Customers' assessments of quality and value, buying decisions, and recommendations are all influenced by emotions. But too often companies don't adequately anticipate those emotions and therefore can't mitigate negative ones. This is especially true for "high-emotion services"--those that trigger strong feelings before the service even begins. Services relating to major life events, such as birth, marriage, illness, and death, fall into this category, as do airline travel, car repair, and home buying, selling, and renovation. They may elicit intense feelings for the following reasons: lack of familiarity with the service, lack of control over its performance, major consequences if things go wrong, complexity that makes the service a black box, and a long duration. The authors have identified four guidelines that can help managers influence expectations and perceptions of quality and value, enhancing customers' satisfaction and loyalty: (1) Identify emotional triggers; (2) Respond early to intense emotions; (3) Enhance customers' control; and (4) Hire the right people. They use some leading providers of cancer care to illustrate the application of these guidelines.

Employee wellness programs have often been viewed as a nice extra, not a strategic imperative. But the data demonstrate otherwise, according to Berry, of Texas A&M University; Mirabito, of Baylor University; and Baun, of the University of Texas MD Anderson Cancer Center. Their research shows that the ROI on comprehensive, well-run employee wellness programs is impressive, sometimes as high as six to one. To achieve those kinds of results, employers cannot merely offer workers a few passes to a fitness center and nutrition information in the cafeteria. The most successful wellness programs are supported by six essential pillars: engaged leadership at multiple levels; strategic alignment with the company's identity and aspirations; a design that is broad in scope and high in relevance and quality; broad accessibility; internal and external partnerships; and effective communications. Companies in a variety of industries-including Johnson & Johnson, Lowe's, H-E-B, and Healthwise-have built their employee wellness programs on all six pillars and have reaped big rewards in the form of lower costs, greater productivity, and higher morale. Those benefits are not easy to achieve, and verifiable paybacks are never a certainty. But the track record inspires emulation, especially when you see the numbers.

Critics of the American healthcare system recite a long list of problems, including rising out-of-pocket costs, inconvenient access, overuse of emergency departments, uncoordinated medical records, and declining numbers of primary care doctors. To address these issues, some new venues have evolved, such as retail and urgent care clinics; however, the emergency department has become the only service provider available to all patients on a 24/7 basis. It is time to reinvent the system. The concept of patient-centered medical homes offers a structure for integrating innovations that can transform the delivery of healthcare. In this model, each patient develops an ongoing relationship with a primary care physician supported by a team of caregivers. An integral feature is the electronic medical record, which facilitates coordinated communication and decisions. Access expands beyond the traditional physician office visit to satellite services tailored to individual needs. Services center on whole-person care, including wellness and preventive counseling, as well as acute and chronic care. Adoption of the patient-centered medical home transforms healthcare delivery into a system that benefits everyone.

Most firms are trying to combine products and services into innovative offerings in an effort to boost revenue and profit streams and balance cash flows. These hybrid solutions can help companies attract new customers and increase demand among existing ones by offering them superior value. Such offerings are commonplace - think Apple (the iPod product combined with the iTunes service). While the promise of combined offerings is great, it's easy to get them wrong. The problem is that too many companies, expecting to catch the brass ring, don't think through exactly how to structure, market, and sell their combined offerings. Over the past three years, the authors have analyzed more than 100 winning hybrid offerings from a variety of B2B and B2C companies. Their research shows that most companies stumble in at least one of four ways: failure to differentiate, failure to scale, failure to assess markets and prices appropriately, and failure to invest in the brand. The authors identify common types of hybrids: A flexible product-and-service combination allows buyers to customize their purchase. A "peace-of-mind" bundle offers the best of breed in both product and service. A multibenefit bundle offers customers an increasing number of add-on features or benefits. A "one-stop" bundle focuses on convenience shopping. The authors also offer a practical set of guidelines for identifying the opportunities to create a successful hybrid offering in your own company.

Herein, I discuss the pillars of competing with service excellence to create compelling customer value. My focus is on building the infrastructure of quality service. All companies are service companies, in whole or part, because all create value for customers through performance (i.e., services). Thus, the pillars of quality service really are pillars in any excellent company. The overarching message of this article is: great organizations compete with great service, in good times and bad.

Companies commonly adopt "the customer is always right" maxim as a basic premise for delivering quality service. A close examination of customer behavior, however, reveals that customers can be not only wrong but also blatantly unjust. Unfair customers take advantage of being "always right" by demanding unwarranted privileges and compensation, adversely affecting companies and, in some cases, employees and other customers. Companies can actually strengthen their ability to deliver quality service by dealing effectively with unfair customers.

A strong services brand is built and sustained primarily by customers' interactions with the provider. A services branding model depicts the dynamics of brand creation. From the interrelationships among the presented brand, external communications, and customers' experiences emerge brand awareness, meaning, and ultimately, equity. Illustrates the services branding model by showing how one organization has created, extended, and protected a powerful brand through an unwavering commitment to the well being of its customers. Managers outside of healthcare can benefit from three branding lessons embedded in the Mayo Clinic story: (1) attend to organizational values; (2) play defense, not just offense; and (3) turn customers into marketers.

This is an MIT Sloan Management Review article. Service businesses now make up about 70% of the aggregate production and employment in the OECD nations, yet true innovation is rare in the service sector. Many companies incrementally improve their offerings, but few succeed in creating service innovations that launch new markets or reshape existing ones. By thinking about a service in terms of its core benefits and the separability of its use from its production, managers can more easily see how to out-innovate their competitors. Before they can do so, though, they must understand the different types of market-creating service innovations as well as the factors that enable them. Introduces and describes a two-by-two matrix whose taxonomy helps managers think strategically about service innovations that can create new markets. The dimensions of the matrix refer to the type of benefit offered and the degree of service separability. References best-practices examples to illuminate each cell of the matrix and explain the value of understanding the dynamics of the cell that is most applicable to a service innovation effort.

When customers lack the expertise to judge a company's offerings, they naturally turn detective, scrutinizing people, facilities, and processes for evidence of quality. The Mayo Clinic understands this and carefully manages that evidence to convey a simple, consistent message: The needs of the patient come first. From the way it hires and trains employees to the way it designs its facilities and approaches its care, the Mayo Clinic provides patients and their families concrete evidence of its strengths and values--an approach that has allowed it to build what is arguably the most powerful brand in health care. Marketing professors Leonard Berry and Neeli Bendapudi conducted a five-month study of evidence management at the Mayo Clinic. Their experiences led them to identify best practices applicable to just about any company, in particular those that sell intangible or technically complex products. Essentially, the authors say, companies need to determine what story they want to tell, then ensure that their employees and facilities consistently show customers evidence of that story. At Mayo, the evidence falls into three categories: people, collaboration, and tangibles. The way in which Mayo manages evidence to communicate its message is an example to be followed.

This is an MIT Sloan Management Review article. Offering products or services alone is no longer enough: Organizations must provide their customers with satisfactory experiences. Competing on this dimension means orchestrating all the clues that people detect in the buying process. Customers always have an experience--good, bad, or indifferent--whenever they purchase a product or service from a company. The quality of the experience lies in how effectively the company manages it--in all its facets and from beginning to end. Organizations that simply tweak design elements or focus on improving isolated pockets of the customer experience--by providing a quick hit of entertainment, for example--will be disappointed in the results. An organization's first step toward managing the total customer experience is recognizing what the authors call clues: the signals or messages given off by everything involved in the buying process. Clues can include the product itself (Does it work as advertised?), the layout of a retail outlet (Are the signs easy to follow?), the salesperson's tone of voice (Did he really mean it when he said, "Have a nice day"?), and so on. Organizations that orchestrate the sum total of all the clues can create an optimal experience for their patrons. Addressing the clues that speak to emotions is especially important. Emotional bonds between companies and customers are difficult for competitors to sever. The internalized meaning and value that the clues assume can create a deep-seated preference for a particular experience--and, thus, for one company's product or service over another's. Discusses the tools that are available to help organizations rethink the signals they are sending to customers. Presents two case studies in which organizations dramatically improved their customers' experiences.

Despite the harsh realities of retailing, the illusion persists that magical tools can help companies overcome the problems of fickle consumers, price-slashing competitors, and mood swings in the economy. Such wishful thinking holds that retailers will thrive if only they communicate better with customers through e-mail, employ hidden cameras to learn how customers make purchase decisions, and analyze scanner data to tailor special offers and manage inventory. But the truth is, there are no quick fixes. In the course of his extensive research on dozens of retailers, Leonard Berry found that the best companies create value for their customers in five interlocking ways. Whether you're running a physical store, a catalog business, an e-commerce site, or a combination of the three, you have to offer your customers superior solutions to their needs, treat them with respect, and connect with them on an emotional level. You also have to set prices fairly and make it easy for people to find what they need, pay for it quickly, and then move on. None of these pillars is new, and each sounds exceedingly simple, but don't be fooled--implementing these axioms in the real world is surprisingly difficult. The author illustrates how some retailers have built successful operations by attending to these commonsense ways of dealing with their customers and how others have failed to do so.