Page 72 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Unit 3: Analysing Profitability of Customers

and are classified as no action group. In another study, Warland, Heerman, and Willits (1975) Notes
categorized the consumer complaint behaviour into upset action and upset no action. They
argued that consumers might not complain, even though they are dissatisfied; they regard them
as the upset but no action group. Otherwise, they are in upset action category. Other researchers
have different labels for these styles, such as complainers and non-complainers and activists and
non-activists (Singh, 1990).
Action taken by consumers is not only to complain to the seller, but also include warning
families and friends, stopping patronage, diverting to mass media, complaining to consumer
council and complaining by writing a letter to management (Heung & Lam, 2003). This buttresses
the two-level hierarchical classification (public or private action used in this study) first proposed
by Day and Landon in 1976.

Public action refers to the direct complaint actions to the seller or a third party (e.g. consumer
agency or government), which included seeking redress directly from retailer or manufacturer,
and taking legal action (Bearden, 1983; Bearden &Oliver, 1985; Cornwell, Bligh, & Babakus,
1991). The public actions that could be taken by consumer included verbal complain to retailer/
manufacturer, writing comment card or complaint letters, writing to newspaper or complaint to
consumer council (Heung & Lam, 2003). Private action indicates that complaint is privately
through negative word-of-mouth communications to family and friends or the decision not to
repurchase the product or services again or boycott store (Bearden, 1983; Broadbridge & Marshall,
1995; Cornwell et al., 1991). Private actions generally do not get the direct attention of the seller
and thus could have a serious impact on sales and profitability (Heung & Lam, 2003).
Bearden and Oliver (1985: 228) pointed out that ‘’private complaint has no effect on the firm’s
responses, but may reinforce negative attitudes through the process of consensual validation
whereby individuals seek confirmation of their feelings by selectively exposing themselves to
agreeable others’’. It is important to know that a consumer may only either involve in one
action (the public or private complaint) or will involve in both public and private complaint
(Kolodinsky, 1995).

Defection

Customer defection is also termed as ‘’customer exit’’ or ‘’switching behaviour’’. In Colgate and
Hedge (2001), the terms switching, defection and exit were used interchangeably, which showed
that the terms have similar definition. Defection can be defined as customers forsaking one
product or service for another (Garland, 2002). The customer decides not to purchase a product
or service again.
Crie (2003) defined defection as an active and destructive response to dissatisfaction, exhibited
by a break of the relationship with the object (brand, product, retailer, supplier, etc.). According
to Colgate and Hedge (2001), defection is the customer’s decision to stop purchasing a particular
service or patronising the service firm completely, which is a gradual dissolution of relationships
due to problem(s) encountered over time. They explained that defection is a complex process
following customers faced with problem(s).
Stewart (1998) in studying the customer defection in the banking industry tried to define defection
as the ending of the relationship between customer and bank. He explained further that the
relationship is marked by a customer ‘’run down’’ the account to a negligible balance and have
no future transaction or formally close the account.

Previous research has shown that complaint has impact on the defection intention by the customer.
Arnould (2004) pointed out that dissatisfied customers who do not complain are more likely to
discontinue purchase, which means, they are more likely to defect than those who complain.

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