Why Customer Service Frustrates Consumers: Using a Tiered Organizational Structure to Exploit Hassle Costs – MSI

Working Paper

Why Customer Service Frustrates Consumers: Using a Tiered Organizational Structure to Exploit Hassle Costs

Anthony Dukes and Yi Zhu

Sep 24, 2018

Develops a game theoretical model of the complaint process in which customer claims are heard and evaluated by the CSO, and studies the micro-economic incentives of a dissatisfied customer seeking compensatory redress from a firm’s CSO. Explores the relationship between a tiered CSO and the firm’s pricing and quality decisions.

Topics

Omnichannels & Customer Journey

research recap

Customer Frustration by Design?

On average, U.S. consumers spend 13 hours year in calling queues. This game-theoretic model examines organizational incentives to make dissatisfied customers "jump through hoops". While tiered CSO structures may help firms control redress costs and screen claim, customer frustration "by design" can also damage reputation and, ultimately, erode profitability.

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