Customers' reactions to different organizational tactics in a service termination context

Amin Nazifi, Dahlia El-Manstrly, Katja Gelbrich

Research output: Contribution to journalArticle

Abstract

Purpose – This research examines the effects of organizational tactics (e.g., explanation and monetary compensation) on customers' reactions to service termination. The mediating role of anger and the moderating role of termination strategy on the effectiveness of organizational tactics are examined to enhance our understanding of customers' reactions to service termination.
Design/methodology/approach – Three experimental studies are conducted with different contexts (telecom, banking) and samples (students, consumers).
Findings – Study 1 results show that explanation and high monetary compensation reduce negative word of mouth (nWOM) and enhance corporate image and anger mediates these effects. Study 2a results show that high monetary compensation becomes ineffective when firms use a soft termination approach. Study 2b results show that an explanation is equally effective in soft and hard termination approaches. Importantly, unlike high monetary compensation, explanation can fully eliminate the negative consequences of service termination.
Practical implications – Managers can mitigate negative customers' reactions to service termination by offering a truthful explanation. Further, they should provide high monetary compensation only if they do not help dismissed customers find an alternative provider.
Originality/value – This paper contributes to the service termination literature by shedding more light on the effectiveness of different organizational tactics following different termination strategies. The findings challenge existing wisdom on the overrated role of monetary compensation showing that in service termination, explanation is the most effective remedy. Further, unlike justice, anger fully explains customers’ reactions to service termination.
LanguageEnglish
Pages1-40
Number of pages40
JournalEuropean Journal of Marketing
DOIs
Publication statusAccepted/In press - 20 Oct 2019

Fingerprint

Tactics
Termination
Anger
Negative word-of-mouth
Banking
Managers
Design methodology
Corporate image
Telecom
Justice
Wisdom
Experimental study
Remedies

Keywords

  • service termination
  • monetary compensation
  • explanation
  • anger
  • negative word of mouth
  • corporate image

Cite this

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abstract = "Purpose – This research examines the effects of organizational tactics (e.g., explanation and monetary compensation) on customers' reactions to service termination. The mediating role of anger and the moderating role of termination strategy on the effectiveness of organizational tactics are examined to enhance our understanding of customers' reactions to service termination. Design/methodology/approach – Three experimental studies are conducted with different contexts (telecom, banking) and samples (students, consumers). Findings – Study 1 results show that explanation and high monetary compensation reduce negative word of mouth (nWOM) and enhance corporate image and anger mediates these effects. Study 2a results show that high monetary compensation becomes ineffective when firms use a soft termination approach. Study 2b results show that an explanation is equally effective in soft and hard termination approaches. Importantly, unlike high monetary compensation, explanation can fully eliminate the negative consequences of service termination.Practical implications – Managers can mitigate negative customers' reactions to service termination by offering a truthful explanation. Further, they should provide high monetary compensation only if they do not help dismissed customers find an alternative provider.Originality/value – This paper contributes to the service termination literature by shedding more light on the effectiveness of different organizational tactics following different termination strategies. The findings challenge existing wisdom on the overrated role of monetary compensation showing that in service termination, explanation is the most effective remedy. Further, unlike justice, anger fully explains customers’ reactions to service termination.",
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Customers' reactions to different organizational tactics in a service termination context. / Nazifi, Amin; El-Manstrly, Dahlia; Gelbrich, Katja .

In: European Journal of Marketing, 20.10.2019, p. 1-40.

Research output: Contribution to journalArticle

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