Proactive Customer Service: Operational Benefits and Economic Frictions

Abstract

We study a service setting where the provider has information about some customers' future service needs and may initiate service for such customers proactively, if they agree to be flexible with respect to the timing of service delivery. Academic / Practical Relevance: Information about future customer service needs is becoming increasingly available through remote monitoring systems and data analytics. However, the literature has not systematically examined proactive service as a tool that can be used to better match demand to service supply when customers are strategic. Methodology: We combine i) queueing theory, and in particular a diffusion approximation developed specifically for this problem that allows us to derive analytic approximations for customer waiting times, with ii) game theory, which captures customer incentives to adopt proactive service. Results: We show that proactive service can reduce customer waiting times, even if only a relatively small proportion of customers agree to be flexible, the information lead time is limited, and the system makes occasional errors in providing proactive service-in fact we show that the system's ability to tolerate errors increases with (nominal) utilization. Nevertheless, we show that these benefits may fail to materialize in equilibrium because of economic frictions: customers will under-adopt proactive service (due to free-riding) and over-join the system (due to negative congestion-based externalities). We also show that the service provider can incentivize optimal customer behavior through appropriate pricing. Managerial Implications: Our results suggest that proactive service may offer substantial operational benefits, but caution that it may fail to fulfill its potential due to customer self-interested behavior.

Proactive Customer Support: Re-Architecting A Customer Support/Relationship Management Software System Leveraging Predictive Analysis/AI and Machine Learning

“…The proactive customer care approach changes how organizations interact with consumers by emphasizing issue anticipation and resolution before they escalate. Integrating advanced analytics and machine learning algorithms is at the heart of this paradigm shift, allowing organizations to foresee and fulfill customer needs with unprecedented precision [7]. One critical part of this strategy is its emphasis on rapid issue resolution, which reduces customer frustration by recognizing possible issues before they negatively impact the user experience.…”

Management model based on Relational Marketing to increase customer satisfaction through the implementation of the Knowledge Creation Model.

“…In recent years, technologies such as artificial intelligence and data analysis have been implemented. These tools have been greatly helpful in creating predictive models of customer behavior and identifying customer issues [14]. Additionally, providing credit facilities to B2B customers can be beneficial.…”

“…To alleviate demand, methods such as scheduling can be used to ensure all customers receive the same quality of service. However, this also depends on the flexibility and willingness of the customer, considering that individuality and self-interest prevail in the purchase decision [14].…”

Innovation and Digital Transformation in UAE Public Services: Reactive to Proactive

“…Such required information about customer future needs is gradually available. Proactive services can literally reduce service waiting time and sometimes eliminate the need of service channels and the queuing in service centres (Delana et al, 2021).…”