"Make sure the technology is efficient and simple, but still offer choices," Bitner said. "Then make sure it works right."