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It Takes Two to Tango: How Empathy Affects Sales Encounters

June 1, 2013

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Jan Wieseke, PhD (Germany), Anja Geigenmüller, PhD (Germany), and Florian Kraus, PhD (Germany)

In sales, retailing, or service businesses, employees' performance during personal encounters is the most influential driver of customer satisfaction. Numerous studies strengthen the fact that employees' behavior shapes customers' service evaluations, their trust in a service employee, and their desire to continue their relationship with a service provider. Accordingly, service firms are advised to hire employees who are willing and able to take the customer's perspective, to sense and respond to a customer's emotions, and to display individual attention and caring for customer needs. Likewise, there is anecdotal evidence that customers' attention and concern for service employees can enhance smooth and harmonious service interactions. Customers who are sensitive to service employees' working conditions are more likely to acknowledge an employee's efforts, which may countervail their discomfort with an unsatisfactory service outcome.

Although the reciprocal character of customer-employee interactions and the influence of empathy on the experience of these interactions are widely acknowledged, studies on effects of empathy in personal encounters are scant. Therefore, we sought to understand how employee and customer empathy govern service interactions. Our study identifies two main effects of empathy. We found that customer empathy strengthens the positive effect of employee empathy on customer satisfaction, leading to more "symbiotic interactions." The findings also indicate that customer empathy is able to mitigate negative effects of customer dissatisfaction on customer loyalty. Obviously, empathic customers are likely to respond to a dissatisfying encounter with "forgiveness."

These findings have important implications for real estate professionals, specifically in the areas of hiring and training sales agents and managing clients.

Employee and Customer Empathy

Despite a considerable ambiguity regarding the nature and conceptualization of empathy, we contend that empathy is best understood as a multidimensional construct comprising cognitive and emotional constituents. We define employee empathy as an employee's ability to sense and react to a customer's thoughts, feelings, and experiences during a service encounter (Castleberry and Shepherd 1993). Imagine a typical home-purchasing decision. For real estate agents, it is critical to anticipate their clients' wishes and to guide them through the decision process. Since searching a new home is a challenging and emotion-laden process, responding to verbalized needs would not be sufficient to provide a satisfying purchasing experience. Employee empathy would therefore enable the agent to react to the client's feelings and thoughts in order to manage the service encounter successfully.

Further, we identify customer empathy as a customer's ability to fully recognize the employee's perspective. We propose that customer empathy fosters an increased understanding of the employee's experience during the service encounter. Empathy strengthens a client's ability to competently interact with the real estate agent and to display behaviors appropriate for such a complex purchasing situation.

Symbiosis and Forgiveness in Service Interactions

Prior research reveals two main effects of empathy in employee-customer interactions. First, empathy strengthens the ability to competently interact with others and to display behaviors appropriate for a given situation or person (Redmond 1989). By fostering a more complete and accurate understanding of the interaction partner, empathy elevates the ability to predict or anticipate the actions or reactions of others (Hakansson and Montgomery 2003). In addition, adapting behaviors to the other's thoughts and feelings and acting for the benefit of the other facilitates reciprocal actions (de Waal 2008). We conclude that empathy on the part of the employee and the customer enhances mutual adaptation in service encounters, which results in "symbiotic" customer-employee interactions and a satisfying service experience (Varadarajan and Rajaratnam 1986). We call this interaction effect of customer and employee empathy "symbiosis," indicating mutual alignment between the parties involved in service encounters.

Second, empathy relates positively to actions intended to help others. In particular, sensing and understanding another's distress increases one's willingness to advance the other individual's welfare (Batson and Shaw 1991). Further, the motivation to help is an integral component of forgiveness, which involves a decrease in revenge-seeking and an increase in benevolence (McCullough and Hoyt 2002). Having the ability to understand and relate to another's thoughts, feelings, and experiences increases the likelihood of forgiving encountered mistakes (Thompson et al. 2005). As previous studies suggest, individuals with greater empathy tend to respond to interpersonal hurt with less anger and greater indulgence than do those with less empathy (Konstam, Chernoff, and Deveney 2001; McCullough and Worthington 1995). We term this effect of empathy "forgiveness," referring to the fact that empathy is capable of alleviating dissatisfying experiences in social interactions.

We postulated and tested three hypotheses. First, referring to prior research, we expected employee empathy to relate positively to customer satisfaction. Having a better understanding of their customers' needs and wants, empathic sales agents are able to tailor their interactive behaviors to the individual client. Second, we hypothesized that customer empathy elevates the effect of employee empathy on customer satisfaction. Empathic clients are able to recognize the efforts sales agents make to satisfy their clients. A favorable perception of an agent's efforts, in turn, increases the level of customer satisfaction. Third, we put forward a hypothesis regarding the "forgiveness effect" of empathy in service interactions. Research in social psychology reveals that an individual's disposition to empathize influences responsibility attributions for negative outcomes. Empathic individuals are more apt to make benevolent attributions when an unfavorable event occurs. This provides rationale for the "forgiveness" of customers - that is, customers who are better able to sense a situation that causes a failure are more inclined to react to an unsatisfactory event in an indulgent, benevolent manner.

Research Study and Empirical Findings

To test our hypotheses on the symbiosis and the forgiveness effect in employee-customer interactions we chose the context of travel sales. Travel agencies are characterized by (1) individual and interpersonal interactions with the customer (including verbal and nonverbal exchange) and (2) a significant influence salespeople may exert on the customer during the interaction. Furthermore, travel sales require intense collaboration between the travel agent and the customer.

Dyadic data were obtained using face-to-face interviews with travel agents and customers in different locations (metropolitan areas, smaller cities). Research assistants visited selected travel agencies and administered the questionnaires to frontline employees and customers who were present on the day of the interviews. To achieve the best possible response and matching rates between employees and customers, members of the research team personally administered questionnaires to travel agents. Subsequently, the interviewers spent one day in the travel agencies and asked customers for an interview after their interaction with a travel agent. We used code numbers to match frontline employees and customer questionnaires.

Data analysis provided support for all hypotheses. We found a positive effect of employee empathy on customer satisfaction. Hence, an agent's level of empathy drives its client's satisfaction with a service. Further, our research supports the proposed "symbiosis effect:" The higher the level of customer empathy, the stronger was the impact of the employee's empathy on the customer's satisfaction. Finally, data supported our proposition regarding the "forgiveness effect." In line with prior research, our study revealed a direct, strong and significantly positive impact of customer satisfaction on loyalty. As expected, clients' satisfaction with a service results in higher customer loyalty. Beyond that, we identified a significant interaction effect between customer empathy and customer satisfaction on customer loyalty: The effect size of customer satisfaction on customer loyalty decreases when customer empathy is high. In contrast, when customer empathy is low, the effect size of customer satisfaction on customer loyalty increases. These results provide support for our proposition that customer empathy mitigates the negative effect of customer dissatisfaction on customer loyalty. These results indicate that for empathic customers, satisfaction with the service encounter is less important to customer loyalty than it is for customers who are less empathic.

Implications for Real Estate Professionals

Hiring and Training Sales Agents

Real estate agencies need to hire sales people capable of sensing client expectations and fostering symbiotic client-agent interactions. Candidate profiles, search mechanisms, and recruiting methods should therefore address not only professional skills but also the ability to apprehend and react to customers' thoughts, feelings, and intentions during a service encounter. Sales agents must be able to walk in the shoes of their clients, to sense and to share their clients' emotions.

Moreover, real estate agencies should foster their agents' abilities to recognize and to respond to different client characteristics. To this end, measures including role playing, videotaping, and mentoring programs are valuable instruments. Managers should be aware of the relevance of knowledge sharing between experienced and inexperienced employees regarding relevant customer characteristics, strategies of recognition, and responses to cope with those characteristics. Helping agents to manage their own emotions and to respond verbally and nonverbally to clients in an appropriate manner is of particular importance with regard to the relevance of personal interactions in home-purchasing situations. This is especially true for situations when agents must respond to clients' expressions of anger or dissatisfaction.

Managing Clients

In order to trigger symbiotic service encounters, agencies can try to match clients and sales agents by their personality types and their language styles. Client pre-encounter profiles allow a matching of clients and sales agents, enabling the client to be directed to an agent with whom he or she is most likely to experience mutual understanding and smooth interaction. Service providers for call centers such as eLoyalty's Integrated Contact Solutions (www.teletech.com) employ this approach to steer each caller to an employee who best matches the caller's personality (Boyd 2010). From the initial contact, the system records and analyzes a caller's language pattern so as to create and enrich his or her personality profile. In doing so, the level of each employee's empathy is leveraged. Moreover, this way of "interaction routing" enhances communication quality between the interactants and, hence, symbiotic interactions.

An easy way to implement this approach is to ask clients to reveal their communication preferences themselves. Before a sales encounter takes place, clients could be asked to answer some questions regarding preferred personality types and individual abilities. Alternatively, agents could ask their clients to assess the quality of interactions and communication during the sales encounter in order to find the best match between clients and sales agents.

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References

Boyd, E.B. (2010), "How a Personality Test Designed to Pick Astronauts is Taking the Pain Out of Customer Support," (accessed December 1, 2012) [available at http://www.fastcompany.com].

Castleberry, Stephen B. and C. David Shepherd (1993), "Effective Interpersonal Listening and Personal Selling," Journal of Personal Selling and Sales Management, 8 (Winter), 35-49.

Batson, C. Daniel and Laura L. Shaw (1991), "Encouraging Words Concerning the Evidence of Altruism," Psychological Inquiry, 2 (2), 159-168.

Hakansson, Jakob and Henry Montgomery (2003), "Empathy as an Interpersonal Phenomenon," Journal of Social and Personal Relationships, 20 (3), 267-284.

Konstam, Varda, Miriam Chernoff, and Sara Deveney (2001), "Toward Forgiveness: The Role of Shame, Guilt, Anger, and Empathy," Counseling and Values, 46 (1), 26-39.

McCullough, Michael E. and William T. Hoyt (2002), "Transgression-Related Motivational Dispositions: Personality Substrates of Forgiveness and Their Links to the Big Five," Personality and Social Psychology Bulletin, 28, 1556-1573.

McCullough, Michael E. and Everett L. Worthington (1995), "Promoting Forgiveness: The Comparison of Two Brief Psychoeducational Interventions with a Waiting-List Control," Counseling and Values, 40, 55-68.

Redmond, Mark V. (1989), "The Functions of Empathy (Decentering) in Human Relations," Human Relations, 42 (7), 593-605.

Varadarajan, P. Rajan and Daniel Rajaratnam (1986), "Symbiotic Marketing Revisited," Journal of Marketing, 50 (January), 7-17.

de Waal, Frans B.M. (2008), "Putting the Altruism Back into Altruism: The Evolution of Empathy," Annual Review of Psychology, 59, 279-300.

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About the Authors

Jan Wieseke, PhD
Professor of Marketing, Chair of Business Administration and Marketing,
University of Bochum, Germany

Jan Wieseke obtained his PhD in 2004 at the University of Marburg, Germany. His research interests center on sales and services marketing, the employee-customer interface and the application of social identity theory in marketing settings. His work has been published in outlets including the Journal of Marketing, Journal of Marketing Research, Journal of Service Research, Journal of the Academy of Marketing Science, Marketing Letters, Journal of Marketing Theory and Practice, and Journal of Vocational Behavior.

Anja Geigenmüller, PhD
Professor of Marketing, Department of Marketing,
Ilmenau University of Technology, Germany

Anja Geigenmüller obtained her PhD from the Freiberg University of Technology, Germany. Her research includes aspects of customer participation, customer-employee interaction, and management of the service encounter. Her work has been published in outlets including the Journal of Service Research, Journal of Marketing Theory and Practice, Journal of Business and Industrial Marketing, Journal of Retailing and Consumer Services, and Schmalenbachs Business Review.

Florian Kraus, PhD
Professor of Marketing, Dr. Werner Jackstädt Endowed Chair,
University of Mannheim, Germany

Florian Kraus obtained his PhD from the Philipps University in Marburg, Germany. Moreover, he held a research position at the University of Houston, Texas, USA. His current research focuses on frontline employees' behavior and performance. He also conducts research on house brands, motivation, and organizational identification in the context of services marketing and sales management. Professor Kraus' work appeared in the Journal of Marketing, Journal of the Academy of Marketing Science, Strategic Management Journal, Journal of Service Research, and Organizational Behavior and Human Decision Processes.

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