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Abstract

Even though customer satisfaction and loyalty have been studied at length, few if any studies have focused on antecedents to customer loyalty for dissatisfied complaining customers. In this article, a theoretical model focusing on negative affect, satisfaction with complaint resolution, and corporate image as antecedents to customer loyalty is proposed and tested empirically. First, satisfaction with complaint resolution has a positive impact on customer loyalty. Complaint resolution is thus an important element of the company’s customer retention strategy. Second, negative affect caused by the initial service failure has a negative impact on satisfaction with complaint resolution and customer loyalty. From this finding, one can imply that the customer starts the resolution process from a deficit. Finally, corporate image has a positive impact on customer loyalty. Thus, corporate image plays a role not only in attracting new customers but also in retaining existing dissatisfied customers.
What Drives Customer Loyalty with Complaint Resolution?
Tor Wallin Andreassen
This paper was published in Journal of Service Research, Vol 1, No 4, 1999
Tor Wallin Andreassen is an Associate Professor of Marketing at The Norwegian
School of Management. He is the founder and director of the Norwegian Service
Forum and the Norwegian Customer Satisfaction Barometer. He is currently a
Visiting Professor at the Owen School of Management, Vanderbilt University, 401
21st Avenue South, Nashville, TN 37215, USA. Email: tor.w.Andreassen@bi.no
The author is thankful for initial comments offered by Professor Evert
Gummesson, Stockholm University and Professor Roland T. Rust, Vanderbilt
University, funding provided by Forum for Service Studies at the Norwegian
School of Management, and for data provided by the Norwegian Customer
Satisfaction Barometer. Finally, help and support offered by colleagues at the
Center for Service Marketing at Owen Graduate School of Management, is
acknowledged.
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Abstract
Even though customer satisfaction and loyalty has been studied at length, few if
any studies have focused on antecedents to customer loyalty for dissatisfied
complaining customers. A theoretical model focusing negative affect, satisfaction
with complaint resolution, and corporate image as antecedents to customer loyalty
is proposed and tested empirically. First, satisfaction with complaint resolution
has a positive impact on customer loyalty. Complaint resolution is thus an
important element of the company’s customer retention strategy. Second, negative
affect caused by the initial service failure has a negative impact on satisfaction
with complaint resolution and customer loyalty. From this finding we can imply
that the customer starts the resolution process from a deficit. Finally, corporate
image has a positive impact on customer loyalty. From this finding we can learn
that corporate image plays a role not only in attracting new customers, but also in
retaining existing dissatisfied customers.
Key words: Dissatisfaction, complaint resolution, negative affect, corporate
image, customer loyalty.
3
Introduction
Today it has become a truism that service quality is crucial to customer
satisfaction, customer retention, and profitability. Statements like “Satisfaction
guaranteed”, “Quality is our number 1 priority”, “Built to last”, and “No surprise
or money back” are evidence of service companies’ belief in quality as the bridge
to future revenue. However, not all companies manage to deliver services of high
quality and to the satisfaction of its customers. Whereas satisfaction with a service
or service provider may be a strong incentive for customers to maintain or increase
current retention rate, dissatisfaction with a service or service provider may be a
strong incentive to exit from the interaction. In fact Reichheld & Sasser (1990)
claim that for suppliers of services, customer defection may have a stronger impact
on the bottom line than scale, market share, unit cots, and other factors usually
associated with competitive advantage.
The primary focus of previous research on customer dissatisfaction, cf. (Day &
Landon, 1976; Gilly & Gelb, 1982; Bearden & Teel, 1983a; Richins, 1983; Richins,
1987; Singh, 1990; Folkes, 1984, 1988) has been to explain which particular type of
complaint behavior a dissatisfied customer might choose. In a review of the
complaint literature, Robinson (1978) claims that most studies have not been
generalizable. On the other hand, work related to resolution management, cf.
(Hirschman, 1970; Fornell and Wernerfeldt, 1987, 1988; Rust, Subramanian and
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Wells, 1992) is mostly theoretical derivations based on stringent mathematical
assumptions.
In short one is left with the impression that work related to antecedents to
customer loyalty for dissatisfied complaining customers is lacking. This is
surprising given current research focus on relationship marketing, customer
loyalty and the importance of customer retention for the company's long term
profitability.
The purpose of this paper is to examine the impact of negative affect, corporate
image and satisfaction with complaint resolution on customer loyalty. The study
is limited to dissatisfied complaining customers. Respondents are recruited from
twelve different service industries. A conceptual model treating satisfaction with
complaint resolution, initial negative affect, corporate image, and customer loyalty
as latent variables with multiple indicators is proposed. Next, the results of an
empirical study testing the model are presented. Finally the implications of the
findings are discussed.
The conceptual model
Management discovers the organization's inability to satisfy its customers via two
feedback mechanisms: exit and voice (Hirschman, 1970). Exit implies that the
5
customer stops buying the company's services while voice is customer complaints
expressing the consumers' dissatisfaction directly to the company. Customer exit
or change of patronage will have an impact on the long-term revenue of the
company. According to Hirschman (1970) and Fornell and Wernerfeldt (1987) the
number of customers who defect due to dissatisfaction, may be reduced;
if the number of dissatisfied customers is reduced (e.g. improved service
quality).
if the number of dissatisfied non-complaining customers is reduced (e.g.
increased voice).
if the number of lost complaining customers is reduced (e.g. improved
complaint resolution).
In our model we do not limit customer loyalty of dissatisfied complaining
customers to a function of satisfaction with complaint resolution. We believe that
negative affect caused by negative disconfirmation of expectations from the initial
service encounter may have a negative impact on the satisfaction judgement of
complaint resolution and customer loyalty. We also believe that most customers
have formed a perception of and attitude toward the supplier. Previous
experience, word-of-mouth, media or advertising may be the background for this
corporate image. This customer held image of the company is believed to have a
positive impact on customer loyalty. The conceptual model is illustrated in Figure
1.
6
Place Figure 1 about here
Since the effects of disconfirmation on satisfaction are well established, we will
briefly describe customer satisfaction and customer loyalty, but focus our
discussion on initial negative affect and corporate image as the "new" variables.
7
Methods
In the following section we will discuss the constructs in the conceptual model,
proposed analysis, and sample.
Defining the measures
Initial negative affect
Most references on affect build on Bradburn's (1969) affect-balance theory which
claims that events in life alternate between the positive and the negative, and that
instances of one do not preclude occurrences of the other. This argument is
particularly relevant to services since the service product consists of a number of
attributes which may be perceived as pleasant or unpleasant (Oliver, 1993).
Bearden and Teal (1983b) suggest that consumer complaint behavior (i.e. voice/no
voice) is an action resulting from the emotions of dissatisfaction. Due to monetary
costs, frustration, anxiety, tension the customer begins in a deficit (Oliver, 1997).
Initial negative affect is the common denominator describing the unsatisfactory
service encounter experienced by customers who voiced or have not voiced their
dissatisfaction to the company. Depending on degree of deficit, initial negative
affect is believed to impact on the satisfaction judgment of the resolution process
and customer loyalty. Affect is a generic term covering a whole range of
preferences, evaluations, moods and emotions. Emotions refer to a complex
8
variety of affects, beyond merely feeling good or bad. It involves intense feelings
with physiological arousal, which may last for some time (Fiske & Taylor, 1991).
Research in consumer satisfaction, (cf. Westbrook, 1980), and in psychology, (cf.
Schwartz & Clore, 1983), shows that positive and negative affective orientations
color later affective judgment of every variety. The Mano and Oliver Framework
(1993) identifies negative affect as a negative antecedent to satisfaction. Initial
negative affect triggered by the initial service failure my thus have a negative
impact on the satisfaction judgment of complaint resolution due to the customer
being in a negative state of mind. It is also likely that initial negative affect for the
same reason may have a negative impact on customer loyalty. Based on the above
discussion there is ample reason to believe that excitation transferred from one
source, i.e. dissatisfaction with the initial service, to another, i.e. satisfaction with
complaint resolution, may color subsequent customer loyalty both directly and
indirectly.
In summary, a customer who is dissatisfied with the initial service encounter
experiences some degree of negative affect, e.g. anger, disappointment, negative
surprise. For dissatisfied complaining customers, initial negative affect is believed
to impact on the satisfaction judgment of complaint resolution and customer
loyalty. In this respect both cognitive and affective elements are assumed to
influence customer loyalty, i.e. whether customers exit or remain.
We express the above as:
9
H1: For dissatisfied complaining customers, initial negative
affect (INA) is negatively correlated with satisfaction with
complaint resolution (SCR).
H2: For dissatisfied complaining customers, initial negative
affect (INA) is negatively correlated with customer loyalty
(CL).
Satisfaction with complaint resolution
Oliver claims that satisfaction is derived from the Latin satis (enough) and facere
(to do or make) (Oliver, 1997, p. 11). Satisfaction is consequently related to
providing what is being sought to the point where fulfillment is reached. In the
marketing literature, satisfaction is defined in several ways:
The evaluation of emotions. (Hunt, 1977, p. 460)
Favorability of the individual's subjective evaluation. (Westbrook, 1980,
p. 49)
Summary psychological state resulting when the emotion surrounding
disconfirmed expectations is coupled with the consumer's prior feelings
about the consumption experience. (Oliver, 1981, p. 27)
A positive outcome from the outlay of scarce resources. (Bearden &
Teel, 1983a, p. 21)
10
Satisfaction is the consumer's fulfillment response. It is a judgment that
a product or service feature, or the product or service itself, provided (or
is providing) a pleasurable level of consumption-related fulfillment,
included levels of under- or overfulfillment. (Oliver, 1997, p. 13)
Finally, Fornell & Wernerfeldt (1987) define customer dissatisfaction as:
[....] a state of cognitive/affective discomfort caused by an insufficient
return relative to the resources spent by the consumer at the stage of the
purchase/consumption process.
From the above definitions it is understood that satisfaction is related to a
subjective evaluation of emotions. The emotion occurs as a function of
disconfirmation and relative output to input. The end result is a positive or
negative feeling of fulfillment. From the latter definition it is clear that negative
fulfillment can be restored by increasing the customer’s return, e.g. through good
complaint resolution.
In line with previous customer satisfaction studies where satisfaction is found to
impact on customer loyalty, we claim that satisfaction with complaint resolution
have a positive impact on customer loyalty. We express this as:
11
H3: For dissatisfied complaining customers, satisfaction with
complaint resolution (SCR) is positively correlated with
customer loyalty (CL).
Corporate image
According to Dowling (1988) corporate image is a construct similar to the construct
of self-concept in psychology. Both terms refer to a set of thoughts and feelings
having reference to an object (e.g. a company or person). Corporate image is
believed to have the same characteristics as self-schema (Markus, 1977). It consists
of cognitive generalization about the self and is derived from past experiences. To
most consumers schemas develop -become richer or change- over time. In the case
of dissatisfaction with complaint resolution this update may be gradual or
massively. In keeping with Rothbart’s (1981) terminology this may be termed
bookkeeping and conversion respectively.
Building on Keller (1993), substituting brand with organization may give a
definition of corporate image: “ [P]erceptions of an organization reflected in the
associations held in consumer memory.” Associations are close to what is termed
schemas in cognitive psychology, i.e. “[P]eople’s cognitive structures that
represent knowledge about a concept or type of stimulus, including its attributes
12
and the relations among attributes” (Brewer & Nakamura, 1984; Fiske & Linville,
1980).
Proof of the importance of corporate image was found in the Norwegian Customer
Satisfaction Barometer (NCSB). In all industries studied a positive correlation
between corporate image and customer satisfaction existed, and customer
satisfaction was positively correlated with customer loyalty in eight industries.
Interestingly, in the service station industry a positive correlation existed between
corporate image and customer loyalty. This may be due to the nature of the
service (generic) and the structure of the industry (large concentration, and
similarity in service concepts) which means there are hardly any switching costs
associated. Andreassen and Lindestad in their studies found that corporate image
played an active role in the formation of customer loyalty among existing
customers (Andreassen & Lindestad, 1998a, 1998b).
Since an existing consumer's attitude toward a company is primarily experience-
based, positive/negative disconfirmation may strengthen/ weaken the customer's
impression of and attitude toward the company. There are several possible
reasons why attitudes formed through direct experience are good predictors of
behavior. First, direct experiences provide a great deal of information. An
attitude developed as a function of experience may be better informed and more
robust. Second, because behavior provided an initial basis for forming the
13
attitude, the behavioral implications of the attitude may be clearer. Third, the
links between the attitude and the actual experience may make the attitude more
accessible in memory, and thus come to mind more readily confronted with a
similar situation. In the context of dissatisfaction with services and/or
dissatisfaction with complaint resolution we believe that corporate image may
function as a moderator to intended consumer behavior, i.e. one or two negative
experience does not cause the customer to exit from the market or change
patronage. In the case of dissatisfaction with services we believe that a good
corporate image may function as moderator on future intent and thus reduce
incentives to exit as a function of dissatisfaction with complaint resolution.
We express the above discussion as:
H4: For dissatisfied complaining customers, corporate image
(CI) is positively correlated with customer loyalty (CL).
The above hypotheses can be tested empirically by calculating the significant path
coefficients. The existence of significant path coefficients in the right direction
with the right sign is needed in order to clarify the hypothesized antecedents to
customer loyalty for dissatisfied complaining customers.
14
The sample
Data for this study were generated as a function of the annual process of collecting
data for the Norwegian Customer Satisfaction Barometer (NCSB) in 1996. At the
end of the NCSB-interview each respondent was asked if she, within the last six
months, had reason to be dissatisfied with the service for which he or she was
interviewed. If the respondent answered affirmatively, he or she was, as the last
question of the NCSB-interview, asked to participate in a new dissatisfaction study
at some agreed date and time within the next two to three weeks. No incentives
were promised or mentioned. If the respondent accepted the invitation, he or she
was called back and interviewed at the agreed date and time. Each interview
lasted from 12 to 15 minutes. No response at this stage was handled using three
callbacks. All telephone interviews both for the NCSB and the dissatisfaction
study were handled by an independent professional market research bureau.
The final sample contained 201 respondents of whom 55.2 per cent were males and
44.8 per cent females from 12 service industries. The average household income
was about NOK 380,000 (USD 60,000). The respondents' age varied between 18
and 80, a small skewness toward younger respondents. Mean birth year was 1955.
Average education was one to two years of college education, with a small bias
towards respondents not having finished their college degree. The respondents
were equally distributed between urban and rural areas.
15
Operationalizing the measures
Initial negative affect, corporate image, satisfaction with complaint resolution or
customer loyalty cannot be measured directly by using an objective measure
(Simon, 1974). If, however, they are treated as abstract and theoretical
phenomenon they can be measured as a weighted average of multiple indicators
(Johnson & Fornell, 1991). Measurement errors in the index are taken care of
through the quality and quantity of the measures being used (Fornell, 1989).
Consequently initial negative affect, corporate image, satisfaction with complaint
resolution, and customer loyalty were measured using multiple indicators. A
description of the indicators is presented in Appendix A. Standardized parameter
estimates for the indicators of the latent variables in the model are included in
Appendix B. The number of items making up each measure and Cronbach alpha
coefficients, which express internal consistency in measures, gives characteristics
of the latent variables. The Cronbach alpha coefficients are presented in Appendix
B. All Cronbach alpha scores are within the accepted zone.
Proposed analysis
We treat initial negative affect, satisfaction with complaint resolution, corporate
image, and customer loyalty as latent variables with multiple indicator measures
(i.e. ni, si, ci, and cli) (Bolton & Drew, 1991; Oliver, 1992). Customer loyalty is a
16
function of initial negative affect (-INA), satisfaction with complaint resolution
(+SSR), and corporate image (+CI). This can be expressed as:
Eq. 1 CL = ƒ( INA, SSR, CI, ζ1)
SCR = ƒ( INA, ζ2)
ζi, are error terms containing all other elements not accounted for in the equations.
A reflective measurement model was used, where the observed variables are
caused by the latent variables (Bollen, 1989). Endogenous (dependent) latent
variables are labeled η, and the exogenous (independent) latent variable is labeled
ξ. The dependence of the latent variables is then expressed as η = Βη + Γξ + ζ.
The relationships hypothesized in this study were analyzed by using structural
equation modeling (LISREL VIII, ML) (Jöreskog & Sörbom, 1989). A selection of fit
indices reported by LISREL 8.12a is included in Appendix C. According to the fit
indices the theoretical models fit the data reasonably well (Medsker, Williams, &
Holahan, 1994; Hair, Anderson, Tatham, & Black, 1995). Reestimation of the same
model using Generalized Least Squares (GL) reports parameter estimates in the
same range with the same sign. This is an indication of good model fit of the
structural model (Olsson, 1996).
17
Parameter estimates
According to Jöreskog (1993) and Anderson and Gerbing (1988) a two-step
approach is preferable for testing structural equation models. 1 First, the
measurement model is estimated without imposing any structural constraints.
This allows for inspection of the lack of fit that can be attributed to the
measurement alone. The second step includes the structural relationships
proposed by the theoretical framework. By using the two-step approach one
avoids the confusion in interpretation that can result from one-step approach
(Anderson & Gerbing, 1988). This study employed the two-step approach.
The estimated standardized path coefficients between the endogenous and
exogenous variables (i.e. the gamma matrix) are illustrated in Table 1.
Place Table 1 about here
1 Fornell and Yi (1992) who claim that the underlying assumptions of the two-step
approach are difficult to meet challenge this view.
18
As can be seen from Table 1 initial negative affect has a negative impact on
satisfaction with complaint resolution and customer loyalty. Corporate image has
a positive but somewhat weaker impact on customer loyalty. Satisfaction with
complaint resolution has strong positive impact on customer loyalty (0.57, t =
5.52).
Discussion
The growing recognition of relationship marketing makes the importance of
understanding post-purchase consumer evaluations more important. Based on the
model structured and the data sampled H1 is accepted. Initial negative affect has a
significant negative impact on satisfaction with complaint resolution. H2 is
accepted. Initial negative affect has a significant negative impact on customer
loyalty. H3 is accepted. Satisfaction with complaint resolution has a significant
positive impact on customer loyalty. H4 is accepted. Corporate image has a
significant positive impact on customer loyalty.
A successful complaint resolution, as perceived by the complainer, is a positive
surprise and may create strong positive feelings (delight). An unsuccessful
resolution will create strong negative feelings (anger). Both outcomes will impact
customer loyalty. This finding is in keeping with numerous studies of customer
satisfaction. Interestingly in this study satisfaction with complaint resolution was
19
the stronger driver of customer loyalty. These findings support the importance of
understanding antecedents to satisfaction with complaint resolution. 2
The negative affect cause by negative disconfirmation of expectations in the initial
service encounter has a carry over effect on the satisfaction judgment of complaint
resolution. Independent of the outcome of the resolution process, negative affect
stimulates exit behavior. The findings from hypotheses one and two point to the
importance of improving service quality in order to avoid failures. Johnston goes
one step further when he suggests that manager must actively seek out dissatisfied
non-complaining customers (Johnston, 1995). His claim is supported by this
study.
A good corporate image can compensate for a bad or mediocre complaint
resolution. Customers will balance the complaint resolution experience with
previous encounters, i.e. customers may consider the initial incident as irregular
and not representative for the company. If the customer perceives the incident
which gave reason to complain as a one-time episode this will not change the
customer’s attitude toward to company. In this respect corporate image functions
2 In a forthcoming study one researcher found that equity rather than
disconfirmation of expectation was the stronger driver of satisfaction with service
recovery (Andreassen, forthcoming 2000).
20
as an aggregated expectation formed through previous encounters or external
sources.
Managerial implications
The findings from the present study illustrate the importance of a professional
resolution process. The fact that satisfaction with complaint resolution has the
strongest impact on customer loyalty underscores the importance of complaint
resolution in creating long-term customer interactions. This calls for a deeper
understanding of antecedent to satisfaction with complaint resolution in order to
achieve satisfaction. Negative affect caused by the initial service failure has a
strong carryover effect on the satisfaction judgment of the resolution and future
intent. This calls for programs, which may improve the company’s current service
quality. Given negative affect’s impact on customer loyalty the importance of
actively seeking out dissatisfied non-complaining customers is apparent from this
study. The importance of developing and confirming a good corporate image is
also apparent from this study. Like a shadow from the past a good corporate
image moderates any negative effects caused from dissatisfaction with complaint
resolution. On the other hand, dissatisfied complaining customers who where not
satisfied with the company’s effort in trying to recover, will update their current
perception of and attitude toward the company. A similar experience in the next
encounter may stimulate exit behavior despite numerous previous successful
21
encounters. This argument is supported by the carry over effect from negative
affect on customer loyalty. A good corporate image is created partly as a function
of what the company does in its daily operations, and partly through its marketing
communication, and partly through the media. People’s perception of a company
will create expectations of the company with regard to complaint resolution.
Dissatisfied complaining customers expect more from a company they have
experienced as or perceive as being customer oriented. Complaint management
and complaint handling must thus be designed in accordance with the company’s
profile communicated through media or advertisements.
Summary
Building on theory from consumer behavior, affect-balance theory, and cognitive
psychology this paper considered dissatisfaction with services and antecedents to
customer loyalty. A theoretical model was proposed and tested empirically based
on a cross-sectional national sample of 201 dissatisfied complaining customers of
services. The results suggested that negative affect caused by the initial service
failure have a negative impact on satisfaction with complaint resolution and
customer loyalty. Second, satisfaction with complaint resolution has a positive
impact on customer loyalty. Finally, corporate image had a positive impact on
customer loyalty. Of the three constructs, satisfaction with complaint resolution
has the strongest impact of customer loyalty. The paper pointed out the
22
importance of successful complaint resolution and initiatives that actively seek out
dissatisfied non-complaining customers. Finally, customers’ satisfaction with
complaint resolution may confirm or stimulate change of current perception of and
attitude toward the company. A negative outcome plus the effect of negative
affect from the initial service failure may speed up this process.
23
APPENDIX A
Measures
Initial negative affect
Using Watson & Telgen's (1985) typology of affect, high negative affect was
measured combining three works (Watson & Tellegen, 1985; Russel, 1980;
Plutchik, 1980).
disappointed
angry
surprised
To which degree would you say that your dissatisfaction at that moment can be
described as follow: (to the interviewer: by “that moment” we refer to the moment
dissatisfaction arose)
1. Disappointment (possible description of dissatisfaction at the moment
dissatisfaction arose) (-5=in very low degree, +5=in very high degree)
2. Anger (possible description of dissatisfaction at the moment dissatisfaction
arose) (-5=in very low degree, +5=in very high degree)
24
3. (negative) Surprise(possible description of dissatisfaction at the moment
dissatisfaction arose) (-5=in very low degree, +5=in very high degree)
Corporate image
The construct is operationalized through the use of four items, which is believed to
reflect corporate image. These items were derived at after a pretest among 400
respondents concerning banking and charter services and applied in the
dissatisfaction study. The items are:
opinion of the company
the company’s profile
perception of company being customer-oriented
company related word of mouth from other
I am going to ask you now some few questions regarding your general attitude
and feelings for *?COMPANY.
1. In general, how positive or negative would you say that your perception of
*?COMPANY is? (-5=very negative, +5=very positive)
2. How satisfied or dissatisfied are you with the way *?COMPANY presents
itself? (To the interviewer: we refer here to the way the company presents itself
to the public e.g. through advertising, attitudes the company expresses and the
like) (-5=very dissatisfied, +5=very satisfied)
25
3. To what extent do you perceive *?COMPANY as customer oriented? (-5=in
very low degree, +5=in very high degree)
4. How positive or negative do you perceive that others mention *?COMPANY?
(-5=very negative, +5=very positive)
Satisfaction with complaint resolution
Market researchers distinguish between transaction-specific satisfaction and their
global evaluation of the service (Holbrook & Corfman, 1985; Olshavsky, 1985). In
this study satisfaction with complaint resolution (SCR) was measured using two
items;
overall satisfaction with complaint resolution (aided)
compared to ideal performance, i.e. complaint resolution
1. How satisfied or dissatisfied are you with the way *?COMPANY has so far
kept you informed regarding the development of your case? (-5=very
dissatisfied, +5=very satisfied)
2. Imagine an ideal way of processing complaints. If you consider *?COMPANY’s
way of processing your complaint so far, how far from or close to do you think
*COMPANY is to this ideal? (-5= very far from the ideal, +5= very close to the
ideal).
Customer loyalty
26
Two items are used.
remaining loyal to the company
providing referrals
1. How probable or improbable is that you will continue being a customer of
*?COMPANY in a year from now? (-5=very improbable, +5=very probable)
2. In case a friend of yours asks you for advice when choosing COMPANY, how
probable or improbable is that you would recommend the person to choose
*?COMPANY? (-5=very improbable, +5=very probable)
APPENDIX B
Place Table B-1 about here
Place Table B-2 about here
27
28
APPENDIX C
Model fit
Place Table C-1 about here
29
Table 1
Influence on the exogenous variable on the endogenous variables
Satisfaction with
complaint resolution
Initial negative
affect
Corporate Image
Satisfaction with
complaint resolution
- 0.28
(0.09)
t = -2.97
Customer loyalty 0.57
(0.10)
t = 5.55
-0.19
(0.09)
t = -2.00
0.17
(0.09)
t = 1.93
30
Table B-1
Standardized parameter estimates for the indicators of the seven latent variables
in the model
Indicator Estimate
Initial negative affect λx1.1 0.78
Initial negative affect λx1.2 0.46
Initial negative affect λx1.3 0.62
Corporate image λx4.13 0.69
Corporate image λx4.14 0.55
Corporate image λx4.15 0.53
Corporate image λx4.16 0.48
Customer loyalty λy1.1 0.77
Customer loyalty λy1.2 0.77
Satisfaction with complaint resolution λy2.3 0.85
Satisfaction with complaint resolution λy2.4 0.88
31
Table B-2
Chronbach alpha coefficients for seven constructs
Construct Number of items Cronbach's alpha
Satisfaction with complaint
resolution
2 .88
Initial negative affect 3 0.55
Corporate image 4 .79
Customer loyalty 2 .76
“Norms”
(Nunnally, 1967, p. 226) 0.5 - 0.8
((Nunnally, 1978, p. 245-
246)
0.7 - 0.8
(Peterson, 1994) 0.77 3
3 Mean score across 4.286 alpha coefficients, 1.032 samples and 832 studies investigated
32
Table C-1
Fit indices provided by LISREL
Indices Values
Chi square 40.71
39 df
(P = 0.40)
RMSEA 0.015
GFI 0.96
AGFI 0.94
NFI 0.93
NNFI 1.0
CFI 1.0
CN 307.70
33
Figure 1
The conceptual model
CL
η1
ζ1
s2
s1
CI
ξ2
c1
ci
c4
γ12
β12
ζ2
SSR
η2
INA
ξ1
n1
n2
n3
γ11
γ21
s1
s2
-H2-H1
H3
H4
34
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... From the customer's perspective, their satisfaction relates to the extent to which their expectations prior to purchase met or exceeded when they availed the service (Flint et al., 1997).Satisfaction transmits the idea that a firm's actions are subject to the well-being of its customer and that no opportunistic behaviours occur (Ambrose et al., 2007).According to Andreassen (1999), initial service failure causes negative effect, which in turn has a carryover effect on satisfaction judgement on complaint resolution. Initial negative affect also has an adverse effect on customer loyalty whereas satisfaction with complaint resolution has a positive effect on customer loyalty. ...
... Customers expect to have any service failures diagnosed and resolved quickly (Sangareddy et al., 2009). Complaint resolution is therefore an important element of an organisation's retention strategy (Andreassen, 1999). As depicted in the above figure, the complaint management process consists of three interrelated yet distinct factors (Sangareddy et al., 2009): "(I) interactional justice: perceived quality of interaction between the service provider and the customer, (II) procedural justice: perceived fairness of the service recovery process and (III) distributive justice: perceived fairness of the outcome of the service recovery procedure". ...
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E.ON is one of UK’s largest power and gas companies. E.ON’s new initiative known as ‘Target Operating Model’, which is believed to enhance customer experience and deliver operational benefits, is currently underway. The initiative includes enhancements in various areas such as training, processes, systems and website development. E.ON has a top-down approach in adopting the KPIs for these initiatives, starting from defining strategic objectives and cascading them to business function level. Strategic, operational, financial and team/individual performance represent a major objective for an organisation. To appreciate the extent to which corporate objectives are achieved and in order to evaluate the efficiency of business strategies, it is vital to define an integrated system of performance indicators capable of assessing processes with respect to the set targets and objectives at a given point in time. Moreover, managerial decisions should be based on a thorough knowledge of the current state of the business which cannot be attained in the absence of a performance measurement system. Such a system should be capable of informing management about the results obtained in all initiatives of the company. Given the importance of performance measurement systems for the success of a business, this report evaluates the adequacy of the KPIs used by E.ON. In addition, a business model is presented highlighting the best practices in ‘customer complaint resolution’ divisions within the utility sector. Primary research was conducted in the form of survey questionnaires and Structural Equation Modelling technique was adopted to detect a pattern in the complainants’ responses to the questionnaire. The survey measured consumers’ judgement about their respective energy suppliers’ customer complaint resolution process. We believe that the findings of this research have an imperative practical implication as the constructs of the model are chosen to test the appropriateness of KPIs in addressing the underlying principal determinants of ‘Loyalty’, which is the ultimate objective of the customer complaint resolution division. The research also tests the adequacy of the KPIs which are intended to meet the requirements identified by “Which?”, “Consumer Future” and Ofgem in order to bolster E.ON’s stance in the top rankings. Furthermore, a gap analysis is performed to identify KPIs that could be adopted by E.ON with respect to its strategic objectives. Using AHP methodology, the list of new KPIs are ranked based on SMART (Specific, Measureable, Attainable, Realistic and Time-sensitive) criteria. Finally, the report provides recommendations to E.ON summarising the KPIs that could be replaced and/or adopted as part of the organisation’s performance measurement system.
... Sự hài lòng của khách hàng trong việc xử lý khiếu nại là mức độ mà khách hàng cảm thấy hài lòng đối với những gì họ đề xuất với ngân hàng. Sự hài lòng của khách hàng cho thấy họ thỏa mãn với những gì ngân hàng đã thực hiện với họ thông qua các đề xuất của họ đối với ngân hàng (Andreassen & Wallin, 1999). ...
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Tóm tắt: Nghiên cứu này tập trung xác định mối quan hệ giữa Xử lý khiếu nại, Sự hài lòng, Niềm tin và Lòng trung thành của khách hàng cá nhân trong ngành ngân hàng. Dựa trên mẫu điều tra từ 288 các cá nhân là các khách hàng có giao dịch tại các Ngân hàng thương mại trên địa bàn TP. Đà Nẵng, các phương pháp thống kê, đánh giá độ tin cậy thang đo Cronbach’s Alpha, phân tích nhân tố khám phá (EFA), phân tích nhân tố khẳng định (CFA) và mô hình phương trình cấu trúc (SEM) được sử dụng để phân tích. Kết quả cho thấy, (1) Nhân tố Xử lý khiếu nại (KN) tác động tích cực đến Niềm tin (NT), Sự hài lòng (HL) và Lòng trung thành (TT); (2) Nhân tố Sự hài lòng (HL) tác động tích cực đến Niềm tin (NT) và Lòng trung thành (TT) và (3) nhân tố Niềm tin (NT) tác động tích cực đến Lòng trung thành (TT). Từ khóa: Xử lý khiếu nại, Sự hài lòng, Niềm tin, Lòng trung thành. Mã phân loại JEL: C51, C81. Abstract: This study focuses on defining the relationship between Complaint Handling, Satisfaction, Trust and Loyalty of individual customers in the banking industry. Based on a sample of 288 individuals who are customers with transactions at commercial banks in Da Nang city, statistical methods, Cronbach's Alpha test, Exploratory Factor Analysis (EFA), Affirmative Factor Analysis (CFA) and Structural Equation Model (SEM) for analysis. The results show that (1) Complaint Handling (KN) positively affects Trust (NT), Satisfaction (HL) and Loyalty (TT); (2) Satisfaction (HL) positively affects Trust (NT) and Loyalty (TT) and (3) Trust (NT) positively affects Loyalty (TT). Keywords: Complaint Handling, Satisfaction, Trust, Loyalty. JEL code: C51, C81.
... ⮚ Argan (2014) found that the companies responding the most to the complaint were at the top in the ranking of success. According to Andreassen (2019), corporate image has an important place in attracting new customers and regaining dissatisfied customers (Andreassen, 1999). Based on these two studies and the current study findings, an effective e-complaint management system should be established in order to increase the success performance of any glamping business and to create/prevent its corporate image from being damaged. ...
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Article Classification: Research Article Purpose-The purpose of the study is to create a foresight about what kind of method is followed by glamping businesses in e-complaint management and to develop various recommendations along with the results obtained. Design / Methodology/ Approach-"Case study" was chosen as the qualitative research design of the study and the research data were collected with multiple data sources through document review, participant observation and unstructured interview. The data obtained by in-depth, unstructured, face-to-face interview method with the owner/manager of the glamping business on the management of complaints within the scope of the research and 115 comments for the glamping business in the Google Maps application between November 2020 and April 2021 were subjected to content analysis. The obtained data was analyzed by using the previously licensed MAXQDA© 2018 package program. Results-The data analyzed in the research were evaluated under two categories: "e-complaint" and "e-complaint management". There are 5 themes under the e-complaint category and 11 themes under the e-complaint management category. The research results have shown that the business responded to positive posts more than negative posts. The business often stated in their responses to the complaints that they were trying to improve themselves, they thanked the guests for their constructive feedback and sharing their experiences and they were sorry for the bad experience. Some complaints were responded only with general statements without any explanatory information, while other complaints were explained not to be true. Discussion-In line with the results of this research, recommendations were made to the glamping business and future academic studies on this subject.
... Recovery satisfaction mostly taps the cognitive components (i.e., expectations, disconfirmations, justice perception) (Harris et al., 2006;Mccoll-Kennedy et al., 2003;Smith et al., 1999;Wirtz and Mattila, 2003). However, a service failure often evokes strong emotional responses from customers (e.g., angry, frustrated, irritated, etc.) and the affective responses have a significant influence on customers' evaluation of the organization's service recovery effort (Andreassen, 1999). Therefore, service recovery efforts are highly likely to affect customers' emotional ties with firms. ...
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This research was aimed to determine the direct and indirect effect of justice perception, which would be analyzed in this research and based on three dimensions as distributive justice, interactional justice, and procedural justice to the customer affection and loyalty of patients in Xxx Hospital Malang. The research population covered the patients or families who have complained about service failure in the hospital. This data was based on the data from the public relation of Xxx Hospital Malang in 2018. The total sample was 232 respondents who had been selected through the saturated sampling method. The data was analyzed through the Partial Least Square PLS technique in SmartPLS 3.0 program application. The research finding indicated that distributive justice did not significantly affect customer affection from the three construct dimensions of justice perception. In contrast, the interactional justice and procedural justice affected positively and significantly the customer affection, and then the customer affection affected positively and significantly patient loyalty. This result showed that the higher interactional justice and procedural justice of patients would determine the higher customer affection of patients to Xxx Hospital Malang. The higher customer affection would determine the higher patient loyalty. For further research is recommended to re-explore the research variables that might affect the customer affection and loyalty directly on similar research objects or other hospitals, for instance, customer satisfaction, revisit intention, WOM, and other aspects. The next researches should also be done by developing the research model and using samples with different characteristics.
... Behavioral loyalty is a consumer's actual purchase that is observed by researchers over a certain period of time, while attitudinal loyalty is defined as a commitment and request to buy which is usually observed or measured through survey methods. The relationship between satisfaction with service recovery, cumulative satisfaction and loyalty Andreassen (1999) argues that negative affection for the company arises due to the disconfirmation of negative expectations from previous service delivery which has a negative impact on satisfaction ratings in responding to customer complaints and loyalty. ...
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In so many service industries, there will always be possibility that consumer experiences dissatisfaction to quality of service given by company. Customer dissatisfaction can be reflecting from complain submitted at company, discuss this with others or even changes over to other service provider. If service failure generating dissatisfaction of consumer happened in corporate, hence company can perform service recovery to return satisfaction of consumer. Service recovery is believed not only can return satisfaction of consumer losing however also can maintain loyalty consumer to service provider. The study aim is to test whether service recovery strategy relationship to cumulative satisfaction and loyalty on the geographical perspective of Bandung city Insurance companies, Indonesia. Satisfaction with service recovery consisted of communication, empowerment, feedback, atonement, education, and tangibles. Research model applied in this research adaptation from research model Boshoff (2005). Sampling technique used convenience sampling, total sample in this research to 200 respondents from insurance company in Bandung which has experienced service recovery. Statistical test applies multiple regression method with supported by SPSS 16. After done statistical testing the hypothesis, the result that independent variable (satisfaction with service recovery) what can explain variable dependent (cumulative satisfaction) are communication, feedback, and education about the reasons of dissatisfaction, equal to 62.9%. While cumulative satisfaction can only explain loyalty equal to 47.5% only, mean there are still other factor influencing consumer loyalty after service recovery further satisfaction to service recovery applied by insurance company.
... Typically, the consumer will find excuses for a negative service experience because of a certain corporate image of the bank. The image of a bank is said to play a significant role in retaining customers (Lewis & Soureli, 2006;Andreassen, 1999;Bloemer, Ruyter & Peeters, 1998). Similarly, Boohene and Agyapong, (2011) as well as Siddiqi (2011), claim that good corporate image leads to high customer loyalty. ...
Article
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Retail banks are increasingly focused on maintaining a loyal customer base. This is because loyal customers translate into higher profits and increased market share. The Generation Y cohort, which comprises the youth of today, is an important current and future banking segment and its bank loyalty could have a notable effect on the profitability of retail banks. Understanding the factors that positively contribute towards this cohort’s bank loyalty will aid retail banks in devising appropriate marketing strategies for effectively targeting this market and maintaining their loyalty. As such, the purpose of this study was to determine the influence of perceived customer value, employee service quality, bank image and customer satisfaction on Generation Y students’ bank loyalty in a South African context. The study followed a descriptive research design and a quantitative research approach. A self-administered questionnaire was used to collect data from a convenience sample of 271 banking students registered at two public university campuses in Gauteng, South Africa. The collected data were analysed using descriptive statistics, reliability measures, correlation analysis and multivariate regression analysis. The study’s findings suggest that South African Generation Y students’ perceived customer value, bank image and customer satisfaction has a statistically significant positive influence on their bank loyalty. However, their perceived bank employee service quality has a positive yet nonsignificant influence on their bank loyalty.
... Hence, branding strategies play a crucial role in developing and creating a positive image in the minds of customers. Traveling firms get the opportunity to invite discussions from their customers, and can find ways to improve their customer service .. Social media tools are more of a personalized medium where customers and traveling entities interact in an informal way, which promotes trust and good faith among both parties (Andreassen, 2009). ...
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Social Media has revolutionized the dissemination of information in the travel and hospitality industry. Social websites, online blogs, and communities have given consumers an upper hand in accessing and choosing their places of visits. This has been made possible by customer review websites such as Trip advisor which informs and assists consumers. The current study seeks to understand the impact of social media and relationship marketing on customer loyalty and sales in the travel and hospitality industry. The study utilized a mixed-method design to collect primary and secondary data. 70 consumer participants across the United Kingdom were randomly chosen to participate in the study. Qualitative data was obtained by interviewing five Tripadvisor managers from Tesco. Additionally, the existing literature, publications, and journals provided further information on the role of social media and relationship marketing in the travel and hospitality industry. Data was analyzed arithmetically through the calculation of percentages and the use of graphs and charts. The findings of the study depict that factors such as age, education, gender, household income and size are the major factors affecting consumer behavior. The findings also depicted that Tripadvisor has strategically been advanced by its presence on Facebook where it offer extensive service to travel and hospitality consumers. However, the study recommends that Tripadvisor should ensure its presence in other major social websites such as Twitter, Tiktok, Instagram, and LinkedIn.
... The longer the waiting time becomes, the larger the amount of stress experienced due to time loss and uncertainty [8] and the more likely customers are to express such negative emotions as uncertainty, anxiety, anger, annoyance, worry, embarrassment, discomfort, disappointment, displeasure, demoralization, distress, and stress [9,31,32]. The first negative emotion caused by failed service can negatively affect consumer satisfaction, cause the negative emotion of anger, and lead to negative behaviors, such as exchange or refund [33]. A wait or delay can be the initial failure in service delivery, which causes consumers to experience negative emotions and reduces their repurchase intention [10]. ...
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The ultimate purpose of this study was to analyze the effects of perceived waiting time for airport security screening service had on airport image through the medium of passengers’ psychological and emotional responses. For this purpose, a survey was conducted in passengers using Incheon International Airport and Gimpo International Airport. A total of 294 questionnaires were analyzed using structural equation modeling. Perceived waiting time was found to have statistically significant effects on wasted time, boredom, and neglect among the sub-factors for airline passengers’ psychological responses. Wasted time had a positive effect on negative emotional response and had a negative influence on acceptability. In addition, acceptability had a positive effect on airport image. The results of this study can be utilized not only as basic data for future airport security screening service research, but also have a positive impact on airport sustainability by increasing airport security and safety.
... Several studies in services marketing have shown that managerial postpurchase engagement also drives brand loyalty. In these prior studies, surveys and experiments with purchase-intention measures have been predominantly used and have shown the positive relationship between the managerial postpurchase interactions and the survey participants' self-reported repurchase intention (Andreassen, 1999;DeWitt et al., 2008;Van Vaerenbergh et al., 2012). As interesting as these findings are, they have not been extended to a study that looks into loyalty behavior in a real-world setting. ...
Article
Owing to the impact of third-party commissions upon hotel profitability, many hotel brands have actively engaged in book direct campaigns, but to date, no large-scale longitudinal effort has been conducted to systematically evaluate direct booking behavior (i.e., direct versus online travel agency [OTA]). In this study, we use three years of transactional data from a large hotel brand to evaluate booking channel choices. To address the dynamic nature of the longitudinal individual-level data, we use a hidden Markov model (HMM), allowing us to evaluate both short- and long-term effects. Using the HMM, we evaluate the latent loyalty status of customers through their observed online booking channel behavior (i.e., direct versus OTA). As a result, we find that customer–manager engagement through guest satisfaction surveys (and managerial responses to those surveys) has a long-term effect on consumer propensities to book direct, gradually increasing customer loyalty to the brand. Specifically, we find that positive customer feedback signals a greater willingness to book direct in subsequent purchases. Moreover, managerial responses to the satisfied customer result in greater tendency to remain loyal and book direct. Second, the membership program tier of the customer has a significant short-term effect on the consumer’s propensity to book direct. Low-loyalty customers’ direct booking tendency increases as soon as they join the membership program. These findings not only illustrate the impact of membership status upon channel choice but also indicate the effect of the customer’s voice and the resulting managerial response upon booking behaviors over time.
Article
Data obtained from 375 members of a consumer panel in a two-phase study of consumer experiences with automobile repairs and services were used to examine the antecedents and consequences of consumer satisfaction. The results support previous findings that expectations and disconfirmation are plausible determinants of satisfaction, and suggest that complaint activity may be included in satisfaction/dissatisfaction research as suggested by earlier descriptions of consumer complaining behavior.
Article
A simplified cognitive model is proposed to assess the dynamic aspect of consumer satisfaction/dissatisfaction in consecutive purchase behavior. Satisfaction is found to have a significant role in mediating intentions and actual behavior for five product classes that were analyzed in the context of a three-stage longitudinal field study. The asymmetric effect found demonstrates that repurchase of a given brand is affected by lagged intention whereas switching behavior is more sensitive to dissatisfaction with brand consumption. An attempt to predict repurchase behavior on the basis of the investigated cognitive variables yielded weak results. However, repurchase predictions were improved when the model was extended to a multipurchase setting in which prior experience with the brand was taken into account.
Article
Following a review of the service failure and recovery literature, this study seeks to investigate: first, what constitutes failure in the minds of customers; second, the impact of recovery on satisfaction; third, the key attributes needed by staff affecting a recovery; and fourth, the main steps in the process of recovery. The analysis is based on 224 service anecdotes from customers from a wide range of service organisations. The study identified four main types of failure: the service system, the physical goods, a customer's body failure (i.e., medical) and customers making a mistake. It found that the key attributes required of staff affecting a recovery are to appear pleasant, helpful and attentive, show concern for the customer, act quickly and be flexible. The key activities in the recovery process are to provide information about the problem, take action and that staff should appear to put themselves out to solve the problem and if possible involve the customer in the decision making. Any form of atonement did not appear to be necessary.