Reducing Customer Dissatisfaction: How Important is Learning to Reduce Service Failure?

31 Pages Posted: 8 Aug 2006

See all articles by Michael A. Lapre

Michael A. Lapre

Vanderbilt University - Operations Management

Date Written: August 2006

Abstract

As service failures are inevitable, firms must be prepared to recover and learn from service failures. Yet, the majority of customers are still dissatisfied with the way firms resolve their complaints. Can learning to reduce service failures reduce customer dissatisfaction, and to what extent are such reductions sustainable? Previous research showed that organizational learning curves for customer dissatisfaction (i) follow a U-shaped function of operating experience and (ii) are heterogeneous across firms. In this paper, I tease out where the U-shaped learning-curve effect and learning-curve heterogeneity originate: service failure or customers' propensity to complain given the occurrence of a service failure. Using quarterly data for nine major U.S. airlines over 11 years, I find that the U-shaped learning-curve effect as well as the learning-curve heterogeneity originates in the propensity to complain. In the long term, reductions in service failure did not translate in sustainable reductions in customer dissatisfaction. Customers' propensity to complain eventually went up. Managing the propensity to complain provides more opportunity for a firm to distinguish itself from competitors.

Keywords: customer dissatisfaction, learning curve, organizational learning, marketing, service failure, empirical research

JEL Classification: M10

Suggested Citation

Lapre, Michael A., Reducing Customer Dissatisfaction: How Important is Learning to Reduce Service Failure? (August 2006). Available at SSRN: https://ssrn.com/abstract=922766 or http://dx.doi.org/10.2139/ssrn.922766

Michael A. Lapre (Contact Author)

Vanderbilt University - Operations Management ( email )

401 21st Avenue South
Nashville, TN 37203
United States
615-322-2389 (Phone)
615-343-7177 (Fax)

HOME PAGE: http://www.owen.vanderbilt.edu/faculty-and-research/faculty-directory/faculty-profile.cfm?id=114

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