LINTHICUM, MD, June 10 - Receiving an expected level of bad service may increase the chance that a customer will return. This surprising conclusion and others are suggested by new research published in a journal of the Institute for Operations Research and the Management Sciences (INFORMS®).
"Some commonly held beliefs about the way that customers perceive quality and act on their perceptions are simply wrong," says Roland Rust of the Owen Graduate School of Management at Vanderbilt University in Nashville.
The researchers use operations research techniques related to decision-making and uncertainty to conclude that:
- It is not necessary to exceed customer expectations to increase preference
- Receiving an expected level of bad service does not reduce preference
- Customers may rationally choose a brand with worse expected quality, even if all non-quality attributes are equal
- Paying more attention to loyal, experienced customers can sometimes be counterproductive
The researchers attribute many of their conclusions to the fact that experience with a brand makes knowledge of the brand's quality more complete. When considering which brand to buy, the evidence suggests that customers consider not only the expected level of quality, but also the amount of risk associated with the brand.
The study, "What You Don't Know About Customer-Perceived Quality: The Role of Customer Expectations" is by Dr. Rust; J. Jeffrey Inman, University of Wisconsin; Jianmin Jia, Chinese University of Hong Kong; and Anthony Zahorik, ACNielsen Burke Institute. It appears in the current issue of Marketing Science, an INFORMS publication.
Important Implications for Management
The research, say the authors, can have important implications for the way
companies introduce and market their products.
For example, companies introducing a new product might want to spend less money
on advertising and more money on giving potential customers the chance to try
the product.
"Coupons, promotions, and other ways to induce trial in the early stages of a product launch may be more necessary than previously thought, even if a positive brand image already has been created through advertising," says Dr. Rust.
Because loyal customers are less likely to switch to another brand, the authors suggest that management should pay more attention instead to newer, presumably less loyal customers, because those are the customers for which quality differences will have the greatest impact. Because of this effect, the authors recommend that customer satisfaction surveys should include an experience question.
The Study
Hypotheses for the study were obtained using a mathematical model of customer
expectation updating based on a set of assumptions that are well-supported in
the academic literature. The hypotheses were then tested via two behavioral
experiments, which were extensively analyzed.
In the first experiment, 160 undergraduate students at two large universities participated in a computerized decision-making exercise. During the exercise, students received a series of experiences that would help them develop preferences from among three brands of camera batteries. In the second experiment, 223 students participated. After being exposed to as many as 20 experiences at a coffee shop, the subjects were asked to describe the consistency of service at the shop.
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 12,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, the stock market, and telecommunications.
Journal
Marketing Science