Talk Up or Criticize? Customer Responses to WOM About Competitors During Social Interactions

Popular metrics such as the Net Promoter Score (NPS) highlights many benefits of word of mouth (WOM) to firms. Is WOM all it is claimed to be? Building on social identity theory, this research develops a conceptual model of WOM exchange in social settings and tests the model with customer surveys of three service sectors. The findings show that the effects of (1) positive and negative WOM (P/NWOM) received about competitors and (2) perceived presence of critical incidents (PPCIs) on P/NWOM given about own service provider are far from intuitive. Responses to PWOM received counter the suggestions in the NPS literature. The findings also indicate that the best firms can hope for when receiving NWOM about competitors is that their customers remain silent. It is recommended that firms communicate a message that is consistent with the nuanced views expressed by friends in social circles, rather than a uniformly superior positioning.

[1]  G. L. Shostack.  Breaking Free from Product Marketing , 1977 .

[2]  G. McClelland,et al.  Misleading Heuristics and Moderated Multiple Regression Models , 2001 .

[3]  P. Bone.  Word-of-mouth effects on short-term and long-term product judgments , 1995 .

[4]  C. Fornell,et al.  Evaluating structural equation models with unobservable variables and measurement error. , 1981 .

[5]  Jacob Cohen.  Statistical Power Analysis for the Behavioral Sciences , 1969, The SAGE Encyclopedia of Research Design.

[6]  V. Mittal,et al.  Satisfaction, Repurchase Intent, and Repurchase Behavior: Investigating the Moderating Effect of Customer Characteristics , 2001 .

[7]  Stephen S. Tax,et al.  Customer Evaluations of Service Complaint Experiences: Implications for Relationship Marketing , 1998 .

[8]  K. Bollen,et al.  A tetrad test for causal indicators. , 2000, Psychological methods.

[9]  Holly M. Rotalsky,et al.  Tracking service failures and employee recovery efforts , 1995 .

[10]  J. Nunnally.  Psychometric Theory (2nd ed), New York: McGraw-Hill. , 1978 .

[11]  Hyunsun Park,et al.  Effects of various characteristics of social commerce (s-commerce) on consumers' trust and trust performance , 2013, Int. J. Inf. Manag..

[12]  Paul G. Patterson,et al.  Customer rage episodes: Emotions, expressions and behaviors , 2009 .

[13]  David M. Szymanski,et al.  Customer satisfaction: A meta-analysis of the empirical evidence , 2001 .

[14]  Cheryl Burke Jarvis,et al.  A Critical Review of Construct Indicators and Measurement Model Misspecification in Marketing and Consumer Research , 2003 .

[15]  Joel E. Collier,et al.  Investigating the Employee’s Perspective of Customer Delight , 2013 .

[16]  Neil A. Morgan,et al.  The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Business Performance , 2006 .

[17]  William T. Ross,et al.  The Asymmetric Impact of Negative and Positive Attribute-Level Performance on Overall Satisfaction and Repurchase Intentions , 1998 .

[18]  Robert W. Palmatier,et al.  Factors Influencing the Effectiveness of Relationship Marketing: A Meta-Analysis , 2006 .

[19]  Larry E. Toothaker,et al.  Multiple Regression: Testing and Interpreting Interactions , 1991 .

[20]  H. Tajfel,et al.  An integrative theory of intergroup conflict. , 1979 .

[21]  R. Sitgreaves.  Psychometric theory (2nd ed.). , 1979 .

[22]  D. W. Barclay,et al.  The Effects of Organizational Differences and Trust on the Effectiveness of Selling Partner Relationships , 1997 .

[23]  William C. Martin,et al.  Modeling word-of-mouth usage , 2013 .

[24]  Scott R. Swanson,et al.  Service recovery attributions and word‐of‐mouth intentions , 2001 .

[25]  Bo Edvardsson,et al.  Service quality improvement , 1998 .

[26]  Claes Fornell,et al.  A Customer Satisfaction Research Prospectus , 1994 .

[27]  Michael S. Moore,et al.  A Tale of Two Theories , 2009 .

[28]  Bruce Cooil,et al.  A Longitudinal Examination of Net Promoter and Firm Revenue Growth , 2007 .

[29]  Seth Godin,et al.  Purple Cow: Transform Your Business by Being Remarkable , 2003 .

[30]  Peter A. Dacin,et al.  Spreading the word: Investigating antecedents of consumers’ positive word-of-mouth intentions and behaviors in a retailing context , 2005 .

[31]  John P. Meyer,et al.  AFFECTIVE, CONTINUANCE, AND NORMATIVE COMMITMENT TO THE ORGANIZATION: A META-ANALYSIS OF ANTECEDENTS, CORRELATES, AND CONSEQUENCES , 2002 .

[32]  F. Bookstein,et al.  Two Structural Equation Models: LISREL and PLS Applied to Consumer Exit-Voice Theory: , 1982 .

[33]  Fred Reichheld,et al.  The Ultimate Question: Driving Good Profits and True Growth , 2006 .

[34]  Nicola Stokburger-Sauer,et al.  Brand community: Drivers and outcomes , 2010 .

[35]  P. Patterson,et al.  Customer choice of self‐service technology: the roles of situational influences and past experience , 2012 .

[36]  Michael H. Burzynski,et al.  The Effect of Positive and Negative Prior Information on Motion Picture Appreciation , 1977 .

[37]  Jochen Wirtz,et al.  Services Marketing: People, Technology, Strategy , 2000 .

[38]  V. Zeithaml.  How Consumer Evaluation Processes Differ between Goods and Services , 1981 .

[39]  E. Anderson.  Customer Satisfaction and Word of Mouth , 1998 .

[40]  C. Bebko.  Service intangibility and its impact on consumer expectations of service quality , 2000 .

[41]  Cristiana Raquel Lages,et al.  Drivers of in‐group and out‐of‐group electronic word‐of‐mouth (eWOM) , 2013 .

[42]  W. Chaplin,et al.  The next generation of moderator research in personality psychology. , 1991, Journal of personality.

[43]  D. Lehmann,et al.  Reactance to Recommendations: When Unsolicited Advice Yields Contrary Responses , 2004 .

[44]  P. Franses,et al.  The effect of relational constructs on customer referrals and number of services purchased from a multiservice provider: Does age of relationship matter? , 2002 .

[45]  P. Berthon,et al.  Unveiling videos: Consumer‐generated ads as qualitative inquiry , 2011 .

[46]  Shih-Chieh Chuang,et al.  The effect of service failure types and service recovery on customer satisfaction: a mental accounting perspective , 2011 .

[47]  Tomás Bayón,et al.  The effect of word of mouth on services switching , 2004 .

[48]  M. Hogg,et al.  A tale of two theories: A critical comparison of identity theory with social identity theory , 1995 .

[49]  A. Woodside.  Moving beyond multiple regression analysis to algorithms: Calling for adoption of a paradigm shift from symmetric to asymmetric thinking in data analysis and crafting theory , 2013 .

[50]  Lawrence A. Crosby,et al.  Effects of Relationship Marketing on Satisfaction, Retention, and Prices in the Life Insurance Industry , 1987 .

[51]  Pranjal Gupta,et al.  How e-WOM recommendations influence product consideration and quality of choice: A motivation to process information perspective , 2010 .

[52]  Hans Baumgartner,et al.  Response Styles in Marketing Research: A Cross-National Investigation , 2001 .

[53]  Rodolfo Vázquez-Casielles,et al.  The Word of Mouth Dynamic: How Positive (and Negative) WOM Drives Purchase Probability , 2013, Journal of Advertising Research.

[54]  R. Oliver.  Satisfaction: A Behavioral Perspective On The Consumer , 1996 .

[55]  David Horowitz,et al.  A voice from the silent masses: An exploratory and comparative analysis of noncomplainers , 2006 .

[56]  Susan M. Keaveney,et al.  Customer Switching Behavior in Service Industries: An Exploratory Study , 1995 .

[57]  Ruth N. Bolton,et al.  Customer-to-Customer Interactions: Broadening the Scope of Word of Mouth Research , 2010 .

[58]  Alexander Leischnig,et al.  Shopping events, shopping enjoyment, and consumers’ attitudes toward retail brands—An empirical examination , 2011 .

[59]  R. Bagozzi,et al.  On the evaluation of structural equation models , 1988 .

[60]  Katherine N. Lemon,et al.  A dynamic model of customers' usage of services : usage as an antecedent and consequence of satisfaction , 1999 .

[61]  Glenn L. Christensen,et al.  A Cultural Models Approach to Service Recovery , 2007 .

[62]  Rebecca J. Slotegraaf,et al.  The paradox of a marketing planning capability , 2004 .

[63]  P Brenner,et al.  Word of Mouth , 1996, Encyclopedia of Database Systems.

[64]  Margaret G. Meloy,et al.  Predecisional Distortion of Product Information , 1998 .

[65]  C. Fornell,et al.  Customer Satisfaction, Market Share, and Profitability: Findings from Sweden , 1994 .

[66]  Stephen S. Tax,et al.  Customer Evaluations of Service Complaint Experiences: Implications for Relationship Marketing: , 1998 .

[67]  Sunil Gupta,et al.  Customer Metrics and Their Impact on Financial Performance , 2006 .

[68]  Andreas Ritter,et al.  Structural Equations With Latent Variables , 2016 .

[69]  Lauren I. Labrecque,et al.  The Assimilative and Contrastive Effects of Word-of-Mouth Volume: An Experimental Examination of Online Consumer Ratings , 2011 .

[70]  P. Lachenbruch.  Statistical Power Analysis for the Behavioral Sciences (2nd ed.) , 1989 .

[71]  M. Evans.  A Monte Carlo study of the effects of correlated method variance in moderated multiple regression analysis , 1985 .

[72]  T. Keiningham,et al.  A Longitudinal Analysis of Customer Satisfaction and Share of Wallet: Investigating the Moderating Effect of Customer Characteristics , 2007 .

[73]  E. B. Andersen,et al.  Modern factor analysis , 1961 .

[74]  Scott B. MacKenzie,et al.  Common method biases in behavioral research: a critical review of the literature and recommended remedies. , 2003, The Journal of applied psychology.

[75]  M. Darby,et al.  Free Competition and the Optimal Amount of Fraud , 1973, The Journal of Law and Economics.

[76]  Celso Augusto de Matos,et al.  Customer reactions to service failure and recovery in the banking industry: the influence of switching costs , 2013 .

[77]  D. Albarracín,et al.  Attitudes without objects: evidence for a dispositional attitude, its measurement, and its consequences. , 2013, Journal of personality and social psychology.

[78]  Michele Costabile,et al.  How Relationship Age Moderates Loyalty Formation , 2008 .

[79]  R. Shachar,et al.  On Brands and Word of Mouth , 2013 .

[80]  P. Heaven,et al.  Attitudes and Behavioral Intentions toward Vietnamese in Australia , 1986 .

[81]  Susan T. Fiske,et al.  Attention and weight in person perception: The impact of negative and extreme behavior. , 1980 .

[82]  H. Tajfel,et al.  The Social Identity Theory of Intergroup Behavior. , 2004 .

[83]  R. Lennox,et al.  Conventional wisdom on measurement: A structural equation perspective. , 1991 .

[84]  Bård Tronvoll,et al.  Negative emotions and their effect on customer complaint behaviour , 2011 .

[85]  C. Judd,et al.  Statistical difficulties of detecting interactions and moderator effects. , 1993, Psychological bulletin.

[86]  C. Chung,et al.  The impact of word-of-mouth communication on attribute evaluation , 2011 .

[87]  William S. Peters,et al.  Form, effect size and power in moderated regression analysis , 1987 .

[88]  Susan M. Keaveney,et al.  Customer Switching Behavior in Service Industries , 1995 .

[89]  A. Pruyn,et al.  THE IMPACT OF EMPLOYEE COMMUNICATION AND PERCEIVED EXTERNAL PRESTIGE ON ORGANIZATIONAL IDENTIFICATION , 2000 .

[90]  C. Ranaweera,et al.  For Better or for Worse? Adverse Effects of Relationship Age and Continuance Commitment on Positive and Negative Word of Mouth , 2013 .

[91]  P. Herr,et al.  Effects of Word-of-Mouth and Product-Attribute Information on Persuasion: An Accessibility-Diagnosticity Perspective , 1991 .

[92]  Katherine N. Lemon,et al.  A Dynamic Model of Customers’ Usage of Services: Usage as an Antecedent and Consequence of Satisfaction , 1999 .

[93]  John Hulland,et al.  Use of partial least squares (PLS) in strategic management research: a review of four recent studies , 1999 .

[94]  Mary Jo Bitner,et al.  The Service Encounter: Diagnosing Favorable and Unfavorable Incidents: , 1990 .

[95]  L. J. Harrison‐Walker.  The Measurement of Word-of-Mouth Communication and an Investigation of Service Quality and Customer Commitment As Potential Antecedents , 2001 .

[96]  J. E. Swan,et al.  Consumer perceptions of interpersonal equity and satisfaction in transactions: A field survey approach. , 1989 .

[97]  Mary Jo Bitner,et al.  Encounter Satisfaction versus Overall Satisfaction versus Quality: The Customer's Voice , 1994 .

[98]  D. Knippenberg,et al.  Organizational identification versus organizational commitment: self-definition, social exchange, and job attitudes , 2006 .

[99]  K. Weber,et al.  The Service Encounter , 2008 .

[100]  Donal E. Carlston,et al.  Negativity and extremity biases in impression formation: A review of explanations. , 1989 .

[101]  Anne Beaudry,et al.  The Other Side of Acceptance: Studying the Direct and Indirect Effects of Emotions on Information Technology Use , 2010, MIS Q..

[102]  R. E. Burnkrant,et al.  The Moderating Role of Commitment on the Spillover Effect of Marketing Communications , 2001 .

[103]  F. Reichheld.  The one number you need to grow. , 2003, Harvard business review.

[104]  Peter C. Verhoef,et al.  Service Encounters as a Sequence of Events , 2004 .

[105]  David L. Mothersbaugh,et al.  Switching barriers and repurchase intentions in services , 2000 .

[106]  H. Winklhofer,et al.  Index Construction with Formative Indicators: An Alternative to Scale Development , 2001 .

[107]  C. Fornell.  A National Customer Satisfaction Barometer: The Swedish Experience: , 1992 .

[108]  Wynne W. Chin,et al.  A Partial Least Squares Latent Variable Modeling Approach for Measuring Interaction Effects: Results from a Monte Carlo Simulation Study and an Electronic - Mail Emotion/Adoption Study , 2003, Inf. Syst. Res..

[109]  Debra Ann Grace,et al.  How Embarrassing! An Exploratory Study of Critical Incidents Including Affective Reactions , 2007 .

[110]  R. Oliver.  A Cognitive Model of the Antecedents and Consequences of Satisfaction Decisions , 1980 .