Improving customer service is more important when the economy is good than when it’s bad, according to a newly published study from Georgia State University researchers.
In a rough economy, hungry businesses sometimes try particularly hard to improve good customer service to keep the patrons they have. But that might be the wrong strategy, according to the study in Marketing Science, a journal of the Institute for Operations Research and the Management Sciences.
For service firms, it appears that it is more important to improve customer service in good times rather than bad ones, according to research at GSU’s J. Mack Robinson College of Business by Professor V. Kumar, assistant professor Nita Umashankar and PhD candidates Hannah Kim and Yashoda Bhagwat.
In analyzing data from an international airline, they found that the same improvement in customer experience bumped up revenue by 20 percent in a good economy, instead of just 10 percent in a poor economy.
The authors theorize that when times are tough we concentrate so much on prices, that we put less focus on how we are being treated.
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