Avoiding the Pitfalls of Customer Participation

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Companies pay a lot of attention to getting customers to play an ongoing role in the business by providing suggestions and ideas on their products and services.  Regardless of whether this feedback takes place through surveys, comment cards, online forms, or some other means, studies point to the advantages of encouraging such dialogue.  It can create a bond that enhances customer loyalty and even a willingness to pay higher prices.

However, as Professors Omar Merlo, Andreas B. Eisingerich, Hae-Kyung Shin, and Robert A. Britton write in the Fall 2019 MIT Sloan Management Review, it also has downsides that many senior executives are not aware of.  Indeed, their research, which included interviews and roundtable discussions with 87 executives and 276 employees in a range of service industries, found that enthusiasm for customer participation wanes the closer one gets to the company’s front lines.  When customers are encouraged to speak up, front-line employees can feel threatened.  Even though they are committed to advancing the objectives of the business, front-line employees sometimes see themselves as caught in the middle, torn between representing the views of customers, regardless of how reasonable those views may be, and what they think is reasonable.

For example, customers sometimes expect front-line employees to convey information to management that goes against their interests.  This might include complaints about them or their colleagues or suggestions that could add to their workload.  When the requests have bearing on the workers’ careers and job security, resentment can ensue.  Companies that place too much emphasis on customer participation may be setting up a dynamic in which front-line employees are expected to tolerate poor customer behavior, such as verbal abuse, for their own survival. This can have negative emotional and behavioral consequences, leading to feelings of betrayal and frustration by employees who feel the company values customer-generated information more than their well-being.  The perceived imbalance can have insidious effects on internal morale.

For organizations, the stakes are high: While customer participation can be beneficial, if managers don’t get...

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