Volume 22, Number 2
Scheduling consumer satisfaction
Mike Dixon shows that saving the best for last isn’t always the best idea
Save the best for last. That bit of well-meaning advice, frequently tossed around whenever someone must make a choice about consuming a series of goods or services, sounds logical enough.
But when it comes to offering products and services for others to consume over time, following this advice isn’t always the best idea. At least not if you want to maximize customer satisfaction along with profits, says Assistant Professor Mike Dixon, an Ivey Business School professor in Operations Management.
“It’s all about experience design,” Dixon explains, noting that when people buy a bundle of products or services, such as season tickets to a music venue or theatrical company, management typically has a good idea of what will be the best performance of any bundle. “So event placement planning can be deployed to increase the customer’s overall satisfaction level.”
Dixon’s unique research in this area – which includes an analysis of the influence of event sequences on repeat season ticket sales at a Vienna concert hall – has lead him to conclude that it actually doesn’t always make sense to save the best for last when selling goods or services.
According to the Ivey professor — who has published papers on the sequence effects in service bundles and the related implications for scheduling in leading academic publications such as the Journal of Operations Management and Production and Operations Management – the ideal graph of consumer satisfaction following the consumption of a series of event-type services tends to look like a Nike swoop.
“At the beginning of the offering cycle, you typically want something pretty exciting to keep customers coming back for more, then once people are hooked, it makes sense to plan an immediate dip in utility, or enjoyment, so you can have a steady rise in satisfaction levels, ending on another high note that drives another round of series ticket sales,” Dixon says. “The tricky part is understanding when the high note in satisfaction at the beginning should be higher than the final peak. Among other things, we have found that time is a factor, meaning that in long series of events it can pay to front-load the offering with satisfaction by saving the best for first.”
Like finance and marketing, operations management – which involves the design of model-based systems and analytical tools to help improve organizational operations and decision-making – plays a key role in the success of any large-scale business. The field dates back to the late 1800s, when efficiency experts such as Frederick Winslow Taylor used their expertise to make the emerging industrial world run more like clockwork. As a result, many people imagine making improvements to manufacturing when thinking about the discipline today.
“But that just scratches the surface,” says Dixon, noting operations management is equally applicable to the service sector. “Most people would say my research is very much influenced by marketing and psychology, but it fits within operations because it’s about scheduling. It actually involves pretty complex data analysis and algorithms, and it can really pay off for a service provider, especially one like a theatre festival that targets a variety of consumers with multiple bundles of events that vary in times, genre and venue.”
Like his research, Dixon is unique in the field of operations management.
“I am not an engineer like many of my colleagues,” he says. “I am really into jazz, and so I started university as a music major, playing saxophone and drums. But I wasn't good enough to make music my career, and so I eventually traded music for business classes because my other dream was to open a jazz-based restaurant. After graduating, I managed a couple of restaurants, but that turned out to be another wrong turn. I really enjoyed the operations side of managing a restaurant. I just didn’t enjoy the human resources aspect of restaurant management enough to dedicate my life to it.”
After returning to school for an MBA at the University of Utah, Dixon discovered he had another passion — data analysis.
“I really nerded out on statistical analysis,” he says. “And that eventually landed me a job at American Express, where I worked in quality improvement until a prof from my MBA days pulled me into the PhD program at Cornell University’s School of Hotel Administration, which focuses on services and service management.”
Dixon was a business professor at Monterey’s Naval Postgraduate School (NPS) before joining Ivey last year. He is currently researching what happens when an element of surprise is introduced into the service bundle equation.
“I was discussing the art of scheduling with an organizer of the Monterey Jazz Festival, who was planning a three-day festival. I remember thinking his basic plan set up a Nike swoosh in consumer satisfaction by booking something pretty exciting to kick off the festival, followed by a bunch of stuff in the middle that lead up to a big expected headliner. But then he mentioned thinking about adding a surprise act, explaining that nobody really knew Diana Krall when she was slotted to play the end of the festival with a headliner years ago, and she just wowed everybody with her talent. That started me thinking about what happens to satisfaction levels when consumers are treated to an unexpected service offering at different times during a series of events.”
Dixon’s work on maximizing satisfaction via scheduling can be applied to a wide range of experiences outside of business. Strategically placing moments of peak satisfaction and introducing surprises, for example, can improve enjoyment levels during a family vacation. As a university teacher, Dixon even uses his research to try to maximize student experience in his classes. “It just makes sense,” he says. “After all, some of my individual classes are more interesting than others. And one even involves a cool game that I could introduce as a surprise.”
So does Dixon expect his first Ivey course to get top marks from students?
“We will have to wait and see about that,” he says. “Then again, I have done pretty well in student rankings in the past, which is pretty good for a prof of operations management who started university wanting to be a jazz musician.”