“Service Encounter 2.0”: An investigation into the roles of technology, employees and customers

“Service Encounter 2.0”: An investigation into the roles of technology, employees and customers

Read new CSI blog by Bart Larivièrea, David Bowenb, Tor W. Andreassen, Werner Kunzd, Nancy J. Sirianni, Chris Voss, Nancy V. Wünderlich and Arne De Keyser.

1 Introduction

The context in which products and services are designed, produced, and consumed is changing at a frenetic pace. The rapid development of Artificial Intelligence (AI) and corresponding novel digital technologies and devices such as smartphones, advanced robotics, Intelligent Agents and the Internet of Things (IoT) are fundamentally altering the interplay between customers and organizations – thereby changing the roles of all involved actors. It is against this background that this paper seeks to understand how the transformed business environment is affecting the very nature of the service encounter – widely considered to be one of the foundational constructs of service research ().

The objectives of this paper are three-fold. First, we seek to establish an evolved view of the service encounter – which we label Service Encounter 2.0 – that accounts for the changing context in which it takes place. This will not only help foster novel academic research on the topic, but it can also assist managers in adjusting their focus when making strategic decisions about service encounter design and management. Second, we put forward a synthesis of the changing interdependent roles of technology, employees, and customers in the Service Encounter 2.0 and discuss how they impact employee/customer outcomes. In conceptualizing these roles, we account for distinct business models - asset builder, service provider, network orchestrator, technology creator – as drivers of technology deployment.

interface. The latter can be considered as an integration of people (i.e., employees, other customers), the physical environment, service processes and technology (). As such, service encounters also encompass customer interaction with company elements other than human actors such as the servicescape and self-service technologies.

This perspective, however, falls short of the current service reality. The context in which service is delivered and experienced has fundamentally changed in several ways (). This warrants an updated perspective on the service encounter concept. Today, service encounters are enabled by complex service systems, which are configurations of resources, including people and technologies, that interact with other service systems to co-create value (). For example, a service encounter is now often realized by multiple providers working together in a service network. Also, customers themselves take on an increasingly active role to co-create the service encounter (); sometimes also in interaction with other customers (). Most importantly, the service interface is gradually evolving to become technology-dominant (e.g., Intelligent Assistants acting as service interface) rather than human-driven (i.e., service employee acting as service interface). This evolution is only expected to continue as customers, like companies, are increasingly interacting through technology themselves (). One such example is the use of smartwatches which track users' behaviors like walking and sleeping. These devices interact automatically with a service provider (e.g., Fitbit) for further data analysis. Here, customer-company interactions happen in an automated way, without customers taking any deliberate action.

In light of this evolved context, we consider the Service Encounter 2.0 to encompass “any customer-company interaction that results from a service system that is comprised of interrelated technologies (either company- or customer-owned), human actors (employees and customers), physical/digital environments and company/customer processes.”

These encounters range from simple dyadic interactions to complex interactions that bring together multiple entities (human and non-human) through various interfaces. They entail human-to-human, human-to-technology and technology-to-technology interactions ().

In this paper, we take a particular interest in understanding how technology, as implemented by the company, impacts the human actors involved in the service encounter – i.e., employees and customers. This will be the focus of the remainder of this paper. We start by conceptualizing the different roles of technology in the service encounter and consider how these are (in part) driven by the company's adopted business model. After, we consider how each of these roles impacts

2 The Service Encounter 2.0

Early work on the service encounter defined it as “the dyadic interaction between a customer and a service provider” (). The focus was on ‘dyadic, human and role-driven’ interactions between customers and employees (). In other words, the service encounter was mainly considered to be ‘a game of people’ driven by specific learned behaviors appropriate for the situation (i.e., roles) (). However, broader interpretations of the concept quickly became more common. Following, the service encounter now refers to distinct moments where customers interact with a concrete service

interface. The latter can be considered as an integration of people (i.e., employees, other customers), the physical environment, service processes and technology (). As such, service encounters also encompass customer interaction with company elements other than human actors such as the servicescape and self-service technologies.

This perspective, however, falls short of the current service reality. The context in which service is delivered and experienced has fundamentally changed in several ways (). This warrants an updated perspective on the service encounter concept. Today, service encounters are enabled by complex service systems, which are configurations of resources, including people and technologies, that interact with other service systems to co-create value (). For example, a service encounter is now often realized by multiple providers working together in a service network. Also, customers themselves take on an increasingly active role to co-create the service encounter (); sometimes also in interaction with other customers (). Most importantly, the service interface is gradually evolving to become technology-dominant (e.g., Intelligent Assistants acting as service interface) rather than human-driven (i.e., service employee acting as service interface). This evolution is only expected to continue as customers, like companies, are increasingly interacting through technology themselves (). One such example is the use of smartwatches which track users' behaviors like walking and sleeping. These devices interact automatically with a service provider (e.g., Fitbit) for further data analysis. Here, customer-company interactions happen in an automated way, without customers taking any deliberate action.

In light of this evolved context, we consider the Service Encounter 2.0 to encompass “any customer-company interaction that results from a service system that is comprised of interrelated technologies (either company- or customer-owned), human actors (employees and customers), physical/digital environments and company/customer processes.”

These encounters range from simple dyadic interactions to complex interactions that bring together multiple entities (human and non-human) through various interfaces. They entail human-to-human, human-to-technology and technology-to-technology interactions ().

In this paper, we take a particular interest in understanding how technology, as implemented by the company, impacts the human actors involved in the service encounter – i.e., employees and customers. This will be the focus of the remainder of this paper. We start by conceptualizing the different roles of technology in the service encounter and consider how these are (in part) driven by the company's adopted business model. After, we consider how each of these roles impacts employees and customers.

3 A conceptual framework

To organize our discussion, we propose a conceptual framework that describes the driving forces of the Service Encounter 2.0 (i.e., technology taking on distinct roles in the service encounter) and its consequences for service employees and customers. The framework is outlined in Figure 1.

Fig. 1. Conceptual framework.

Technology takes a central position in the Service Encounter 2.0. Considering how a company can use technology in the service encounter, we distinguish three key roles: (1) augmentation of service employees, (2) substitution of service employees, and (3) network-facilitation. The occurrence of these technology roles is in large part driven by the company's business model. In we discuss the distinct roles of technology in connection with the adopted business model. In, we identify how this shift induces new employee roles in the service encounter; doing the same for customers in. In, we discuss the impact of these changed roles on relevant outcomes and investigate how these relationships are moderated by employee/customer role readiness.

4. Employee and customer training, performance appraisal and feedback

To perform well, employees and customers must develop specific skills that allow them to execute their role(s) in the service encounter (). For example, employees as enablers must possess competencies of both technology readiness and interpersonal skills (). To date, however, much remains unknown on what specific skills and competencies underlie every distinct role. Yet, this knowledge is crucial for the development of effective training practices. The latter can be various in nature and entail traditional (i.e., in person) and more innovative (i.e., computer-mediated,

gamification) tools (). Training and education might also be effective to overcome employee and/or customer resistance against a changing service encounter. Not every individual is eager to work with technology and might experience distrust and anxiety, which can ultimately lead to service sabotage ().

Further, new metrics should come to track employee and customer performance in the service encounter and their experience thereof (), and link these different metrics. For example, employees as innovators might be judged on their actual contribution to service improvement processes, whereas customers as innovators might be monitored through their customer knowledge value (). These adapted metrics could then provide valuable information for employee evaluation, the development of novel incentive schemes and the valuation of customers. Especially for customers, we argue that companies should move beyond simple customer satisfaction measurement. Rather, measuring customer role performance and providing feedback on how well customers execute their various roles can help boost future role performance. Uber, for instance, allows its drivers to rate customers and shares aggregate scores from 1 to 5 with its customers. Being relatively new in practice, rating customers might lead to some resistance as evaluation becomes a two-way street.

At the same time, more research is needed on how employees experience the service encounter. Notwithstanding major interest in customer experience, research on the employee experience is currently lacking. Employee experience is a topic deserving of far more elaboration and research. Borrowing from the work on customer experience, employee experience needs to be conceived and measured with the same longitudinal, journey perspective. A structured analysis of the employee experience, its exact conceptualization and measurement could strongly advance our knowledge of (service) employees.

5 Organizational challenges

Companies need to stay at the forefront of the dynamic forces that are fundamentally changing the service encounter setting. Therefore, they must develop adaptive capabilities that allow to anticipate changes on the market (i.e., vigilant learning), experiment with multiple service encounter setups (i.e., adaptive experimentation) and develop strong relationships with technology-creating and other parties (i.e., open marketing) ().

Furthermore, any company should continuously evaluate its current business model (i.e., mix of capabilities, partnerships and strategies) and consider how characteristics of other models can

complement the current one to create better service experiences. The goal should be to create an optimized (hybrid) model that emerges from a blend of (disrupted) business models that create value through a fusion of physical (asset builder), human (service provider), intellectual (technology creator), and network (network orchestrator) capital. Effective company leadership will be critical to such change ().

6 Other

The by technology accelerating organizational change is not only transforming service employee roles. It is also causing the disappearance of many traditional service jobs. Indeed, recent work by estimates that around 47% of total US employment risks to be replaced by technology. Clearly, such change represents a critical event for any involved actor and typically leads to an increase in employee uncertainty, anxiety, stress and resistance (). More research is needed to uncover how threats of obsolescence affect employee experience. Also, what should happen with the large numbers of “substituted” employees? Here, it is especially important for public policy makers and schools to figure out what capabilities are needed to survive in such fast-changing business environment and how education programs should be adapted to prepare students for the workforce of the future.

7 Concluding thoughts

As technology is fundamentally changing the nature of the service encounter, managers will need to take important decisions on how to best manage and mix all involved parties. In this paper, we have emphasized that technology, employees and customers can take on different roles. Companies that figure out ideal role combinations across distinct service encounters along the customer journey will gain a competitive advantage. Acknowledging inherent customer and employee heterogeneity to perform well in their transformed roles and recognizing the limits of technology will be key managerial capacities in the future. While our framework offers a first insight, new theory and empirical research is needed in support of this exciting area in service management.

Published: 24 July 2017 14:17