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Article Excerpt
Past research in the retailing and services marketing literatures has focused on the importance of creating and maintaining customer satisfaction (Anderson and Mittal, 2000; Berry and Bendapudi, 2003; Fournier and Mick, 1999; Oliver et al., 1997). One particularly important aspect of the customer satisfaction process that has received significant attention recently is service recovery, which is defined as the process by which the firm attempts to rectify a service- or product-related failure (Maxham and Netemeyer, 2002). Retailer responses to failures are shown to reinforce customer relationships when handled properly (Blodgett et al., 1997), and/ or aggravate the negative effects of the failure when mismanaged (Hoffman et al., 1995; Krapfel, 1988). The behaviors and feelings of the retail salesperson are of critical importance during the service recovery process. The retail salesperson frequently represents the final (or only) point of contact between the retail firm and the customer, and the service recovery efforts he/she enacts can have an enormous impact not only on immediate customer satisfaction, but, importantly, on service quality perceptions and future patronage intentions (Pugh, 2001; Bitner et al., 1994, 1990).
One type of service recovery that has emerged as particularly salient to retailers is the handling of product returns. Returns transactions provide a critical point of contact between the retail firm and the customer, and return volumes can represent anywhere from 6-40% of sales for a given retailer. Return transactions also represent a prime opportunity for the retailer to recuperate assets and customers that might otherwise be lost (Stock, 1999; Rogers and Tibben-Lembke, 1999; Dunne et al., 2001).
In general, most research addressing product returns has assumed that the customer has a legitimate reason for returning a product, and/or the retailer should accept returns with little or no questions asked. However, anecdotal accounts and articles in the business press refute this perceived legitimacy perspective (Krapfel, 1988; Steinauer, 1997; Tomlinson, 2002; Industrial Relations Review & Report, 1994). Retail salespeople who handle returns will readily share stories about outrageous customer behavior. For example, some customers return clothing items that are stretched or ripped at the seams, claiming poor workmanship, when in fact it is clear that the article was simply too small (Dacy, 1994). Other retailers and salespeople cite "boomerang shopping" (c.f., Neuborne, 1996) or "renting" as a major issue; that is, the customer purchases items that are intended from the outset to be used and then returned at a later date. One customer practicing boomerang shopping openly described Wal-Mart as being the "best rent-a-center in the country," as he recalled his purchase of a snow-blower during the autumn months and its subsequent return in the spring after the snow thawed (Neuborne, 1996). These and other types of questionable customer behaviors related to returns, such as receipt fraud, price arbitrage, and the return of stolen merchandise (Speights and Hilinski, 2005), are estimated to cost the retail industry over $13 billion per year (Rogers et al., 2005), placing returns abuse in a similar category with shoplifting and returned checks in terms of lost value to retailers.
Unfortunately, the retail salesperson is frequently "caught in the middle," between satisfying customer desires and enforcing store policy. The salesperson may feel pressured to ignore customer malfeasance and provide "service with a smile," even in the face of overt or blatant attempts by the customer to take advantage of policies that are originally enacted with his/her best interests in mind (Tomlinson, 2002). The salesperson may suspect that the customer is blatantly misleading or even providing false information. It stands to reason that illegitimate or devious acts by the customer meant to circumvent store policies could eventually result in a negative emotional reaction by the retail salesperson.
In the marketing domain, consumer attitudes toward products, services, employees, retail settings, and transactions have played a dominant role in research for over 25 years. However, the attitudes of customer contact personnel--salespersons, retail clerks, service representatives, and marketing management--are much less understood. Our study addresses this deficiency in the literature by introducing attitude toward the customer as a new concept of interest. Attitude toward the customer (hereafter, Ac) is defined herein as the customer contact's predisposition to respond favorably or unfavorably toward a particular customer during an exchange episode. This definition is consistent with other attitudinal constructs studied in marketing (e.g., attitudes toward the advertisement or brand, per Mitchell and Olson (1981)).
This study seeks to answer an important question related to the attitude toward the customer concept: Does the behavior of customers during a service recovery episode influence the retail salesperson's attitude toward the customer? Specifically, Ac is examined in this article within a common and extremely important service recovery context: the retail product returns process.
This research explores the salespersons' Ac within the retail returns context. Specifically, this article examines institutional determinants of Ac under conditions where the customer is perceived as being in breach of the implicit contract governing retail exchange. The following sections of the article (1) introduce the Ac construct, (2) test and evaluate a model useful for predicting Ac in an experiment conducted within the retail returns context, based on relational contracting and perceived legitimacy/institutional theory, and (3) provide discussion and implications of the study for retailers and academics interested in further improving the returns-related service recovery effort.
LITERATURE REVIEW AND HYPOTHESES
The Problem of Retail Returns
In the U.S. and some other parts of the world, when customers are dissatisfied with a purchase they have made, the retailer will "guarantee" the product by allowing the customer to return it within reasonable guidelines. The customer can exchange it for a similar or different item, for store credit or, in some cases, for a full refund (Dunne et al., 2001). Liberalized retail returns represent an outgrowth of the focus on customer satisfaction, the relationship value of the customer, and customer relationship management initiatives. Part of this emphasis has resulted from the increased attention to the economic benefits firms accrue with the retention of loyal customers (e.g., Reinartz and Kumar, 2003; Stahl et al., 2003). Clearly, returns are an important issue for retailers; 91% of consumers interviewed for one study considered return policies and processes as an important factor in their decision about where to make a purchase (see Schuman, 2004).
However, some retailers are becoming concerned that they take the service recovery effort too far. There is a trend toward "no-questions-asked," extremely liberalized returns policies where the customer can return nearly anything, nearly anytime, and in nearly any condition (Autry, 2005; Dacy, 1994; Rosenbaum and Kuntze, 2003). Not surprisingly, many customers do just that, to the detriment of both the retailer and the retail salesperson who has worked hard to serve them. While understanding the returns process is of paramount importance, the role of the salesperson in the retail returns process has generally been ignored both in the marketing literature and in retail practice.
Attitude toward the Customer (Ac)
Attitude toward the customer is an underdeveloped area of marketing. However, it is apparent that an employee's reaction to a customer can be influenced by their evaluation of an interaction with a customer, over and above their feelings about the sales transaction itself. We propose that a specific type of attitude object, then, is the customer him/herself and is based on the salesperson's reaction to a particular interaction. Research has demonstrated repeatedly that attitudes toward an ad or brand serve as a significant predictor of product evaluations (c.f., Burton and Lichtenstein, 1988; Cox and Cox, 1988; MacKenzie and Lutz, 1989; MacKenzie et al., 1986; Mitchell and Olson, 1981; Mittal, 1990; Muehling and Laczniak, 1988; Shimp, 1981). Accordingly, it is reasonable to assume that the nature of the particular interaction between the customer contact personnel and the customer would predict an evaluation of the customer. This evaluation is critical for retailer performance, as evaluations of customers have been linked to sales effectiveness (Bowen and Schneider, 1985; Evans et al., 2000).
Theoretical Foundations
The examination of customer behaviors during service recovery and commensurate salesperson attitudes about the customer is grounded in institutional and relational contracting theory. The research framework depicting the focal theoretical relationships is presented in Figure I. Specifically, two postulates are offered and utilized related to the exchange environment encompassing the customer-retail salesperson relationship. First, we postulate that retail exchanges are institutionalized, i.e., governed by structural assumptions stipulating that the actions of either party are desirable, proper, or appropriate within a socially constructed system of norms, values, and/or beliefs (e.g., Nielsen and Rao, 1996;...
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