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A Beginner’s Guide to Behavioral Economics in Field Service

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Have you ever wondered why some customers choose you and why some others opt for alternatives? You might have done everything correctly, and the customer had no complaints they shared but still decided to part ways with no explanation. If you are trying to figure out what happened, it is time you learn about behavioral economics in field service. 

Behavioral economics is a field of psychology in which we seek to understand the decisions that customers make. Let’s take a look at why some customers make the decisions they do and what factors and behaviors contribute to a successful connection between your business and its customers. 

The idea, in brief

The idea behind customer psychology for any business, including field service, is the ‘Perception’ of the customers. Perception forms when they first interact with you—it could be a phone call or an in-person visit to your office. Perception defines your customer’s reality, and it is created the first time they interact with you. If you understand this and make this encounter a memorable one, you will come out ahead. Behavioral economics helps you understand how these perceptions are formed and what you can do to fix them. After all, the success of a business does not just rely on their product or services, emotional intelligence is also a factor in positive service interactions. 

How do customers interpret service encounters?

Customers interpret service encounters based on the three forces that strongly influence their feelings. The sequence in which the service is delivered impacts customer perception, as a smooth and efficient sequence can leave a positive impression, while a disjointed or confusing sequence can lead to frustration. For example, a customer waiting in a long line before being attended may feel frustrated and undervalued. Understanding these kinds of behavioral interactions helps in identifying customer psychology.

The duration of the service encounter also plays a significant role in customer perception. A lengthy wait time or prolonged interaction can lead to impatience and dissatisfaction, while a quick and efficient interaction can leave a positive impression. For instance, a customer waiting for a long time to receive assistance from a customer service representative may become frustrated and perceive the service as poor.

Rationalization, or the customer’s attempt to make sense of the service encounter, also influences perception. If a customer experiences a delay or issue during the service encounter, they may rationalize it by considering external factors such as the company’s workload or staffing levels.

Segment the pleasure, combine the pain

“Segmenting the pleasure and combining the pain” in the customer experience involves breaking down enjoyable experiences into smaller, more frequent stages while consolidating unpleasant ones into a single occurrence. For example, in field service, this principle can be implemented by organizing the customer experience into separate stages. The stages can be divided into communication, scheduling and dispatching, resource allocation, invoicing, payments, and follow-up. Each of these can be managed to provide a positive and memorable experience while consolidating potential inconveniences such as wait times and stockouts into specific times or areas.

This approach positively impacts how customers perceive and feel about the overall service. Breaking down pleasant experiences into stages helps customers appreciate each interaction, leading to increased satisfaction. On the flip side, consolidating unpleasant experiences into a single stage minimizes their negative impact, contributing to an overall positive perception of the business or event. In essence, applying the principle of segmenting pleasure and combining pain makes the entire customer experience more satisfying.

Get the bad experiences out of the way early

Customers tend to remember the standout moments, both positive and negative. High points could include instances where the field service team exceeded expectations or went above and beyond to solve a problem. Low points, on the other hand, may involve delays, misunderstandings, or any negative aspects of the service. Field service businesses should aim to minimize low points by addressing issues promptly and maximizing high points through exceptional customer service, clear communication, and efficient problem resolution.

One effective way to approach a bad experience is addressing the issue and acknowledging it before you provide a solution When you acknowledge the negative experience, it will not dominate your customer’s recollection of this encounter. When you resolve negative experiences quickly, you can create a positive trend in providing quality service. Over time, these positive experiences can encourage customer loyalty. 

Let your customers feel they are in control of their decisions

One crucial aspect is the concept of autonomy. By empowering your customers with choices, you create an environment where they feel in control of their decisions. Picture this: you run a field service company specializing in home maintenance and repairs. When a potential customer reaches out to inquire about your services with the intention of booking, a subtle shift in approach can make all the difference.

Instead of dictating a specific service package, present the options available, highlighting the unique benefits of each one. Offer them the freedom to choose the package that aligns best with their needs. This simple adjustment not only respects the autonomy of your customers but also enhances their overall satisfaction. If you are familiar with Nudge’s theory, you know how restricting freedom of choice can result in negative decision-making. 

Extend this principle to the scheduling process. Rather than imposing a fixed time and date for the service, allow your customers to decide what works best for them. By giving them control over these choices, you not only cater to their individual preferences but also foster a sense of empowerment.

Making a positive impression from beginning to end 

Key rituals in professional service encounters include the initial greeting, the exchange of credentials or introductions, and the closure or follow-up. These rituals are significant in marking key moments as they set the tone for the interaction and establish a sense of professionalism and credibility. The initial greeting, for example, creates a first impression and sets the stage for the rest of the encounter. 

The exchange of credentials or introductions serves to establish the expertise and qualifications of the service provider, creating a feeling of trust and confidence in the customer. Finally, the closure or follow-up ritual signifies the end of the encounter and demonstrates a commitment to ongoing communication and support.

Small touches, such as personalized thank-you notes or follow-up calls, can have a disproportionate impact on customer loyalty as they show care and attention to detail. Focusing on the customer’s last encounter can lead to increased satisfaction and loyalty, as it tends to leave a lasting impression. Strategies to finish strong include personalized follow-up, seeking feedback, and showing appreciation for the customer’s business.

It is crucial to stick to these rituals in professional service encounters as they can greatly enhance customer perceptions and experiences. Consistently following these rituals creates a sense of predictability and reliability, which can make customers feel included and valued. By adhering to these key rituals, service providers can reinforce their brand image and build strong customer relationships, ultimately leading to a positive and memorable customer experience.

Conclusion

Proposal theory in behavioral science suggests that customers don’t make decisions by considering all possible options. Instead, they select from a small set of options they already have in mind—which is called the ‘consideration set.’ Segmenting pleasure, eliminating bad experiences, making the best first impression, and strong closure are factors involved in the consideration set. So, gear up your services and operations simplifying these factors to scale your business.

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