Citation
(2014), "Executive summary of “It’s just not fair: exploring the effects of firm customization on unfairness perceptions, trust, and loyalty”", Journal of Services Marketing, Vol. 28 No. 6. https://doi.org/10.1108/JSM-07-2014-0259
Publisher
:Emerald Group Publishing Limited
Executive summary of “It’s just not fair: exploring the effects of firm customization on unfairness perceptions, trust, and loyalty”
Article Type: Executive summary and implications for managers and executives From: Journal of Services Marketing, Volume 28, Issue 6
This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present.
There’s a saying that you sometimes can’t do right for doing wrong. It probably rings true with marketers who decide the right thing to do to increase the firm’s attractiveness and improve relationships is to customize services to match customers’ individual needs. What could possibly go wrong? Well plenty. For instance, treating customers differently can mean favoring certain ones over others, leading to different customers receiving different prices and promotions for the same service. Result? A perception of unfairness.
In fact, customer tracking systems and information storage via customer databases, both requirements for effective customization practice, are seen by some as potential causes of customers’ unfairness perceptions. Such perceptions have a negative impact on customer behavior and firm performance. Customers might opt out of relationships and engage in firm-damaging behavior such as spreading negative word of mouth – or worse. On the other hand, what about that extremely well-studied concept called “trust”? Does trust play a part in lessening feelings of “It’s just not fair”?
People like “fairness”, and it seems unfair if one customer is paying more than another. And human nature being what it is, people perceiving inequity tend to develop a motivation to either balance this perception or restore equity. So beware the angry, disgruntled customer. It’s not as if firms these days can customize an offering to one customer “on the quiet” because of the transparency which the internet provides. Customers have more ways of comparing what they get and what others might get, increasing unfairness perceptions. This is particularly true for price and promotional offers.
So what’s to be done? The first step is to better understand the influence of customers’ unfairness perceptions on their behavior. In “It’s just not fair: exploring the effects of firm customization on unfairness perceptions, trust and loyalty”, Dr Bang Nguyen et al.
develop a conceptual framework exploring the relationships between perceived negative firm customization, unfairness perceptions and customer loyalty intentions; and
investigate the moderating effects of trust in these relationships.
Their findings show that perceived negative firm customization heightens unfairness perceptions, which, in turn, decrease customers’ loyalty intentions. This supports attributions theory, indicating that people are likely to search for causal explanations for an event when the event is surprising and/or negative and attribute such negative behavior towards a provider. Customization, unfairness and trust contribute to customer loyalty intentions as antecedents.
Additionally, they find that trust moderates unfairness perceptions and customer loyalty intentions in the following ways:
trust increases the effectiveness of customization (by reducing negative perceptions), leading to increased loyalty;
trust increases customer loyalty intentions despite unfairness perceptions; and
trust did not differ in the way trust moderated both relationships between customization and unfairness on customer loyalty intention. This suggests that the effectiveness of trust is equally as strong in both situations. This relationship between trust, unfairness and customer loyalty intention explains the importance of trust in any exchange relationship. Consequently, the role of trust is even more important than previously thought.
When customizing a service for a customer, such as an insurance offer, the firm should consider potential negative associations with the customization. The customer may, for instance, associate customized insurance offers with increased prices and added administration fees. To avoid such negative associations, the firm can enhance the customization by highlighting the unique context, which is the customer’s personal situation. By creating increasingly individualized offers, the customer may not have a comparable standard, and find it difficult to compare the offer with others, thus diminishing negative associations and reducing unfairness perceptions. These customized offerings should be compared with other, less, or even more customized offers to allow the customer to compare the options. This comparison allows customers to perceive the value of their customization even better.
The study shows that it is beneficial for managers to develop trust-based schemes to weaken negative associations. In that way, a customer will be able to differentiate between the different vendors and choose to build a relationship or remain in a relationship with the fairest firm. Although it may not be possible to manage this level of trust with every single customer, a firm should try (for instance, by using this study’s findings) to understand where the efforts should be made. For example, if a customer is in a distant relationship, the firm should focus on efforts to increase the trust (enhance relationships), whereas with customers in a close relationship, the firm should develop methods to constantly monitor the levels of trust (maintain relationships). Examples of schemes creating trust are often seen online and include peer rankings, reviews and endorsements.
In the hospitality sector, reviews reflect the level of trust that customers receive once they have checked into their hotel. Therefore, more efforts should be put into achieving higher ratings, by encouraging satisfied customers to write reviews (which they often neglect to do).
To read the full article enter 10.1108/JSM-05-2013-0113 into your search engine.
(A preícis of the article “It’s just not fair: exploring the effects of firm customization on unfairness perceptions, trust, and loyalty”. Supplied by Marketing Consultants for Emerald.)