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The 13th INTERNATIONAL RESEARCH CONFERENCE IN SERVICE MANAGEMENT

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How does customer participation support improve customer participation profitability?

LIONEL NICOD

How does customer participation support improve customer participation profitability?

LIONEL NICOD

Abstract This papers aims at studying the relationship between customer participation support and participation. Participation has become a main issue in services with the development of customer’s roles in services and the rise of self services technologies. In this context, companies attempt to find out solutions to improve customer participation performance as customer participation support. This paper reviews participation definitions and participation customer participation support definition. Then, it studies the relationship between customer participation support and participation through a quantitative study (570 respondents) in an Ikea store. This paper contributes to define a methodology to study customer participation from a service provider perspective. It proposes to alternate questionnaire and observation phases and to measure participation thanks to robust indicators such as customer participation profitability. When we quickly explain his role to customer at the beginning of the visit, his participation profitability increases. Moreover, the support nature (cognitive vs cognitive + affective) has a stronger influence upon customer participation profitability (CPP) than the support medium (employee vs physical evidences).

LIONEL NICOD AIX-MARSEILLE UNIVERSITY IAE of Aix-en-Provence, Cergam E-Mail: lionel.nicod@univ-amu.fr

Introduction Since the beginning of services as a specific marketing research fields, customer participation has been highlighted as a main difference from product marketing (Bateson and Langeard, 1982; Eiglier and Langeard, 1987; Larsson and Bowen, 1989 Bitner et al, 1997). Indeed customer participation is a requirement in the process of service producing (Eiglier and Langeard, 1987). Founding on the servuction theory, service is the result of an encounter between three factors: physical evidences, employees and customers. So customers may be considered as partial employee (Mill and al, 1983; Mill and Morris, 1986) and their participation is the work, which they have to perform. During the last decades, the participation weight has dramatically increased: the technologies development has led to the implementation of Self-Service Technologies. So issues about participation become crucial for companies. Defining participation in services Customer participation in services is defined in two ways: as a degree of action and as a set of roles. First, authors consider participation as a degree of action: a degree of customer physical attendance (Chase, 1978), a degree of customer implication (Silpakit and Fisk, 1985), a degree of customer contributions (Langeard et al, 1981; Eiglier and Langeard, 1987; Larsson and Bowen, 1989). A customer has a high participation when he’s active and he has a low participation when he’s passive or when the service may take place without him. Second, participation is defined as a role content: “Each participant (customer and employee) has a role to play: the script from which he/she reads is often strictly defined ” (Solomon et al., 1985). Founding on Katz and Kahn (1966) and Bateman and Organ (1983), Keh and Teo (2001) identify two roles: the intra role and the extra role. The intra role includes the different customer activities that are required to produce the service. Indeed customers have to do different actions during the service process as co-producers (Solomon et al, 1985; Mills and Morris, 1986; Larsson and Bowen, 1989; Bateson, 2002; Orsingher, 2006), they have to give some information to firms (Mills et al, 1983; Mills and Morris, 1986; Kelley et al, 1990; Lengnick-Hall, 1996; Bitner et al, 1997; Bettencourt, 1997). The extra role includes various tasks that are performed voluntarily beyond what is expected: customers may contribute to quality (Bettencourt, 1997; Bitner et al, 1997; Lengnick-Hall, 1996; Mills et al, 1983), customers may help each other (Bettencourt, 1997; Lengnick-Hall and Claycomb, 2000), customers may produce word of mouth (Bettencourt, 1997). So we define participation as the different roles a customer may or have to perform during the service process and his degree of action in each role. These role performances influence service outcomes.

Profitability as a participation outcome From a company point of view, participation improves profitability (Lovelock and Young, 1978; Eiglier and Langeard, 1987; Bitner and al, 2002). Customers are standing in for the employees in self-service activities and this process dramatically reduces human costs in organization (Fitzsimmons, 1985). Thanks to the implementation of Self-Service technologies, these costs savings increase. In their article, Meuter et al. (2005) give the example of IBM that save 2 $ billions with their online services. But the relationship between participation and profitability assumes that customers know how to participate correctly. According to Bateson (2002), a good participation is not obvious, depending on customer expertise. Participation means uncertainty if companies don’t manage their customers. Employee consider participation as an increase in their workload (Hsieh et al., 2004), which is more important if customers don’t perform their role correctly.

Meuter et al, (2005) advice companies to train customers and to strengthen “the effectiveness of their customers as coproducers”. So companies have to support their customers to transform them into effective coproducers. Customer participation support: a new concept in services In literacy, authors often mention the support that companies may supply to improve customer participation. For example, Bateson (2002) suggests that services organization should help customers to learn the script. Bitner et al. (1997) shows that in the weight watchers program, the success requires the customer skills development and the service support. Despite of its importance, few authors focus on the concept and they consider it in two ways: as a perceived support and as an actual support. On the first hand, Bettencourt (1997) define the perceived customer support founding on the perceived organizational support theory (Eisenberger et al, 1986). He demonstrates that this support has a positive influence on some extra roles. The main limit of this definition lays on the organizational support theory. This theory explains how an organization can support his employee in human resources. This approach assumes that “employees form general beliefs concerning how much the organization values their contributions and cares about their well-being (perceived organizational support” (Rhoades et al., 2001). Consequently, this theory is founded on the employee beliefs about a potential support and not on the real support that an employee receives. The perceived organizational support of a customer lies in the potential support, which he believes that he may receive from the service provider. On the other hand, the customer participation support can be defined as “the help that the employees, other customers or the servicescape bring to customer and this help may be information support, emotional support or instrumental support.” (Nicod, 2012). This definition is founded on the social support stream. Founding on Gottlieb (1981), Albrecht and Adelman (1987) define this help as social support : « a communication

that reduces uncertainty.., and functions to enhance a perception of personal control » (p. 19). This support may have different nature: information, emotional or instrumental (Taylor et al. (2004)) and may come from employee or other customers (Rosenbaum and Massiah (2007)). The information or cognitive support helps customer to understand a process. The affective or emotional support reduces customer’s uncertainty, it improves clients' self-esteem, or it enhances the clients' sense of social connection to others (Adelman et al; 1993; Adelman and Ahuvia, 1995). The instrumental support takes place when employees or physical evidences replace customer in the participation script. Customer participation support appears to be a mix of a medium (employee, physical evidences or other customers) and a nature (affective, cognitive or instrumental). As we want to explain the influence of an operative customer support on participation, we adopt this second definition of customer participation support. Organizing Framework From this literature overview, two main issues emerge. First, we would like to establish the relationship between customer participation support and participation: does customer participation support improve participation? Then, if customer participation support improves participation, are there a better support medium or nature?

If we want to study how customer participation support improves participation, we have to define what a good participation is. This definition depends on the point of view and on the context. A good participation for a customer is different from a good participation for a company. In literacy, authors focus on a good participation for customers, which is a part of customer experience. In this study, we adopt the firm point of view and we focus on the intra-role in participation. We choose to test this relationship in an Ikea store. Ikea has a quite complex process that customer has to learn to participate well and several parts of the participation script require a self-service activity. So, a good participation has a strong influence on IKEA profitability. We carry out a short qualitative study to define a good participation in IKEA store. We interview a manager to define a “good” participation in this store. From this interview, it results that a customer participates well when he spends little time with employees and when his participation is consistent with the Ikea “how to shop” guide. So we decide to consider as a good participation: a participation in which a customer spends little time with employee and buy products. We measure it as a ratio between the purchasing amount and the time that a customer spends with employee, what we name customer participation profitability (CPP). According to Ikea manager, the goal of the visit (utilitarian or hedonic) influences customer behavior, what is consistent with literacy (Babin et al. 1994; Bonnin, 2006). According to Babin et al. (1994), “Utilitarian consumer behavior has been described as ergic, task related and rational. Perceived utilitarian shopping value might depend on whether the particular consumption need stimulating the shopping trip was accomplished”. A utilitarian customer directly goes to his goal and he spends less time in the store. “Hedonic shopping value reflects shopping’s potential entertainment and emotional worth” (Babin et al., 1994), customers want to live an experience and

to feel positive emotions. The time that they spend in the store is perceived as a pleasure time whereas it’s a duty and a constraint for utilitarian customers. So we decide to consider the influence of the visit orientations (hedonic vs utilitarian) on the relationship between the customer participation support and the customer participation profitability (CPP). In our study, three dimensions describe the customer participation support: the availability (present or not), the support medium (employee, physical evidence or other customers) and the nature (affective, cognitive or instrumental). Concerning the support medium, we choose to separate Ikea customer participation support from other customers support. Other customers are divided into two categories: strangers and companions. In Ikea store, customers rarely request strangers to help them. In this study, we focus on companion support. Customers voluntarily bring their companions to help them into the store. We separate companion support from Ikea support for two reasons. First, Ikea cannot control companion support. Second, Ikea support is a discrete support at a moment of the visit whereas companion support is continuous. We divide support medium into two variables: support medium (employee vs physical evidence) and companion attendance (present or not). As regards support nature, it is difficult to compare a cognitive support and an instrumental support for instance, because they appear at different moments in participation. They are not commutable. Consequently, we choose to manipulate it differently by contrasting a pure cognitive support with a cognitive and affective support. So we test the following model:

Figure 1: Relationships between customer participation support and CPP

IKEA support :

Availability (available or

not)

Medium (employee vs

physical evidence)

Nature (cognitive vs

cognitive +affective)

Companion (yes or not)

Utilitarian or hedonic goal

Customer

expertise

Customer participation

profitability (CPP)

In this model, we assume that people who receive a support from IKEA or from companion have a higher CPP than people without support (H1 and H4). Among people receiving a support, we suppose that employee has a higher influence on CPP than physical evidence (H2). Employees create particular relationships with customer and are able to communicate positive emotions (Price & Arnould, 1999; Pugh, 2001) and then customers should listen to them more carefully. We assume that cognitive and affective support has a higher influence than cognitive support (H3). Indeed cognitive support helps customer to understand how the store is organized and affective support reduces the perceived risk, which is a limit to customer participation (Lovelock and Young, 1979; Eiglier and Langeard, 1987; Meuter, 2003). So people, who receive two supports: cognitive one and affective one, should have a higher customer participation profitability (CPP). H1: The customer participation support availability has a positive influence on customer participation profitability (CPP) H2: An employee support has a stronger influence on customer participation profitability (CPP) than a physical evidence support. H3: A cognitive and affective support has a stronger influence on CPP than a cognitive support. H4: A companion has a positive influence on CPP. Utilitarian people are looking for achieving their goal quickly whereas hedonic people are in store to live an experience (Babin et al, 1994). So we assume that utilitarian people will be more receptive to customer participation support coming from Ikea than hedonic people: H5 (a,b,c) : The following relationships are stronger for utilitarian customers than for hedonic customers:

(a) The customer participation support availability has a positive influence on CPP.

(b) An employee support has a stronger influence on CPP than a physical evidence support.

(c) A cognitive and affective support has a stronger influence on CPP than a cognitive support.

Expert knows well the organization and the process in the store, they are already productive (Bateson, 2002). So we assume that customer participation support is more effective on non expert customers: H6 (a,b,c): The relationships : H1,H2,H3 are stronger for non expert customers than for expert customers.:

(a) The customer participation support availability has a positive influence on CPP.

(b) An employee support has a stronger influence on CPP than a physical evidence support.

(c) A cognitive and affective support has a stronger influence on CPP than a cognitive support.

Method and sample Our objectives require a quasi-experimental design. First, we contrast two situations: supported customers vs unsupported customers. As we separate the support coming from IKEA and the support coming from a companion, we establish the following design: Customer without

companions Customer with companions

Customer with a support from IKEA

100-150 100-150

Customer without a support from IKEA

100-150 100-150

Table 1: Quasi-experimental design 1 Then, among people helped by IKEA, we divide them in four categories by using support medium and nature: Cogntive nature Cogntive and affective

nature

Employee medium 50-75 50-75

Physical evidence medium 50-75 50-75

Table 2: Quasi-experimental design 2 In each case of the second table, we take care to have the same number of customers with companions as customers without companions to neutralize this influence. We exclude people with child from the sample and people who come and create their kitchen, because their participation is too different from the standard one. The sample size is 570 respondents. We manipulate the support nature with two scripts: a script in which there is only cognitive information and a script in which we add an affective information to cognitive information, with sentences such as “ you will see, the process is very simple”. We carry out manipulation checks (sample: 60 respondents) and customers clearly identify the difference between the cognitive script and the cognitive and affective script. We manipulate the support medium with two media. Concerning the physical medium, we use an ipad with a short movie whereas concerning employee, an employee tells the script showing pictures on an ipad. The quasi-experimental process is the following one. When a customer enters in Ikea store, we interview him to measure his hedonic/utilitarian orientation and his expertise. We control customer gender, age and the kind of expected purchase (furniture, decoration accessories…). We adapt the scale from Babin and al (1994) to measure hedonic/utilitarian orientation and we create a 3 items scale to measure the expertise. We run AFE to check the scale dimensionalities. As in the article of Babin and al. (1994), the hedonic/utilitarian has two dimensions : an utilitarian one

(Cronbach’s alpha = 0,828) and an hedonic one (Cronbach’s alpha = 0,906). The expertise scale is a one-dimension concept (Cronbach’s alpha = 0,807). Then we affect him to an experimental condition. If customer is helped, we train him about the IKEA process with a support medium and nature. The customer participation support length is between 2 and 3 minutes. Then we follow each customer and we observe his behavior and we measure the purchasing amount with an observation table. As we define participation as customer roles, we have to observe each of them to know if customer performs them correctly. The mean of the visit length is around 50 minutes per customer. We compute the customer participation profitability (CPP) by dividing the purchasing amount by the time that the customer spends with employee. Findings

Main effects in the relationship between support availability, support medium, support nature, companion attendance on customer participation profitability (CPP).

We check that the control variables (gender, age, kind of expected purchase) have no relationships with support availability, support nature, support medium and companion attendance. Then, we analyze the data in two times. In a first time, we neutralize hedonic/utilitarian orientation and expertise as covariables in two ancovas. In the first ancova, we study the influence of support availability and companions on CPP. In the second ancova, among helped customers, we analyze the influence of support nature and medium on CPP. We obtain the following results (the spss outputs are in appendix 1 and 2): Support

availability Companion attendance

Hedonic orientation

Utilitarian orientation

Expertise

Customer participation profitability (CPP)

+ + - + No influence

Support

medium Support nature Hedonic

orientation Utilitarian orientation

Expertise

Customer participation profitability (CPP)

No influence

+ (if cognitive and affective)

- No influence No influence

Table 3: The Ancovas results

So the support availability at the beginning of the visit and the companion attendance have a positive influence on CPP (H1 and H4 accepted, sig<0,05). When customer receives some quick explanations about the process or when he’s accompanied, his ratio between his purchasing amount and the time that he spends with employee increases. The influence of a companion (Eta=0,027) is stronger than the influence of ikea support (Eta= 0,014).

The customer participation support availability reduces the gap of CPP between customer with companions and without companions. We split the data with customer participation support (with support vs without support) and we test the influence of companion on CPP thanks to an ancova (appendix 3) and Bonferroni’s contrast (appendix 4):

Figure 2: The influence of companion attendance on CPP depending on Ikea

customer participation support availability. There is a weaker significant difference of CPP between with or without companions groups if customer participation support is present (sig = 0,02). If customer participation support is not present, the difference is a stronger significance (sig<0,001). Among the customers who are helped, there is no significant difference between a support supplied by an employee and a support supplied by physical evidence (H2 rejected, sig=0,565>0,05). There is no reason to mobilize employees to help customers at the store entrance, they don’t raise CPP more than physical evidences. The support nature influences CPP when a customer receives a cognitive and affective support, his profitability is higher (H3 accepted, sig<0,05). As we assumed, few words of encouragement may increase customer participation.

Moderation effect of hedonic/utilitarian orientation

In a second time, we analyze the moderation effects of utilitarian/hedonic orientations and expertise. In a first time, we selected pure hedonists and pure utilitarian people from the cases. Pure hedonists are people with a score higher than 4 on the mean of hedonic items and lower than 4 on the mean of utilitarian items. Pure utilitarian are the opposite: with a score lower than 4 on the mean of hedonic items and higher than 4 on the mean of utilitarian items. We split the data in two groups: pure hedonic people vs pure utilitarian people. Then we execute several one-way anovas to identify the influence of the independent variables (support availability, support medium, support nature) on CPP for each group (hedonic/utilitarian customers). We obtain the following results: Influence of the following variable upon CPP

Without moderation Utilitarian customers

Hedonic Customers

Support availability + + (if present) No influence

Support medium No influence No influence No influence

Support nature + (if cognitive and affective)

+ (if cognitive and affective)

No influence

Table 4 : The results of moderations by visit orientation

As supposed, customer participation support availability has a higher influence on CPP for utilitarian people than for hedonic people (H5a accepted, sig<0,05). The support medium has no influence whatever the visit orientation be (H5b rejected, sig>0,05). A cognitive and affective support has a higher influence on CPP (H5c accepted, sig<0,05). Utilitarian people are in tense and they want to achieve their goal quickly. When companies encourage them, they reduce their perceived risk. Hedonists are not anxious, so customer participation support influences them less.

Moderation of customer expertise Concerning expertise, we recode the data: people with a mean of expertise items higher than 6 are considered as experts and lower than 6 are considered as non expert. Then we execute anovas of the independent variables (support availability, support medium, support nature) on CPP for each group (expert vs non expert customers). We obtain the following results: Influence of the following variable Without Expert No

upon CPP moderation Expert

Support availability + No influence No influence

Support medium No influence No influence No influence

Support nature + (if cognitive and affective)

+ (if cognitive and affective)

No influence

Table 5 : Results of moderations by visit orientation

Customer expertise has no moderation effects except for support nature (H6a, b rejected, sig>0,05). Paradoxically, support nature has a higher influence on CPP for experts (H6c rejected, sig<0,05). This result is quite surprising because experts are more sensitive to affective support than non experts. This relationship may result from context. In Ikea store, customers are used to be independent. Experts don’t expect to be helped and least of all they don’t expect to be affective supported. This positive surprise may influence positively their CPP. Discussion The focus of this paper has been on the relationships between customer participation support (availability, medium and nature) on customer participation profitability (CPP) defined as the ratio between purchasing amount and time that customers spend with employee. In contrast to traditional approach, we adopt the company perspective and we build a specific methodology to measure the real participation performance of a customer. If participation is defined as the different roles a customer may or have to perform during the service process and his degree of action in each role, we have to observe it to establish if the role is performed correctly or not. So, we define with Ikea what a good participation is, and we create a participation measurement: the customer participation profitability (CPP). Then we measure it in two steps: a questionnaire to control variables, an observation to measure participation performance. The methodology is difficult to operationalize because it requires a lot of observers (70 people were involved in this study to observe customers) but we obtain a reliable reflect of customer participation and its efficiency. In this paper, we develop the customer participation support concept by measuring the relationships between the dimensions of this notion (availability, medium, nature) and participation. We establish the positive influence of customer participation support on CPP specifically for utilitarian customers.

Managerially, companies should encourage customer to come with companions. Indeed, the companion influence is stronger than Ikea support one. For example, discount operations or special services might be dedicated to customers with companions. If a customer participation support is deployed at the store entrance, companies have to focus more on the support nature than on the support medium. They should not only explain the process but also they should reassure and bolster their customers showing them that participation is easy. customer participation

support should target utilitarian customer and specifically expert customer, who are more sensitive to affective support. Further research could explore deeply the customer participation profitability (CPP). Among the different services and contexts, different tools, which measure participation, could be developed. Ikea manager indicate us that Ikea expectations about the participation of hedonic and utilitarian customers are quite different. The creation of a measurement dedicated to hedonists could be interesting. Concerning the customer participation support concept, we identify the influence on CPP, but not on the decision to participate. Research about the influence of customer participation support on decision to participate and how it motivates customer to participate could be led. It’s possible for example that employee as support medium has no influence on CPP but it may motivate customer to participate.

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Appendix 1 : Ancova with Ikea support availability and companion availability

Tests des effets inter-sujets Variable dépendante:sqrtrendementpersonnel

Source Somme

des carrés de type III ddl

Moyenne des carrés D Sig.

Eta au

carré partiel

Non centré.

Paramètre Puissance observéeb

Modèle corrigé

473,884a 5 94,777 6,269 ,000 ,054 31,346 ,997

Ordonnée à l'origine

11773,795 1 11773,795 778,792 ,000 ,587 778,792 1,000

H 82,660 1 82,660 5,468 ,020 ,010 5,468 ,646 U 64,838 1 64,838 4,289 ,039 ,008 4,289 ,543 Support 117,932 1 117,932 7,801 ,005 ,014 7,801 ,796 Companions 226,220 1 226,220 14,964 ,000 ,027 14,964 ,971 Support * Companions

7,212 1 7,212 ,477 ,490 ,001 ,477 ,106

Erreur 8284,673 548 15,118 Total 20607,723 554 Total corrigé 8758,557 553

a. R deux = ,054 (R deux ajusté = ,045) b. Calculé à partir d'alpha = ,05 Appendix 2 :Ancova with support nature and medium Tests des effets inter-sujets Variable dépendante:sqrtrendementpersonnel

Source Somme des carrés de type III ddl

Moyenne des carrés D Sig.

Modèle corrigé 116,935a 5 23,387 2,379 ,039 Ordonnée à l'origine 5545,785 1 5545,785 564,197 ,000 H 45,482 1 45,482 4,627 ,032 U 5,823 1 5,823 ,592 ,442 Support medium 3,261 1 3,261 ,332 ,565 Support nature 48,406 1 48,406 4,925 ,027 Support medium * support nature

1,014 1 1,014 ,103 ,748

Erreur 2624,480 267 9,830 Total 8228,292 273 Total corrigé 2741,415 272

Appendix 3 : Ancova wuth companion availibility splitting data among customer participation support availability

Tests des effets inter-sujets

Variable dépendante:sqrtrendementpersonnel

Customer support Source Somme des

carrés de type

III ddl

Moyenne des

carrés D Sig.

dimension1

Yes Modèle corrigé 317,550a 3 105,850 5,601 ,001

Ordonnée à l'origine 7285,062 1 7285,062 385,467 ,000

H 127,857 1 127,857 6,765 ,010

U 66,221 1 66,221 3,504 ,062

Companion 102,651 1 102,651 5,431 ,020

Erreur 5254,003 278 18,899

Total 12692,959 282

Total corrigé 5571,553 281

No Modèle corrigé 142,543b 3 47,514 4,313 ,005

Ordonnée à l'origine 4717,701 1 4717,701 428,253 ,000

H ,209 1 ,209 ,019 ,891

U 10,709 1 10,709 ,972 ,325

Companion 135,864 1 135,864 12,333 ,001

Erreur 2952,333 268 11,016

Total 7914,764 272

Total corrigé 3094,876 271

a. R deux = ,057 (R deux ajusté = ,047)

b. R deux = ,046 (R deux ajusté = ,035)

Appendix 4 : Bonferroni contrast

Comparaisons par paire

Variable dépendante:sqrtrendementpersonnel

Customer

support

(I)

Companion

(J)

Companion

Mean

differences

(I-J) SD Sig.a

dimension1

Yes

dimension2

Yes dimension3

No 1,244* ,534 ,020

No dimension3

Yes -1,244* ,534 ,020

No

dimension2

Yes dimension3

No 1,426* ,406 ,001

No dimension3

Yes -1,426* ,406 ,001

Basée sur les moyennes marginales estimées

*. La différence des moyennes est significative au niveau ,05.

. Ajustement des comparaisons multiples : Bonferroni.