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Accenture Professor of Marketing in the Carroll School of Management Katherine “Kay” Lemon is an expert in the areas of customer equity, customer asset management and customer-based marketing strategy. Currently serving a four-year appointment as the editor of the Journal of Service Research, she has conducted research in a range of global industries and co-authored three books on customer relationship management. Chronicle's Ed Hayward recently spoke with Lemon about her current projects, the journal’s focus and her father’s influence on her research.
Your recent research with Asst. Prof. Linda Salisbury and colleagues from Britain looked at how credit card statement information influences the debt repayment habits of consumers. What did you find there?
We found that the minimum monthly payment information you see each month on a credit card statement failed to motivate consumers to pay down their credit card balance quicker. In fact, it resulted in cardholders actually paying less per month.
Was that a surprise?
We thought giving people information about how long it will take them to pay off a credit card by making just the minimum payment and the total interest they’d have to pay would have a daunting effect and motivate people to pay more each month toward their credit card debt. But it didn’t. That was the most surprising result we saw. But if card companies set a higher minimum monthly payment, then people would pay it. That was somewhat counterintuitive to our expectations…I think the larger issue that surprised us is that a lot of people don’t truly understand compound interest. But if you give them a simple heuristic, they can see how small actions, such as small increases in payments, can make a difference in their personal finances.
What did the findings imply about why people struggle with credit card debt?
People tend to use a single reference point to make decisions. But when decisions become complex or require extra thought or forecasting into the future, with all the things people have going on in their lives they don’t have time to sit down and think about what to do. That’s part of what I find so interesting about researching how consumers make financial decisions. I’m interested in how we can make it easier for people to act in their own best interests.
A new project involves looking at how firms solicit customer feedback. What are you looking at specifically?
We’re all familiar with those questionnaires we get that ask us to rate something on a scale of 1 to 5 or 1 to 10. But what happens if you ask an open-ended question about a customer experience? Such as, “Tell us what you enjoyed most about your experience?” What we’re finding is this kind of question has a prominent effect on customers on each end of the spectrum: those who had a very positive experience and those who had a very negative experience. When you give customers a chance to express themselves, it has a positive effect on whether or not those customers – whether satisfied or not – return to conduct more business. So it has real implications for firms and how they should reach out to customers for feedback about their services.
You’re working with Oracle on a project that examines different customer service options. What are you seeing there?
We’re working with Oracle to find out how online support communities work. When firms need help from a company like Oracle, they can read it online, ask a technician or ask the Oracle community. We’re looking at experiences within the community. Do people who ask questions in the community ultimately make a service request, or do they get the help they need? Companies are really at the beginning of peer-to-peer support. It has the potential to help them spend less time on service issues and focus on more complex problems.
You’re the editor of the Journal of Service Research, which is one of the most highly rated marketing journals. What aspects of service does the journal cover?
The Journal of Service Research is a broad, interdisciplinary journal that examines anything that has to do with academic research in the service industry. It covers management, operations, strategy, marketing, and information technology looking at how to improve the practice of service and build our theory of service. In 2011, we received 327 manuscripts and published 27, plus five comment articles. There are 100 researchers on the editorial board and I have three undergraduate editorial assistants – Hayden Smith ’12, Kat Brandenburg ’12 and Joe Simko ’14 – who field manuscripts, correspond with authors and write summaries and press releases.
How is service changing?
Customer engagement is transforming service. With the rapid growth of social media and mobile technologies, consumers can now interact with firms and that is creating different service models. Under the old model, it used to be very difficult for consumers to talk back. Dialogue and interaction were missing from the equation in customer service. There might have been a complaint desk in the back of your department store. Now it is very different and consumers can voice their opinions almost instantaneously.
How will companies respond to the consumer upheaval sparked by service blunders like Netflix’s failed pricing overhaul and the since-abandoned plan for Bank of America to charge customers a fee for using debit cards?
Technology certainly played a role in consumers expressing their anger, but it was also a lot of old fashioned word-of-mouth buzz that forced companies to reassess those proposals and others. I expect firms to continue to try to establish platforms and opportunities for consumers to interact with them so they can deal with these and other questions head-on.
Tell us about how you got your start in the business world as a child, helping your father.
My dad (the late Fred Newell) worked in marketing for department stores in Pittsburgh and in California. Every night, his store managers called in with their numbers and many times I would answer the phone and take their numbers and write them down for my dad. I remember walking the stores with my dad and seeing what he saw in sales and the displays. So I sort of grew up in and around marketing.
You and your father co-authored the 2001 book Wireless Rules: New Marketing Strategies for Customer Relationship Management Anytime, Anywhere. What kind of influence has he had on your work?
His career was constantly evolving, from marketing manager to department store executive to consultant and author. There was a saying, “Give the lady what she wants,” which grew out of the fact that for many companies, women were the target audience. He was in department stores for many years and the customers were mostly women. His focus was about putting the customer at the center of the business, which still holds true today. That’s where marketing should be. Almost everything I study has something to do with finding out how well the customer is served by an organization.