(Press-News.org) ATLANTA—Customers care more about their past experiences with service firms when the economy is doing well, according to a research team from the J. Mack Robinson College of Business at Georgia State University.
The researchers found it is more important for service firms to focus their resources and efforts on improving customer experience when economic times are good, as opposed to when the economy is down. This new finding contradicts previous beliefs that firms should increase their efforts to improve customer experience during difficult economic times to hold on to existing customers.
Dr. V. Kumar, a Regents Professor of Marketing, Dr. Nita Umashankar, assistant professor of marketing, and Ph.D. candidates Hannah Kim and Yashoda Bhagwat analyzed survey and purchase data over multiple years from nearly 800 customers of a Fortune 1,000 international airline carrier. The researchers also combined data from a state-level index from the Gallup Poll that measures how people feel about their general well-being, which is highly correlated with the health of the economy.
"When the economy is doing poorly, customers tend to focus more on price, irrespective of their personal income," Umashankar said. "When the economy is doing better, customers pay attention to other aspects of the purchase decision, including how satisfied they were in the past and whether the firm made an effort to fix anything that went wrong. They tend to weight their past experiences with the firm more heavily to inform their future purchase decisions when the economy is doing better. So where does the firm get a bang for their buck in terms of investing in customer service? We would never advocate for firms to provide a poor experience to the customer, but you get a greater return for your investment when the economy is doing better."
The researchers found the international airline carrier doubled its gain in revenue when it improved customer experience during better economic times. The company had a 10 percent gain in revenue when the economy was worse compared to a 20 percent gain when the economy was better.
When the economy is poor, the researchers recommend for service managers to emphasize lower prices and better value. During strong economic times, they believe that service managers should aim to improve customer experience by increasing satisfaction, reducing failures and implementing recovery efforts. Companies should also make customers aware of the superior experience they offer.
The study also found the impact of the economy is greater on lower-income consumers. When the economy goes from weak to strong, people with a lower income show a greater leap in spending.
"The takeaway for firms is that when you see improvements in the economy, maybe it's worth providing offers to lower income consumers because they're the ones who are going to change their behavior the most, probably because they feel a little more confident about how things are going," Umashankar said.
The researchers' findings are published in the article, "Assessing the Influence of Economic and Customer Experience Factors on Service Purchase Behaviors," in the journal, Marketing Science.
This study is among the first to examine how customers respond to improvements in customer experience during changes in the economy. Previous studies have not explored this subject from a customer perspective, Umashankar said.
INFORMATION: END
Customer experience matters more when economy is strong, research shows
2014-09-24
ELSE PRESS RELEASES FROM THIS DATE:
NRL researchers develop novel method to synthesize nanoparticles
2014-09-24
WASHINGTON – Scientists at the U.S. Naval Research Laboratory (NRL) Materials Science and Technology Division have developed a novel one-step process using, for the first time in these types of syntheses, potassium superoxide (KO2) to rapidly form oxide nanoparticles from simple salt solutions in water.
"Typically, the synthesis of oxide nanoparticles involves the slow reaction of a weak oxidizing agent, such as hydrogen peroxide, with dilute solutions of metal salts or complexes in both aqueous and non-aqueous solvent systems," said Dr. Thomas Sutto, NRL research chemist. ...
Most stars are born in clusters, some leave 'home'
2014-09-24
Washington, D.C.—New modeling studies from Carnegie's Alan Boss demonstrate that most of the stars we see were formed when unstable clusters of newly formed protostars broke up. These protostars are born out of rotating clouds of dust and gas, which act as nurseries for star formation. Rare clusters of multiple protostars remain stable and mature into multi-star systems. The unstable ones will eject stars until they achieve stability and end up as single or binary stars. The work is published in The Astrophysical Journal.
About two-thirds of all stars within 81 light ...
King Fire in California still blazing
2014-09-24
Over 92,960 acres have been burned by the King Fire since it began on September 13, 2014. The fire is currently 38% contained, and the cause of the fire is arson. Over 7,600 personnel are battling this fire.
With the southwest winds there is a potential for extreme fire behavior if the winds, fuels, and topography come into alignment. There is the possibility for single and group tree torching, upslope crown runs, and spotting up to 1/2 mile. The highest probability is on the northwest portion of the fire. A Red Flag warning remains in effect for this fire. A Red ...
Study: Pain keeps surgery patients awake, extends hospital stay
2014-09-24
DETROIT – Pain can make it difficult for some patients to get a good night's rest while recovering in the hospital following certain surgical procedures, often resulting in longer hospital stays, according to researchers at Henry Ford Hospital in Detroit.
The study shows patients who reported poor sleep while in the hospital following total hip replacement or knee replacement surgery had higher pain scores.
"Our results show that increased pain scores result in deceased sleep duration," says study lead author Anya Miller, M.D., with the Department of Otolaryngology-Head ...
Survey: Costs of ACA health insurance in Texas vary significantly depending on income
2014-09-24
HOUSTON – (Sept. 24, 2014) – The cost of monthly premiums for health insurance plans for Texans under the Affordable Care Act (ACA) can vary by hundreds of dollars, depending on a person's income and the level of coverage chosen, according to a report released today by the Episcopal Health Foundation and Rice University's Baker Institute for Public Policy.
The report found Texans earning about $17,000 a year were offered free premiums on some ACA Marketplace health insurance plans because of federal tax credits. However, a person who makes around $35,000 a year would ...
Organ donation: Do we opt-in or opt-out?
2014-09-24
Researchers say there should be an international database containing the very latest information about organ donations and transplants, so policy makers can make informed decisions on whether to adopt an opt-out or opt-in system.
The call comes after a study, carried out by The University of Nottingham, the University of Stirling and Northumbria University, showed that overall an opt-out system might provide a greater number of organs for transplant but many factors can influence the success of either system and a repository of accessible information would help individual ...
Recreational activity a major pollutant on Canadian coast of Pacific Ocean
2014-09-24
From recreational boats and fishing vessels to commercial cruise ships and private marinas, a newly published study shows that oil discharges related to human maritime activity on the Canadian coast is posing a major threat to marine ecosystems in the Pacific Ocean.
The study – published in the August edition of the journal Applied Geography, with University of Calgary associate professor in geography Stefania Bertazzon as lead author – provides a geospatial analysis of oil discharges in the Canadian Pacific Ocean.
The findings show that a large portion of oil discharge ...
New study finds university health schools' use of holistic admissions has positive impact
2014-09-24
On September 30, 2014, in Washington, DC, higher education and health leaders will release a report that is the first to examine nationwide the impact and use of holistic review—a university admissions process that assesses an applicant's unique experiences alongside traditional measures of academic achievement such as grades and test scores—for students pursuing careers in the health professions.
Many colleges and universities use a holistic admission process to select students. The practice has become more popular in health fields such as medicine, because it enables ...
Tonsil stem cells could someday help repair liver damage without surgery
2014-09-24
The liver provides critical functions, such as ridding the body of toxins. Its failure can be deadly, and there are few options for fixing it. But scientists now report in the journal ACS Applied Materials & Interfaces a way to potentially inject stem cells from tonsils, a body part we don't need, to repair damaged livers — all without surgery.
Byeongmoon Jeong and colleagues point out that currently, the only established method for treating liver failure or severe cases of liver disease is complete or partial transplantation. But the need is much greater than the number ...
New linguistic tools can predict your dialect characteristics
2014-09-24
A new linguistic study may make it possible to more accurately predict the dialect features people use based on their demographic characteristics and where they live. In a new article published in the September 2014 issue of Language, Martijn Wieling (University of Groningen) and colleagues used statistical modeling techniques to predict whether speakers in Tuscany use words from standard Italian or words unique to local dialects.
The article, "Lexical differences between Tuscan dialects and standard Italian: Accounting for geographic and socio-demographic variation using ...