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

Amin Nazifi, Dahlia El-Manstrly, Katja Gelbrich

Research output: Contribution to journalArticle

1 Citation (Scopus)
132 Downloads (Pure)

Abstract

Purpose: This study aims to examine 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 the understanding of customers’ reactions to service termination. Design/methodology/approach: Three experimental studies are conducted with different contexts (telecom and banking) and samples (students and consumers). Findings: Study 1 results show that explanation and high monetary compensation reduce negative word-of-mouth 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, the 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, the explanation is the most effective remedy. Further, unlike justice, anger better explains customers’ reactions to service termination.

Original languageEnglish
Pages (from-to)26-48
Number of pages23
JournalEuropean Journal of Marketing
Volume54
Issue number1
Early online date6 Dec 2019
DOIs
Publication statusPublished - 6 Dec 2019

Keywords

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

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