Customer Reactions to Service Separation

Service separation
This research defines service separation as customer’s absence from service production, which denotes the spatial separation between service production and consumption.
The results indicate that service separation increases customers’ perception of not only access convenience and benefit convenience but also performance risk and psychological risk. Furthermore, these effects differ across services.
The current research focuses on one service characteristic-inseparability, which means that production and consumption of a service take place simultaneously.

Two main questions
1. What are the benefits and down-sides of service separation to customers?
2. How do customers’ reactions to separation affect their purchase decisions and post-experience evaluations?

Theoretical Background
The arguments of service separation
Pros: Separated services can benefit customers by allowing a professional to do the job better than they could themselves, thus saving time and effort.
Cons: Service separation limits marketability and is undesirable because offering produced without customer involvement are at a disadvantage.

Four categories of service
1. Physical acts to customers’ bodies (i.e. hairstyling, dental surgery)
2. Physical acts to own objects (i.e. dry cleaning, automobile repair)
3. Nonphysical acts to customers’ minds (i.e. consulting)
4. Processing of information (i.e. internet banking)
The research focuses on 3&4 because they can be performed both separately and inseparately, which enables them to compare customer reactions across these two modes of service delivery and allows service providers the flexibility of designing and choosing either or both service delivery modes.

A Qualitative Study
To explore customer reactions to service separation, the authors conducted in-depth interviews, and got the results of advantages and disadvantages of separated services as below.
General across services:
Advantages- Saving times and effort, Flexibility
Disadvantages- High risk, Anxiety
Specific to certain services:
Advantages- Lower price, Higher quality
Disadvantages- Reduced interactions, Delay recovery, Fewer services

Hypotheses Development
The Effects of Separation on Service Convenience
As the table above shows, service convenience is related to customers’ time and effort perceptions when buying or using a service.
Service separation effects access convenience and benefit convenience:
1. Access convenience: For unseparated services, customers must visit the “service factory” in person, whereas for separated services, customers can gain access remotely.
2. Benefit conveniences: is related to the time and effort customers expand on service experiment.
Because separation provides customers with the flexibility of buying and consuming the service at their convenience which leads to time and effort saving, the authors made hypothesis:
1. H1: Customers perceive separated services as having greater access convenience than unseparated services.
2. H2: Customers perceive separated services as having greater benefit convenience than unseparated services.

The Effects of Separation on Perceived Risk
Perceived risk is a function of adverse consequence and uncertainty:
1. Adverse consequence: refers to the amount of costs involved in attempting to achieve a set of purchase goals in buying situation.
2. Uncertainty: customers’ probabilistic beliefs in occurrence of adverse consequence.
Two key components of perceived risk:
1. Performance risk: related to whether the service can perform as expected.
2. Psychological risk: pertains to the possible loss of psychological well-being due to using this service.
For separated services, consumers’ absence from production means they sense fewer tangible attributes of the service encounter, and separation decreases consumers’ perceived control over service. Thus, the authors made hypothesis:
1. H3: Customers perceive separated services as having performance risk than unseparated services.
2. H4: Customers perceive separated services as having psychological risk than unseparated services.

The Differential Effects of Separation Across Services
The experience-credence typology based on the way customers collect information for evaluation:
1. Experience services: customers can obtain information by way of experience and form their judgment accordingly.
2. Credence services: customers are not able to gather enough information from experience and therefore have difficulty making confident evaluations.
This article postulates that separation will lead to less perceived benefit convenience for credence services than for experience services, and make hypotheses:
1. H5: The positive effect of service separation on consumers’ access convenience does not vary for credence services and experience services.
2. H6: The positive effect of service separation on consumers’ benefit convenience is weaker for credence services than for experience services.
In contrast, the authors predict that the effect of separation on performance risk and psychological risk are more profound for credence services than for experience services.
1. H7: The positive effect of service separation on consumers’ performance risk is stronger for credence services than for experience services.
2. H8: The positive effect of service separation on consumers’ psychological risk is stronger for credence services than for experience services.

Study 1:

Purpose: to examine the effects of service separation on perceived convenience and risk for experience and credence service.

Experimental Design:
Two by two design: separated or un-separated mode of delivery; experience services and credence services
70 respondents: 32 MBA, 20 postgraduates, 18 undergraduates were asked to list 36 experience and credence services

Chinese-style fast food (in-restaurant dining or calling for delivery) and training program on interview skills (in-class instruction or watching Webcast of the session) were selected to represents experience and credence services, respectively. And fictitious names were used and the order was randomized to ensure nonbiased answers.

Experimental Procedure and Measures:
Sample- Participants were recruited by online ad on bulletin board of a large Beijing University
Procedure- Participants were asked to evaluate access convenience, benefit convenience, performance risk, and psychological risk or both separated and unseparated modes.
Measures- Each construct had 3 item 7 point “agree/disagree” scale. 3 items were used to measure performance risk and 4 items were used to assess psychological risk.

Results:
H1-H8were all supported by the experiment.
Study 1 indicates that service separation increases service convenience but also increases perceived risk. Separation leads to similar access convenience across experience and credence services, but the favorable affect of separation on benefit convenience is less true for credence services. The unfavorable performance and psychological risks are magnified for credence service.

Study 2:
Hypotheses Development:
H9- An established customer-service provider relationship mitigates the positive effect of service separation on performance risk
H10- An established customer-service provider relationship mitigates the positive effect of service separation on psychological risk

Perceived value (benefit-cost) is positively related to service convenience, which enables customers to conserve their limited resource of time and effort, and it is negatively related to perceived risk because it highlights the costs associated with purchasing a service that has uncertain outcomes.

H11- Customers are more likely to purchase the separated mode of experience services than the separated mode of credence services

H12- Customers in an establish relationship with the service provider are more likely to purchase the separated mode of both experience and credence services than new customers

Experimental Design:
Study 2 uses a 2 (service separation) x 2 (service category) x 2 (customer-service provider relationship) mixed experimental design.
Ticket agency (experience) and student counseling (credence) services, in which customers could purchase airline ticket by going to ticket office or buy over telephone or visit counselor office or seek online counseling via instant messaging, were selected. Customers were separated into long-term relationship or new customer; and both services modes charge same price and promised the same quality

Study 2 was conducted in the similar way of study 1 and participants were asked to make a probable purchase decision on the scale of 100 points.

Results:
H9-H12 were all supported by experiment results. Thus, Study 2 confirms that customer relationship management can effectively reduce the unfavorable consequences (perceived risks) of separation for both experience and credence services. Customers prefer for separation varies across service categories and customer service provider relationships. Customers are more likely to purchase the separated mode for experience services when they have an established relationship with service provider. Study 1 and 2 provide consistent results in regards to moderating role of service category on customer reaction to service separation.

Study 3:
customers considered separated services more convenient and risky may also be explained by the need to use technology-based machines to complete these services
second, studies 1 and 2 relied on scenario-based experiments and student samples and the external validity of the findings requires substantiation. Third, study3 aims to overcome some limitations.

Experimental Design
A quasi-experimental design is used to investigate customers’ actual experiences with separated and unseparated service.

Experimental Procedure and Measures
Sample-participants in executive development and executive MBA programs at major university in Beijing to complete the survey.
Procedure- prepared two versions of the questionnaire for each service
Measures- the measures of service convenience and perceived risk were the same as those in Studies 1 and 2.

General Discussion
This research provides the first examination on customer reactions to service separation, and conduct three quantitative studies to investigate the effects of service separation on service convenience and perceived risk, which influence customers’ purchase decisions and postexperience evaluations.
Study1 : service separation not only can increase access and benefit conveniences but also leads to higher performance and psychological risks. Moreover, for credence services, its favorable effects are diminished, while its unfavorable effects are augmented.
Study2 : when both separated and unseparated service modes are available, customers will make trade-offs between the benefits and the shortcomings of service separation.
Study 3 : retests hypotheses using a quasi experiment on nonstudent customers and obtain consistent findings.

Theoretical Contributions
The lack of corroborating empirical evidence has meant that the dispute on the desirability of service separation could not be effectively resolved. The current research empirically investigates service separation from customer’s perspective. And separated services are not synonymous with technology delivered services. In addition, while some services may benefit from technologies to create a separated delivery mode, service separation does not necessarily depend on technology or machine.

Managerial Implications
Separation may be a win-win strategy for both firms and customers. Building strong brands, offering service guarantees, and instituting service recovery can be suggested as effective strategies to lower perceived risk. Firms can provide a separated option to increase convenience and flexibility for customers; for delivering the core benefit, the unseparated mode may be more effective to convey personal interaction and care. And firms can reduce the perceived risk attributable to separation by instituting customer relationship management.

Future Research Directions
First, the concept of temporal separation merits further examination because it would be useful to know in what ways temporal separation is different from spatial separation.
Second, the effects of separation on reliability and assurance would be more complex because they may depend on service characteristics and other contextual factors.
Third, it would be worthwhile to examine if and under what conditions hedonic services can be separated because there may be differences in the consequences of separation between utilitarian and hedonic services.
Finally, the effects of service separation on service convenience and perceived risk may benefit from cross-cultural validation.