Yany Grégoire

How Much Compensation Should a Firm Offer for a Flawed Service? An Examination of the Nonlinear Effects of Compensation on Satisfaction

This research examines the nonlinear effects of compensation on customer satisfaction in order to determine the optimal compensation after a flawed service. As our core contribution, we argue that the nature of this nonlinear effect depends on the way customers handle a flawed service. Building on the Service-Dominant (S-D) logic, this research introduces two specific failure handling tactics—when customers reject versus accept a flawed value proposition—that affect the shape of the nonlinear function of compensation on satisfaction. Our key hypotheses are tested with two experiments that manipulate 11 compensation levels (0–200%) and the two failure handling tactics (rejection vs. acceptance). Consistent with our logic, both studies reveal an S-shaped curve progression for service rejection and a concave shape for service acceptance. For service rejection, the highest incremental effect of compensation on satisfaction lies in between 60% and 120%. For service acceptance, the highest return in satisfaction is obtained with the first dollars invested in partial compensation. As a major managerial takeaway, firms can use these findings to determine the compensation level that provides the best satisfaction return.

Consumer Resistance: From Anti-Consumption to Revenge

This chapter offers a review of two facets of consumer resistance—a phenomenon we broadly define as consumers’ sense of opposition toward consumption, marketing and corporations. These two specific facets are consumer anti-consumption and revenge. First, it discusses four anti-consumption lifestyles (i.e., global impact consumers, market activists, anti-loyal consumers, and simplifiers) as well as their antecedents (i.e., materialism, self-control, long-term orientation, and environmental concern) and their consequences (i.e., macro-economic effects, sustainability, and consumer’s well-being). Second, it presents the psychological process leading to consumer revenge—i.e., the actions to hurt a firm. Specifically, it discusses the cognitive and emotional antecedents leading to a desire for revenge as well as the most common revenge behaviors (indirect and direct). In conclusion, this chapter explains that both consumers’ anti-consumption and revenge actions are grounded in consumers’ strong desire for regaining power over firms.

Growing Nonprofit Giving Via Peer-To-Peer Connections: Benefits and Potential Backlash

Peer-to-Peer charities allow donors to donate to a specific charitable project (or recipient), whereas traditional charities allocate donor contributions as the charity deems fit. Two preliminary studies show that potential donors prefer P2P charities model over traditional charities, because P2P charities enhance donors’ felt connection with the charity’s beneficiaries. Four subsequent studies explore how consumers respond after learning their donation (to a P2P charity) was redirected to a different project and/or location. Studies 2 and 3 show that donors express strong negative attitudes toward the charity when they learn of any change in their intended recipient. Study 4 tests a theoretical process model linking redirected donations with donors’ subsequent negative attitudes and behaviors (e.g., negative word of mouth). Study 5 provides a second test of the model, and shows that apologies and compensation (in combination) reduce negative donor attitudes and behaviors following a redirect.

When Your Best Customers Become Your Worst Enemies: Does Time Really Heal all Wounds?

Abstract Customer revenge and avoidance in the context of online complaints by the public are hot topics. This article helps managers to understand the phenomenon and to prevent damage. Do online complainers hold a grudge-in terms of revenge and avoidance desires-over time? Results show that time affects the two desires differently: although revenge decreases over time, avoidance increases over time, indicating that customers hold a grudge. Then, we examine the moderation effect of a strong relationship on how customers hold this grudge. Indeed firms’ best customers have the longest unfavorable reactions. This is called the love-becomes-hate effect. Specifically, over time the revenge of strong-relationship customers decreases more slowly, and their avoidance increases more rapidly, than for weak-relationship customers. Further, we explore a solution to attenuate this damaging effect: the firm offering an apology and compensation after the online complaint. Overall, strong-relationship customers are more amenable to any level of recovery attempt.