How customers react to service unfairness? Moderating roles of interpersonal similarities on experience of envy and benign envy

Abstract

The “Customer Pyramid” and other similar customer management concepts advise firms to prioritize customers and treat them differently. Yet, offering preferential treatment to selected customers is potentially controversial. It implies a relatively inferior treatment to other customers and elicits the perception of service unfairness. In this study, we employ the social comparison theory to explicate the underlying process of how service unfairness impacts non-recipients’ behaviors. Specifically, we examine (1) impacts of service unfairness on the customers’ emotional experiences of envy and benign envy, (2) the differential effects of envy and benign envy on the non-recipients’ behaviors toward the preferentially treated customers (spreading negative word of mouth) and the sources of unfairness (cooperation with the salesperson and repurchase intention toward the store), and (3) the boundary conditions of the non-recipients’ similarities with those preferentially treated customers and the salesperson on the impacts of service unfairness. We tested our framework with laboratory experiments and a survey study in the context of clothing retail stores of 331 customers. Results support the roles of envy and benign envy in mediating the impact of service unfairness on those non-recipients’ behavioural outcomes. Specifically, if service unfairness elicits envy, it will increase the non-recipients’ negative WOM mouth toward those preferentially treated customers, reduces their repurchase intention, and lessens their cooperation with the salesperson. However, witnessing a preferential treatment received by others could be motivating for the non-recipients because they would also have the chance to enjoy such preferential treatment in the future (i.e., experience of benign envy). Our findings show that if service unfairness increases non-recipients’ experience of benign envy, it will motivates them to repurchase more, be more cooperative with the salesperson, but with no impact on the act of spreading negative WOM. Moreover, findings on the moderation influence of customers’ similarity with other customers and the salesperson further shed insights about the conditions for the differential impacts of service unfairness on ones’ experiences of envy and benign envy. Our study offers important implications on how firms can benefit from implementing customer management strategies involving differential treatments while minimizing their drawbacks.