Download An interview with Christian Grönroos

An interview with Christian Grönroos
Interview by Sarah Powell
Dr Christian Grönroos is Professor of Service and Relationship Marketing
at Hanken Swedish School of Economics in Helsinki, Finland and chairman
of the board of the CERS Centre for Relationship Marketing and Service
Management at the business school.
Dr Grönroos is one of the pioneers of modern service marketing. His
research interests also include internal marketing, service quality and
relationship marketing. Grönroos has been awarded the Ahlsell Award for
outstanding research into marketing and distribution and the Erik Kempe
Award for his textbooks on service management and marketing. He has
also received the American Marketing Association's (Service Interest
Group) 1999 Career Contributions to Services Discipline Award. Christian
Grönroos is a distinguished member of the Finnish Society of Science and
Letters.
You are one of the early developers of the school
of service management and marketing thought
that, internationally, has been labelled 'The
Nordic School'. How, broadly, does the Nordic
philosophy differ from that, say, developed in
the USA?
Christian Grönroos:
That is actually a very important question.
Because of a difference in underlying philosophy,
service management and marketing have
developed rather differently here in Europe, and
specifically Northern Europe, compared with
North America. One of the differences has been in
the method of research. In North America this has
followed a more traditional, quantitative
approach, based on the testing of hypotheses.
Here in Europe it is more a matter of trying to
develop a theory without formulating a
hypothesis for testing, and using qualitative
approaches. This has enabled us to move more
quickly and effectively when developing
marketing in a new area such as services. My
feeling is that the North American approach acts
as something of a straitjacket as everything must
be 'squeezed' into old marketing frameworks
such as the Four P model and the marketing mix
approach which we feel are of no interest to
service management and marketing.
To what do you attribute this difference in
approach?
Christian Grönroos:
There are a number of ways of answering this
question. First of all, because marketing as a
systematized body of knowledge was first
developed in North America and developed in the
consumer goods context, a tradition has grown
up there which it is very difficult to discard introducing a totally new way of thinking is
problematical in academia because academics
tend to 'shoot down' anything new, requiring
proof of everything.
Secondly, there are differences in methodology
between Europe and North America. I consider
methodology a constraint. In North America they
talk of methodological strengths. The North
Americans, as said, have been, and still are, to a
substantial degree obliged to think in terms of
quantitative analysis, considering this the only
scientifically rigid and therefore robust way to
develop new ideas. However if you pursue your
research in that way, you have to start from where
you are, formulate a hypothesis based on what
you know, and then test it, making small
incremental improvements. I consider that a
straitjacket approach as well.
Meanwhile in Europe, while we also have
quantitative bases, in the early stages in new
areas and new sub-areas, the approach is
markedly qualitative: you don't formulate
hypotheses based on what is; instead you try to
build on what is, but with far more freedom. I
think that has been a particular strength when we
are talking about a new area like service
marketing where it has turned out that the old
marketing approaches, such as the marketing
mix approach, do not 'fit' very well. Just adding
new Ps to the Four P marketing model without
changing the basic approach as has been done in
North America is no solution.
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In the services arena the operational side is
important for the marketing effort. How do
customers perceive the service? How good is
performance? The Nordic School approach says
that marketing is not a function with a predetermined set of decision-making areas as per
the Four P or however many Ps model.
You are one of the earliest proponents of the
term 'service management' to describe marketorientated management of services in service
and manufacturing firms. How does this differ
from scientific management?
Christian Grönroos:
The scientific management approach is
problematical in the sense that it is standardized.
This philosophy is based on the late 19th/early
20th century concepts of writers such as
Frederick Taylor, which were taken up by Henry
Ford and others. The idea was that organizations
would be most effective if they focused on the
division of labour and specialization. According
to scientific management you maximize, or at
least optimize, your effectiveness within each
specialization. This functioned very well during
most of the 20th century. However, with the
development of the post-industrial society, it no
longer works because we are reaching a situation
where service is important - and service is not a
function; it is by definition a process involving a
number of business functions.
What is important is how the customer perceives
the service process. For example, you may
optimize the operational aspects of the service
process and you may be very effective in using
resources, but this will not necessarily lead to the
best quality in service - and customers will not be
willing to pay money for poor service. So this is
bad from a marketing point of view.
So while, as said, scientific management is
based on the idea of division of labour,
separation of each task from the other, and
specialization in people and other resources
used in performing these tasks, service
management starts from the idea of a process
perceived by the customer, which provides value
for the customer. While there is room for
specialization,
there
is
considerable
generalization in the sense that you can't have
different tasks and sub-tasks that are suboptimized if they counteract each other because
the customer perceives these individually and
also the sum of them both. Consider the
following example. Sub-optimizing in a restaurant
operation would mean that in the kitchen it
would be most effective to have only a limited set
of dishes to serve. In the restaurant itself it would
be profitable to encourage the guests to eat
quickly and then leave. That would be suboptimizing two of the sub-processes.
From a scientific management point of view,
these are good ideas as you are using your
resources as efficiently as possible. But from a
marketing point of view they are disastrous
because customers will want a menu with
choices and will want to relax and enjoy their
meal, not rush through it. With service
management, you consider the process as a
whole to ensure that customers feel they have
received value, that they are satisfied and would
return. The restaurant example only too clearly
illustrates the difference between scientific and
service management approaches.
“All in all I am very
sceptical about how CRM is
used as a concept by
consultants and how it is
'sold' to managers and
executives in companies
that are looking for new
ways of managing their
businesses in order to meet
the challenge of
competition in postindustrial society.”
So this brings us to the whole concept of
relationship marketing and needing to know
more about your customers in order to serve
them better?
Christian Grönroos:
Exactly. You need to get to know your customers
throughout, not only focusing on what products
and services they want but the service
consequences to customers, e.g. what level of
care they want; how they would like to pay; how
we can best answer customer enquiries; how we
should communicate with them; how we manage
failures, and so on...
To what degree do you think the absence of
personal interaction in e-commerce complicates
customer relationship management (CRM)? Do
you believe tools such as CRM and
personalization software can bridge the gap?
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Christian Grönroos:
That is actually a very good question as it covers
major issues. Let's start with the second part of
the question, i.e. tools such as CRM and
personalization software. Now, to my mind what
consultants call CRM right now has nothing to do
with customer relationship management as this
is a system, a strategic system for managing
customers throughout, in each and every subprocess. What consultants call CRM are simply
tools normally used for developing IT-based data
systems to manage some part of this; they are no
more than a tool for some part of customer
relationship management. That said, these tools
can be and often are effective and important
instruments in developing a CRM approach - but
that is if, and only if, the other bits and pieces are
in place as well, i.e. there is a customer
relationship-based strategic foundation for the
company. If this is not the case, then I do not
believe that CRM tools and other such software
can bridge this gap. In the latter case, with the
CRM tool, the company may be more effective in
making promises, but it will fulfil them as badly
as before. There could be problems with
deliveries, with software upgrading, customer
training, claims handling, invoicing and so on. In
customer relationship management, all this has
to be addressed, not just one part of it.
So, all in all I am very sceptical about how CRM is
used as a concept by consultants and how it is
'sold' to managers and executives in companies
that are looking for new ways of managing their
businesses in order to meet the challenge of
competition in post-industrial society.
Coming back to the first part of your question, i.e.
that relating to the absence of personal
interaction in e-commerce, this is a complicated
issue. To date there is still no real, systematized
knowledge or theoretical model about how to
handle e-commerce from a relationship point of
view. The transaction itself is easier of course and
in the future I am quite convinced that in ecommerce the absence of personal interaction
will be no major obstacle for managing the
business from a customer relationship
management point of view. There is no reason
why e-vendors should not develop a very
interactive and relationship-orientated contact
with their customers and visitors to their
websites and that is what e-commerce is
attempting to do.
The problem at the moment is that those who
develop a new technology only understand the
technology and have very little knowledge about
its potential use. Meanwhile, those destined to
use the new technology have very little idea
about how this technology really works although
they see that it looks promising. Here, referring to
what we discussed previously, consultants have
a major responsibility but in general they are not
bearing that responsibility very well. Some are, of
course, and I suppose we should not expect the
consultants to shoulder all the blame. Buyers
tend not to be very knowledgeable; they have
little understanding and tend to seek 'quick
fixes', pressuring consultants to suggests tools
that they hope will create a customer relationship
management system. But customer relationship
management takes more than a 'quick fix'.
You mentioned in a recent article that customers
must feel rewarded for disclosing data about
themselves which provide the key to relationship
building. With more and more companies
seeking information from customers and
potential customers, do you not think there is a
risk of a backlash with increasing numbers of
consumers simply refusing to disclose any
information about themselves?
Christian Grönroos:
Oh yes, very much so. We're in a situation where
too many companies have latched on to the idea
of culling information from customers or potential
customers visiting a website. That said,
customers must disclose some personal data
otherwise the relationship can't really develop.
What the marketer has to do is to make the
customer feel incentivized, motivated to disclose
data. That is the key - customers must in effect
feel that they are gaining something if they offer
information. There are a number of ways of doing
this. One is to ensure that the customer needs
the type of product or service on offer on the
Internet. The next step in motivating response is
to ensure that the website communicates a
positive potential offering. If the website doesn't
'ring a bell' with site visitors and fails to interest
them, visitors will see no reason to interact with
it.
I am not talking about rewarding customers in
terms of offering them something simply for
giving data about themselves - although there
too, possibly, there is room for development. I am
talking more about how you present your
product, how you target it to the appropriate
audience, and how you communicate what you
are offering in such a way that potential
customers are motivated to continue and accept
that to do this they need to reveal some details
about themselves.
Internet selling is challenging traditional
methods of selling. What do you see as the major
marketing issues to be addressed?
Christian Grönroos:
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My understanding is that the situation now faced
with the emergence of e-commerce points to the
need for some totally new thinking. E-commerce
has
substantially
increased
competitive
pressures. If you go into a normal shop, it may
not be that easy or convenient to make a
comparison with a competing shop because
there may not be one in the vicinity - so the
tendency is usually to stay and see what the shop
has to offer. The situation is not at all the same
on the Internet. It is perfectly simple to 'jump'
from one website to another and make direct
comparisons. This makes it imperative, as
already stressed, that companies 'hold on' to
website visitors by ensuring that on their very first
'hit' on the site they are motivated to stay on...
There may need to be totally new ways of thinking
about how to encourage the customer to proceed
with a site visit - how to present what you are
offering in an interesting way that stimulates
curiousity. Then too, you need to add a 'comfort'
factor, making everything straightforward and
easy, offering simple, convenient methods of
payment and so on, and trying to determine
exactly what the customer wants - which of
course requires knowledge of the customer. So
what I would emphasize is the need for new and
innovative thinking to meet this challenge. □
In addition to his academic career, Christian
Grönroos lectures on service management and
marketing and relationship marketing in
university-level executive programmes and inhouse seminars in service and manufacturing
firms in Europe, North America, Latin America and
Australasia. Dr Grönroos is the author or coauthor of several books, and numerous research
reports, articles, conference publications and
working papers. He is a member of the Editorial
Advisory Board of Emerald’s Management
Decision.
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