Stick Around . . . You Won’T Regret It: an Exploration of Future Regret Avoidance on the Service Retention Decision

Katherine N. Lemon, Boston College
Tiffany Barnett White, University of Illinois
Russell Winer, University of California at Berkeley
ABSTRACT - The trend in marketing towards building relationships with customers continues to grow and marketers have become increasingly interested in retaining customers over the long-term. Not surprisingly, many practical and theoretical models of customer retention have explored satisfaction as a key determinant in customers’ decisions to keep or drop (i.e., discontinue) a given product or service relationship (Bolton 1998, Boulding et al. 1999, Rust et al. 1999). Indeed, satisfaction measures have accounted for up to 40% of the variance in models of customer retention (Reichheld 1996).
[ to cite ]:
Katherine N. Lemon, Tiffany Barnett White, and Russell Winer (2001) ,"Stick Around . . . You Won’T Regret It: an Exploration of Future Regret Avoidance on the Service Retention Decision", in NA - Advances in Consumer Research Volume 28, eds. Mary C. Gilly and Joan Meyers-Levy, Valdosta, GA : Association for Consumer Research, Pages: 77.

Advances in Consumer Research Volume 28, 2001     Page 77

STICK AROUND . . . YOU WON’T REGRET IT: AN EXPLORATION OF FUTURE REGRET AVOIDANCE ON THE SERVICE RETENTION DECISION

Katherine N. Lemon, Boston College

Tiffany Barnett White, University of Illinois

Russell Winer, University of California at Berkeley

ABSTRACT -

The trend in marketing towards building relationships with customers continues to grow and marketers have become increasingly interested in retaining customers over the long-term. Not surprisingly, many practical and theoretical models of customer retention have explored satisfaction as a key determinant in customers’ decisions to keep or drop (i.e., discontinue) a given product or service relationship (Bolton 1998, Boulding et al. 1999, Rust et al. 1999). Indeed, satisfaction measures have accounted for up to 40% of the variance in models of customer retention (Reichheld 1996).

Though robust, we argue that the findings regarding the role of customer satisfaction, traditionally conceptualized as a mental integration of customers’ expected and experienced (i.e., past and current) level of utility from a given product or service experience, can be augmented by incorporating future utility considerations as well. Specifically, we advance the notion that, when deciding whether or not to continue a service relationship, consumers not only consider current and past evaluations of the firm’s performance (e.g., overall satisfaction, service quality or perceived quality), they also incorporate future considerations regarding the service. Accordingly, we examine one anticipated future stateBthe anticipation of future regretBand demonstrate the impact of this factor, over and above satisfacton, on consumers’ keep/drop decisions.

In this paper, we review literature that motivates the inclusion of future considerations into models predicting consumers’ keep/drop decision. Drawing from the consumer decision-making literature, we explore the impact of the mental simulation of future outcomes on consumers’ decisions to remain-in versus end service relationships. Next, we discuss the proposed effects of anticipated regret, on consumers’ decisions to keep or drop a given service. Particular emphasis is placed on the manner in which the anticipation of regret moderates the impact of satisfaction on this decision. In addition, we conceptually distinguish the decision to continue or discontinue an on-going service relationship from the decision to re-purchase (or re-visit) a given service or establishment (i.e., from a more transaction-based service), highlighting the differential impact of anticipated regret on these disparate service types.

The results of this study show support for the predicted influence of anticipated regret on the consumer’s keep/drop decision. When asked merely to consider the regret they might experience from dropping (or discontinuing) a given service in error, consumers appeared to be more likely to continue consuming (or re-patronizing) the serviceBeven when current levels of satisfaction are relatively low.

The results also show that the effects of priming anticipated regret seem stronger for those consumers in on-going relative to transaction-based services. Those consumers in on-going services, those in which dropping the service required a deviation from the status quo, were even more hesitant to drop the service relationship than those who were deciding whether to re-purchase or re-use the more transaction-based service. These results provide compelling preliminary support for the conceptual distinction drawn between the two service types.

Taken together, the findings support our assertion that consumers are forward-looking with respect to the decision to remain in versus leave service relationships. In addition to speculating about a given firm’s past and current level of performance, we show that consumers also take into account their own future-oriented behaviors and outcomes. In this research we focus on the extent to which consumers may be motivated to reduce the possibility that they experience regret in the future as a result of continuing or discontinuing a given service in "error." Understanding that customers take future considerations into account when making decisions about the firm should influence customer acquisition and retention strategies, and all elements of the marketing mix.

REREFENCES

Bolton, R. (1998), "A Dynamic Model of the Duration of the Customer’s Relationship with a Continuous Service Provider: The Role of Satisfaction," Marketing Science, 17 (1), 45-65.

Boulding, B., A. Kalra and R. Staelin (1999), "The Quality Double Whammy," Marketing Science, 18 (4), 463-484.

Reichheld, Frederick (1996), Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value, The Harvard Business School Press: Cambridge, MA.

Rust, Roland, J. Jeffrey Inman, Jianmin Jia and Anthony Zahorik (1999), "What You Don’t Know About Customer-perceived Quality: The Role of Customer Expectation Distributions," Marketing Science, 18(1), 77-92.

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