Based on Research By Tony Gorry and Robert A. Westbrook

How Has Information Technology Reshaped The Way Companies Treat Their Customers?

By G. Anthony Gorry and Robert A. Westbrook

Information technology is reshaping relationships between companies and customers, bringing benefits to both. But unfettered use of this technology can erode customer care. For a company to care for clients effectively, both its managers and front line employees must listen empathetically to what they have to say. Unfortunately, a rash of “innovations” aimed primarily at reducing costs has made many companies opaque to their customers who are, as a consequence, inadequately served and increasingly frustrated.

A number of innovative companies have shown, however, that technology need not sour relations between businesses and those they serve. Indeed, it can enrich them if senior managers take the following steps. They need to affirm an empathetic involvement with customers; understand how current systems mediate interactions with customers; deploy technologies that help customers tell their stories; and, finally, enable workers and managers alike to hear and respond to these stories. When these steps enable employees to step “into the customers’ shoes,” their companies can genuinely claim, “We care for you.”

A company’s claim to care for its customers ultimately rests on an empathetic connection with them. It is innate in each of us to respond to the joys and sorrows of others, to feel what they feel. Our empathetic responses are strongest in the presence of others where we can see how they act and hear what they say. Thus face-to-face interactions with customers are invariably more vivid and powerful than the abstractions of quantitative marketing and sales analyses.

Now, however, social networks coupled with our own highly developed imaginations, can place us in the situations of others who are not physically present.

Technology has played a central role in this ability, reshaping customer relationship management with intelligent call routing, interactive voice response, Internet protocol telephony, self-service web portals, and multi-channel integration. It has also given companies better knowledge of who their customers are and how they were acquired.

These deployments profoundly affect front line employees who deal directly with customers, answering questions, resolving problems, and generally supporting them. The attitudes and actions of these employees directly determine the nature of the company’s care for its customers. With appropriate technology and systems, businesses can make it easier for these workers to render not only sufficient but exemplary customer service as well.

One example: access to extensive real-time customer information enables service agents at USAA and American Express to respond almost instantly to customer inquiries and requests for assistance. Indeed, without properly functioning technology, it would be difficult for a large business to care even minimally for its customers.

In the best of circumstances, technology designed to support front line employees promotes not only the company’s interest, but the interests of customers as well. It facilitates convenient access to information about products and services, expedited procurement, easier shipping and billing inquiries and faster reporting of emerging problems. FedEx customers, for instance, can dispatch and follow the course of shipments through the Internet. Amazon customers are able to buy a wide variety of products in an easily, quickly and enjoyably from their own homes or businesses.

The challenge is that in their quest for efficiency, companies too often deploy technology solely as a replacement for front-line personnel, and thereby diminish the role of empathy in customer care. Then uncaring robots or humans rigidly constrained in their responses are deaf to customer concerns and complaints.

Luckily, not all businesses have filled their front line ranks with robots. Many offer less rigidly structured portals where customers seeking a sympathetic hearing have the option of speaking with humans. Used properly, technology can enhance customer experience. Companies such as USAA and American Express have earned their reputations for outstanding customer service with integrated systems that make extensive knowledge about customers readily available to front line personnel. An agent who can pick up the thread of a previous conversation is better able to imagine the customer’s situation, more likely to respond empathetically, and more likely to help.

But such companies seem exceptions. In too many others, economic reasons alone have driven increased reliance on technology in customer relations, causing even well intentioned companies to drift away from those for whom they profess to care so much.

Then, too, customer narratives, elicited by empathetic employees on the front line, can suggest ways a company can improve its performance. The story of IBM is a case in point. When Lou Gerstner took the company’s reins 1993, the company had lost its way. Many in the financial community doubted it could recover. But Gerstner sent each of his top 50 managers to meet with five large customers, not to sell any product but to listen closely to their suggestions and concerns. Gerstner opened every staff meeting with one question: “What are you learning from customers?” This dedication to a culture of listening and empathy is credited with turning the company around.

Good customer care, in other words, is not a luxury. Research shows that when customers feel a company cares, they value its products and services more highly. Greater customer satisfaction means deeper customer loyalty, which translates directly into higher repurchasing and more convincing recommendations to others. Just a 1% gain in customer satisfaction, the researchers point out, has been shown to boost net operating cash flows by an average of $1.01 per $1,000 in company assets. For the larger U.S. firms, that translates to an average gain of $55 million in future cash inflows.

The great companies also innovate with their customer service. Consider Apple’s groundbreaking “Genius Bar,” where customers meet with support personnel – the “geniuses” – to get face-to-face technical help. The booming demand for the geniuses’ time reflects customers’ desire to talk to Apple directly, to tell their stories to an empathetic listener, and to get their problems resolved in real time.

In recent years, the Genius Bar has been translated to cyberspace. Companies like IBM, Nortel, and Cisco are implementing elaborate virtual environments where customers can meet employees “face to face” and express themselves as they would in person. In the coming years, the Rice researchers expect countless new customers will join these virtual communities. The technologies that companies employ to serve the customer need to evolve too, because companies need to do more than only care about their customers. Above all else, they need to be able to treat customers as promised.

To learn more, please read: Gorry, G. A. & Westbrook, R. A. (2011). Once more, with feeling: Empathy and technology in customer care. Business Horizons, 54(2), 125-134.

G. Anthony Gorry is the Friedkin Professor Emeritus of Management at Rice University

Robert A. Westbrook is the William Alexander Kirkland Professor of Business in the Jesse H. Jones Graduate School of Business of Rice University.