That moment when the customer commits and hands over the money is obviously important, but do you know how important? The transaction type influences the majority of the consumer experience and impacts the end of the relationship. Further, it defines the opportunity for feedback. It can cloud or clarify transparency and it establishes the power relationship that is present throughout the rest of the engagement.
If you are serious about improving the end of your consumer relationship, then you need to look at the transaction model you use. It can establish way more than a financial relationship.
There are five broad types of transaction model in services, each with its own characteristics.
The type of transaction characterises the whole consumer experience and influences the type of ending.
1 - Payment After Delivery
Payment after delivery is found in restaurants, cafes, and hairdressers, where you receive a service before making a payment. It often has tips as part of that payment, increasing the transparency of the transaction and encouraging honest feedback. The consumer has enormous leverage at the end of this type of transaction.
Businesses who utilise this opportunity thrive on this well-meaning feedback from an empowered consumer, seeing good honest feedback as a gift.
2 - Payment Before Delivery
In contrast, payment before delivery (seen with rail travel and concerts), empowers the provider. The consumer is in a subservient position, with little recall of poor quality delivery as the transaction is completed before the service is delivered.
It’s a historical approach, coming from a time when paper tickets were given as a form of proof and customer identity. It’s a little outdated in a digital-dominated world of immediacy.
Feedback tends to be minimised in these relationships: consumers have little leverage beyond a promise or a complaint form. This is currently being witnessed by countless late commuters in the UK on Southern Railway. If these people were given a more modern transaction model, they could be empowered and have leverage. Sadly many poor performing services hide behind the Payment Before Delivery model.
3 - Scheduled Payment
Scheduled Payment is used by gyms, utility companies and councils. They like the guaranteed income and have learnt that manually chasing customers for money every month is hard. Direct-debits are a fantastic system for convenience if you are doing repeat transactions at regular intervals, but in terms of leverage and visibility, it falls short.
Automated transactions hide in personal bank accounts – out of sight, out of mind. We have all experienced the surprise of a forgotten direct-debit when checking our statement. This concealed relationship minimises the opportunity for feedback and reduces the perception of the relationship having deteriorated. Industries that use this model have some of the lowest service quality across sectors.
4 - Synchronous Payment
Synchronous Payment has evolved from the traditional shop transaction experience where money would be exchanged immediately for ownership of an item. Now, access is commonly granted to digital items in this synchronous way – buying films on iTunes, access to online applications or games. The immediacy of this exchange creates a perception of conclusion and satisfaction. Transparency is evident in the immediacy of the experience.
Some relationships relent on this good position by following up with alternative transaction models. I have seen this in computer application sales, where the provider sells an app via Synchronous Payment and then follows up with additional features through a Scheduled Payment model and therefore reducing transparency.
5 - Continuous Observation
One of the more recent modes of transaction is the one many of us do by agreeing to Terms and Conditions. Companies value the data people create and the opportunity to mine that data, so will allow free access to services in return for observing behaviour. In essence, the currency is data and the T&Cs are the moment of transaction. But there is a lot more to it than that.
The Continuous Observation model increases risk for the consumer, many of whom are new to this approach of transaction which is experienced as ticking a box, somewhat like a Synchronous Payment. In reality, the transaction is going on constantly thereafter, like a permanent super-powered Scheduled Payment in the currency of data.
Control and visibility of this is hidden deep in the operating system, only surfacing through privacy settings, resulting in a simplistic binary version of the situation.
Engagement with the provider is though chatbots and forums, humans are a rare option. Feedback is captured through behaviour analysis and customer reviews. The provider empowered through this distancing of discussion. The consumer reduced to data points and hopelessly weakened position of influence.
Potentially the most worrisome aspect of the Continuous Observation model is its ending. The consumer’s data being pulled constantly when the service is active and is still being processed after the consumer perceives the end of the relationship. This long tail of the ending is only now being dealt with via the European Union’s General Data Protection Regulation. This puts in place new rights for the user to bring a clear and empowering end to the Continuous Observation model.
Ends, Joe Macleod - http://www.andend.co/
Sector innovation through transaction
Different sectors of industry adopt the similar historical transaction models. This limits the service to established norms of that sector’s service quality.
Imagining a different transaction model for your business can provide an enormous boost to innovation. It will turn many preconceptions on their head, including the end experience. It’s an exercise I often do in the Closure Experiences workshops I run. It never fails in generating some of the most interesting and pioneering business approaches.
Establishing the best ending for your customers goes beyond planning a goodbye. The differences set down at the moment of transaction define so many aspects at the end: potential for feedback, transparency of the service and how the consumer feels at the end and in the aftermath.
If you are thinking of working on the end of your service and aim to improve the off-boarding, a good place to start is the transaction model you use. It goes way beyond the money.