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Customers do not merely purchase services; they are also often actively involved in their design and delivery. In this respect they are co-producers, which means that they not only have an impact on the quality of their own experiences but also influence the satisfaction of other customers, and they can help or hinder the productivity of front-line employees and the company. Customers also frequently fail in their co-production role.1 Research indicates that about one-third of all service problems are caused by the customer.2 As companies increasingly shift work to customers and incorporate more self-service technologies, customers will take on even greater responsibility for service quality. As a result, their failures will become more critical.
Poor co-production by customers has financial implications. For example, the World Health Organization has identified the failure of patients to take prescribed medications correctly as a major global problem. In the United States, only 51% of patients follow their medication regimen for high blood pressure. Evidence shows that 96% of patients who adhere to their prescriptions have control over their blood pressure versus 18% of those who don’t adhere to their prescriptions.3 Similarly, The Merck Manual, a leading medical text, has identified 15 reasons why patients don’t take their medicine, ranging from misunderstood instructions and financial concerns to forgetfulness and apathy. These failures led to 23% of nursing-home admissions, 10% of hospital admissions and countless additional medical appointments, tests and procedures.4 Such customer failures add significant and unnecessary costs to the medical system.
We define a customer failure as any action by the customer that has a negative impact on that customer’s experience, the experience of other customers or the company’s productivity. Unfortunately, widely used performance measures and quality frameworks such as the Malcolm Baldrige National Quality Award, the Balanced Scorecard and the various versions of the International Organization for Standardization (ISO) are mostly silent on the contributions of customer co-production to company performance. Based on our research, we have developed a framework for preventing customer failure.
This framework evolved out of findings from two long-term research programs, one related to service failure and recovery and the second focusing on customer participation in services. (See “About the Research.”) For this component of the research, we conducted interviews with senior managers, front-line managers and customers on the subject of customer failures.
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1. R.B. Chase and D.M. Stewart, “Make Your Service Fail-Safe,” MIT Sloan Management Review 35 (spring 1994): 35–45.
2. V. Zeithaml and M.J. Bitner, “Services Marketing: Integrating Customer Focus Across the Firm,” 3rd ed. (New York: McGraw Hill, 2003).
3. World Health Organization, “Adherence to Long-Term Therapies: Evidence for Action,” report (Geneva: WHO, 2003).
4. M.H. Beers and R. Berkow, eds., “Merck Manual of Diagnosis and Therapy,” 17th ed. (New York: John Wiley & Sons, 1999).
5. See N. Bendapudi and R. Leone, “Psychological Implications of Customer Participation in Co-Production,” Journal of Marketing 67 (January 2003): 14–28; L.A. Bettencourt, “Customer Voluntary Performance: Customers as Partners in Service Delivery,” Journal of Retailing 73, no. 3 (1997): 383–406; and L.A. Bettencourt, A.L. Ostrom, S.W. Brown and R.I. Roundtree, “Client Co-Production in Knowledge-Intensive Business Services,” California Management Review 44 (summer 2002): 100–128.
6. C.K. Prahalad and V. Ramaswamy, “Co-opting Customer Competence,” Harvard Business Review 78 (January–February 2000): 79–87.
7. S.S.Tax and S.W. Brown, “Recovering and Learning from Service Failure,” MIT Sloan Management Review 40 (fall 1998): 75–89.
8. S. Picton, “Now What Do We Do?” National Post, Mar. 27, 2001, sec. E, pp. 1–2.
9. M.L. Meuter, A.L. Ostrom, R.I. Roundtree and M.J. Bitner, “Self-Service Technologies: Understanding Customer Satisfaction with Technology-Based Service Encounters,” Journal of Marketing 64, no. 3 (2000): 50–64.
10. D.M. Stewart and R.B. Chase, “The Impact of Human Error on Delivering Service Quality,” Production and Operations Management 8, no. 3 (fall 1999): 240–263.
11. Chase, “Make Your Service Fail-Safe”; and Stewart, “The Impact of Human Error on Delivering Service Quality.”
12. D.E. Bowen, “Managing Customers as Human Resources in Service Organizations,” Human Resource Management 25, no. 3 (1986): 371–384.
13. M.J. Bitner, “Servicescapes: The Impact of Physical Surroundings on Customers and Employees,” Journal of Marketing 56 (April 1992): 57–71.
14. Meuter, “Self-Service Technologies”; and A. Parasuraman, V.A. Zeithaml and A. Malhotra, “E-S-QUAL: A Multiple-Item Scale for Assessing Electronic Service Quality,” Journal of Service Research 7 (February 2005): 213–233.
15. Bowen, “Managing Customers as Human Resources.”
17. S. Dellande, M.C. Gilly and J.L. Graham, “Gaining Compliance and Losing Weight: The Role of the Service Provider in Health Care Services,” Journal of Marketing 68 (July 2004): 78–91.
18. P.M. Podsakoff, S.B. MacKenzie, J.B. Paine and D.G. Bachrach, “Organizational Citizenship Behaviors: A Critical Review of the Theoretical and Empirical Literature and Suggestions for Future Research,” Journal of Management 26, no. 3 (2000): 513–563; and D.E. Bowen, S.W. Gilliland and R. Folger, “HRM and Service Fairness: How Being Fair with Employees Spills over to Customers,” Organizational Dynamics 27 (winter 1999): 7–23.