Good customer service gains from competitors

One firm's loss can be another's gain! Savvy businesses can win over customers who walk away unhappy with another firm's services, new research has shown.

The findings refute past findings that a bad service or retail experience taints a consumer for the entire day.

For instance, to win the loyalty of a dissatisfied airline passenger, a hotel could provide the traveller a room upgrade or even a simple apology for the airline's failure, found Clay Voorhees, lead researcher from Michigan State University.

"We found that if you offer these goodwill gestures, you not only negate the negative feelings in the customer, you actually get a lift in attitude toward your firm," said Voorhees.

To test their theory, the researchers conducted three experiments dealing with the airline, hotel and restaurant industries and polled more than 500 people.

They found that when the firm responsible for the bad service made a goodwill gesture, it had no effect on the customer's negative attitude, attempts made by a firm affiliated with the offending company improved the customer's attitude only slightly.

But when a completely unaffiliated company made a goodwill gesture after the negative experience, the customer's attitude toward that unaffiliated company improved significantly.

Voorhees said the findings underscore the importance of training frontline workers to react to customer complaints regarding other firms.

The study also suggests firms should investigate their entire service chain to identify possible weak spots.

The study was published in the Journal of the Academy of Marketing Science.