More Web Proxy on the site http://driver.im/

article

Customer Bill of Rights Under No-Fault Service Failure: Confinement and Compensation

Authors:

Rachel R. Chen,

Eitan Gerstner,

Yinghui (Catherine) YangAuthors Info & Claims

Marketing Science, Volume 31, Issue 1

Pages 157 - 171

https://doi.org/10.1287/mksc.1110.0683

Published: 01 January 2012 Publication History

Abstract

Service providers and their customers are sometimes victims of failures caused by exogenous factors such as unexpected bad weather, power outages, or labor strikes. When such no-fault failures occur in confined zones, service providers may confine customers against their will if making arrangements for them to leave is very costly. Such confinements, however, can result in severe pain and suffering, and customer complaints put regulators under pressure to pass a customer bill of rights that allows captive customers to abort failed services. This paper shows that service providers are better off preempting such laws by voluntarily allowing customers to escape the service under failure. Moreover, service providers can profit by targeting compensation to customers based on whether they use or leave the service under failure.

References

[1]

Bitner, M. J., Booms, B. H. and Tetreault, M. S., "The service encounter: Diagnosing favorable and unfavorable incidents," J. Marketing, v54, pp. 71-84, 1990.

[2]

Biyalogorsky, E. and Gerstner, E., "Contingent pricing to reduce price risks," Marketing Sci., v23, pp. 146-155, 2004.

Digital Library

[3]

Biyalogorsky, E., Carmon, Z., Fruchter, G. E. and Gerstner, E., "Overselling with opportunistic cancellations," Marketing Sci., v18, pp. 605-610, 1999.

[4]

Bomkamp, S., "Questions and answers: The new tarmac delay rule," Seattle Times, 2010.

[5]

Brady, D., "Why service stinks," Business Week, pp. 118-128, 2000.

[6]

"Flight prompts calls for passenger rights," 2009.

[7]

Chen, K., New “passenger bill of rights” limits tarmac time, reimburses lost bags, PBS News, 2011.

[8]

Chen, R. R., Gerstner, E. and Yang, Y., "Should captive sardines be compensated? Serving customers in a confined zone," Marketing Sci., v28, pp. 599-608, 2009.

Digital Library

[9]

Chu, W., Gerstner, E. and Hess, J. D., "Managing dissatisfaction: How to decrease customer opportunism by partial refunds," J. Service Res., v1, pp. 140-155, 1998.

[10]

Courville, L. and Hausman, W. H., "Warranty scope and reliability under imperfect information and alternative market structures," J. Bus., v52, pp. 361-378, 1979.

[11]

Dai, Y. S. and Levitin, G., "Reliability and performance of tree-structured grid services," IEEE Trans. Reliability, v55, pp. 337-349, 2006.

[12]

Davidow, M., "Organizational responses to customer complaints: What works and what doesn't," J. Service Res., v5, pp. 225-250, 2003.

[13]

Davis, S., Gerstner, E. and Hagerty, M., "Money back guarantees in retailing: Matching products to consumer tastes," J. Retailing, v71, pp. 7-22, 1995.

[14]

"Canada passes airline passengers' bill of rights," 2008.

[15]

Fruchter, G. and Gerstner, E., Selling with “satisfaction guaranteed”, J. Service Res., v1, pp. 313-323, 1999.

[16]

Guo, L., "Service cancellation and competitive refund policy," Marketing Sci., v28, pp. 901-917, 2009.

Digital Library

[17]

Heiman, A., McWilliams, B., Zhao, J. and Zilberman, D., "Valuation and management of money-back guarantee options," J. Retailing, v78, pp. 193-205, 2002.

[18]

Hess, R. L., Ganesan, S. and Klein, N. M., "Service failure and recovery: The impact of relationship factors on customer satisfaction," J. Acad. Marketing Sci., v31, pp. 127-145, 2003.

[19]

Hewitt, E., "The airline passenger's bill of rights," MSNBC News, 2007.

[20]

Hoffman, K. D., Kelley, S. W. and Rotalsky, H. M., "Tracking service failures and employee recovery efforts," J. Services Marketing, v9, pp. 49-61, 1995.

[21]

Holloway, B. B. and Beatty, S. E., "Service failure in online retailing, a recovery opportunity," J. Service Res., v6, pp. 92-105, 2003.

[22]

Keaveney, S. M., "Customer switching behavior in service industries: An exploratory study," J. Marketing, v59, pp. 71-82, 1995.

[23]

Kelley, S. W., Hoffman, K. D. and Davis, M. A., "A typology of retail failures and recoveries," J. Retailing, v69, pp. 429-452, 1993.

[24]

Kendall, C. L. and Russ, F., "Warranty and complaint policies: An opportunity for marketing management," J. Marketing, v39, pp. 36-43, 1975.

[25]

Lavoie, P., Kenne, J. P. and Gharbi, A., "Optimization of production control policies in failure-prone homogenous transfer lines," IIE Trans., v41, pp. 209-222, 2009.

[26]

Lee, C., Robinson, K. M., Wendt, K. and Williamson, D., "The preparedness of hospital health information services for system failures due to internal disasters," Health Inform. Management J., v38, pp. 18-26, 2009.

[27]

Levitin, G. and Dai, Y. S., "Performance and reliability of a star topology grid service with data dependency and two types of failure," IIE Trans., v39, pp. 783-794, 2007.

[28]

Lowy, J., "Government imposes 3-hour limit on tarmac strandings," Tulsa World, 2009.

[29]

Lutz, N., "Warranties as signals under consumer moral hazard," RAND J. Econom., v20, pp. 240-255, 1989.

[30]

Maxham, J. G. and Netemeyer, R. G., "A longitudinal study of complaining customers' evaluations of multiple service failures and recovery efforts," J. Marketing, v66, pp. 57-71, 2002.

[31]

McCollough, M. A., Berry, L. L. and Yadav, M., "An empirical investigation of customer satisfaction after service failure and recovery," J. Service Res., v3, pp. 121-137, 2000.

[32]

Menezes, M. A. J. and Currim, I. S., "An approach for determination of warranty length," Internat. J. Res. Marketing, v9, pp. 177-195, 1992.

[33]

Meuter, M., Ostrom, A., Roundtree, R. and Bitner, M., "Self-service technologies: Understanding customer satisfaction with technology-based service encounters," J. Marketing, v64, pp. 50-64, 2000.

[34]

"JetBlue apologizes after passengers stranded," 2007.

[35]

Padmanabhan, V. and Rao, R. C., "Warranty policy and extended service contracts: Theory and an application to automobiles," Marketing Sci., v12, pp. 230-247, 1993.

Digital Library

[36]

Parasuraman, A., "Modeling opportunities in service recovery and customer-managed interactions," Marketing Sci., v25, pp. 590-593, 2006.

Digital Library

[37]

Quick, R., "The lessons learned," Wall Street Journal, pp. R6, 2000.

[38]

Shugan, S. M. and Xie, J., "Advance pricing of services and other implications of separating purchases and consumption," J. Service Res., v2, pp. 227-239, 2000.

[39]

Shugan, S. M. and Xie, J., "Advance selling for services," Calif. Management Rev., v46, pp. 37-54, 2004.

[40]

Smith, A. K., Bolton, R. N. and Wagner, J., "A model of customer satisfaction with service encounters involving failure and recovery," J. Marketing Res., v36, pp. 356-372, 1999.

[41]

"Compensation for delays," 2011.

[42]

Stewart, D. and Chase, R., "The impact of human error on delivering service quality," Production Oper. Management, v8, pp. 240-263, 1999.

[43]

Stoller, G., "Fliers on delayed planes get more support," USA Today, 2009.

[44]

Tax, S. S., Brown, S. W. and Chandrashekaran, M., "Customer evaluations of service complaint experiences: Implications for relationship marketing," J. Marketing, v62, pp. 60-76, 1998.

[45]

Tax, S. S., Colgate, M. and Bowen, D., "How to prevent your customers from failing," Sloan Management Rev., v47, pp. 30-38, 2006.

[46]

Thomson, S., Airlines “cheating” passengers, BBC News, 2007.

[47]

Welling, L., "Satisfaction guaranteed or money (partially) refunded: Efficient refunds under asymmetric information," Canad. J. Econom., v22, pp. 62-78, 1989.

[48]

Weun, S., Beatty, S. E. and Jones, M. A., "The impact of service failure severity on service recovery evaluations and post-recovery relationships," J. Services Marketing, v18, pp. 133-146, 2004.

[49]

Xie, J. and Gerstner, E., "Service escape: Profit from customer cancellations," Marketing Sci., v26, pp. 18-30, 2007.

Digital Library

[50]

Xie, J. and Shugan, S. M., "Electronic tickets, smart cards, and online prepayments: When and how to advance sell," Marketing Sci., v20, pp. 219-243, 2001.

Digital Library

[51]

Zhu, Z., Sivakumar, K. and Parasuraman, A., "A mathematical model of service failure and recovery strategies," Decision Sci., v35, pp. 493-525, 2004.

Cited By

Dukes AZhu Y(2019)Why Customer Service Frustrates ConsumersMarketing Science10.1287/mksc.2019.114938:3(500-515)Online publication date: 1-May-2019
https://dl.acm.org/doi/10.1287/mksc.2019.1149
Rust RHuang M(2014)The Service Revolution and the Transformation of Marketing ScienceMarketing Science10.1287/mksc.2013.083633:2(206-221)Online publication date: 1-Mar-2014
https://dl.acm.org/doi/10.1287/mksc.2013.0836

Customer Bill of Rights Under No-Fault Service Failure: Confinement and Compensation
1. Applied computing

Recommendations

Investigating Customer Loyalty in Service Failure-Recovery Encounter: The Moderating Role of Customer Coproduction
ICSSI '13: Proceedings of the 2013 Fifth International Conference on Service Science and Innovation

More and more customers nowadays play an active role in service encounters in which they are engaged in service production process to co create value. For instance, customers can enjoy service either by cooperating with service firms or by having the ...
A method for service failure effects analysis based on customer satisfaction
HCI'13: Proceedings of the 15th international conference on Human Interface and the Management of Information: information and interaction for learning, culture, collaboration and business - Volume Part III

Recently, the importance of service is widely accepted. Service Engineering that aims to design a service from the engineering viewpoint has been proposed. In order to achieve a successful service, service providers should maintain service quality and ...
How to acquire customer loyalty in online retailing industry? An empirical study from service recovery perspective
Highlights
- Online retailers recognize the need to identify service failures, improve service recovery, and retain loyal customers.
- The study examines how service failure attribution affects the severity of service failure in recent Chinese ...
Abstract
With the rapid development of online retailing, retailers have recognized the importance of identifying service failures, improving service recovery, and retaining loyal customers. However, few studies have utilized an empirical study to measure ...

Comments

Please enable JavaScript to view thecomments powered by Disqus.

Information & Contributors

Information

Published In

cover image Marketing Science

Marketing Science Volume 31, Issue 1

01-02 2012

193 pages

ISSN:1526-548X

Issue’s Table of Contents

Publisher

INFORMS

Linthicum, MD, United States

Publication History

Published: 01 January 2012

Accepted: 17 August 2011

Received: 20 September 2009

Author Tags

Qualifiers

Article

Contributors

Other Metrics

View Article Metrics

Bibliometrics & Citations

Bibliometrics

Article Metrics

2
Total Citations
View Citations
0
Total Downloads

Downloads (Last 12 months)0
Downloads (Last 6 weeks)0

Reflects downloads up to 03 Jan 2025

Other Metrics

View Author Metrics

Citations

Cited By

Dukes AZhu Y(2019)Why Customer Service Frustrates ConsumersMarketing Science10.1287/mksc.2019.114938:3(500-515)Online publication date: 1-May-2019
https://dl.acm.org/doi/10.1287/mksc.2019.1149
Rust RHuang M(2014)The Service Revolution and the Transformation of Marketing ScienceMarketing Science10.1287/mksc.2013.083633:2(206-221)Online publication date: 1-Mar-2014
https://dl.acm.org/doi/10.1287/mksc.2013.0836

View Options

View options

Media

Figures

Other

Tables

View Issue’s Table of Contents