A lecturer at the University of New England has won an international award for a report on research aimed at helping business people retain their customers after a service failure.

Dr Fredy Valenzuela, from UNE’s School of Business, Economics and Public Policy, focused on the banking industry and, specifically, the role of “barriers” that can prevent customers from switching from one bank to another.

Dr Valenzuela’s research has shown that “switching barriers” imposed by customers themselves (e.g. a feeling of loyalty to a bank that had hitherto served them well) are more beneficial to businesses than “switching barriers” imposed by businesses (e.g. the imposition by a bank of a complex and lengthy exit process). He refers to the former kind of barrier as a “positive barrier”, and the latter as a “negative barrier”.

Dr Valenzuela presented his paper, “The influence of switching barriers on service recovery evaluation in the retail banking industry”, at the 3^rd International Conference on Service Management, which was held last month at Pennsylvania State University in the United States. The paper, which won one of six Best Paper Awards at the conference, was based on research that gained Dr Valenzuela a PhD degree from UNE earlier this year.

In 2005 he won a Best Paper Award at the International Conference on Business and Information held that year in Hong Kong. That paper focused on “service recovery” by banks – i.e., restoring the confidence of customers after a service failure. In the paper he presented last month, he combined the concepts of “service recovery” and “switching barriers” to show that “positive barriers” to switching can improve a bank’s performance in service recovery.

“The best barrier is a positive one,” he said. “Banks can reduce the amount of switching by increasing the level of trust and interpersonal relationship between themselves and their customers. This is more effective than, for example, increasing the level of difficulty for customers to switch banks.”

He said such “trust” and “interpersonal relationship” enabled a bank to communicate more effectively with a customer in demonstrating that it had reversed the negative consequences of a service failure and improved the service. “Customers want to see banks not only reverse their mistakes, but improve their service so that the failure does not happen again,” he explained.

THE PHOTOGRAPH displayed here shows Dr Valenzuela with his Best Paper Award from the 3rd International Conference on Service Management.

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