Frustration-Based Promotions: Field Experiments in Ride-Sharing

Maxime C. Cohen (), Michael D. Fiszer () and Baek Jung Kim ()
Additional contact information
Maxime C. Cohen: Desautels Faculty of Management, McGill University, Montreal QC H3A 1G5, Canada
Michael D. Fiszer: Via Transportation Inc., New York, New York 10013
Baek Jung Kim: Sauder School of Business, University of British Columbia, Vancouver, British Columbia V6T 1Z2, Canada

Management Science, 2022, vol. 68, issue 4, 2432-2464

Abstract: The service industry has become increasingly competitive. One of the main drivers for increasing profits and market share is service quality. When consumers encounter a bad experience, or a frustration , they may be tempted to stop using the service. In collaboration with the ride-sharing platform Via, our goal is to understand the benefits of proactively compensating customers who have experienced a frustration. Motivated by historical data, we consider two types of frustrations: long waiting times and long travel times. We design and run three field experiments to investigate how different types of compensation affect the engagement of riders who experienced a frustration. We find that sending proactive compensation to frustrated riders (i) is profitable and boosts their engagement behavior, (ii) works well for long waiting times but not for long travel times, (iii) seems more effective than sending the same offer to nonfrustrated riders, and (iv) has an impact moderated by past usage frequency. We also observe that the best strategy is to send credit for future usage (as opposed to waiving the charge or sending an apologetic message).

Keywords: ride-sharing; field experiments; quality management; service operations (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2021.3991 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:4:p:2432-2464

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().