Customer Satisfaction and Firm Profits in Monopolies: A Study of Utilities

Bhattacharya, Abhi; Morgan, Neil; Rego, Lopo L.

doi:10.1177/0022243720962405

Cited by 30 publications

(20 citation statements)

References 62 publications

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“…Despite calls for service designs that explicitly consider customer well-being (Fisk et al, 2018;Johns and Davey, 2019;Rosenbaum et al, 2017), many service firms have resisted and refused to change their practices, seemingly due to their indiscriminate embrace of relationship marketing strategies (Frow et al, 2011). Our study shows that captivity alters customers' service evaluations, to the extent that it even might have negative effects on service firms' image and performance (Bhattacharya et al, 2020;Wetzer et al, 2007). When captive customers seek solutions to mitigate their negative emotions and improve their well-being, they seek emotional support and spread NWOM.…”

Section: Managerial Implicationsmentioning

confidence: 72%

“…If they believe they have no other choice than to use their current provider to obtain a service they need, customers experience negative emotions, directly associated with their captive service relationship, which affects their service evaluations and well-being. Recognizing and managing these captivity emotions is critical because they can have detrimental effects on not just customer relationships but also service employees' emotional states (Liu et al, 2019;McColl-Kennedy et al, 2009) and service costs (Bhattacharya et al, 2020).…”

Section: General Discussion and Conclusionmentioning

confidence: 99%

“…We further demonstrate how NWOM can help relieve captivity emotions. Considering that NWOM spread by captive customers can affect service providers' reputations and profitability (Bhattacharya et al, 2020), we outline some implications and potential solutions that service providers might provide to reduce customers' feelings of captivity.…”

Section: Rq3mentioning

confidence: 99%

“…Even if the primary goal of such behavior might not be to seek revenge, it is still likely to tarnish service firms' image (Leisen Pollack, 2017a;Richins, 1983). Even in monopolistic situations, NWOM by customers affects service firms' profitability by increasing service costs (Bhattacharya et al, 2020). Managers should recognize why captive customers spread NWOM, as well as the advantages of developing solutions that can reduce customers' feelings of captivity and facilitate customers' emotional venting.…”

Section: Managerial Implicationsmentioning

confidence: 99%

“…Captive customers also might use NWOM to vent their dissatisfaction (Conlon et al, 2004), seek emotional support (Gelbrich, 2010), and improve their well-being (Fliess and Volkers, 2020). In doing so, even if they cannot leave the service relationship, captive customers might impose some costs on firms and reduce their profitability (Bhattacharya et al, 2020). It is then critical for service providers to understand how customer captivity affects service relationships.…”

Section: Conceptual Frameworkmentioning

confidence: 99%

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Customer captivity, negative word of mouth and well-being: a mixed-methods study

Furrer

Kerguignas

Landry

2021

JSM

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Purpose When customers feel that they have no choice but to stay with their current provider to obtain a service that they need, they feel captive. This study aims to investigate customer captivity as a type of vulnerability and evaluate its effects on customers’ service evaluation and word-of-mouth (WOM) behavior, as well as to identify solutions that reduce customers’ feelings of captivity and improve their well-being. Design/methodology/approach This sequential, quantitative–qualitative, mixed-methods study draws from a survey of 1,017 customers and a qualitative analysis of 20 in-depth semi-structured interviews. Moderated mediation analysis is used to test the quantitative hypotheses; a thematic analysis explores the qualitative data. Findings The results of the quantitative study show that captivity emotions and price unfairness perceptions are two manifestations of customer captivity, which directly and indirectly affect service evaluations and WOM behavior. The findings of the qualitative study highlight how captive customers use emotional support-seeking negative word-of-mouth (NWOM) as a solution to reduce their captivity emotions and improve their well-being, by reinforcing their social ties and regaining a sense of control. Research limitations/implications This study advances transformative service research by demonstrating how captivity affects customers’ well-being and customer vulnerability literature by investigating captivity as a type of vulnerability. It contributes to service marketing literature by identifying customer captivity as a boundary condition for generic service evaluation models. Practical implications Captive customers seek emotional support and consequently spread NWOM. Therefore, it is critical for service providers to reduce customers’ captivity feelings and implement adequate solutions to prevent NWOM and decrease the risk of negative impacts on their profitability. Originality/value Any customer can become vulnerable, due to contextual circumstances. This study focuses on customer captivity as a type of vulnerability and proposes adapted solutions to improve customers’ well-being.

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Section: Managerial Implicationsmentioning

confidence: 72%

Section: General Discussion and Conclusionmentioning

confidence: 99%

Section: Rq3mentioning

confidence: 99%

Section: Managerial Implicationsmentioning

confidence: 99%

Section: Conceptual Frameworkmentioning

confidence: 99%

See 3 more Smart Citations

Customer captivity, negative word of mouth and well-being: a mixed-methods study

Furrer

Kerguignas

Landry

2021

JSM

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Customer satisfaction, loyalty behaviors, and firm financial performance: what 40 years of research tells us

et al. 2023

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The authors synthesize research on the relationship of customer satisfaction with customer- and firm-level outcomes using a meta-analysis based on 535 correlations from 245 articles representing a combined sample size of 1,160,982. The results show a positive association of customer satisfaction with customer-level outcomes (retention, WOM, spending, and price) and firm-level outcomes (product-market, accounting, and financial-market performance). A moderator analysis shows the association varies due to many contextual factors and measurement characteristics. The results have important theoretical and managerial implications.

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Weathering the crash: Do customer-company relationships pay off during economic crises?

Morgeson,

Sharma,

Schultz

et al. 2023

J. of the Acad. Mark. Sci.

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Do stronger relationships with customers (customer-company relationships [CCR]) help firms better weather economic crises? To answer this question, we examine firm performance during the stock market crashes associated with the two most severe economic crises of the last 15 years—the protracted Great Recession crisis (2008–2009) and the shorter but extreme COVID-19 pandemic crisis (2020). Juxtaposing the predominant expected utility theory perspective with observed deviations in investor behavior during crises, we find that both pre-crash firm-level customer satisfaction and customer loyalty are positively associated with abnormal stock returns and lower idiosyncratic risk during a market crash, while pre-crash firm-level customer complaint rate negatively affects abnormal stock returns and increases idiosyncratic risk. On average, we find that one standard deviation higher CCR is associated with between $0.9 billion and $2.4 billion in market capitalization on an annualized basis. Importantly, we find that these effects are weaker for firms with higher market share during the COVID-19 crash, but not during the Great Recession crash. These results are found to be robust to a variety of alternate model specifications, time periods, sub-samples, accounting for firm strategies during the crises, and endogeneity corrections. When compared to relevant non-crash periods, we also find that such effects are equally strong during the Great Recession crash and even stronger during the COVID-19 pandemic crash. Contributing to both the marketing-finance interface literature and the nascent literature on marketing during economic crises, implications from these findings are provided for researchers, marketing theory, and managers. Supplementary information The online version contains supplementary material available at 10.1007/s11747-023-00947-1.

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Customer Satisfaction and Firm Profits in Monopolies: A Study of Utilities

Cited by 30 publications

References 62 publications

Customer captivity, negative word of mouth and well-being: a mixed-methods study

Customer captivity, negative word of mouth and well-being: a mixed-methods study

Customer satisfaction, loyalty behaviors, and firm financial performance: what 40 years of research tells us

Weathering the crash: Do customer-company relationships pay off during economic crises?

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