Knocking Opportunities: The Impact of Damage Values on Opportunistic Customer Claiming Behavior After Service Failure

Abstract

Many firms feel obliged to reply to customer complaints and even knowingly unjustified high claims after service failures with generous compensations in order to keep customer satisfaction on a maximum level. An expanding body of literature has focused on opportunistic customer behavior reflected in customers who intentionally engage in cheating or fraudulent actions to take monetary advantages after a company’s service failure during service recovery (e.g., Wirtz and Kum 2004; Berry and Seiders 2008). However, the majority of this work is related to knowingly and incorrect reported failures which did not occur such that customers’ cheating on firms is not necessarily triggered by dissatisfaction or service failures at all (Ro and Wong 2012). Although several factors driving opportunistic customer claiming behavior have been identified (see also Baker et al. 2012)—i.e., customer-centric (e.g., customer financial greed, customer personality traits, and customer oppositional cultural model; Reynolds and Harris 2005; Andreasen 1988; Ringberg et al. 2007), firm-centric (e.g., generous redress practices and firm size; Harris and Reynolds 2003; Wirtz and McColl-Kennedy 2010), and relationship-centric drivers (e.g., low justice perceptions and one-time transactions; Wirtz and McColl-Kennedy 2010)—the impact of damage values on opportunistic claims still remains unexplored. Thus, the purpose of this research is to improve our knowledge of the underlying mechanisms of customer claiming behavior triggered by the value of damage caused by service failures. The results of three experiments detect a seemingly paradoxical behavior: The likelihood of engaging in opportunistic claiming declines with increasing damage values, whereas the magnitude of opportunistic claims rises. Further analysis reveals that these opposing effects can be ascribed to perceived risk of opportunistic claiming. This research provides important implications for a more efficient complaint management in business practices. For instance, firms could develop a classification scheme of damage values tailored to their specific businesses. For each respective type of failure value, strategies referring to different levels of generosity should be developed. For high value level situations, stricter checking routines for the assessment of claims have to be put in place. Thereby, companies should generate a sense of thinking in trade-offs between high-frequency complaints associated with relatively low amounts of fraud and, in contrast, opportunistic claims of high magnitudes which occur less frequently.References available upon request.