The Impact of E-Services Failures and Customer Complaints on Electronic Commerce Customer Relationship Management

Article excerpt

ABSTRACT

Handling customer complaints has become a strategic concern in electronic commerce Customer Relationship Management (e-CRM). The purposes of this study are to (a) explore the major causes of customer complaints, comparing online and in-store environments, and( b) examine how customer complaints are differently perceived based on the types of service failures. The Justice Dimensions with Complaint Handling framework proposed by Tax, Brown, and Chandrashekaran (1998) are applied in this study for the classification of e-service failure types. The data were collected from online customer feedback publicized on Internet websites and the shopping log data reported by selected consumer panels. The research identified that the impact of service failure with the justice dimension affects customers' propensity to complain in the online shopping environment. Further, the study emphasizes that successful service management is the core of e-commerce customer relationship management (e-CRM).

INTRODUCTION

Handling customer complaints and managing customer service have become crucial for Electronic Customer Relationship Management (e-CRM). Previous studies (Cho, Im, Hiltz, and Fjermstad 2002; Julta, Craig, and Bodorik, 2001; Levesque and McDougall 1996) have ascertained that successful e-CRM requires adherence to a stable and consistent strategy that focuses on the goals of maintaining customer loyalty and of using complaint handling data to solve problems and address issues raised by customers. The key e-CRM components proposed in the previous research (Cho et al. 2002) include: (a) maximizing customer satisfaction/minimizing customer dissatisfaction; (b) increasing customer loyalty; and increasing product/service quality; and (c) resolving customer complaints.

What are the major concerns of e-services? Hollowell (2002) stressed the necessity of understanding the different forms (e.g., virtual: either pure information or automated) service takes in organizations that conduct business through the Internet. With the Internet's technological advances, customers enjoy greater convenience, such as Web-based service centers where customers can ask questions regarding product information, payment issues, delivery, product returns, etc. before and after making a purchase. However, customer complaints due to faulty e-commerce transactions or service still exist. We can find such complaints on various customer feedback systems, such as www.epinions.com, www.thirdvoice.com, or www.complaints.com. Customer feedback systems not only provide a service to deliver customer complaints, but also become a source of spreading the reputation of the business, product, or service.

Based on the importance of e-CRM to improve customer satisfaction and resolve customer complaints in the online environment, the purpose of this study is to explore e-service failures that have been the major causes of customer complaints. In particular, we investigate the major causes of customer complaints in the online and in-store environments; explore different types of service failure; and measure the impact of service failure on the customer's propensity to complain. Previous studies (Cho et al. 2002) have researched major causes of customer complaints in the online and in-store environment. However, how the types of service failures that have been the major causes of customer complaints differ in the online and in the in-store environments has rarely been researched. This study used the framework by Blodgett, Hill and Tax (1997) and Tax, Brown, and Chandrashekaran (1998) to classify the types of e-service failure. This study investigates how the previous framework, called justice dimensions, will work in online environment. While past studies have collected data via surveys, this study used log data, which is collected from consumer panels, and customer feedback posted on "customer service centers," which are managed to resolve customer complaints (Cho, Im, Hiltz, and Fjermstad 2002). …