A Rejection-Based Model of Partial Service Termination and its Impact on Unprofitable Customers

Mathieu Béal (), Charlotte Lécuyer, Caroline Bayart and Denis Clot
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Mathieu Béal: EM - EMLyon Business School
Charlotte Lécuyer: IAE - UCA - Institut d'Administration des Entreprises - Clermont-Auvergne - UCA - Université Clermont Auvergne, CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA - Université Clermont Auvergne
Caroline Bayart: CHROME - Détection, évaluation, gestion des risques CHROniques et éMErgents (CHROME) - Université de Nîmes - UNIMES - Université de Nîmes
Denis Clot: LSAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon

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Abstract: This research examines partial service termination (PST) as a strategy that allows companies to deliberately cease providing unprofitable customers with certain services while maintaining relationships with those customers. Through a preliminary qualitative study, a quasi-experiment, and two scenario-based experiments, this research contributes to the intentional service failures literature by demonstrating negative customer reactions to PST. First, the results showed that PST increases the probability of customers terminating their other contracts by 2.14 times while increasing their propensity to spread negative word-of-mouth (nWOM). Second, using belongingness theory, we identify the key underlying psychological process behind PST: customers interpret PST as a threat to their need to belong in relationships with companies, which is reflected in their feelings of rejection and anger. Third, relationship breadth and three recovery tactics (i.e., monetary compensation, explanations, and support in finding alternatives) were identified as contingent variables that buffer the negative consequences of PST. Customers with high relationship breadth are less likely to terminate other contracts and bad-mouth following PST. This is likely because high relationship breadth reduces perceived rejection following PST. Furthermore, a combination of monetary compensation, explanations, and support in finding alternatives represents the most efficient recovery approach to reduce anger.

Keywords: Termination strategies; Unprofitable customer management; Perceived rejection; Relationship breadth; Service recovery (search for similar items in EconPapers)
Date: 2025-02-14
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Published in Journal of Service Research, inPress, 21 p. ⟨10.1177/10946705241304191⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04964899

DOI: 10.1177/10946705241304191

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