CAMBRIDGE, Mass.–A new study by Harvard researchers that includes a credit union has found many companies are making a mistake when it comes to how they handle customers/members at their most anxious moments, with the researchers also offering a simple remedy they suggest can boost loans closed.
The study said many companies in “high-anxiety settings,” such as financial services and healthcare, “are funneling nervous customers to self-service technologies (“SSTs”) – kiosks, websites, and smartphone apps – isolating them at the precise moment when they’re most keen for connection. It is clear that these technologies are less expensive to offer than human support. But what’s less clear is the toll these self-service interactions may take on customers.”
Published in the Harvard Business Review, the research was conducted by Michelle A. Snell, a doctoral candidate in the Technology & Operations Management program at Harvard Business School, and Ryan W. Buell, the UPS Foundation Associate Professor of Service Management in the Technology and Operations Management unit at Harvard Business School, where he is also the faculty chair of the Transforming Customer Experiences executive education program.
What Study Asked
The study set out to answer the questions, “Is there an effective way of helping customers deal with their concerns? Or are companies exacerbating customer anxiety and doing long-term damage to service relationships?”
To conduct its research, the two researchers said they conducted two lab experiments and one field experiment with a U.S. credit union that was not identified.
“We found that anxious customers interacting through self-service technology feel dissatisfied with their decisions even when those decisions appear aligned with their goals,” the two authors stated. “Their dissatisfaction reduced their trust in the service provider. But our results also reveal how a simple, and surprisingly low-cost, change – offering access to a readily-available human – can reverse the negative effects of customer anxiety.”
The researchers said they chose financial services as an area of study because it is “riddled with uncertainty and complex decision-making known to provoke anxiety and distress for its customers.”
The Experiments
Its first experiment involved development of an online investing platform to simulate a retirement planning experience. More than 150 adult participants from across the U.S. were told to allocate a hypothetical portfolio of $100,000 across stocks, bonds and cash over a series of multiple rounds with the objective of growing the portfolio. As incentive, participants were paid cash bonuses based on their performance in the simulation. Every few rounds participants were asked to rate how satisfied they were with a decision they had just made, as well as how anxious they felt at that time.
Noting customer anxiety in online settings undermines customer satisfaction and trust, a second experiment repeated the first, but offered customers the opportunity to connect with a real person for help.
Offsetting Deleterious Effects
“We found that when people had the ability to connect with another person – either an expert or a peer – the deleterious effects of anxiety were offset,” the researchers said. “What really surprised us though was that very few participants took advantage of the opportunity to chat with someone. Although those who felt most anxious before the experiment were the most likely to use the chat feature, merely having the option to access a person seemed to be all most people needed to feel supported. This implies that companies deploying self-service technologies for anxiety-provoking tasks might be able to put their customers at ease, and enhance their trust in the firm, with a relatively low-cost change in design. Just knowing that we can chat with another person – even if we don’t choose to do so – seems to make a big difference.”
Field Tested at CU
The researchers said they then took their work into the field with an unidentified U.S. credit union that had recently launched an online loan application process. The credit union was seeking to increase the percentage of approved applicants who completed the closing process and accessed the funds for their loans.
“Over 200 applicants were randomly assigned to one of three groups: (1) those who received no contact from the credit union until their loan decision had been made, (2) those who received text messages with updates about the status of their approval process (e.g., “we have begun our review”, “we are pulling your credit report”, etc.), and (3) those who received the same messages throughout, with each message including the name and phone number of their loan officer, and an invitation to reach out with questions,” the researchers said.
What Else Was Learned
“Sending applicants text messages with a play-by-play of their approval process performed worse on average than sending no messages at all, in that people who received the text messages and were subsequently approved were less likely to move forward with their loan,” the researchers continued. “In a post-hoc study to understand why, we found that reminding people they are being evaluated – even though the evaluation is an expected part of the service – increases their anxiety.”
In contrast, the researchers said they found the probability of approved loan applicants moving forward with their loans jumped from 64% to 80% when members receiving those same play-by-play messages were also invited to connect with a loan officer.
Balancing Touch and Technology
“As automated service processes are being deployed to engage customers, it has never been more important to understand how to balance touch and technology to deliver efficient and satisfying experiences – ones that lead to trusting, long-term relationships,” the researchers wrote. “Our findings suggest that using self-service technologies in high-anxiety settings can be costly. Anxious customers left to fend for themselves are less satisfied with their choices, and less trusting of the company with which they are interacting. Merely offering access to talk to a person can be enough to restore customer confidence, improve trust in the firm, and strengthen long-term relationships.”
Additional information can be found here: https://hbr.org/2019/04/why-anxious-customers-prefer-human-customer-service