Self-service technologies mean customers are playing an ever greater role in delivering the products and services they buy. Dr Toni Hilton of Westminster Business School looks at how to ensure such co-production does not hamper co-creation.
The need to move away from conceptualising value as something that is simply produced by suppliers and consumed, or destroyed, by customers is now widely accepted. It is the way in which the resources of all parties are brought together, or integrated, into the resultant product or service, as well as the experience of that process, that creates the value – hence the phrase co-creation of value.
Co-production – the tasks that each party performs in the ‘production’ of the product or service – is similarly important and not to be confused with co-creation. Generally, in consumer product markets, customers have very little input into the production processes, but this is not true of consumer services and, increasingly, in B2B markets customers do play significant roles.
Co-creation and co-production become more complicated where customer experiences incorporate the use of
self-service technologies (SST) – whether one is navigating their way through a telephone banking menu or scanning their own groceries through the supermarket till.
One of the big differences between our understanding of services marketing as distinct from product marketing, is the key role that people play and the importance of the holistic experience when customers evaluate services. Yet SST replaces the customer – service employee experience with a customer – technology experience. People are replaced with machines and technologies. There is a danger that organisations might see SST as a cheap way of ‘co-creating’ value with customers when in fact what they are doing is merely shifting responsibility for service production to their customers, who are of course external to the organisation – in other words, out of the realm which they control and manage.
Risks
Such an arrangement has serious implications for companies, turning the customer into a partial employee, sometimes even the primary producer. Not everyone is equally willing or able to do this, so companies must account for this diversity within the SST design. While customers may be cheaper, they are also harder ‘to train’ and ‘manage’ than employees, and they can be ad hoc advisers to other customers as they co-produce the service. As ‘partial employees’, customers are less familiar with the internal processes and systems of the organisation and are therefore unable to draw upon the same level of expertise that employees do when producing the service.
Meanwhile, employees must take on roles to educate and support customers as their co-production role increases– especially around self-service recovery when the technology fails, requiring the intervention of employees. All of this means customer perceptions of value are likely to change.
It’s easy to see why SST is attractive to companies, but it may result in lower customer perceptions of quality and value. This is likely to be especially true where:
- High customer churn requires constant support for ‘novice’ customers.
- ‘Novice’ customers outweigh the number of returning ‘expert’ customers.
- Large number of employees are required to support ‘novice’ customers.
- Large number of employees are required to support ‘expert’ customers in on-going fashion if it is impossible to complete service without employee interventions (e.g. confirming age for alcohol purchases or taking security caps off items).
- When customers do not perceive their increased co-production role to be ‘fair’ or commensurate with the value received.
- Where customers have no choice but to use SST.
Research
Where SST delivers more value than before, it is attractive to customers, and our research confirms this basic assertion. SST creates value when the service provided is faster, more convenient, cheaper or results in a unique offering unavailable through another route. Likewise where staff are used more effectively to support customers – and do so visibly – as opposed to simply being replaced by the SST. Choice is also critical; customers should still be able to opt for the conventional route rather than being forced to use SST.
But there remains a big question in customers’ minds regarding the achievement of best price or other bases for value, and this comes down to the expert knowledge that employees have, such as the complexities of different train ticket types, postage and so forth. In addition, some customers are unwilling to undertake tasks that seem to be inherent to the service provision they are paying for, and there is widespread exasperation when SSTs fail and customers need help.
All of this points to the need for organisations adopting SST to ensure these innovations create value that is at least commensurate with customer’s co-production role. They must support their customers, as ‘partial employees,’ as well as their actual employees in their respective new roles. This may mean dramatically simplifying the tasks undertaken by customers, who can’t be expected to have the same level of internal and systems knowledge and skills as employees, or it may mean designing SST which factors in customers’ diverse abilities, resources and willingness to use it.
At the same time, organisations must determine and manage the value that is being co-created with their customers – ensuring a strategy for how customers will gain the knowledge and skills to operate the SST and how they will be supported when and if it fails. The full costs of moving away from face to face interaction must be evaluated, especially in the B2B context where much relies on personal relationships. It is a point equally important in the B2C realm, where customers’ perceptions of value may decline – leading to them switching to another organisation that does offer a face-to-face service.
Replies (3)
Please login or register to join the discussion.
Toni, you've come up with a perspective on the SaaS model that I think uncovers many of the risks in a way that business people and strategist can now see what the factors are that we're up against when launching a SaaS-based product - thanks for a well written article!
Thanks (0)Self-service technology can be 'efficient' but it can't come at cost to the customer experience - if the customer views SST as a cost-saving device rather than a process to streamline then its perceived value plummets. The problem is that what to one person is efficient, is penny pinching to another!
Thanks (0)thank you for a very insightful and well written article which captures excellently the risks involved in co-production and SST. I like the concept of customers as 'partial employees'. The challenge it seems to me is in segmenting customers in terms of their level of 'expertise' and willingness to 'co produce' and flexing service delivery in line with these differential requirements.
Thanks (0)