ArticlePDF Available

Customer Reactions to Service Provider Overgenerosity

Authors:

Abstract

Existing research in services marketing has mostly focused on service encounters in which the service provider fails to meet customer expectations. Service encounters in which customer expectations are exceeded have not been as thoroughly examined. This article focuses on service encounters characterized by service provider generosity: the act of giving customers value beyond their expectations. Utilizing an experimental research design, the authors demonstrate that consumer reactions to such behavior are moderated by the organizational level of the service provider as well as the existence of a past purchase history. Counter to conventional belief, under certain conditions, overgenerosity may hinder customer assessments of a service. The article concludes with a discussion of the implications for services marketing strategy and research.
Customer Reactions to Service
Provider Overgenerosity
Hooman Estelami
Fordham University
Peter De Maeyer
The Monitor Company
Existing research in services marketing has mostly fo
-
cused on service encounters in which the service provider
fails to meet customer expectations. Service encounters in
which customer expectations are exceeded have not been
as thoroughly examined. This article focuses on service
encounters characterized by service provider generosity:
the act of giving customers value beyond their expecta-
tions. Utilizing an experimental research design, the au-
thors demonstrate that consumer reactions to such
behavior are moderated by the organizational level of the
service provider as well as the existence of a past purchase
history. Counter to conventional belief, under certain con
-
ditions, overgenerosity may hinder customer assessments
of a service. The article concludes with a discussion of the
implications for services marketing strategy and research.
Generosity has been defined as a “willingness to share”
and “giving freely, free from meanness or prejudice” be
-
yond expected levels (Dalgish 1997; Machan 1998). Al
-
though generous service provider behavior seems to be a
fundamental component of the marketing strategy of many
large and small businesses, existing academic research in
services marketing has had little coverage of the impact of
such behavior on the customer. A significant amount of the
current literature has instead focused on customer reac
-
tions to instances in which firms fall short of one’s expec
-
tations. However, emerging evidence suggests that outper-
forming consumer expectations through generous actions
may potentially help in bringing about consumer delight,
with subsequent positive effects on constructs such as atti-
tude, word of mouth, and repurchase intentions (e.g.,
Estelami 2000; Oliver, Rust, and Varki 1997; Singh 1990;
Taylor 1997).
Numerous examples of service provider generosity can
be found in the business press. These include a customer
service employee at Nordstrom who gladly accepts a pair
of returned tires from a customer, although Nordstrom
never carries tires (Heskett, Sasser, and Schlesinger 1997).
Other examples include a cashier who accepts a transac
-
tion although the customer is a few pennies short of cash
and customer service protocols that compensate consum
-
ers for incremental losses incurred due to product failures
(Estelami 2000; Reichheld and Sasser 1990). Although
from an economic perspective, such actions may not nec
-
essarily represent substantial costs to the firm (e.g.,
Fornell and Wernerfelt 1987), they are typically consid
-
ered to be beyond the norms of most service protocols.
Nevertheless, service provider generosity may provide the
firm with unique opportunities to gain the attention, trust,
and potentially the long-term loyalty of customers.
This article therefore explores the impact of service
provider generosity on customer responses. The impact of
JOURNAL OF SERVICE RESEARCH / February 2002Estelami, De Maeyer / SERVICE PROVIDER OVERGENEROSITY
This research was supported by a grant from Fordham University’s Graduate School of Business and the Fordham University Pricing
Center. Please address correspondence to the first author at the Graduate School of Business, Fordham University, 113 West 60th Street,
New York, NY 10023; phone: (212) 636-6296; fax: (212) 765-5573; e-mail: estelami@fordham.edu.
Journal of Service Research, Volume 4, No. 3, February 2002 205-216
© 2002 Sage Publications
factors such as the existence of a past purchase history, the
service provider’s organizational level, and the magnitude
of generosity on consumer judgments is examined through
an experimental research design. The article concludes
with a discussion of the managerial and research implica
-
tions of the findings.
CONSUMER EXPECTATIONS AND
SERVICE PROVIDER GENEROSITY
Expectations are the basis of consumer judgments for
most service encounters (Oliver 1980; Parasuraman,
Zeithaml, and Berry 1988; Rust et al. 1999) and are often
the means by which the actual performance of a business is
gauged. Customers enter service encounters with certain
expectations about the various aspects of a service, such as
speed of service, politeness of employees, and cleanliness
of the service outlet. Research has shown that multiple ex
-
pectations are used to gauge the quality of an aspect of a
service encounter. These expectations may relate to what
consumers would ideally desire, what they predict to expe-
rience, or what they consider to be adequate service
(Zeithaml, Berry, and Parasuraman 1993). Although de-
sired and predicted service expectations are found to be
largely influenced by promises communicated to custom-
ers by service providers, expectations of adequate service
levels are affected by factors such as the number of com-
peting services, situational factors, and consumers’ in-
volvement in the service process.
The magnitude of the discrepancy between consumer
expectations and the actual experienced service deter-
mines customer satisfaction with the offering (Oliver
1980), and the management of the discrepancy between
customer expectations and service provider performance
has therefore become a focus for developing effective ser
-
vice marketing strategies (Oliver 1997). This focus is
driven by the recognition of a “zone of tolerance” sur
-
rounding customer expectations (Johnston 1995;
Liljander and Strandvik 1993; Woodruff, Cadotte, and
Jenkins 1983). This zone represents consumers’ tolerance
for differences between desired and adequate levels of ser
-
vice performance (Zeithaml, Berry, and Parasuraman
1993) and is a range of firm performances in which expec
-
tations are considered by customers to have been met. Ser
-
vice provider performance within the lower and upper
limits of this zone will likely result in mere satisfaction.
However, performance below the lower limit of the zone is
likely to result in customer dissatisfaction, and perfor
-
mance above the upper limit of the zone may result in cus
-
tomer delight (Oliver, Rust, and Varki 1997; Pieters,
Koelmeijer, and Roest 1995; Singh and Widing 1991).
It is the latter form of exceeding customer expectations
that interests us in this article. The business press provides
numerous examples of situations in which firms such as
Chubb Insurance, Xerox, Southwest Airlines, and Home
Depot seek to exceed the upper limit of the zone of indif
-
ference. For example, Xerox provides its customers with
unconditional product returns at the customer’s request
(“Why Your Copier Isn’t Working, 1992), Home Depot
entertains product returns for items purchased from its
competitors (“Cheerleading, 1992), and in a highly com
-
petitive property and casualty market Chubb Insurance has
found a profitable path by providing outstanding service to
customers (Fefer 1996). Other examples include a cashier
who chooses to complete a transaction although the cus
-
tomer is short by a few pennies (Reichheld and Sasser
1990) and a Southwest Airlines pilot who provides a late
passenger a flight on his own personal aircraft (Weinstein
1997). Such generous behaviors create unique customer
experiences in which one’s expectations about the service
encounter are significantly exceeded. Research in both
service quality management and pricing has documented
the positive impact of exceeding customer expectations on
customer satisfaction and delight, with subsequent effects
on customer choice and loyalty (Estelami 2000; Rust et al.
2000). For example, evidence in the customer service liter-
ature suggests that liberal customer compensation policies
have an overwhelmingly positive effect on customer eval-
uations of the company, beyond any other aspect of the ser-
vice encounter (Goodwin and Ross 1989; Tax, Brown, and
Chandrashekaran 1998). Oliver, Rust, and Varki (1997)
have also shown that unexpected high levels of firm per-
formance may result in a state of emotional arousal and de
-
light in consumers. The result is an increase in consumer
behavioral measures such as purchase intentions and satis
-
faction self-reports. Similar evidence in the pricing litera
-
ture (e.g., Barnes 1975; Berkowitz and Walton 1981;
Estelami 1997; Keiser and Krum 1976) suggests system
-
atic consumer preference for price presentation tactics that
imply seller generosity (e.g., “buy one, get one free”)
rather than traditional presentations of price information
(e.g., “50% off”). Service provider generosity may there
-
fore help develop outstanding levels of customer satisfac
-
tion, which may subsequently have positive effects on
repurchase behavior (Anderson and Sullivan 1993; Bitner,
Booms, and Tetreault 1990; Bolton 1998; Oliva, Oliver,
and MacMillan 1992; Oliver, Rust, and Varki 1997).
Literature on the empowerment of service employees
also supports the fact that enabling service providers to
take extra initiatives for ensuring positive service encoun
-
ters will result in high customer satisfaction levels. Em
-
powering implies giving employees the decision-making
power to take additional steps beyond organizational
206 JOURNAL OF SERVICE RESEARCH / February 2002
norms for serving customers (Lawler, Mohrman, and
Ledford 1995). Research has established that this organi
-
zational characteristic not only helps increase customer
satisfaction levels but also produces positive results on
profitability (Bowen and Lawler 1995). Empowerment
also results in higher levels of employee satisfaction
(Kopelman 1986), improves work output quality, and low
-
ers costs (Beekun 1989). Needless to say, the resulting em
-
ployee satisfaction has been found to also indirectly
influence customer satisfaction levels (Loveman 1998).
However, although low and moderate levels of generos
-
ity may produce customer delight and positively influence
subsequent customer behavior, overgenerosity may be
considered as beyond the norms of operating a business
profitably and may trigger additional cognitive processes
that question the nature of the transaction. As a result,
overgenerous behavior may be perceived as unusual, atyp
-
ical, and suspicious by customers. This is a result of infor
-
mation asymmetry surrounding buyer-seller transactions,
in which sellers typically have an information advantage
over the buyer on the value of the product being sold
(Mishra, Heide, and Sort 1998). In service encounters, the
magnitude of this asymmetry makes customer judgments
highly influenced by the contextual elements of the trans-
action (Singh and Sirdeshmukh 2000). As a result, out-
come variables such as customer satisfaction and
judgments regarding the ethical standards of the service
provider may be negatively affected by unusual events,
which may compromise the customer’s trust in the service
provider (Bigley and Pearce 1998; Doney and Cannon
1997; Garbarino and Johnson 1999).
Research in social psychology has also found evidence
for a persistent effect not only of the economic outcome of
negotiations but also the perceptions surrounding them.
For example, Thompson (1990) found that in dyadic nego
-
tiations, perceptions of the other party’s outcomes signifi
-
cantly affects one’s evaluation of the negotiation. He
attributed this to the lack of sufficient objective outcome
information in many negotiations, resulting in increased
reliance on subjective cues and outcome perceptions.
Lowenstein, Thompson, and Bazerman (1989) have also
shown that in evaluating transactions, customers prefer a
fair distribution of outcomes between the parties, and
Corfman and Lehmann (1993) suggested that customers’
concern for the welfare of the other party significantly in
-
fluences the satisfaction gained in buyer-seller transac
-
tions. As a result, overgenerosity in service transactions
can trigger cognitive processes that may also put into ques
-
tion the ethical values of the service provider and question
whether or not these values and the resulting actions are
consistent with the policies and welfare of the business
(Levy and Dubinsky 1983; McIntyre, Thomas, and Gilbert
1999).
Moderating Role of Service
Provider Organizational Level
Customer reactions to service provider generosity may
be further affected by contextual elements of the service
encounter, which primarily relate to the setting in which
the behavior takes place, rather than the amount of gener
-
osity (Goodwin and Ross 1992). One potential moderating
factor is the organizational level of the service provider.
The organizational level of the service provider may influ
-
ence customers’ interpretation of generous acts. Because
generosity is not a standard component of service encoun
-
ter protocols, and because it may also imply sacrifices by
the business, its practice by an employee at lower organi
-
zational levels may be perceived as risky behavior, which
may not be compliant with organizational policies and
norms.
Overly generous action by lower level employees may
therefore be considered as a compromise to their commit-
ment to the organization and potentially perceived as unfa-
vorable behavior (Cohen 1993; Hunt and Morgan 1994).
Therefore, lower level employees (e.g., cashiers, clerks,
etc.) who engage in overgenerous behavior may help cre-
ate uncomfortable customer experiences. On the other
hand, service providers at higher organizational levels
(e.g., owners, managers, assistant managers, etc.) may be
more appropriate vehicles for such behavior. The generous
behavior of higher level employees may be more accept-
able to customers, as they may be perceived as being aware
and compliant with organizational policies and unlikely to
compromise their business’s well-being (Meyer and Allen
1991).
The Effects of Past Purchase History
A second contextual factor that may influence cus
-
tomer reactions to overgenerous service provider behavior
is the presence or absence of a past purchase history with
the service provider. Research has shown that the exis
-
tence of a purchase history between buyers and sellers
helps customers become more responsive toward positive
actions taken by a business. For example, Tax, Brown, and
Chandrashekaran (1998) have shown that customers who
have a transaction history with the seller perceive the
seller’s actions more positively than those with no pur
-
chase history. Similar results have been reported by Oliva,
Oliver, and MacMillan (1992), who suggested that past
purchase history reduces the chances of customer switch
-
Estelami, De Maeyer / SERVICE PROVIDER OVERGENEROSITY 207
ing behavior and improves the bond between buyer and
sellers.
The existence of a purchase history may therefore make
it more acceptable for customers to be recipients of gener
-
ous offers from a service provider. This is especially true in
certain service sectors such as the gaming and hospitality
industries in which the act of generously rewarding loyal
customers is considered to be an expected part of doing
business (Chipkin 1997; Pinney, Thompson, and Strate
1995). As such, in these markets, service provider gener
-
osity is a well-received and expected practice for loyal cus
-
tomers (Bull and Alcock 1993; Yu 1999). Similar
responses are evident in other service industries in which
customer loyalty rewards are expected. In such light, gen
-
erosity may be perceived as the means for establishing and
strengthening a long-term relationship between the busi
-
ness and the customer.
Overview of Research Questions
In the following section, the results of a study will be
presented to explore consumer reactions to service pro-
vider generosity under the various conditions described
above. In particular, the experimental research design used
will attempt to examine the following three questions:
1. What cognitive responses do consumers exhibit
in reaction to service provider generosity, and
how do these responses vary as a function of the
magnitude of generosity?
2. Are consumer reactions to generous service pro-
vider behavior influenced by their past purchase
history with the service provider?
3. Are consumer reactions to generous service pro
-
vider behavior influenced by the organizational
level of the service provider?
METHOD
To explore the effects of service provider generosity, an
experimental design associated with qualitative data was
utilized. The between-subject experiment manipulated the
monetary amount of generosity, the service provider orga
-
nizational level, and past purchase history in written de
-
scriptions of a service encounter. Participants were then
asked qualitative open-ended questions as well as struc
-
tured questions to gauge their cognitive reactions to varia
-
tions in the described scenarios. Examining customer
reactions to service encounters through combined use of
qualitative open-ended questions and quantitative struc
-
tured responses is similar to previous works in services
marketing research (e.g., Bitner, Booms, and Tetreault
1990; Estelami 2000; Goodwin and Ross 1989; Keaveney
1995). This approach, which enables both exploratory
analysis of customer responses and quantitative study of
their cognitive responses to service scenarios, is detailed
below.
Independent Variables
Participants were given a brief written description of a
retail encounter, following which a series of open-ended
and structured questions was asked. The written descrip
-
tion outlined a scenario in which the participant is mak
-
ing a road trip to a nearby town and on the way there stops
at a convenience store to buy snacks, drinks, and food
items. Having presented the selected items to the cashier,
the cash register rings the total amount. Participants were
told that they have only $10 in cash and no credit card on
hand. Generosity was manipulated by changing the total
bill and informing the participant that despite the lack of
sufficient funds, the cashier was willing to complete the
transaction, with no obligation to repay the forgone
amount in the future. The various levels of generosity were
established through a pretest exercise. Eighteen graduate
business students were given descriptions of the service
encounter described above, without specifying the pur-
chase history, organizational level, or dollar amount
forgone by the service provider. They were then asked to
express what amount of forgone payment they would con-
sider to be associated with low, moderate, or high levels of
generosity exhibited by the service provider. Each respon-
dent therefore provided three measures associated with the
three levels of generosity. The average response across all
pretest respondents for each of the three generosity levels
was then computed and used as the basis for the manipula
-
tion of service provider generosity. The resulting levels of
generosity were $10.04 (low), $10.50 (moderate), and
$16.87 (high), expressed as the total bill associated with
the transaction. This approach for determining factor lev
-
els in an experimental design is consistent with the com
-
mon practice used in pricing research for eliciting
expected monetary terms in a business transaction (e.g.,
Monroe 1990; Park and Lessig 1981; Rao and Monroe
1988).
The organizational level of the service provider was
manipulated by either stating that the cashier is an em
-
ployee of the store (low organizational level) or stating that
the cashier is the owner (high organizational level). Pur
-
chase history was manipulated by stating either that the
participant has never shopped there before or that the par
-
ticipant frequently shops at that location. This resulted in a
between-subject design with a total of 12 cells: 3 (generos
-
ity level) × 2 (organizational level) × 2 (purchase history).
208 JOURNAL OF SERVICE RESEARCH / February 2002
Dependent Variables
The obtained measures include open-ended written de
-
scriptions of participants’reactions to the service scenario,
as well as structured questions. Following each service
scenario description, participants were asked three open-
ended questions. The first question asked them to state any
positive aspects of the transaction that come to their mind.
The second question asked them to state any negative as
-
pects that come to their mind. The objective of asking these
two questions was to capture cognitive responses associ
-
ated with the transaction and to tabulate positive and nega
-
tive thoughts arising from different scenarios. The last
open-ended question asked participants to state what they
thought about the service provider by asking them, “What
words would you use to describe the cashier?” These writ
-
ten responses were used to facilitate exploratory analysis
by categorizing customer responses to service provider
generosity using subsequent content analysis procedures.
On the page following the open-ended questions, par
-
ticipants were asked a series of structured questions to
gauge their reactions to the described service scenario.
This helped quantify and validate observations made
through the analysis of the open-ended questions. Cus-
tomer satisfaction was measured through three statements:
“I am satisfied with the transaction that took place,” “I am
happy that I made my purchase at this store, and “I appre-
ciate what the cashier did for me. A customer satisfaction
multi-item scale was constructed by averaging each partic-
ipant’s response on these three statements, resulting in a
coefficient alpha of .77. Customer assessment of the
seller’s ethical standards was measured through three
statements: “The cashier’s action was ethically correct,
“The cashier engaged in inappropriate behavior, and “I
think the cashier should be reported to authorities, result
-
ing in a coefficient alpha of .72. The utilized statements
were based on past research in service marketing research
(Chonko and Hunt 1985; Oliver 1980; Parasuraman,
Zeithaml, and Berry 1988; Simonson 1991; Swan,
Bowers, and Richardson 1999; Vitell and Muncy 1992)
and were pretested with graduate business students and re
-
fined prior to the administration of the experiment. The
combined use of qualitative and quantitative customer re
-
sponses to service scenarios is consistent with previous
measurement approaches in this area of research (e.g., Good-
win and Ross 1989; Tax, Brown, and Chandrashekaran
1998).
Participants
Prior to administration, the experimental stimuli were
pretested on 84 graduate business students, refined, and
modified for wording and clarification. A total of 358 par
-
ticipants were then recruited through mall intercepts in
two shopping malls in southern New York State and ran
-
domly assigned to each of the 12 between-subject cells. Of
these, 31 provided unusable responses. The resulting sam
-
ple consisted of 327 adults, 55% of which were female.
The mean age was 34 years, and 62% were living with a
spouse. Participants were given monetary compensation
($2 and a souvenir key chain) for their participation, and
the completion of the task typically took about 5 minutes.
The cell sizes ranged from 24 to 31, and the average cell
size was 27 participants.
Analysis of Open-Ended Questions
CONTENT ANALYSIS PROCEDURE
The first part of the analysis consists of content analysis
of participants’written responses to open-ended questions
relating to each service encounter, after which responses
to the structured questions will be analyzed. Following the
description of each scenario, participants were asked to list
(a) positive thoughts about the transaction, (b) negative
thoughts about the transaction, and (c) their perceptions of
the service provider. These written descriptions were then
content analyzed using a procedure established by Weber
(1985) and used by others in service quality research (e.g.,
Keaveney 1995; Tax, Brown, and Chandrashekaran 1998).
In this approach, a subset of the completed descriptions is
independently examined by two judges. Each judge devel-
ops his or her own category of responses, and then the two
judges converge to a common categorization scheme, with
disagreements involving a third judge. The final categori-
zation scheme is then used by each judge to independently
categorize the entire set of responses. Disagreements in
categorization are resolved by a third judge.
Following the above approach, a subset of 110 re
-
sponses were first used to develop the categories for each
of the three open-ended questions. The finalized categori
-
zation scheme was then used on the entire set of 327 re
-
sponses. The agreement rates between the judges were
generally high: 84% for positive thoughts, 78% for nega
-
tive thoughts, and 86% for perceptions of the service pro
-
vider. This approach to analyzing the open-ended
responses facilitates an exploratory examination of cus
-
tomer responses while enabling the tabulation of results
for quantitative analysis.
Participants’ Descriptions of
the Service Encounter
Table 1 outlines the identified categories, the associated
descriptions, and related overall frequencies for positive
and negative thought listing. It is important to note that the
Estelami, De Maeyer / SERVICE PROVIDER OVERGENEROSITY 209
percentages in Table 1 may add to more than 100% be-
cause participants expressed multiple thoughts for a given
described scenario. The top portion of the table lists cate-
gories related to the open-ended question about negative
thoughts that may come to the participant’s mind. The
most frequent negative thought category is the recognition
of the fact that the business may be making a sacrifice and
therefore losing money in the process of forgoing the pay-
ments. Related risks are that the business could go bank-
rupt if this behavior continues and that the employee’s job
may be placed at risk by engaging in such extraordinary
behavior. The relatively high frequency of this negative
thought category is consistent with the observations made
by Corfman and Lehmann (1993) and Lowenstein,
Thompson, and Bazerman (1989) in the context of negoti
-
ations, in which a concern for the welfare of the other party
is found to influence one’s own satisfaction with a transac
-
tion. The second most frequent category of negative
thoughts is concerned with the ethical appropriateness of
the action taken by the service provider. These respon
-
dents consider the act to be potentially dishonest, and
some express guilt in having accepted the offer. The third
most mentioned category of negative thoughts relates to
the fact that such service provider behavior may help set
unreasonable customer expectations of similar behaviors
in the future. The last category of negative thoughts relates
to respondents’suspicions about the motives of the service
provider in extending such an offer. These respondents
question whether the offer is generous altogether and if
other motives such as incorrect pricing, overpriced goods,
or the employee’s desire to cheat the business may account
for the exhibited behavior.
The bottom portion of Table 1 lists all categories of
thoughts expressed in response to the open-ended question
probing the positive thoughts that the participant might
have about the service encounter. As can be seen from the
table, the majority of participants expressed positive
thoughts. In general, these thoughts fall into three catego-
ries. The most frequent is recognition of some form of per-
sonal gain through the service provider’s generous
behavior. These are reflected in participants’ expressions
relating to having received more than what they normally
would and having been saved the inconvenience of not get-
ting the needed items. The next most frequent category of
positive thoughts relates to participants’ appreciation for
the service provider’s gracious behavior by carrying out
unexpected acts of generosity. In such context, generous
behavior is mentioned as a good mechanism for building
customer satisfaction. The least frequently mentioned cat
-
egory of thoughts considered by respondents as positive
relates to the fact that such behavior facilitates the comple
-
tion of a business transaction with subsequent benefits to
the business. This latter category was mentioned by less
than 10% of respondents.
Tabulation of Thought Listings
Although the results in Table 1 provide an overall sum
-
mary of participants’ responses across all experimental
conditions, they do not report on the variations in these re
-
sponses across the factors manipulated in the experiment.
To enable such analysis, an index was constructed to tabu
-
late the relationship between positive and negative thought
listings. This is achieved by simply subtracting the latter
210 JOURNAL OF SERVICE RESEARCH / February 2002
TABLE 1
Categorization of Participants’ Open-Ended Thought Descriptions
Percentage of
Open-Ended Question Category Sample Thought Descriptions Partcipants
Negative thoughts Store loses “The store goes short of cash”; “If repeated, the store loses money”; “The employee may 55.0
lose her job”; “It’s bad for business”; and so on
Ethically “I would not accept this,” “I would feel ashamed of the situation,” “I would be indebted to 32.4
incorrect someone,” “I accepted something dishonest,” and so on
May set wrong “May increase buyer expectations in the future,” “Other customers may expect same 14.7
precedence treatment,” “Prices may go up as a result of this,” and so on
Question mo- “I question the motives of the seller,” “The cashier cheated his business,” “Maybe the goods 11.6
tives of seller were overpriced in the first place,” and so on
None None 8.9
Positive thoughts Personal gain “Received more than what I should have gotten,” “I was recognized and rewarded as a 61.8
customer,” “You are saved from the hassle of a second trip,” and so on
Gracious “Did something he/she didn’t have to do,” “I am happy/thankful,” “Someone did a nice thing 58.4
behavior for me,” “Good service,” “Good customer relations,” and so on
Transaction “Keeps the line moving,” “Brings repeat customers,” “The store still manages to make a 7.0
facilitation sale,” “I will refer the store to others,” and so on
for the seller
None None 1.2
from the former. The resulting index would help quantify
the direction and intensity of consumer thoughts (Grinnell
1997; Kendall, Butcher, and Holmbeck 1999; Miles and
Huberman 1984):
TPI = number of positive thoughts
– number of negative thoughts.
This index, referred to here as the thought polarity index
(TPI), ranges from negative to positive, depending on the
number of negative and positive thoughts mentioned by
the participant. A positive value of TPI indicates that the
participant expressed more positive thoughts than negative
thoughts. A TPI of zero indicates an equal number of nega
-
tive and positive thoughts, and a negative value indicates
that the participant expressed more negative thoughts than
positive thoughts. This approach for quantifying respon
-
dents’thought listings is consistent with previous research
on the analysis of consumers’ cognitive responses (e.g.,
Maheswaran and Sternthal 1990; Sujan 1985) and pre
-
scriptions made by Judd, Smith, and Kidder (1991). Figure
1 provides a factorial plot of TPI across the various condi-
tions manipulated.
As can be seen in Figure 1A, there is a negative relation-
ship between the amount of generosity and TPI. This indi-
cates that the relative frequency of negative thoughts
compared to positive thoughts increases with the magni-
tude of generosity. In addition, there is an effect of service
provider organizational level. Low organizational levels
are associated with less favorable TPI levels. To assess the
significance of the observed pattern, an ANOVA was com-
puted with TPI as the dependent variable and generosity
amount and organizational level as the independent vari
-
ables. The ANOVA is significant (F
5, 281
= 6.92; p < .001)
and so are the main effects of generosity (p < .01) and orga
-
nizational level (p < .01). Figure 1B reports the TPI facto
-
rial plot for various levels of purchase history. As can be
seen, similar to Figure 1A, TPI decreases with generosity.
Moreover, the presence of past purchase history seems to
result in higher TPI levels. This suggests that customers
will evaluate generous service provider behavior more
positively if a past history of purchases exists. The rela
-
tionship between TPI and past purchase history and gener
-
osity amount is significant (F
5, 281
= 7.13; p < .001) and so
are the main effects of past purchase history and generosity
(p < .001).
The content analysis procedure described above was
also used to categorize participants’ open-ended descrip
-
tions of their perceptions of the service provider. The re
-
sulting categories are listed in Table 2. The descriptions
fall into three major groups. The first is negative descrip
-
tions. The largest category of negative statements deals
with descriptions that question the soundness of the ser
-
vice provider’s behavior from a business perspective.
These respondents consider the act to be unprofessional,
as evident by expressions such as “irresponsible” and
“careless. The second set of negative descriptions relates
to suspicions about the motives behind the behavior. These
participants express unease with why they were presented
with the offer and question the employee’s agenda, as re
-
flected in descriptions such as “suspicious” and “dishon
-
est. The third category of negative descriptions
characterizes the service provider as a person engaging in
Estelami, De Maeyer / SERVICE PROVIDER OVERGENEROSITY 211
FIGURE 1
Factorial Plots of the
Thought Polarity Index (TPI)
risky behavior that may be harmful to himself or herself as
well as to the business.
Positive service provider descriptions fall into two ma
-
jor categories. The first includes positive mentions of the
employee’s personality, such as their generosity, kindness,
and helpfulness. The second category of positive descrip
-
tions categorizes the employee as a smart businessperson,
forgoing payments to reward customers and to build the
business. To quantify the open-ended responses, a similar
index to the one mentioned earlier was constructed by sub-
tracting the number of negative descriptions from the num-
ber of positive descriptions given to the service provider:
PPI = number of positive descriptions
of service provider – number of negative
descriptions of service provider.
This index, referred to here as the personality percep
-
tion index (PPI), ranges from the negative to the positive,
has positive values when the participant expresses more
positive descriptions than negative descriptions, and visa
versa. Figure 2 shows the factorial plot of this index across
the various experimental conditions. The operational-
ization of PPI is consistent with that of TPI and prior ap
-
proaches for quantifying respondents’cognitive responses
(e.g., Maheswaran and Sternthal 1990; Sujan 1985).
As can be seen in Figure 2A, higher organizational lev
-
els result in more favorable PPI values. This is consistent
with the results reported in Figure 1A. Moreover, for high
organizational level employees, increasing generosity
from low to moderate levels does not result in any signifi
-
cant decline in the PPI. However, for the low organiza
-
tional level employees, there is a significant decline. This
suggests that there is an interaction between organiza
-
tional level and generosity. For both high and low organi
-
zational level employees, moving from moderate to high
generosity levels results in a decline in PPI. To statistically
assess these observations, an ANOVA was estimated with
PPI as the dependent variable and the generosity amount,
service provider organizational level, and their interaction
as the independent variables. The ANOVA is significant
(F
5, 281
= 18.9; p < .001). The main effects of organizational
level and generosity amount are both significant (p < .001)
and so is their interaction (p < .05). Figure 2B plots similar
data, but with respect to past purchase history. The pres-
ence of past purchase history results in higher levels of
PPI, consistent with the observations made in Figure 1B
for TPI. Moreover, the main effects of generosity (p < .01)
and purchase history (p < .05) are significant, consistent
with results observed earlier.
Analysis of Structured Questions
The structured questions enable a reexamination of the
results obtained using the open-ended questions, through
further quantitative analysis. As described earlier, there
were two multi-item scales used, the first measuring cus
-
tomer satisfaction and the second measuring participants’
perceptions of the ethical standards of the service provider.
Figure 3 shows the resulting plots for the effects of gener
-
osity under various organizational level conditions on
these two constructs. As can be seen in Figure 3A, scenar
-
ios in which the payments are forgone by a high organiza
-
tional level service provider result in consistently higher
customer satisfaction levels than when the behavior is ex
-
hibited by a lower level service provider. Moreover, as evi
-
dent in Figure 3A, generosity level seems to have a
negative effect for scenarios in which the service provider
organizational level is low. Under this condition, ratings of
satisfaction with the transaction drop from a level of 5.7 at
the low generosity level to 5.2 at the high generosity level.
These results are consistent with those observed in Figures
1 and 2.
A similar pattern emerges in Figure 3B for the effects
on customer perceptions of the service provider’s ethical
standards. With changes in generosity amount, these per
-
212 JOURNAL OF SERVICE RESEARCH / February 2002
TABLE 2
Open-Ended Descriptions of the Service Provider
Percentage of
Category Sample Descriptions Participants
Negative Unwise “Simple minded,” “not a good business person,” “irresponsible,” “unprofessional, 17.4
“carefree,” and so on
Questionable “Suspicious,” “deceiving,” “dishonest,” “disloyal,” “thief,” “greedy,” and so on 16.2
motives
Risky “Risk taker,” “independent,” “single minded,” and so on 4.6
Neutral Neutral Nothing 0.9
Positive Nice personality “Nice person,” “considerate,” “sympathetic,” “understanding,” “helpful,” “generous, 74.9
“kind,” “accommodating,” and so on
Smart business “Good business person,” “ambitious,” “customer oriented,” “entrepreneur,” “reasonable, 33.2
person and so on
ceptions are not dramatically affected for high organiza
-
tional level service providers but significantly drop for low
level service providers. The interaction between generos
-
ity and organizational level is significant at the p < .001
level, consistent with results observed in Figure 2 through
the analysis of the participants’ open-ended responses.
Separate ANOVAs with purchase history and generosity
level as the independent variables also show significant ef
-
fects of past purchase history on both customer satisfac
-
tion (p < .01) and customer evaluations of the service
provider’s ethical values (p < .10), consistent with earlier
results.
The observations made through the analysis of struc
-
tured responses are consistent with the results obtained
through the analysis of open-ended written descriptions.
These observations also challenge the popular belief that
increased generosity should create more positive customer
evaluations of a business. Such a phenomenon is not ob
-
servable for low organizational level service providers as
satisfaction ratings and ethical evaluations drop with
Estelami, De Maeyer / SERVICE PROVIDER OVERGENEROSITY 213
FIGURE 2
Factorial Plots of the
Personality Perception Index (PPI)
FIGURE 3
Factorial Plots for Customer Satisfaction and
Ethical Standards of Service Providers
overgenerosity in a retail transaction. However, for high
organizational level service providers, customer responses
are more stable and unaffected at low to moderate amounts
of generosity. Overgenerosity, however, results in a drop in
customer responses across all conditions. Moreover, the
results suggest strong contextual effects on customer eval
-
uation of generosity: In general, participants expressed
more positive responses to scenarios in which generosity
is displayed by a higher level service provider, and where a
history of past purchases exists.
DISCUSSION
Pragmatic thinking in marketing prescribes that ex
-
ceeding customer expectations should have strong posi
-
tive effects on the relationship between the customer and
the service provider. Although a considerable amount of
research in services marketing has focused on quality im
-
provement processes that will enhance the perceived and
actual value offered to customers in service encounters, re
-
search examining customer reactions to exceeded expecta-
tions is in the development stage. However, this line of
research is not only conceptually interesting as it explores
unexamined territories in the customer satisfaction spec-
trum but also useful as it helps provide managerial direc-
tion in corporate strategies aiming for high customer
satisfaction levels.
From a managerial perspective, this article flags cau-
tion to companies attempting to differentiate themselves
by overextending the value offered to customers. Exam-
ples are Home Depot, Nordstrom, and Xerox, which have
exceptional product return policies (“Why Your Copier
Isn’t Working, 1992), and Southwest Airlines and Alamo,
which strongly urge their employees to take unconven
-
tional additional steps to serve customers (Santora 1991;
Weinstein 1997). The results suggest that although low
and moderate levels of generosity are acceptable to most
customers, high levels may trigger cognitive processes,
with potentially negative effects on customer satisfaction.
Needless to say, high levels of service provider generosity
can often be associated with incremental unplanned costs
to the business and may therefore also prove to be unprofit
-
able measures. For example, since the mid-1990s, per
-
sonal computer manufacturers have found little corporate
benefits from extending the free availability of their tech
-
nical support telephone operations and have since had to
reduce consumer access to these services (Miller 1996).
The empirical results presented here therefore question
the popular belief in marketing that more is better and that
exceeding norms and expectations will always positively
influence customers. The analysis of both open-ended and
structured responses under various controlled conditions
shows that service provider overgenerosity may, under
certain conditions, have a negative effect on customer
evaluations. Although customers are likely to have more
positive evaluations if generosity is extended by a high or
-
ganizational level service provider, overgenerosity by ser
-
vice providers of a low organizational level is not equally
appreciated.
This result suggests that the notion of employee em
-
powerment at all organizational levels as exhibited by
firms such as Xerox, Federal Express, and Hampton Inn
(Bowen and Lawler 1995) must be treated with caution, as
service execution scripts allowing for generous actions by
employees at low organizational levels may be misinter
-
preted by the customer. In addition, the results highlight
the importance of measuring not only the lower threshold
but also the upper threshold of the zone of indifference in
customer expectations. Knowledge of the upper thresh
-
olds will enable marketers to determine when service exe
-
cutions are likely to be interpreted as extraordinary and
overgenerous by customers. The results also indicate that
the presence of a past purchase history with the service
provider positively influences customer reactions to gen-
erous service provider behavior.
Various limitations can be attributed to this work. Al-
though the empirical study presented here focused on a
specific example of generous service provider behavior, a
larger variety of generous actions can be conceptualized
and examined in future research. The multidimensional
nature of consumer services suggests that consumer ex-
pectations can be exceeded in a variety of ways (e.g., speed
of service, employee behavior, physical atmosphere, etc.),
and exploring the relative value of exceeding expectations
on one service dimension versus another across multiple
industries can prove to be both academically and manage
-
rially useful. Moreover, consumer reactions to service pro
-
vider generosity may be multidimensional. Although the
study reported here was limited to examining the effects on
consumer satisfaction and assessments of the ethical stan
-
dards of the service provider, other responses such as pur
-
chase intentions and loyalty may provide new avenues for
research. Moreover, the range of stimulus values used to
manipulate service provider generosity was limiting, and
future research can experiment with a finer grid of service
provider performance when exceeding consumer expecta
-
tions.
Future work can extend the array of factors studied, to
examine additional variables that may affect customer
judgments of generous behavior by service providers. For
example, it is possible that variables such as the brand eq
-
uity of the service firm, the service provider’s gender, and
the customer’s demographic and psychological profile
may further affect reactions to service provider generosity.
In addition, the frequency of the various types of generous
214 JOURNAL OF SERVICE RESEARCH / February 2002
service provider behaviors experienced by customers in
the marketplace has not been documented and may there
-
fore prove to be an interesting area to be surveyed. It is
therefore hoped that this work will inspire additional stud
-
ies in this relatively unexplored area of services marketing.
REFERENCES
Anderson, Eugene W., and Mary Sullivan (1993), “The Antecedents and
Consequences of Customer Satisfaction for Firms, Marketing Sci
-
ence, 12 (Spring), 125-43.
Barnes, J. G. (1975), “Factors Influencing Consumer Reaction to Retail
Newspaper ‘Sale’ Advertising, in 1975 Combined Proceedings,Ed
-
ward Mazze, ed. Chicago: American Marketing Association, 471-77.
Beekun, R. I. (1989), Assessing the Effectiveness of Socio-Technical In
-
terventions: Antidote or Fad?” Human Relations, 42, 877-97.
Berkowitz, E. and J. Walton (1981), “Contextual Influences on Con
-
sumer Price Responses: An Experimental Analysis, Journal of Mar
-
keting Research, 17, 349-58.
Bigley, Gregory and Jone Pearce (1998), “Straining for Shared Meanings
in Organization Science: Problems of Trust and Distrust,Academy
of Management Review, 23, 405-21.
Bitner, Mary Jo, Bernard H. Booms, and Mary Stanfield Tetreault (1990),
“The Service Encounter: Diagnosing Favorable and Unfavorable In
-
cidents,Journal of Marketing, 54, 71-84.
Bolton, Ruth N. (1998), A Dynamic Model of the Customer’s Relation-
ship with a Continuous Service Provider: The Role of Satisfaction,
Marketing Science, 17 (1), 45-65.
Bowen, D. E. and E. E. Lawler (1995), “Empowering Service Em-
ployees,Sloan Management Review, 36 (4), 73-89.
Bull, A. O. and K. M. Alcock (1993), “Patron Preferences for Features
Offered by Licensed Clubs, International Journal of Contemporary
Hospitality Management, 5 (1), 28-32.
“Cheerleading, and Clerks Who Know Awls from Augers” (1992), Busi-
ness Week, August 3, 51.
Chipkin, H. (1997), “Complete Training Includes Gaming, Hotel and
Motel Management, 212 (20), 53-57.
Chonko, L. B. and S. D. Hunt (1985), “Ethics and Marketing Manage
-
ment: An Empirical Examination, Journal of Business Research,13
(July), 339-59.
Cohen, Aaron (1993), “Work Commitment in Relation to Withdrawal In
-
tentions and Union Effectiveness, Journal of Business Research, 26,
75-90.
Corfman, Kim P. and Donald R. Lehmann (1993), “The Importance of
Others’ Welfare in Evaluating Bargaining Outcomes, Journal of
Consumer Research, 20 (1), 124-37.
Dalgish, Gerard M. (1997), Dictionary of American Language.New
York: Random House.
Doney, Patricia and Joseph P. Cannon (1997), An Examination of the
Nature of Trust in Buyer-Seller Relationships, Journal of Mar
-
keting, 61 (April), 35-51.
Estelami, Hooman (2000), “Competitive and Procedural Determinants of
Delight and Disappointment in Consumer Complaint Outcomes,
Journal of Service Research, 2 (February), 285-300.
——— (1997), “Consumer Perceptions of Multi-Dimensional Prices”,
in Advances in Consumer Research, Vol. 24, Merrie Brucks and
Deborah J. MacInnis, eds. Provo, UT: Association for Consumer Re
-
search, 392-99.
Fefer, M. D. (1996), “Chubb: How to Win in a Land of Losers, Fortune,
128 (4), 80-87.
Fornell, Claes and Birger Wernerfelt (1987), “Defensive Marketing
Strategy by Customer Complaint Management: A Theoretical Anal
-
ysis,Journal of Marketing Research, 24 (November), 337-46.
Garbarino, Ellen and Mark Johnson (1999), “The Different Roles of Sat
-
isfaction, Trust and Commitment in Customer Relationships,Jour
-
nal of Marketing, 63 (April), 70-87.
Goodwin, Cathy and Ivan Ross (1989), “Salient Dimensions of Per
-
ceived Fairness in Resolution of Service Complaints, Journal of
Consumer Satisfaction, Dissatisfaction, and Complaining Behavior,
2, 89-92.
——— and ——— (1992), “Consumer Response to Service Failures:
Influence of Procedural and Interactional Fairness Perceptions,
Journal of Business Research, 25, 149-63.
Grinnell, R. M. (1997), Social Work Research and Evaluation: Quantita
-
tive and Qualitative Approaches. Itasca, IL: F. E. Peacock.
Heskett, James L., W. Earl Sasser, Jr., and Leonard A. Schlesinger
(1997), The Service Profit Chain. New York: Free Press.
Hunt, Shelby D. and Robert M. Morgan (1994), “Organizational Com
-
mitment: One of Many Commitments or Key Mediating Construct?”
Academy of Management Journal, 37 (6), 1568-87.
Johnston, Robert (1995), “The Zone of Tolerance: Exploring the Rela
-
tionship between Service Transactions and Satisfaction with the
Overall Service, International Journal of Service Industry Manage
-
ment, 6 (2), 46-65.
Judd, Charles M., Eliot R. Smith, and Louise H. Kidder (1991), Research
Methods in Social Relations. Orlando, FL: Holt, Rinehart and Winston.
Keaveney, Susan M. (1995), “Customer Switching Behavior in Service
Industries: An Exploratory Study, Journal of Marketing, 59 (April),
71-82.
Keiser, S. K. and J. R. Krum (1976), “Consumer Perceptions of Retail
Advertising with Overstated Price Savings, Journal of Retailing,52
(Fall), 27-35.
Kendall, P. C., J. N. Butcher, and G. N. Holmbeck (1999), Handbook of
Research Methods in Clinical Psychology. New York: John Wiley.
Kopelman, R. E. (1986), Managing Productivity in Organizations.New
York: McGraw-Hill.
Lawler, E. E., S. A. Mohrman, and G. E. Ledford, Jr. (1995), Employee
Involvement and Total Quality Management: Practices and Results
in Fortune 1000 Companies. San Francisco: Jossey-Bass.
Levy, Michael and Alan J. Dubinsky (1983), “Identifying and Ad-
dressing Retail Salespeople’s Ethical Problems: A Method and Ap-
plication,Journal of Retailing, 59 (1), 46-66.
Liljander, Veronica and Tore Strandvik (1993), “Estimating Zones of
Tolerance in Perceived Service Quality, International Journal of
Service Industry Management, 4 (2), 6-28.
Loveman, Gary W. (1998), “Employee Satisfaction, Customer Loyalty,
and Financial Performance: An Empirical Examination of the Ser
-
vice Profit Chain in Retail Banking,Journal of Service Research,1
(1), 18-31.
Lowenstein, George F., Leigh Thompson, and Max H. Bazerman (1989),
“Social Utility and Decision Making in Interpersonal Contexts,
Journal of Personality and Social Psychology, 57, 426-41.
Machan, Tibor R. (1998), Generosity: Virtue in Civil Society. Washing
-
ton, DC: Cato.
Maheswaran, Durairaj and Brian Sternthal (1990), “The Effects of
Knowledge, Motivation, and Type of Message on Ad Processing and
Product Judgment, Journal of Consumer Research, 17 (June), 66-
73.
McIntyre, Faye S., James L. Thomas, Jr., and Faye W. Gilbert (1999),
“Consumer Segments and Perceptions of Retail Ethics, Journal of
Marketing Theory and Practice, 7 (2), 43-53.
Meyer, John P. and Natalie J. Allen (1991), A Three-Component Con
-
ceptualization of Organizational Commitment, Human Resource
Management Review, 1, 61-98.
Miles, M. B. and A. M. Huberman (1984), Qualitative Data Analysis: A
Sourcebook of New Methods. Beverly Hills, CA: Sage.
Miller, Greg (1996), “Don’t Call Us, The Los Angeles Times, April 29, 1.
Mishra, D. R., J. Heide, and S. Sort (1998), “Information Asymmetry and
Levels of Agency Relationships, Journal of Marketing Research,35
(August), 277-95.
Estelami, De Maeyer / SERVICE PROVIDER OVERGENEROSITY 215
Monroe, K. B. (1990), Pricing: Making Profitable Decisions. New York:
McGraw-Hill.
Oliva, Terence A., Richard L. Oliver, and Ian C. MacMillan (1992), A
Catastrophe Model for Developing Service Satisfaction Strategies,
Journal of Marketing, 56 (July), 83-95.
Oliver, Richard L. (1980), A Cognitive Model of the Antecedents and
Consequences of Satisfaction Decisions,Journal of Marketing Re
-
search, November, 460-69.
——— (1997), Satisfaction: A Behavioral Perspective on the Consumer.
New York: McGraw-Hill.
———, Roland T. Rust, and Sajeev Varki (1997), “Customer Delight:
Foundations, Findings, and Managerial Insight, Journal of Re
-
tailing, 73, 311-36.
Parasuraman, A., Valerie A. Zeithaml, and Leonard L. Berry (1988),
“SERVQUAL: A Multiple Item Scale for Measuring Consumer Per
-
ceptions of Service Quality, Journal of Retailing, 64 (Spring), 12-
40.
Park, C. Whan and V. Parker Lessing (1981), “Familiarity and Its Impact
on Consumer Decision Biases and Heuristics, Journal of Consumer
Research, 19 (December), 277-91.
Pieters, Rik, Kitty Koelmeijer, and Henk Roest (1995), Assimilation
Processes in Service Satisfaction Formation,International Journal
of Service Industry Management, 6 (3), 17-33.
Pinney, J. K., W. N. Thompson, and L. A. Strate (1995), “Customer Satis
-
faction, Dissatisfaction, and Complaining Behavior in the Gaming
Industry, Journal of Consumer Satisfaction, Dissatisfaction, and
Complaining Behavior, 8, 85-103.
Rao, Akshay R. and Kent B. Monroe (1988), “The Moderating Effect of
Prior Knowledge on Cue Utilization in Product Evaluations, Journal
of Consumer Research, 15 (September), 253-64.
Reichheld, Fredrick F. and W. Earl Sasser (1990), “Zero Defections:
Quality Comes to Services,Harvard Business Review, 68 (Septem-
ber/October), 105-11.
Rust, Roland T., Jeffrey J. Inman, Jianmin Jia, and Anthony Zahorik
(2000), “What You Don’t Know About Customer-Perceived Quality:
The Role of Customer Expectation Distributions, Marketing Sci-
ence, 18 (1), 77-92.
Santora, Joyce (1991), Alamo’s Drive for Customer Service, Personnel
Journal, 70, 42-51.
Simonson, A. (1991), “Examining Consumer Losses and Dissatisfaction
due to Broken Sales and Service Agreements,Journal of Consumer
Satisfaction, Dissatisfaction, and Complaining Behavior, 4, 50-61.
Singh, Jagdip (1990), “Voice, Exit, and Negative Word-of-Mouth Behav
-
iors: An Investigation across Three Service Categories, Journal of
the Academy of Marketing Science, 18 (1), 1-15.
——— and Deepak Sirdeshmukh (2000), Agency and Trust Mecha
-
nisms in Consumer Satisfaction and Loyalty Judgments,Journal of
the Academy of Marketing Science, 28 (1), 150-67.
——— and Robert Widing, II (1991), “What Occurs Once Consumers
Complain?” European Journal of Marketing, 25 (5), 30-46.
Sujan, Mita (1985), “Consumer Knowledge: Effects on Evaluation Strat
-
egies Mediating Consumer Judgments, Journal of Consumer Re
-
search, 12 (June), 31-46.
Swan, J. F., M. R. Bowers, and L. Richardson (1999), “Customer Trust in
the Salesperson: An Integrative Review and Meta-Analysis of the
Empirical Literature, Journal of Business Research, 44 (2), 93-107.
Tax, Stephen S., Stephen W. Brown, and Murali Chandrashekaran
(1998), “Customer Evaluations of Service Complaint Experiences:
Implications for Relationship Marketing,Journal of Marketing,62
(April), 60-76.
Taylor, Steven A. (1997), Assessing Regression-Based Importance
Weights for Quality Perceptions and Satisfaction Judgments in the
Presence of Higher Order and/or Interaction Effects,Journal of Re
-
tailing, 73 (1), 135-59.
Thompson, Leigh (1990), “Negotiation Behavior and Outcomes: Empir
-
ical Evidence and Theoretical Issues, Psychological Bulletin, 108,
515-32.
Vitell, S. J. and J. Muncy (1992), “Consumer Ethics: An Empirical Inves
-
tigation of Factors Influencing Ethical Judgments of the Final Con
-
sumer,Journal of Business Ethics, 11, 585-97.
Weber, Robert P. (1985), Basic Content Analysis. London: Sage.
Weinstein, S. (1997), “The Nichemakers, Progressive Grocer, 76 (2),
87-90.
“Why Your Copier Isn’t Working” (1992), Fortune, May 21, 114-16.
Woodruff, Robert B., Ernest R. Cadotte, and Roger L. Jenkins (1983),
“Modeling Consumer Satisfaction Processes Using Experience-Based
Norms,Journal of Marketing Research, 20 (August), 296-304.
Yu, L. (1999), The International Hospitality Business: Management and
Operations. New York: Haworth.
Zeithaml, V. A., L. L. Berry, and A. Parasuraman (1993), “The Nature
and Determinants of Customer Expectations of Service,Journal of
the Academy of Marketing Science, 21 (1), 1-11.
Hooman Estelami is an assistant professor of marketing and
codirector of the Pricing Center at the Graduate School of Business,
Fordham University. He received his M.B.A. from McGill Uni-
versity and his Ph.D. from Columbia University. His research has
been published in the Journal of the Academy of Marketing Sci-
ence, International Journal of Research in Marketing, Journal of
Service Research, Journal of Business Research, Journal of
Product and Brand Management, Journal of Marketing Theory
and Practice, Journal of Consumer Satisfaction, Dissatisfaction,
and Complaining Behavior, Journal of Professional Services Mar
-
keting,Journal of Business in Developing Nations, and elsewhere.
Peter De Maeyer is a management consultant with
Market2Customer, the marketing practice group of Monitor
Company. He has an M.B.A. from the Helsinki School of Eco
-
nomics and Business Administration and a Ph.D. in marketing
from Columbia University. His research has been published in
the Journal of Consumer Satisfaction, Dissatisfaction, and Com
-
plaining Behavior.
216 JOURNAL OF SERVICE RESEARCH / February 2002
... Overcompensation can thus intuitively be expected to be a more effective strategy to enhance trust than equal compensation. Yet, although some prior studies have reported positive overcompensation effects (e.g., Boshoff, 1997;Gilly & Hansen, 1985;Hocutt et al., 2006), there seems to be a growing consensus, within various literatures, that overcompensation may not be more-and sometimes even less-effective than equal compensation to enhance trust and various trust-related outcomes (for a field study, see Goode, Hoehle, Venkatesh, & Brown, 2017; for a meta-analysis, see Gelbrich & Roschk, 2011; for a narrative review, see Davidow, 2003; also see the empirical work of Estelami & De Maeyer, 2002;Garrett, 1999;Mack, Mueller, Crotts, & Broderick, 2000;Noone & Lee, 2011). Critically, however, is that these prior studies did not investigate the psychological mechanisms which are responsible for the reported lack of positive overcompensation effect. ...
... The present set of studies contributes to cumulative theoretical knowledge in psychology. As mentioned above, several prior studies have shown that overcompensation not always has the intended positive effect (for examples, see Estelami & De Maeyer, 2002;Garrett, 1999;Haesevoets et al., 2013;Mack et al., 2000;Noone & Lee, 2011). However, from this prior body of research it is still unclear why overcompensation is not more effective than equal compensation to promote damaged trust. ...
... This observation corroborates prior research of Steinel et al. (2014), who found that, in a bargaining context, receivers of an unusual high offer often consider such offers as "too good to be true," which in the end may lead them to reject it. In the context of service encounters, Estelami and De Maeyer (2002) similarly reported that "overgenerosity" (i.e., outperforming consumers' expectations through too generous actions) negatively impacts customers' evaluation of a service, and this because acts of overgenerosity triggers additional cognitive processes that put into question the truthfulness of the service provider. ...
Article
Trust violations regularly occur under the form of distributive fairness violations. In response to such violations, the transgressor can signal his or her willingness to go the “extra mile” by compensating the victim beyond the inflicted damage, which is generally referred to as overcompensation. We conducted two behavioral studies (Studies 1 and 2) and one fMRI experiment (Study 3) to investigate the psychological processes and supporting neural systems that underlie the effectiveness of overcompensation as a strategy to enhance trust in interpersonal relationships. Towards this end, we investigated how people on the receiving end of the compensation experience being overcompensated. Our studies, first of all, revealed that after being overcompensated people did not report higher levels of trust in the transgressor than after being equally compensated, a finding that runs counter the “extra mile” logic. As expected, our behavioral findings additionally showed that, compared to equal compensation, overcompensation evoked more conflicting thoughts and more sense-making processes in the mind of the receiver. Converging evidence for these findings was provided by our neuroimaging results, which revealed higher activations in the conflict-monitoring and the mentalizing network of the brain after overcompensation compared to equal compensation. Finally, the results of our behavioral studies suggest that conflicting thoughts and sense-making serially mediate the effect that overcompensation has on trust perceptions. Together, these findings shed new light on why overcompensation can backfire and even lead to a further decline of trust. We discuss the theoretical implications of these findings and formulate suggestions for future research.
... In addition to the proposed effects, we have observed a systematic negative relationship between adaptability and review ratings when MAS, PDI, LTO, and IND are low and when IDV and UAI are high. This could be due to a perception of "overgenerous" service delivery (Estelami & Maeyer, 2002;Imrie, 2005). Surprisingly, overattentive service has been found to negatively impact satisfaction. ...
Article
Full-text available
Online peer-to-peer platforms have been widely utilized to facilitate sharing vast amounts of user-generated content (UGC) in the hospitality industry. However, research on the cultural impacts of the broad spectrum of UGC remains nascent and limited. This study therefore elaborates how the hospitality service dimensions that are reflected in UGC both predict service evaluation and are contingent on a reviewer’s prevailing culture. We analyzed a usable sample of 9,257 hotel reviews from 148 countries with latent Dirichlet allocation and aspect-based sentiment analysis algorithms to identify the top service features and corresponding polarity scores. Machine learning identified three dimensions of hospitality service quality: adaptability, reliable delivery, and tangibles. These three dimensions predict customers’ overall hotel ratings, and the magnitude and direction of their effects depend on alignments of cultural orientations. Following Hofstede’s cultural dimensions, reliable delivery and tangibles align with individualism and uncertainty avoidance cultures. Adaptability aligns with power distance, masculinity, long-term orientation, and indulgence cultures.
... In terms of the level of compensation, partial compensation has a greater incremental effect than full or excessive compensation on customer recovery satisfaction (Estelami & De Maeyer, 2002;Gelbrich et al., 2016). Service recovery research (Gelbrich et al., 2015) suggests that this decreasing incremental effect occurs due to the law of diminishing marginal utility. ...
Article
Full-text available
This research provides the first examination of the effectiveness of cryptocurrencies as an innovative recovery tool. Through four experiments, we assess the effects of crypto-compensation against traditional compensation types (voucher/cash) on customer recovery satisfaction. Study 1 findings indicate that crypto-compensation is more effective than voucher and cash in improving customer recovery satisfaction. Further, it shows that consumer innovativeness moderates the effectiveness of crypto-compensation. After establishing the effectiveness of crypto-compensation, Study 2 finds a moderating effect of consumer choice in influencing crypto-compensation effectiveness. Study 3 reveals the differential effect of communicating different crypto-compensation benefits on customer recovery satisfaction. Finally, Study 4 concludes that familiar cryptocurrencies (e.g., Bitcoin vs. EOS) best restore satisfaction after a failure and that compensation message framing (i.e., cryptocurrency monetary value vs. real nominal value) moderates this relationship. Theoretical and practical implications are discussed.
... The findings under the first category "taking advantage of the customer" contradict one of the basic assumptions of benevolence, namely, the customers believe that financial institutions will not behave opportunistically at their expense, even if there is interest and opportunity to do so (Nooteboom, 1996). Negative perceptions toward the service provider may arise if customers grow suspicious of the former's ethical appropriateness or motives (Estelami and De Maeyer, 2002). The respondents' allegations describe a situation in which they perceive that the bank focuses on its own best interest and priorities at the expense of complying with ethical principles. ...
Article
Purpose In banking services, trust is crucial to any relational exchange situation. Using the example of Israeli banks, the main research question driving this paper is – What are the reasons for trusting or not trusting banks? To date, few studies have examined the reasons of ongoing low trust during so-called “normal times”. Design/methodology/approach This paper is unique in approaching the study of customer trust in banks through qualitative analysis by using the interdisciplinary trust approach. Findings The results offer important insights regarding situational normality, structural assurance and customers’ tendencies to trust the bank. The insights about trust derived from this complicated relationship between customers and banks reveals that customers grow dissatisfied and their level of trust consequently decreases when they perceive an imbalance in the exchange relationship with their bank. Originality/value This study provides novel insights into hidden attitudes and feelings behind each component of trust beliefs in the bank–customer trust relationship through interdisciplinary trust perspective.
Article
Researchers have increasingly focused on customer engagement in business-to-business markets, which is critical to firms' long-term performance. In contrast, limited research addresses customer disengagement in business-to-business markets. It is essential to understand this area as customer disengagement harms sellers' revenue, growth, and reputation. We extend previous research in three areas. First, we examine customer disengagement from a broader perspective than relationship termination. Second, we develop a framework for understanding customer disengagement. Finally, we identify the moderators of the relationship between customer dissatisfaction (with the relationship) and customer engagement/disengagement and categorize them as product/service, relationship, and external factors. The findings offer important managerial and theoretical contributions and suggest directions for future research.
Article
Preservice tips are becoming increasingly common in the marketplace (e.g., online food delivery, quick-service restaurants). While prior research has investigated how the practice of preservice tipping is perceived by customers, how preservice tipping impacts the perceptions and behaviors of employees remains unexplored. Does tipping early actually elicit better service? Through a series of four studies, our research compares the effectiveness of tips—a financial incentive, with compliments—a nonfinancial incentive. The results indicate that early tips and compliments are both effective in obtaining better service, but the relative effectiveness of a tip versus a compliment depends on the service context. In closed service contexts—which involve a continuous, relatively short interaction—tips are superior. For example, when getting a drink at a bar, buying a sandwich at a quick-service restaurant, or dropping off a car for valet parking, tipping early should lead to better customer service. In contrast, in open service contexts—which involve multiple interactions over a more extended period and provide an opportunity for a social connection—compliments become more effective. The results have practical implications for customers wishing to enhance their service experiences and for managers in motivating their employees.
Article
Full-text available
Compensation is one of the most important elements of service. Companies often pursue a strategy of overcompensation; however, there are contradictory results in the literature whether overcompensation has a positive or negative effect on postcomplaint customer behaviour. In this paper, based on three studies, we prove that examining the amount of additional effort required of the customer in order to achieve service recovery can help us better explain outcomes of the service recovery. Our results clearly show that the degree of additional customer effort has significant influence both on satisfaction and on perceived fairness and it moderates the effect of the amount of compensation.
Article
A szolgáltatói panaszkezelés egyik legfontosabb eszköze a fogyasztó kompenzálása. A szolgáltatóvállalatok gyakori stratégiája, hogy az okozott kárnál jóval magasabb összegű kompenzációt ajánlanak fel, ezt nevezzük túlkompenzációnak. A szakirodalomban igen ellentmondásos eredmények találhatók azzal kapcsolatban, hogy e túlzott kompenzációs összeg pozitívan vagy negatívan befolyásolja-e a károsult ügyfelek panaszhelyzet utáni magatartását. A szerzők kutatásának célja, hogy egy további tényező, a fogyasztói többlet-erőfeszítés bevonásával magyarázatot adjanak ezen ellentmondások egy lehetséges okára. Mélyinterjúk segítségével először azonosították a fogyasztói többlet-erőfeszítés és a szolgáltatás újrateljesítésén felüli további kompenzációs elvárások közötti kapcsolatot, majd kísérleti módszertan segítségével megvizsgálták a túlzott kártérítési összeg elégedettségre és észlelt panaszkezelési igazságosságra gyakorolt hatását. A kutatási eredmények alapján világossá vált, hogy a kártérítés összege és formája, valamint a fogyasztók részéről kifejtendő többlet-erőfeszítés mértéke mind az elégedettségre, mind pedig az észlelt panaszkezelési igazságosságra hatást gyakorol.
Article
Employees in service frontline positions, which are the point of contact between service providers and customers, interact with customers with heterogeneous concerns. Given these service characteristics of needing to meet the unique needs of each customer, service frontline employees are required to answer regular questions based on quality standards and to deal with personal requests. Employees who demonstrate creativity are more likely to identify the potential needs of customers and to solve customers' problems in a creative and effective manner. This approach also contributes to creating a superior customer experience and building long-term relationships with customers. This paper presents the current status and future issues in this area based on a literature review of the creativity of service frontline employees.
Article
Full-text available
Many marketing exchanges are characterized by an information asymmetry between suppliers and customers. Specifically, customers are faced with both adverse selection and moral hazard problems that involve, respectively, uncertainty about supplier characteristics and the risk of quality cheating. Drawing on prior research, the authors propose that agency problems in a customer relationship can be resolved by means of customer bonds and price premiums, which serve as signals and supplier incentives, respectively. The authors also propose that adverse selection and moral hazard problems exist in relationships between suppliers and their employees. Similar to the customer relationship, these problems can be addressed with signals and incentives of various kinds. The authors present hypotheses regarding the agency problems in both of these relationships and test them empirically in the context of automotive service purchases. Data obtained from 287 service managers support the hypotheses. The data also suggest that institutional differences across service outlets (e.g., ownership structure and size) influence how the two types of agency problems are managed.
Article
Presentation of price is a common form of retail advertising. The authors examine the influences of semantic, comparison, and store name cues on consumer price perceptions. The research, unlike earlier student-based pricing studies, involved 562 consumers from a major metropolitan area who were each exposed to one of 16 treatment conditions. Results indicate comparison cues produce positive results, whereas the effect of semantic cues depends on the particular stimulus. Findings underscore the necessity for broader price research beyond traditional quality implications and wider representation of product types.
Article
On the basis of Hirschman's exit-voice theory, an economic model of defensive marketing strategy is developed for complaint management. Though many firms strive to reduce the number of customer complaints about their products, this objective is found to be questionable. Instead, analysis suggests complaints from dissatisfied customers should be maximized subject to certain cost restrictions. The authors also show that defensive marketing (e.g., complaint management) can lower the total marketing expenditure by substantially reducing the cost of offensive marketing (e.g., advertising). The savings in offensive marketing are often high enough to offset the additional costs associated with compensating complaining customers, even if compensation exceeds the product's profit margin.
Article
The service encounter frequently is the service from the customer's point of view. Using the critical incident method, the authors collected 700 incidents from customers of airlines, hotels, and restaurants. The incidents were categorized to isolate the particular events and related behaviors of contact employees that cause customers to distinguish very satisfactory service encounters from very dissatisfactory ones. Key implications for managers and researchers are highlighted.
Article
Customer satisfaction/dissatisfaction has become an important issue for marketing practitioners. The authors examine the issue in terms of customer service. In particular, practitioners and academicians have noted that simply investing in greater service delivery may not return the cost of the additional investment. Part of the problem is that customers’ response to service increments can be nonlinear, and satisfaction and dissatisfaction thresholds may not occur at the same point. The authors propose a method for analyzing this complex behavior in a way that can lead to the development of more accurate service strategies through an understanding of the relationships among customer-transaction costs, satisfaction, and purchase loyalty. They use a catastrophe model to describe a service loyalty customer-response surface. Then, by presenting a “real-world” application with a small service-quality customer dataset provided by General Electric Supply, they show how one actually estimates such a model and interprets the results.
Article
Many companies consider investments in complaint handling as means of increasing customer commitment and building customer loyalty. Firms are not well informed, however, on how to deal successfully with service failures or the impact of complaint handling strategies. In this study, the authors find that a majority of complaining customers were dissatisfied with recent complaint handling experiences. Using justice theory, the authors also demonstrate that customers evaluate complaint incidents in terms of the outcomes they receive, the procedures used to arrive at the outcomes, and the nature of the interpersonal treatment during the process. In turn, the authors develop and test competing hypotheses regarding the interplay between satisfaction with complaint handling and prior experience in shaping customer trust and commitment. The results support a quasi “brand equity” perspective—whereas satisfaction with complaint handling has a direct impact on trust and commitment, prior positive experiences mitigate, to a limited extent, the effects of poor complaint handling. Implications for managers and scholars are discussed.
Article
This article assesses how forms of work commitments (job, occupational, union, and organization commitment) are related to withdrawal intentions and union effectiveness. Using a matrix measurement approach for work commitment (WC), 129 white-collar employees from three private industrial firms in Israel were surveyed. The findings indicate that almost all of the outcome variables are affected by WC forms. When job satisfaction was included in the equations, it contributed to the explained variance mainly in the case of withdrawal intentions. The results are discussed in terms of their implications for future investigation into WC, and on the need for a new conceptual framework of the relationships among WC, job satisfaction, and work outcomes.