A field experiment examines within a financial services firm the impact of a customer satisfaction survey-based intervention that enables front-line employees to identify and contact less-than satisfied customers (less than 9 on a 10-point scale) to proactively prevent potential customer defections. The impact is measured using operational data from 28,000 new customers and their associated defection behavior over a period of eight years. The experiment applies binomial Z-tests of proportions to assess the difference in defection rates of targeted and non-targeted customers before and after the intervention. The research finds that the use of closed loop satisfaction measurement reduces customer defections (by 40%, p>.001). Further, the research finds that the primary reduction is for non-targeted customers rather than for targeted customers, contrary to expectations. The research also provides additional support for the 'service recovery paradox' wherein customers who are less-than satisfied who are satisfactorily resolved have reduced defection rates compared to customers that are satisfied (by 47%, p=.016). The primary limitation of the research is its reliance on data from a single company. Another limitation is the potentially confounding impact of the Great Recession on defections during the study period, which could threaten the validity of the analysis. Consequently, additional tests were performed to control for this and other potentially confounding factors. These tests show that the Great Recession and the host company's cost cutting reactions did impact defections and therefore data from these periods were eliminated from the analyses. The primary theoretical contributions are the use of actual customer defections to measure the impacts and the use of a proactive rather than a reactive intervention. The contribution from a practitioner perspective is the relatively low cost of this intervention for improving customer retention.
| Identifer | oai:union.ndltd.org:pdx.edu/oai:pdxscholar.library.pdx.edu:open_access_etds-1220 |
| Date | 01 January 2011 |
| Creators | O'Connell, Michael Thomas |
| Publisher | PDXScholar |
| Source Sets | Portland State University |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | Dissertations and Theses |
Page generated in 0.002 seconds