Differentiating the effects of gratitude and transactional satisfaction on post-complaint consumer behavior: the moderating role of pre-existing brand attitude Françoise Simon* Maître de conférences HuManiS, EM Strasbourg * 61, Avenue de la Forêt Noire 67085 Strasbourg Cedex, email : [email protected], Différenciation des effets médiateurs de la gratitude et la satisfaction transactionnelle sur les réponses du client réclamant : le rôle modérateur de l’attitude vis-à-vis de la marque Résumé : La recherche en marketing a montré que gratitude et satisfaction transactionnelle médiatisent l'influence des investissements de la firme lors d’une réclamation sur les intentions de réachat. Pour comprendre le rôle de ces médiateurs, nous proposons et testons un modèle dans lequel l'attitude préexistante vis-à-vis de la marque modère leurs effets sur la réponse du consommateur réclamant. Nos résultats mettent en évidence le rôle modérateur négatif de l'attitude préexistante sur la relation entre la satisfaction et réponses du consommateur. A l’inverse, les évaluations antérieures de la marque n'affectent pas le processus psychologique par lequel la gratitude se transforme en réciprocité. Mots-clés : réclamation, gratitude, satisfaction, amplification, attitude préexistante Differentiating the effects of gratitude and transactional satisfaction on post-complaint consumer behavior: the moderating role of pre-existing brand attitude Abstract: Consumer research has shown that both gratitude and transactional satisfaction mediate the influence of complaint investments on repurchase intent. To better understand the role of these mediators, we propose and test a model in which pre-existing brand attitude moderates the effects of gratitude and transactional satisfaction on post-complaint performance out comes. Our findings provide support for the negative moderating role of pre-existing brand attitude on the relationship between transactional satisfaction and performance outcomes. Conversely, prior brand evaluations do not affect the psychological process by which feelings of gratitude are transformed into post-complaint reciprocal behaviors. Keywords: service recovery, gratitude, satisfaction, amplification, pre-existing brand attitude. Differentiating the effects of gratitude and transactional satisfaction on post-complaint consumer behavior: the moderating role of pre-existing brand attitude Introduction The post-complaint behavior of customers has received considerable attention in the marketing literature. Given that failure may drive customer-switching intentions, understanding customers’ perceptions of complaint handling is a relevant issue because the successful handling of complaints may lead to customer retention, which, in turn, will affect company profitability (e.g., McCollough et al. 2000). Companies’ possible responses to complaints encompass different types of actions that are aimed at maintaining customer relationships. Research shows that these relationship investments have a direct impact on satisfaction with complaint handling (SATCOM), and early research established that SATCOM fosters positive performance outcomes; i.e., SATCOM increases repurchase intentions and positive word of mouth (WOM). The managerial relevance of complaint handling is reflected by a vast stream of academic research on the mediating role of transactional satisfaction (e.g., Orsingher et al. 2010). Building on gratitude-based reciprocation theory (Morales, 2005; Palmatier et al., 2009), recent research has developed a relational complementary approach to complaint handling by showing that gratitude also mediates the influence of complaint relationship investments on repurchase intent (Simon, 2013). Gratitude, which is defined as the short-term emotional appreciation of benefits received, is accompanied by a desire to reciprocate, which results in an enhanced effectiveness of relationship investments. Because complaining customers are likely to develop a particular awareness of the efforts exerted by customer service in their favour, they are good candidates for becoming grateful and engaging in reciprocal behaviors. 1 However, little is known about the psychological mechanisms underlying the mediating effects of both gratitude and SATCOM on post-complaint performance outcomes. The present study addresses this void in marketing literature by examining the moderating role of preexisting brand attitude. Drawing on the amplification school of thought, which argues that prior positive brand evaluations can amplify customers’ unfavorable responses to brand failures, this study proposes a model that differentiates the mediating roles of SATCOM and gratitude for the influence of complaint relationship investments on customer behavior. Based on the results of a survey that examined naturally occurring responses among customers who recently experienced a failure, this model was estimated with structural equation modelling. This study extends the existing literature on recovery by providing sound evidence of the differentiated mediating effects of both gratitude and SATCOM on post-complaint performance outcomes. The study also offers new insights into how companies can improve the efficiency of service recovery. 1. Development of the hypotheses 1.1. Outcomes of perceived relationship investments In the marketing literature, a perceived relationship investment is defined as a customer’s perception of the extent to which a brand devotes resources and efforts to maintaining and enhancing its relationship with regular customers (De Wulf et al. 2001, p. 35). In the context of service recovery, complaint relationship investments refer to any irrecoverable resources in which companies invest to maintain relationships, including time, attention, facilitation, psychological compensation as apology or additional costs of the failure that exceed the purchase price (e.g., Davidow 2003; Gelbrich and Roschk 2011). Due to their situational involvement and their expectations of fairness, complaining customers are assumed to be highly sensitive to managerial complaint relationship investments. Therefore, the recognition 2 of a company‘s effort during the complaint handling process may lead the customer to attribute good motives to that company or its representative. Because gratitude is the affective response triggered by the perception that one is the beneficiary of another source’s intentionally provided benefits (e.g., McCullough et al. 2001; Emmons 2004), perceived complaint relationship investment may lead a customer to have subsequent feelings of gratitude toward the company. The occurrence of SATCOM can be explained by the perceived performance in complaint handling. Several studies have shown the positive influence of perceived performance on satisfaction in a recovery context (e.g., Hess et al. 2003). A number of perceived complaint relationship investments significantly reflect perceived performance and are likely to contribute to SATCOM as evidenced by previous empirical research (e.g., Tax et al. 1998; Gelbrich and Roschk 2011). H1: The perceived complaint relationship investment has a positive influence on customer gratitude toward the company. H2: The perceived complaint relationship investment has a positive influence on SATCOM. 1.2. Outcomes of gratitude Empirical research in social psychology consistently supports the propositions that intentionally provided benefits induce gratitude and that gratitude increases compliance (e.g., Goei and Boster 2005; McCullough et al. 2001). Prior studies investigating the outcomes of gratitude in consumer contexts have shown that consumers that are grateful toward a company tend to engage in reciprocal behaviours that reflect commitment patterns, which include repurchasing that company’s products and spreading positive WOM (e.g., Palmatier et al. 2009; Soscia 2007; Simon, 2013). Therefore, post-complaint customers who experience 3 feelings of gratitude are expected to act on their desires to repay the company with such reciprocal behaviours. H3a: Gratitude positively influences repurchase intent. H3b: Gratitude positively influences positive WOM intent. 1.3. Outcomes of SATCOM When applied to post-complaint behaviour, research on satisfaction has found that customers who are satisfied with complaint handling engage in positive WOM and tend to repurchase (e.g., Orsingher et al. 2010). Additionally, positive WOM intent has been shown to be an antecedent of repurchase intent, which suggests that individuals tend to behave in accordance with their cognitions (e.g., Szymanski and Henard 2001). Therefore, we posit the following hypotheses as a replication of previous research: H4a: SATCOM positively influences repurchase intent. H4b: SATCOM positively influences positive WOM intent. H4c: Positive word of mouth intent positively influences repurchase intent. 1.4. Moderating effects of pre-existing brand attitude. Pre-existing brand attitude represents a comprehensive integration of cognitive and affective evaluations pertaining to the brand object (Petty et al., 1997), thus pre-existing brand attitude encompasses an array of perception measures including past experience and relationship quality. Initial service research posits that positive brand evaluations lead customers to respond more favorably to most recovery attempts (e.g., Hess et al. 2003; Tax et al. 1998). However, recent work challenges the buffering view of positive associations with the brand object. Failures have been reported to be more damaging to strong relationships involving favored brands, and brand commitment shows obvious signs of decline despite subsequent 4 recovery attempts (Aaker et al. 2004). In such cases, consumers do not discount the failure transgression that is inconsistent with their brand expectations and are thus unlikely to benefit from complaint handling to the same extent as consumers whose brand evaluations were less favorable. Accordingly, commitment to a high equity brand compared to one of low equity is more adversely affected by a performance lapse and the subsequent recovery interaction (Roehm and Brady 2007). Thus, positive pre-existing brand evaluations appear to alter the favorable consequences of SATCOM because of the cognitive elaboration of inconsistencies between past brand evaluations and the occurrence of brand transgressions. Consistent with the amplification school of thought regarding favorable brand associations (e.g., Aaker et al. 2004), we postulate that pre-existing brand attitudes negatively moderate the relationship between SATCOM and commitment patterns. H5: The positive relationship between SATCOM and repurchase intent and SATCOM and positive WOM intent, respectively, will be lower for individuals with high pre-existing brand attitudes compared to those with low pre-existing brand attitudes. Assuming that the influences of gratitude and SATCOM on performance outcomes rely on different psychological mechanisms, we expect that pre-existing brand attitude will not alter the relationship between gratitude and targeted outcomes. According to social psychology, gratitude-based reciprocal behaviors arise from a sense of obligation to repay that goes beyond pro-social norms and is intrinsically emotionally driven (Emmons 2004; Watkins et al. 2006). Additionally, these behaviors do not require previous relationships and primary expectations regarding their target and can easily extend to strangers (Bartlett and de Steno 2006). For example, even newly developed social connectedness can make a grateful consumer responsive to the needs of a salesperson (Dahl et al. 2005). From this observation, it is possible to conjecture that gratitude generates reciprocal behaviors without heavily relying on 5 previous evaluations of the target. As a potential consequence, pre-existing brand attitude is unlikely to alter the process by which gratitude-based reciprocal behaviors are spontaneously triggered by the perception of the efforts of customer service. 2. Method 2.1. Data collection and sample A survey approach was employed to examine naturally occurring responses among customers who had recently experienced a service or product failure and an associated complaint handling. Data were collected from a sample of undergraduate business students enrolled in a research methods course. The nature of the research model and the detailed research topic were neither mentioned nor suggested. We collected data for our study in two steps. In the first step, students were asked to report any dissatisfaction they had experienced as consumers during an 8-week period. In the second step, students were asked to submit complaints against companies that had dissatisfied them. The students completed a series of scales designed to assess their perceptions of the complaint handling immediately after they executed their interaction with the company’s customer service department. The companies were contacted via either phone or online channels. If no response was received after three separate calls over a two-minute period or after a period of 15 days for phone and online channels, respectively, the complaint was considered ‘unanswered’. In total, 144 students including 62 males (43%) and 82 females (57%) completed the survey. The students were between 21 and 27 years old. The students submitted 440 complaints, and 360 complaints were answered. Regarding the nature of the failures, the respondents mentioned the following types of dissatisfactions: employee difficulty in meeting the specific needs of, and attending to, the consumers (33%), a lack of product quality (30%), delays or 6 service breakdowns (19%), product information and website design inadequacies (11%), and other causes (7%). Our research design permitted a large variety of sector activities to be represented, and these activities included the following: convenience goods (18%), telephone/Internet (16%), financial services (14%), retail (12%), transportation (12%), automotive (9%), and others (19%). On average, 2.5 complaints per respondent were answered, and the complaints varied significantly in terms of the investigated company, type of failure and category of product. The independence of the data across respondents was confirmed with ANOVA tests. 2.2. Measures Participants responded to a series of multi-item nine-point Likert measures that ranged from “completely disagree” (1) to “completely agree” (9) to capture the investigated constructs. Gratitude was measured with the scale of Goei and Boster (2005), which uses items such as “I feel grateful to this company”. To measure perceived relationship investments regarding the complaint encounters, we used the scale of Palmatier et al. (2009) as extended to service customer targets. All other scales have been used in prior studies that report on their reliabilities and validities; i.e., SATCOM (Maxham and Netemeyer 2002), repurchase intent (Maxham and Netemeyer 2002), positive WOM intent (Chea and Luo 2008) and brand attitude (Thomson et al. 2005). 3. Results 3.1. Measurement model We evaluated the psychometric properties of the constructs by conducting confirmatory factor analysis (CFA). The fit indexes indicated that the measurement model produced an adequate fit to the data with a χ2 (155) = 326.72 (p<.001), comparative fit index (CFI) = .98, 7 incremental fit index (IFI) = .98, Tucker–Lewis index (TLI) = .98 and root mean square error of approximation (RMSEA) = .056. All factor loadings were also significant (p<.001), which supports the convergent validity. Cronbach’s alphas were .90 or above and thus demonstrated good reliability. Additionally, we confirmed the discriminant validity because the average variance extracted exceeded the square of correlations between constructs. We list the descriptive statistics and correlations in Table 1. Table 1: Descriptive statistics and correlations Constructs Mean SD AVE 1 2 3 4 5 1. Perceived complaint relationship investment 5.36 2.07 .89 0.96 2. Gratitude 3.63 2.16 .92 .70 .97 3. Satisfaction with complaint handling 5.56 2.27 .95 .87 .65 .96 4. Repurchase intent 4.92 1.92 .87 .52 .57 .45 .95 5. Positive word of mouth intent 2.69 1.76 .90 .60 .34 .59 .41 .97 6. Pre-existing brand attitude 5.62 1.54 .83 .23 .33 .16 .55 .10 ns 6 .95 Notes: Correlations are reported below the diagonal; Cronbach‘s alphas are reported on the diagonal. ns: correlation not significant; p<.001 for all other correlations. AVE = average variance extracted. 3.2. Structural model The hypothesised model was estimated to assess path and explained variance estimates. This model yielded a good fit with χ2 (97) = 233.76 (p<.001), CFI = .98, IFI = .98, TLI = .98 and RMSEA = .063. The hypotheses were supported at p<.01 with the exception of hypotheses H3b and H4a, which concern the direct paths between gratitude and WOM intent and SATCOM and repurchase intent, respectively. These paths were not significant at p<.05. Taken together, these results show that the perceptions of complaint relationship investments were associated with elaboration of both gratitude and SATCOM on the part of the customers. In turn, gratitude led to repurchase intent, whereas satisfaction triggered positive WOM intent. 8 As WOM intent significantly influenced repurchase intent, we content that WOM intent fully mediated the effects of SATCOM on repurchase intent because the path between SATCOM and repurchase intent was not significant. Overall, the model explained 76% of the variance in SATCOM, 51% in gratitude, 37% in purchase intent, and 35% in WOM intent. In sum, our hypothesised model was mostly supported and exhibited significant power in explaining the variance in both final variables. Although we did not find any theoretical support for the hypothesis of a causal relationship between SATCOM and gratitude, these two variables may be statistically correlated. We tested an alternative model in which we included a direct path between SATCOM and gratitude to examine the hypothesis that a causal link exists between these variables. This path was not found to be significant (.16, p>.05), which confirms the relevance of the hypothesised model. Given that the measures of both the independent and dependent variables came from the same source, the strength of the observed relationships between the constructs in our model may have been overstated due to common variance. We controlled for the portion of the variance in the indicators that was attributable to obtaining the measures from the same source by reestimating the structural model. The re-estimation included a single-source first order factor that was added to the indicators of all of the latent variables in the model (Podsakoff et al., 2003). To achieve model convergence (e.g., Rindfleisch et al. 2008), we specified all loadings of the method factor as the same size, which reflects the assumption that CMV affected all items equally. We found that the estimates of our structural model remained unchanged after we introduced the method factor. This result suggests that method variance did not materially affect our conclusions. 3.3. Moderation analysis 9 We tested the moderating effects of pre-existing brand attitude with hierarchical moderated regression analyses (Cohen et al. 2003). All scales were averaged to form a composite, and the constructs were mean-centred to avoid any potential threat of multicollinearity when calculating the interaction terms. Multicollinearity was not a problem because the variance inflation factor (VIF) scores were well within the cut-off of 10. The Durbin-Watson check for independence of error terms was not significant. We also performed the Levene test for homoscedasticity for the dependent variable’s uniform variance across the independent variable, and this test was not significant (p>.10). The results of our regression analyses are reported in Table 2. Table 2: Hierarchical moderating regressions results Dependent variables Word of mouth intent Repurchase intent Model 1 tB value Main effects Gratitude (G) SATCOM (S) Positive WOM (W) .46** 0.02 .26** 8.28 0.28 5.06 Model 2 tB value .45** 0.02 .26** 8.16 0.25 5.02 Model 1 tB value -0.05 .60** -0.86 10.5 Two-way interactions with pre-existing brand attitude (PEBA) PEBA x S -.12* -2.04 PEBA x G -0.03 -0.48 PEBA x W -0.07 -1.35 Model F Total R 2 Adjusted R2 2 R change Model 2 tB value -0 .58** -0.63 10.16 -.14** 0.09 -2.68 1.71 70.14* * 0.37 36.74* * 0.38 85.39* * 0.32 45.12* * 0.34 0.37 0.37 0.32 0.33 0.013 0.01 Notes: Standardized regression coefficients are reported. * p< .05, **p<.01 For each dependent variable, Model 1 concerns the hypothesised main effect variables, and Model 2 includes the main effects and the hypothesised two-way interaction terms (see Table 10 2). The regression analyses of Model 1 confirmed the results from the structural models. Regarding repurchase intent, adding the three interaction variables (i.e., pre-existing brand attitude x gratitude, pre-existing brand attitude x SATCOM, pre-existing brand attitude x WOM intent) to Model 2 increased the R2 value by .13 (∆F=36.74, p<.01). The interaction term between pre-existing brand attitude and SATCOM was significantly negatively related to repurchase intent. This finding suggests that when pre-existing brand attitude was high, the positive effects of SATCOM on repurchase intent were lower. In contrast, no statistically significant interaction was found between pre-existing brand attitude and gratitude. Regarding WOM intent, the regression analysis revealed a similar pattern of interaction effects, which supports H5. When the interaction terms (i.e., pre-existing brand attitude x gratitude and preexisting brand attitude x SATCOM) were entered into model, the R2 value increased by .14 (∆F=45.12, p<0.01). The pre-existing brand attitude x SATCOM interaction term was significant and negatively related to positive WOM intent. In contrast, the pre-existing brand attitude x gratitude term was not significant; the attitudinal variable did not moderate the relationship between gratitude and WOM intent. To interpret the nature of the significant interactions, we plotted the predicted outcome values for different levels of the interacting variables (Cohen et al. 2003). We fixed high, medium, and low values as one standard deviation above the mean, equal to the mean, and one standard deviation below the mean, respectively. The regression lines showing the significant interaction between pre-existing brand attitude and SATCOM on each outcome are depicted in Fig. 1. Regardless of the level of pre-existing brand attitude, SATCOM was positively related to each outcome. For low levels of SATCOM, repurchase intent was negatively related to pre-existing brand attitude, which suggests that the amplifying effect of previous brand evaluations operates fully under low satisfaction conditions. Regarding the middle and high 11 levels of SATCOM, the highest repurchase intent values were achieved when pre-existing brand attitude was at a medium rather than a high level, and its low level led to the lowest values of repurchase intent. Thus, the amplification phenomenon was attenuated under high satisfaction condition for repurchasing. In contrast, the amplification phenomenon was fully effective under this condition when WOM was considered. Regarding the low and middle levels of SATCOM, pre-existing brand attitude played only a minor role in the elaboration of WOM intent. Overall, the regression plots revealed that the amplification effect of prior brand attitude was particularly potent under conditions of low satisfaction when repurchasing was examined and under conditions of high satisfaction when positive word of mouth was examined. 4. Conclusion This study examined the mediating roles of gratitude and SATCOM in conveying the influence of perceived complaint relationship investments on performance outcomes, thus extending the earlier work of Simon (2013). Gratitude was found to mediate the influence of perceived complaint relationship investment on repurchase intent and had no influence on WOM intent. Consistent with previous research on SATCOM, this study also shows that positive WOM intent mediated the influence of transactional satisfaction on repurchase intent. Overall, our study indicates that grateful post-complaint customers are willing to repurchase, and those who are satisfied with the complaint handling are inclined to recommend the failing firm to others. 12 Figure 1: Interaction between SATCOM and pre-existing brand attitude Additionally, this research suggests the existence of substantial differences in the psychological mechanisms of each mediator. Consistent with the amplification school of thought, our findings provide support for the negative moderating role of pre-existing brand 13 attitude on the relationship between SATCOM and performance outcomes. To the best of the authors' knowledge, this is the first report to examine a pre-existing brand attitude-based approach to repurchase and WOM responses in a recovery context. This form of the lovebecomes-avoidance effect represents another piece of evidence that shows that strong relationships can “backfire” on firms after a poor recovery (Aaker et al., 2004). Thus, our findings indicate that pre-existing brand attitude may be useful in a number of recovery studies involving satisfaction-based models. Conversely, prior brand evaluations do not affect the psychological process by which feelings of gratitude are transformed into post-complaint reciprocal behaviors, which suggests that the gratitudinal route to reciprocity is emotionally driven independently of considerations about the inconsistencies between previous brand evaluations and current brand failures. In highlighting the role of post-complaint gratitude in inducing repurchasing intent, our findings have important implications for companies. Most notably, our findings suggest that service customer managers should encourage and train their employees to develop discretionary behaviors in servicing customers that extend beyond formal role requirements because gratitude depends on the perception of singular efforts exerted by the concerned company. Service customer managers should also ensure that they are able to control for customer gratitude much as they do for SATCOM; e.g., by issuing surveys immediately after complaint handlings. Moreover, to prevent “love becomes avoidance” situations, firms should also develop recovery procedures that are specifically designed to satisfy the needs of high brand attitude customers. Firms should make special efforts to identify these customers, and insure that they are provided with relationship investments that are likely to generate feelings of gratitude. Whereas transactional satisfaction fails to repair their grievances, discretionary inputs can effectively compensate the lesser efficiency of role-based complaint investments. 14 Although this study expands our knowledge of complaint handling efficiency, the use of a student sample is a limitation because the students may have had a more limited scope of consumption experiences than other customer segments. Another limitation is that respondents were asked to complain. Even if their complaints arose from actually experienced failures, it is possible that their emotional states were weaker than those of spontaneous consumers. Additionally, this study focused on a single interaction with customer service representatives. Therefore, future research might examine the persistence and correlates of post-complaint gratitude over time. Another promising avenue for research would be to investigate whether different types of relationship recovery investments are equally able to elicit gratitude in complaint handling. In that respect, researchers should consider interactional, procedural and distributive recovery investments and assess their different contributions to both gratitudinal and transactional routes to loyalty. 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