Preventing Consumer Grudges across the Age Spectrum: Time Is of the Essence
Aron, David, Gordon, Geoffrey, Judson, Kimberly, Aurand, Timothy, Domagalski, Sandra, Academy of Marketing Studies Journal
Is there such a thing as a long-standing grudge? Based on personal experiences, the authors can definitively say yes. Consider the following: In 1995, one of the authors' friends (who will be called Mike) became Treasurer of a local youth baseball program. As part of his responsibilities, he was charged with procuring uniforms and equipment for more than 600 youngsters. A day before the season opener, three children were added to league rosters. This meant that Mike had to stop by the local sporting goods store which supplied the organization with all uniforms and equipment.
After picking up the uniform pants needed to equip the new players, Mike patiently waited while the store manager was busily fielding phone calls and customer returns. Mike finally reached the front of the line only to have the store manager, frazzled by the amount of people he had to deal with that day, inform Mike that he would have to return to the store the next day if he wanted to charge the cost of the uniform pants to his league's account. He told the store manager that he would just go to a checkout line and pay cash for the uniform pants. At that point, the store manager yelled over to his three checkout people instructing them not to wait on Mike. Incredulous and angered by now, Mike asked the store manager why he would not be allowed to pay cash for the pants. The manager responded that it would create bookkeeping problems for him if Mike were to return the pants. Mike left the store in a rage vowing never to return and proceeded to open up a league account at a rival store that very same day.
What was the cost to the sporting goods store of their store manager "having a bad day" and taking it out on a customer? Mike is still the Treasurer of his neighborhood Little League and annually spends upwards of $15,000 on items that had previously been purchased at the first store. Furthermore, Mike succeeded in convincing several other local sports leagues to switch their business away from the store. Add in the lost sales from individuals such as Mike and his friends and it can be estimated that over $25,000 in annual purchases are being lost due to this one incident. Multiply this amount by 13 years worth of business and the price of the store manager's indiscretion can be set at upwards of $325,000...and still counting.
Events like the above are not isolated or unusual as they relate to the amount of revenue that could be lost by offending companies. Companies such as Harley Davidson figure the lifetime value of lost customers is more than $200,000, based on the accumulated product, service, and referral sales that go elsewhere (Mackinnon 2005). Depending on the restaurant format, it can be estimated that lifetime revenues lost from "forever-gone" customers and their dining friends can range from $12,000 for a Taco Bell customer (Kotler 2001) to over $100,000 for an upscale restaurant. In the grocery industry, it is estimated a lost customer can cost the offending grocer up to $50,000 in non-retrievable revenues over a ten year period (Javaigi, Whipple, Ghosh & Young 2005). Remember, even a daily average purchase of $3 at a coffee shop can add up to $5,000 per lost customer over a 5 year period. Consumers are more empowered than ever to express their displeasure toward businesses by holding grudges, withholding their patronage from offending organizations, and then making "grudge purchases" from rival firms, on behalf of his Little League.
The current research has four main objectives. The first objective is to revisit the current knowledge on consumer grudgeholding against businesses. The second objective is to examine using empirical data the causes of consumer grudgeholding, the variety of responses enacted by the grudgeholders against their targeted organizations, and the impact of these responses. The third objective is to determine whether differences between age groups exist as it relates to the abovementioned variables and their impact on the firm. …