CUSTOMER PARTICIPATION IN VALUE CREATION,

A DOUBLE-EDGED SWORD

Emergent perspectives in marketing highlight new opportunities for

co-opting customers as a means to define and cocreate value through
their participation.

Consumer participation (CP) drives performance outcomes

(customer satisfaction, employee job satisfaction, employee job
performance) through the creation of economic and relational values.
The effects of CP on value creation depend on participants’ cultural
value orientations.

Promoting CP could be a double-edged sword for firms. CP enhances

consumers’ economic value attainment and strengthens the
relational bond between customers and employees, but it also
increases employees’ job stress and hampers their job satisfaction.
Moreover, the effects of CP on value creation depend on the cultural
values of both customers and service employees; which implies that
arranging customers and service employees with matched cultural
value orientations could facilitate the creation of value through CP.

Customers are fundamentally changing the dynamics of the

marketplace. The market has become a forum in which consumers
play an active role in creating and competing for value.
Significant changes in the both marketing thought and the
marketplace suggest that simply being customer oriented is not
enough; firms must learn and collaborate with customers to create
values that meet their individual and dynamic needs.

Encouraging CP may represent the next frontier in competitive

effectiveness and it reflects a major shift from a goods-centered to a
service-centered logic for marketing.
This new service-dominant logic views customers as proactive
cocreators rather than as passive receivers of value and views
companies as facilitators of the value creation process rather than as
producers of standardized value.
The notion of value cocreation is particularly salient among
professional services, which are customized, high contact and high in
credence properties.

For example, doctors at a clinic meet with patients and collaborate to

identify solutions to their needs, customers of financial services
participate by providing information to their financial advisors and
jointly make decisions about their investment plans.
Such CP should benefit customers through improved service quality,
more customization and better service control. And it should benefit
firm through increased customer satisfaction and productivity gains.

However, CP may not unequivocally create positive value, customers’

increased involvement in the service process may shift more power
from service employees to customers and thereby increase employee
workloads and role conflict,
Value creation is a central tenet of the service dominant logic and the
main premise of CP. It should deliver value to both customers and
firms, and customer who perceive more value from their service
encounters tend to be more satisfied.
Participating customers are more satisfied than nonparticipating
customers when the service outcome is better than expected. CP is
positively related to service quality and satisfaction but has mixed
impacts on future purchase intentions.

Are more participatory service relationships between customers and

service provides desirable? How effective is CP in creating value and
affecting service outcomes for both customers and service
employees? What are the boundary conditions associated with
effective CP?

CP is defined as a behavioural construct that measures the extent to

which customers provide/share information, make suggestions and
become involved in decision making. Thus, it enables service
providers to cocreate customized services with customers to suit
their needs. It is also more salient and offers greater value creation
opportunities for service providers and customers in professional
services that feature high credence qualities, high degrees of
customer contact and customization and high interdependence
between customers and service providers for cocreating favourable
outcomes.
CP drives service outcomes (customer satisfaction, employee job
satisfaction and employee job performance) through the creation of
economic and relational values for both customers and service
employees.
Economic value refers to the benefit and cost outcomes of the core
services, whereas relational value entails the value derived from
emotional or relational bonds between customers and service
employees.

Because CP likely influences employees’ emotional responses,

productivity and job performance, a better understanding of its
simultaneous effects on customers and employees can help managers
meet the formidable challenges of satisfying both groups.

The effects of CP on value creation are contingent on individual

cultural value orientations; customers (employees) with higher
collectivist and power distance value orientations perceive less
economic value from CP.
These findings suggest that fostering CP could be double-edged
sword, in that it enhances customers’ economic value attainment and
strengthens the relational bonds between customers and employees
while also creating job stress for employees because of their loss of
power and control, increased input uncertainties and incompatible
demands and expectations. To maximize the benefits and minimize
the costs of CP, managers should match customers and employees by
their cultural value orientations.
SERVICE MODELS OF FRONTLINE EMPLOYEES

Frontline employees (FLEs) share a common understanding of the

term customer service. Differences in FLE attitudes, behaviours and
performance have been ascribed to organizational characteristics,
social environment, job characteristics and personality.

Three distinct service models or interpretations of customer service

exist –
1 the act of giving customers what they ask for, efficiently and
courteously
2 a means to accomplishing immediate objectives such as sales
quotas
3 the formation of mutually beneficial relationships with customers
through problem solving

Service models are related to FLEs’ customer orientation, attitudes,

behaviours and performance can arise from their keeping of different
service models, illuminate individual level beliefs underlying service
typologies, such as goods and service dominant logic and suggest that
FLE recruitment and training should take service models into
account.

FLEs play a pivotal role in face-to-face service encounters because

they can affect customer perceptions of service quality, satisfaction
and value.
The three service models are related to customer orientation,
competence, and interpersonal values.

For example, hospital cleaners who view their work as highly skilled
and significant to patient healing engage with patients and visitors,
do extra tasks and time their work to enhance the medical unit’s
work flow, whereas those who view their work as unskilled and no
more than cleaning minimize their interaction with patients and
visitors and avoid tasks outside their job description.

FLEs understanding of customer service is critical to how they carry

out their work; yet because it is abstract and defies absolute
definition, this understanding is susceptible to varied interpretation.

The several distinct ways of defining service include –

1 executing an activity, such as a deed, effort or process
2 providing a customer benefit such as and experience or satisfaction
of needs

Interpretations are likely to differ between service employees and

researchers and between highly and moderately successful FLEs,
simply because of differences in their knowledge and experience.

For instance, less competent engineers viewed their work simply as

the adjustment of engine parameters such as exhaust permission
levels while competent engineers viewed their work as optimizing
the customer’s experience.
The three models were termed efficiency, means and win-win,
respectively.
Each service model had a specific combination of four attributes that
described the employee-customer encounter;
The FLEs perception of their customers,
The FLEs perception of themselves,
Their objective of the encounter
And, how they assessed the quality of service provided.

In the win-win service model, customer service involves forming a

mutually beneficial relationship with the customer based on problem
solving.
These FLEs focus on creating an atmosphere in which they can find
out what the customer actually needs, which might be different from
what they say they need, thus solving the customer’s real problem.
They use general principles such as treating customers as you’d like
to be treated rather than following detailed scripts or set procedures.
They perceive themselves as resources that customers can use to
solve their problems. They don’t view themselves as slaves to
customers nor do they view themselves as having a higher status
than customers, rather they seek customer respect to establish a
beneficial relationship. They regard each customer as unique with
different needs generated by distinct circumstances, histories and
personalities. They also perceive customers as being able to make
their own decisions when given the right information.

In the efficiency service model, customer service means giving

customers what they ask for, efficiently and courteously.
These FLEs focus on ensuring that the procedures they follow and
their words and actions are correct, regardless of how customers
behave. They view customers as all wanting the same style of service,
thus the importance of following procedures closely. They view
themselves as being of most used to customer when they can answer
questions. The quality of service is determined by their own efforts.

In the means service model, customer service is a means to an end,

such as making a sale.
Customer service is important in meeting immediate, personal goals.
These FLEs focus on managing customers and making them feel as
though they are friends. This is related to viewing customers as
malleable, in the sense that their behaviour can be influenced by the
FLE’s behaviour. This service model assumes distinct categories of
customers that require different service approaches. They view
themselves as actors, removed from customers and capable of
invoking different ways of relating to these customer groups in their
dealings. The quality of service depends on whether the FLEs
objectives have been achieved through influencing the customer.

Service models may also vary with FLE competence.

There are four reasons for this,
First, efficiency employees focused on the actions involved in the
customer service and followed a procedure or routine for interacting
with customers, whereas win-win employees aimed to create an
atmosphere conducive to problem solving procedures. This
difference seems similar to the low and high level constuals in action
identification theory which posits that as people gain experience in
an activity, they move to higher level construals.
Second, efficiency employees focus more on customers literal
statements of need whereas win-win employees focus on
understanding the deeper underlying reasons for customers stated
needs. This difference is similar to novice and expert problem
solvers. Novices tend to view problems on a surface level and follow
a rule or recipe based approach to problem solving, whereas experts
consider problems on a deeper level and see larger, more meaningful
patterns in the problem.
Third, each service model views customers at different levels of
individuality. Efficiency employees view customers as all wanting the
same style of service, means employees categorize customers into
distinct types and win-win employees recognized the uniqueness of
each customer. These differences correspond to findings in studies of
service customization and adaptive selling that show that as FLEs
gain experience, they are better able to recognize and adapt to
customer differences and thus perform better.
Fourth, efficiency, means and win-win had generally increasing task
and social competence as well as customer service experience.

Efficiency FLEs construe customer service at a low level, focusing on

how to provide customer service by ensuring that their words and
actions are correct. Win-win FLEs construe customer service at a
high level, focusing on why they provide customer service. Finally,
more experienced FLEs have higher-level construals than less
experienced ones.
SOCIAL IDENTITY AND THE SERVICE PROFIT
CHAIN

The conventional service profit chain (SPC) proposes that a firm’s

financial performance can be improved through a path that connects
employee satisfaction, customer orientation, customer satisfaction,
and customer loyalty.

A strong focus in contemporary sales and service management has

been on the SPC which refers to a causal chain linking employee
satisfaction to firm financial performance through mediating
constrcts such as customer satisfaction and customer loyalty.

Internal service quality leads to employee satisfaction, which then

drives employee loyalty and productivity. In turn, employee
productivity drives value, which is the basis for customer
satisfaction. Customer satisfaction then determines customer loyalty,
which leads to profitability and growth. This conventional SPC logic
stands as a widely accepted element of current management wisdom,
especially in contexts in which employee-customer interaction
occurs.
The basic elements of an emloyee-customer-profit model are not
difficult to grasp. Any person with even a little experience
understands intuitively that there is a chain of cause and effect
running from employee behaviour to customer behaviour to profits.
However, not all academic research on the conventional SPC has been
positive. Some studies report either small effect sizes or
nonsignificant effects.

From a practical perspective, there are some implementation

problems related to the conventional SPC. These are mainly related
to the construct of customer satisfaction, which stands at the heart of
the conventional SPC. Although the fundamental role of customer
satisfaction remains undisputed, a permanent increase in customer
satisfaction is becoming increasingly difficult to achieve and
therefore firms are searching for alternative ways to raise customer
loyalty.

A key reason for this centers on customer expectations. According to

the most common view, satisfaction results from a comparison of
expectations with performance. If performance meets expectation,
the customer is satisfied, if not, dissatisfaction results. Thus, a core
assumption is that by improving performance, firms can also increase
satisfaction. A problem with this view is that performance at Time 1
sets the expectations for Time 2.

Customers expect what they are now receiving, and in a sense, they
keep upping the ante.
As a result, it is becoming increasingly difficult to meet or exceed
customer expectations. The need is to go beyond customer
satisfaction to delight customers.
Unfortunately this usually requires a considerable amount of effort
and investment in financial resources and it is not clear whether the
performance outcomes justify this investment.

In the quest for sustained success in a marketplace, more and more

companies are attempting to build deep, meaningful, long-term
relationships with their customers.

Consistent with this view, a complementary SPC built on social

identity theory. The two additional constructs are employee and
customer identification, which involve the degree to which customers
and employess identify with a company to fulfill self-defined needs
and the resultant motional reactions to this identification.
Accordingly, customer-company identification represents a different
aspect of the customer-firm relationship than the classic customer
satisfaction construct, because of the self-defined and emotional
components of customer-company identification, there is an
additional driver of a firm’s outocomes and financial performance.
Employee-company identification may be a powerful predictor of
relevant outcomes in addition to job satisfaction.

The two SPC paths (conventional and the social identity based paths)
are complementary.
Firms that successfully manage both SPC paths tend to perform
better than firms that ar successful in only managing either the
satisfaction or the social-identity based path.
Thus an extended model includes both the old and new SPC paths.
This study has important academic implications because the
customer and employee company identification constructs have
received little research attention in marketing. Despite this these are
important constructs because they represent alternative potential
means of developing a strong bond with customers, an issue that has
recently been of great relevance and importance to academic
marketing theory and research.
 ACKNOWLEDGEMENT

This project would not have been possible without the

support of many people.
 
I owe my sincere thanks to Ms. Anuja Mathur also extend my
gratitude for the excellent guidance and support provided by
her in helping me accomplish the project successfully. She
has been a constant source of inspiration and motivation for
hard work. The classroom teachings provided by her were
extremely beneficial and guided me to work on the project.
 REFERENCES

RESEARCH ARTICLES FROM JOURNAL OF MARKETING –

The Service Models of Frontline Employees

- Rita Di Mascio

Social Identity and the Service Profit Chain

- Christian Homburg, Jan Wieseke & Wayne D. Hoyer

Is Customer Participation in Value Creation a Double-Edged Sword?

- Kimmy Wa Chan, Chi Kin Yim & Simon S.K. Lam