MANAGING CUSTOMER COMPLAINTS AS A CONSEQUENCE OF CUSTOMER DISSATISFACTION

By | February 9, 2018

In traditional markets, customer complaints are considered an important source of information (Tse and Wilton 1988). Since complaint management is recognized as being central to customer satisfaction, any measure of complaint behavior should consider the degree and quality of the underlying customer satisfaction (Cho, Im, Hiltz, and Fjermestad 2001b and 2003). Research by Singh and Wilkes (1996) has shown that effectively handling customer complaints has a dramatic impact on customer retention and loyalty. Although e-marketers or e-researchers have addressed the importance of customer satisfaction and customer retention, the issues of customer dissatis- faction and complaints in the Web environment have rarely been investigated. Few studies have examined factors affecting online customer complaints. Clark, Kaminski, and Rink (1992) stated that defensive marketing is the way to retain dissatisfied customers and argued that it has been neglected as an area of marketing study.

Both traditional and eCRM studies have examined factors that affect customer complaints. Previous studies of customer complaining behavior have provided insights to businesses re- garding which changes should be made to remedy customer problems or make restitution for purchase- or usage-related problems (Yi 1990). Researchers have frequently investigated how customer complaints are affected by individual customer characteristics, customers’ percep- tions of the sources of their dissatisfaction, outcome expectancies, product type, and the costs associated with complaining (Yi 1990; Singh and Howell 1985). A study by Keaveney (1995) identified causal factors that trigger dissatisfaction, including pricing, inconvenience, core ser- vice failures, service encounter failures, employee responses to service failure, and ethical problems.

Few researchers, however, have addressed the issues of online customer complaints. Studies by Cho, Im, Hiltz, and Fjermestad (2001a, 2001b, and 2003) proposed the model of online customer complaining behavior, developed from previous models by Bearden, Crockett, and Graham (1979), Landon (1977), Richins (1982), and Schubert and Selz (1999). Studies by Cho, Im, Hiltz, and Fjermestad (2001a and b) also investigated such technology factors as system performance, Web assessment factors, and other media characteristics as a primary cause of customer complaint behavior. Web assessment factors (Schubert 2002–2003) in- clude information, agreement, and settlement components, all of which can be used to evalu-

ate online customer complaints and to measure the effectiveness of  electronic commerce sites that transcend traditional marketing paradigms. Another study by Cho, Im, Hiltz, and Fjermestad (2002) found several factors that affect customer complaints and suggest effec- tive ways of handling customer complaints, particularly with different product types. A study  by Cho, Im, Hiltz, and Fjermestad (2003) measured the impact of factors such as the degree of dissatisfaction, ego involvement, perceived price, and information search effort upon pro- pensity  to complain.

A study by Kelly and Davis (1994) has addressed the importance of the effective complaint management that has a dramatic impact on customer retention, deflects potential word-of-mouth damage, and improves profitability. Several researchers have stated the importance of complaint management for eCRM. In the early days of e-commerce, Barbara (1985) suggested looking at complaint management as an important aspect of online strategic marketing, having such poten- tial benefits as maximizing customer satisfaction and loyalty, creating favorable publicity, and reducing the overall number of complaints. Sterne (1996) cites www.burke.com as an example of an online business that is considered a leader in e-CRM and improved relationships with online customers. Cho, Im, Hiltz, and Fjermestad (2001b) stated that complaint management is recog- nized as being central to customer satisfaction, and any measure of complaint behavior should consider the degree and quality of the underlying customer satisfaction. Cho, Im, Hiltz, and Fjermestad (2001b) posit that online customer complaints show how e-businesses handle cus- tomer complaints—a reflection of how much they value their customers. A study by Edvardsson and Roos (2004) also noted the impact of customers’ complaint and switching behavior on build- ing long-term and profitable relationships.

A study by Wang and Day (2001) described how online service quality is generated from feedback mechanisms that serve as intermediaries for Web-based information markets—in other words, how online product or service quality is used to evaluate online businesses. For example, customers can use online feedback systems to share their evaluations of product/service quality, including online transactions. In their simplest form, these systems result in increased sales when product or service quality is reported as satisfactory or better, and in decreased sales when cus- tomer complaints persist. Cho, Im, Hiltz, and Fjermestad (2002) also stated that online customer complaints, as a Web-enabled market feedback, have illuminated the origins and causes of online customer dissatisfaction. The qualitative components of this study focus on customer complaints gathered from public/nonprofit feedback Web sites and online customer service centers. This study also found that major online customer complaints and dissatisfaction have been generated from the problems with Web customer service centers. This result provides implications for how e-businesses’ customer service centers should manage customer complaints effectively. The lack of research on online customer complaint management is surprising in light of the identification of this topic as a key eCRM issue by several leading e-businesses, including the Institute of International Research (http://www.iir-ny.com).

Based on the review of studies addressing the importance of online customer complaints, this study readdressed that the proper management of online complaints has a direct effect on cus- tomer retention. Complaint management refers to the strategies used to resolve disputes and to improve ineffective products or services in order to establish a firm’s reliability in the eyes of customers (Tax, Brown, and Chandrashekaran 1998). Complaint data have been a key compo- nent in the process of problem correction and increased performance (Tax, Brown and Chandrashekaran 1998). It is believed that successful management of customer complaints will contribute to improved eCRM by emphasizing its value to e-businesses—that is, how complaint management can affect customer retention and profitability.

CONCLUSION

In an effort to provide a positive contrast of the new against the old, this chapter addressed the issue of customer satisfaction and dissatisfaction as being at the center of successful e- business exchanges. Further, the authors stressed the importance of customer loyalty and complaints as consequences of customer satisfaction and dissatisfaction. The authors reviewed theories and models that have been applied by e-commerce customer relationship management. Theories ap- plied to eCRM have been rooted in satisfaction/dissatisfaction theories and theories for customer complaining behavior that have been proposed by traditional marketers. This chapter also inves- tigated models for customer satisfaction and complaining behavior that examine factors affecting customer relationship management.

This chapter focused on how to maximize/minimize customer satisfaction/dissatisfaction for successful eCRM, because it provides clues as to what managerial changes might have induced different and more desirable behaviors, raising the issue of customer loyalty myopia. This myo- pia stems from believing that consumer behavior can be created and sustained in and by itself without careful regard to its underlying basis on the customer satisfaction side, reviving the long- standing marketing dilemma of attitude and behavioral measures, and the degree to which atti- tudes influence or predict behavior. This chapter also examined studies that address the importance of customer complaints that also go beyond the customer satisfaction concept and much more deeply into the underlying theories and models that attempt to explain why people may or may not be satisfied. This chapter suggested ways to maximize/minimize customer satisfaction/dissat- isfaction, such as improving customer loyalty and resolving customer complaints.

This chapter provides implications for both academics and practitioners. Future study will be needed to investigate modes of online customer satisfaction that are proposed by Fournier and Mick (1999), including satisfaction-as-contentment, satisfaction-as-pleasure, and dissatisfaction- as-surprise. Future research exploring consumer satisfaction of pure-play vs. multichannel is also likely to be fruitful. Other issues that increase the level of relationship between or within online customers and businesses will also be subjects of future research.

Based on the review, this chapter found that little attention has been paid to issues of customer dissatisfaction and complaints in the online environment, and it found opportunities to measure online customer dissatisfaction and complaints both qualitatively and quantitatively. This chapter also rec- ommended that e-businesses develop a defensive marketing strategy and use complaint management as an excellent competitive tool for customer relationship management (Cho, Im, Hiltz, and Fjermestad 2002). Taking complaint management seriously affects such factors as product/service quality, Web site design, and optional policies. The author believes that managing customer dissatisfaction and complaints facilitates repeat business and customer loyalty. Efforts toward the effective resolution of customer problems serve as the basis for long-term product/service quality and successful eCRM.

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