Photo by Charles Etoroma on Unsplash

In this week’s blog, we examine the surprising effect of a psychological phenomenon, known as the labour illusion, on consumer valuations of automated product and service transactions.

It would appear that the integration of technology into business processes and customer experience has created an unprecedented capacity for production, delivery and consumption of goods at competitive prices for modern consumers. Certainly, Operations Management (OM) is driven by the objective to produce more goods at the lowest cost; without diminishing quality, whilst maintaining the highest possible consumer standard. So, it would stand to reason that if a process can be automated and deliver within OM objectives, then logically it must be the most efficient business decision overall, right?

Well, not entirely. According to the research findings of Buell & Norton (2011) who tested the psychological basis for perceived consumer value in automated services, there is a “critical trade-off” for business who invest in processes which shield customers from complexity. They tested the relationships between the perceived absence of labour and operational transparency, i.e. making the processing of tasks visible. Ironically, they found that when businesses introduce time saving tools such as self-service online price comparisons, the appearance of an almost instant, effortless service actually devalues that service in the customer’s eyes. Most importantly, the cascading effect on consumers was that, as effort was removed and perceived value diminished, so too did customer loyalty, satisfaction and even the willingness to pay.

But wait, there’s more!

Buell & Norton (2011) found, in a comparison of two travel websites, both yielding the exact same search results, the website which reported its scanning activity back to the user with a progress bar, was rated as delivering a better value service than the control website which simply gathered and collected results within seconds. Both websites were accessing the same database but the operational transparency of the site which reported its actions, enjoyed greater ratings for perceived effort, better service and increased value compared to the control website.

Not so fast…

Buell & Norton (2011) then tested operational transparency against delivery time. Using the same experimental travel websites, they found that the site which reported its actions during the search process and combined display with a 30 or 60 second wait  was preferred by participants. When operational transparency was combined with a waiting period, the labour illusion once again enhanced the perception of service value.

When to “sweat” and when to stay cool…

Operational transparency puts the “sweat” back in to an automated process. Whilst shielding the customer from the complexity of algorithms and database enquiries,  showing the volume of work a website is churning through to bring together large volumes of data on the consumer’s behalf reintroduces feelings of reciprocity to the consumer. The labour illusion shares a positive relationship with perceptions of value in online self-service as it signals the exertion of effort on behalf of the customer and when operational transparency is built in to the self-service experience, waiting time is actually preferred.

Going forward…

It is worth noting here that whilst this study delivers some compelling results, there has been very little evidence published since on the topic of the labour illusion to challenge these findings or indeed replicate the study. However, it does challenge consumer perceptions of service and value in the development of interfaces for self service transactions and reminds businesses that there is value in everything, even waiting. These research findings suggest that, ultimately people still buy from people even when those people are represented by an automated system.

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