Perspectives Service failures and customer defection: a closer look at online shopping experiences Sohel Ahmad Introduction Although many companies have entered the world of e-commerce in the past few years, very few have been able to attain competitive advantage. In fact, a significant number of online companies have gone bankrupt ± a phenomenon often referred to in the popular press as the dotcom bust. Unrealistic expectations and use of the wrong business model have often been mentioned as the major reasons for these companies’ failures (Budzynski, 2001).

The present study, however, examines certain aspects of the online shopping experience from a consumer’s perspective. Specifically, this study focuses on how consumers react to service failures and which initiatives by the online shop can enhance service recovery. The author Sohel Ahmad is an Assistant Professor in the Department of Management, St Cloud State University, St Cloud, Minnesota, USA Keywords Shopping, Guarantees, Complaints, Customer loyalty, Online computing Abstract This study attempts to understand certain aspects of the online shopping experience from a consumer’s perspective.

In particular, this study investigates the interaction between service failure and online shops’ readiness for service recovery and the resulting impact on customer defection. The findings of the present study suggest that some online shops have severely breached a few fundamental business principles, resulting in lost customers. Specifically, this study finds that failure to institute adequate complaint management and service recovery systems contributed to customer defection.

Hence, service recovery and customer retention need to be given due importance during the service design phase, and appropriate management decisions have to be made upfront rather than after service failures occur when it may be too late. Electronic access The research register for this journal is available at http://www. emeraldinsight. com/researchregisters The current issue and full text archive of this journal is available at http://www. emeraldinsight. com/0960-4529. htm A framework of service recovery Figure 1 presents a simplified overview of service encounters and their possible outcomes.

As shown, online shops, like traditional (offline) businesses, are expected to deliver certain products and/or services to customers. Consumers are satisfied as long as online shops are able to meet or exceed services rendered compared to consumers’ expectations. While marketing shapes customers’ expectations, operations form the service delivery system so that these expectations can be met. Thus, the need for coordination between marketing and operations cannot be overemphasized. A service delivery system fails when it cannot deliver service as promised.

In such a situation, the fail point needs to be documented and the service delivery systems need to be reviewed and modified, if necessary, so as to prevent similar service failures in the future. At the same time, customers should have multiple channels to communicate their concerns. The need for multiple channels of communication is of utmost importance. In a traditional business transaction (offline), a buyer interacts with a seller. In the event of service failure, the seller can quickly take necessary measures for service recovery.

However, during online shopping, a buyer interacts with a mediating environment (Wolfinbarger and Gilly, 2001) that may not detect service failure. Therefore, buyers should be given several means to voice 19 Managing Service Quality Volume 12 . Number 1 . 2002 . pp. 19±29 # MCB UP Limited . ISSN 0960-4529 DOI 10. 1108/09604520210415362 Service failures and customer defection Sohel Ahmad Managing Service Quality Volume 12 . Number 1 . 2002 . 19±29 Figure 1 A framework of service recovery their concerns quickly and easily.

Once complaints are heard, the customer recovery activities need to be invoked with the goal of transforming these dissatisfied customers into satisfied customers and, thereby, minimizing customer outrage. The service recovery process can have a significant impact on positive or negative word of mouth. Customers who are satisfied with the service recovery process are less likely to spread negative word of mouth (Sparks and Bradley, 1997). Frameworks similar to that presented in Figure 1 have received much attention in the context of offline (brick and mortar) shops but very little in the context of online shops.

The present study examines certain aspects of the online shopping experience from a consumer’s perspective. Specifically, an attempt is made to understand the interaction between service failure and the online shops’ readiness for service recovery and the resulting effect on customer defection. The remainder of this paper is organized as follows. First, the data collection method is explained. Then the characteristics of the respondents are highlighted and some general observations are made. These respondents’ online shopping experiences are discussed in the following section. Next, key issues and 20 oncerns related to online shopping are identified. Lastly, some recommendations are made about how these issues/concerns can be effectively handled by making appropriate management decisions that focus on service delivery system design and management. Data and respondents’ characteristics The data for this study were collected from 187 students at a business school in the USA (see Appendix). The participants are undergraduate students including 64 juniors and 123 seniors. The use of students as respondents is sometimes criticized in the literature primarily because students may not adequately represent the target population (Yavas, 1994).

However, a survey conducted by the College Stores Research and Educational Foundation (CSRE) finds that college students shop online on a regular basis and their online shopping is expected to grow significantly in the future (CSRE Campus Market Research Series, 2001). Furthermore, recent studies related to online shopping report that college students demographically represent one of the most active online shopper segments (Yoo and Donthu, 2001; PR Newswire, 2000). Thus, college students Service failures and customer defection Sohel Ahmad Managing Service Quality Volume 12 . Number 1 . 2002 . 19±29 re appropriate respondents for the present study. The average age of the respondents was 22. 6 years. On average these students spent 7. 72 hours per week on the Internet for a myriad of reasons. Some of the most frequently cited reasons include: checking e-mail; chatting with friends; conducting research; checking sports’ scores; shopping online; getting travel information; registering for courses; checking concert tour schedules/ tickets; downloading software; getting course information; searching for jobs; getting movie times/tickets; checking weather/travel information, and playing online games.

About 49. 2 per cent of the respondents indicated that their online shopping will remain about the same and a significant percentage of the respondents indicated that their online shopping would increase (42. 8 per cent) or substantially increase (5. 3 per cent) in the next year. Even about 33 per cent of those respondents who did not shop online at the time of the survey indicated that their online shopping would either increase or substantially increase in the next year. A total of 31 per cent of the respondents had never made any online purchases (see Figure 2).

The main reasons given for this included lack of trust in Internet transactions (such as fear of a credit card number being Figure 2 Online shopping experience flowchart available to other people over the Web), and personal preferences (such as respondents like to see and feel the product before buying it); a few respondents just did not feel the need to shop online. Of those who shopped online (online shoppers), the average time since their first online purchase was about a year (12. 5 months). On average, these online shoppers made six purchases over the last 12 months. Convenience (50. per cent) and competitive price (45. 7 per cent) were selected as the most important reasons respondents made on-line purchases. Other reasons cited included: promotion (e. g. certain number of frequent flyer miles are given if an airline ticket is bought online); sole source (e. g. the product is only available through online sites); and unavailability of the retailer in the USA. Online shoppers chose e-mail (67. 4 per cent) as their most preferred mode of communication if they had a question for an online product/service provider but the information was not available on the Web site.

This was followed by a toll-free telephone call (31. 8 per cent). However, of the respondents who chose a toll-free telephone call, 29. 3 per cent indicated that e-mail would be their preferred mode of communication if the telephone numbers were not toll free. Only 21 Service failures and customer defection Sohel Ahmad Managing Service Quality Volume 12 . Number 1 . 2002 . 19±29 one person (0. 8 per cent) chose fax as the preferred mode of communication but did not explain why. Online shoppers provided several reasons for choosing or not choosing these modes of communication.

Although some of the online shoppers mentioned long wait times (on hold) when using telephone, it was considered the fastest mode of communication. e-mail was considered the least expensive (or free) and most convenient because e-mails could be checked at customers’ convenience. However, some respondents feared that their e-mail addresses might be used for promotional purposes and hence were reluctant to use e-mail when they needed to get information from an online shop. Fax was perceived to be the least desirable because fax machines are not as convenient or easily accessible as a telephone or e-mail. Online shopping experiences

The respondents were asked if they had any bad experiences when they shopped online. About 72. 9 per cent of them did not experience any problems (see Figure 2). About 81 per cent of these respondents indicated that they will consider shopping at the same online shops in the future if need be, 18. 1 per cent were not sure (maybe), and one respondent (1. 1 per cent) chose not to shop at the same e-commerce site as she found a better deal somewhere else. This particular respondent also discouraged her friends from using that online shop. The respondents who did not have any problems with the online shops indicated that they would recommend (61. per cent) or strongly recommend (22. 3 per cent) those e-commerce sites to their friends, while 14. 9 per cent indicated that they would take a neutral position in this matter. About 27. 1 per cent of the shoppers reported that they had bad experiences when they shopped online, mostly citing late delivery, defective product, phone card not working, wrong product, and partial order as the problems they encountered. One (2. 8 per cent) respondent did not receive the product he ordered. This respondent contacted the company after about two weeks and was told that the product was out of stock.

The company did not take any initiative to inform the customer about this situation. However, 22 his credit card was promptly credited when he said that he was no longer interested in the product. Three respondents (8. 6 per cent) reported that they returned certain products that they did not like but it took two to four months to get refunds. Also, some complained about the extra shipping costs they incurred for exchanges. All of the respondents who had problems with online shopping tried to contact the online shops regarding their problems. They used the telephone (51. 4 per cent) and emails (48. per cent) as the modes of communication. Some of the respondents who used e-mails complained that they wanted to call the company about the problem but could not find any contact number on company Web sites and were forced to use e-mail. Three of the respondents (8. 6 per cent) decided not to contact the company by e-mail when they could not find a phone number. Two asked their credit card companies to stop payment on the merchandise; the remaining respondent (who paid by check card) did not take any action. The problem order was for less than $10. 00, and the respondent felt it was not worthwhile to pursue the company.

However, all three of these respondents indicated that they would not consider using these online shops in the future. In addition, they will strongly discourage their friends from using these ecommerce sites. All respondents who sent e-mails received replies from the companies. However, response time varied from a few minutes to six days. A number of these e-mail replies were pre-composed and hence did not address the individual’s problem. Quite a few of these people expressed frustrations particularly when the companies’ replies to their second emails were the same pre-composed responses.

One respondent was so frustrated that he even sent an e-mail to the Webmaster of the company’s Web site and ultimately contacted customer service. Those who ultimately made contact with the online shops’ customer service representatives reported that most of these representatives made efforts to fix the problems. No efforts were made in only two (6. 7 per cent) instances. In those two instances, the customers felt that the service representatives paid very little attention to the complaints and refused to do anything about them. These customers indicated that they

Service failures and customer defection Sohel Ahmad Managing Service Quality Volume 12 . Number 1 . 2002 . 19±29 would not consider using those e-commerce sites again, and they would strongly discourage their friends from using the sites as well. Not all respondents who thought that the service representatives made efforts to fix their problems were satisfied. Nine respondents (30 per cent) reported that the problems were not resolved to their satisfaction and indicated that they would not consider those online shops in the future.

Eight of these nine respondents indicated that they would either discourage or strongly discourage their friends from using these sites and one chose to remain neutral. The respondents who felt that the problems were resolved to their satisfaction (70 per cent) indicated that they might consider (38. 1 per cent) or would consider (61. 9 per cent) shopping at those e-commerce sites again. Furthermore, these respondents indicated that they would strongly recommend (28. 6 per cent) or recommend (42. 9 per cent) these sites to their friends, while 28. 6 per cent remained neutral.

Major findings Although some fear still exists among respondents regarding Internet security, most of them are not afraid to use this technology. Moreover, their responses indicate that online shopping should grow substantially in the future. Even a significant percentage of the respondents who did not shop online at the time of this survey indicated that their online shopping would either increase or substantially increase in the next year. This finding supports the general conception that online shopping will grow substantially in the years to come (Hunt, 2000).

However, which online shops survive and ultimately gain competitive advantage remains to be seen. Modes of communication As mentioned earlier, 67. 4 per cent of the respondents chose e-mail while 31. 8 per cent chose the telephone as their most preferred mode of communication if they had questions for the online shop. However, when these customers encountered problems (service failures), 48. 6 per cent of them used e-mail, while 51. 4 per cent of them used the telephone. This indicates that customers prefer to use the telephone when service 23 ailures occur despite their own indications to the contrary. Furthermore, some customers were dissatisfied when companies were unreachable by phone. Some of these respondents did not voice their complaints to the online shop. However, they indicated that they would not consider these online shops in the future, and they would strongly discourage their friends from using these online shops as well. A few issues need to be noted here. First, consumers should be given the opportunity to contact online shops by phone if they want to, particularly in case of service failure.

Cutting costs by eliminating telephone customer service might seem lucrative, but the results of this study show that only letting customers communicate through e-mails can lead to customer defection. This is important because customer defection can have a greater impact on the bottom line than minimizing costs (Reichheld and Sasser, 1990). Therefore, online shops may pay a hefty price for not allowing customers to reach them easily using a variety of communication modes. Second, as mentioned earlier, customers do not appreciate receiving precomposed e-mails in response to their questions when service fails.

In the event that an online shop has to send pre-composed e-mails during busy times, care should be taken to indicate that the pre-composed email is a general response and a customer service representative will respond within 2448 hours. This pre-composed e-mail should also include telephone numbers so that customers can reach customer service more directly if they so desire. Complaint management The service success, complaint and service recovery rates have been identified as important service system parameters for improving customer satisfaction (Hayes and Hill, 1999).

Customers want their problems resolved when services fail. At a minimum, they expect the service representative to listen to them carefully and sincerely attempt to solve the problem. Customers will probably not be satisfied if their problems are not resolved. However, they will be outraged if the service representatives do not listen to and try to understand their complaints, as the present study finds. Some of the customers who had problems with online shops and felt that the service representative did not pay due Service failures and customer defection Sohel Ahmad

Managing Service Quality Volume 12 . Number 1 . 2002 . 19±29 attention to their complaints indicated that they would not return to these online shops and would discourage or strongly discourage others from using these shops. Some of these customers could have been recovered if the service representatives were properly trained and made aware of the value of a retained customer. Service recovery efforts and customer retention Table I shows that when customers have bad experiences with online shops they do not usually use those online shops in the future and discourage others about them.

So, what can an online shop do? First, it should minimize customers’ bad experiences using all possible preventive measures. However, in spite of best efforts, service failure is inevitable from time to time. Therefore, online shops must have good service recovery plans in place. This is important because customers who felt that their problem(s) were resolved to their satisfaction (SATISF) tended to continue to use the online shops and recommend these online shops to others, as depicted by highly significant correlation coefficients between SATISF and CONSIDER, and between SATISF and RECOMMEN.

That is, it is best to prevent service failures, but all is not lost when a service fails as long as these customers can be ultimately satisfied. In fact, the results of this study show that many of the recovered customers become “apostles”, customers who are so satisfied that they voluntarily convert the uninitiated to a product and/or service (Heskett et al. , 1994). Thus, service recovery is an opportunity to win back an outraged customer and then some. Table I also shows that the variables ABLECONT and EFFORT are not as strongly related to CONSIDER or RECOMMEN as is SATISF.

Table I Correlation coefficients BADEXP CONSIDER RECOMMEN ±0. 53 (129) ±0. 45* (129) * This implies that the ability to contact an online shop after a service failure (ABLECONT) and the efforts by the service representative to fix the problem (EFFORT) are necessary but not sufficient to win back customers; customers’ problems need to be resolved to their satisfaction. This highlights the need to empower customer service representatives with the ability and authority to achieve results for customers (Heskett et al. , 1994).

Two additional analyses were done using variables SATISF, CONSIDER and RECOMMEN in order to develop an in-depth understanding of the impact of service recovery process on customer retention. First, a canonical correlation analysis is discussed followed by a cluster analysis. The readers are, however, asked to exercise caution while interpreting the results of these two analyses due to the small sample size used in the present study. Canonical correlation analysis is used to investigate the relationship between two sets of variables.

Here one set is represented by the linear combination of two variables, CONSIDER and RECOMMEN, while another set is represented by a single variable SATISF. The intent of a customer to repurchase from an online shop is captured by the variable CONSIDER, and the word-ofmouth effect is captured by the variable RECOMMEN. Thus, the linear combination of the variables CONSIDER and RECOMMEN, canonical variate, represents a customer’s loyalty as well as his/her inclination to act as a promoter (loyalpromoter) for an online shop. Three criteria are used to identify statistically significant canonical pairs, as suggested by Hair et al. (1998): (1) level of statistical significance of the function; ABLECONT 0. 34 (35) 0. 45* (35) ** EFFORT 0. 32 (32) 0. 44** (32) *** SATISF 0. 88 (30) 0. 81* (30) * CONSIDER 0. 84* (129) Notes: * p ; 0. 01; ** p ; 0. 05; *** p ; 0. 1; Number of observation in parentheses) Any bad experience with online shopping? BADEXP (No = 1, Yes = 2); Were you able to contact the online shop(s)? ABLECONT (No = 1, Yes = 2) Did the online product/service provider(s) make an effort to fix the problem? EFFORT (No = 1, Yes = 2) Was the problem(s) resolved to your satisfaction?

SATISF (No = 1, Yes = 2) Would you consider shopping at this e-commerce site (the site with which you had problems) in the future? CONSIDER (No = 1, Maybe = 2, Yes = 3) Would you voluntarily recommend this e-commerce site to your friends? RECOMMEN (5 = Strongly recommend, 4 = Recommend, 3 = Neutral, 2 = Discourage, 1 = Strongly discourage) 24 Service failures and customer defection Sohel Ahmad Managing Service Quality Volume 12 . Number 1 . 2002 . 19±29 (2) magnitude of the canonical correlation; and (3) redundancy measure for the percentage of variance accounted for from the two sets of variables.

The first canonical pair is highly significant (p ; 0. 0001) as shown in Table II. The canonical correlation (0. 8814) is high and the redundancy index (0. 6921) is moderate. Thus the first canonical pair passes all three criteria. The canonical weights are found to be 0. 9952 and 0. 9172 for CONSIDER and RECOMMEN respectively, which imply that each of the two variables (CONSIDER and RECOMMEN) contributes highly to forming the “loyal-promoter” canonical variate. This supports the idea that “loyal-promoter” can represent a single construct to include both CONSIDER and RECOMMEN.

The correlation between SATISF and the loyalpromoter canonical variate is found to be 0. 8814, indicating that customer satisfaction (initially dissatisfied but ultimately satisfied due to recovery efforts) is very strongly related to the construct loyal-promoter. Next, K-means cluster analysis, a non-hierarchical method, is used to identify the clusters. This method is used since it has two potential advantages over hierarchical methods (Ketchen and Shook, 1996): (1) it is less impacted by outliers; (2) the final solution optimizes within-cluster homogeneity and between-cluster heterogeneity.

Three clusters are identified taking into account the relative ease of cluster interpretability (see Table III). The first cluster represents lost customers. The problems faced by these customers were not resolved to their satisfaction and they will not consider these e-commerce sites for future shopping. Moreover, they will discourage others from using these online shops. The Table II The relationship between SATISF and loyal-promoter canonical variate Canonical correlation Level of significance Redundancy index Canonical weights CONSIDER RECOMMEN Correlation between the SATISF and the loyal-promoter canonical variate SATISF 0. 814 0. 0001 0. 6921 0. 9952 0. 9172 Table III Cluster analysis Clusters 1 2 Lost Neutral customers customers 1. 00 1. 89 1. 00 2. 11 3. 33 2. 00 3 Active promoters 3. 00 4. 50 2. 00 Variables CONSIDER RECOMMEN SATISF Note: The numbers in the table indicate the mean value of the corresponding variable in three clusters. For example, the mean value of the variable CONSIDER is 2. 11 in cluster 2 customers whose problems were resolved to their satisfaction fall into two clusters. Cluster 2 represents neutral customers who were satisfied with the ecovery efforts but remain neutral about their intent to again use the e-commerce sites or to voluntarily recommend these e-commerce sites to their friends. However, cluster 3 represents delighted customers who not only intend to shop at these sites in the future but also strongly recommend these sites to their friends. Thus, these customers are active promoters for these online shops. This finding reinforces the finding of a study conducted by Johnston and Fern (1999). Reflecting on service recovery strategies, these authors conclude (Johnston and Fern, 1999, p. 9) that “. . . it was found that one set of actions can restore the customer to a satisfied state whereas an enhanced set of actions will delight the customer”. Thus, attempts should be made to delight customers rather than merely satisfying them during the service recovery process. Discussion All too often organizations make tremendous efforts to recruit new customers and place very little effort on retaining existing customers. However, these organizations would put more emphasis on retaining existing customers if they considered customers’ lifetime retention value.

For example, a credit card company takes a loss if a customer leaves the company within a year. However, the same customer usually generates a significant profit stream if he or she is retained for five years or more (Reichheld and Sasser, 1990). The lifetime retention value of even an inexpensive 25 0. 8814 Service failures and customer defection Sohel Ahmad Managing Service Quality Volume 12 . Number 1 . 2002 . 19±29 product/service can be quite high. For example, Taco Bell calculates the lifetime value of a retained customer to be $11,000 (Swift et al. , 1998).

Based on a study conducted in a wide variety of businesses (e. g. bank branches, insurance brokerages, autoservice chain, credit card, software, etc. ), Reichheld and Sasser (1990) observed that a 5 per cent reduction in defections boosts profits by 25-85 per cent. Customer defection has a gigantic impact on the bottom line, yet today’s accounting systems are not capable of capturing the value of loyal customers and the referrals (word of mouth) they provide. This points to the fact that managers have to make an extra effort to institute a control mechanism that keeps track of customer defection.

An online shop’s first step to minimize customer defection should be to put in place a complaint management system (Rust et al. , 1992). This complaint management system should definitely make filing a complaint easy and hassle free. This is important because it is estimated that for every complaint a service organization receives, there are 26 other customers who feel the same way but do not file a formal complaint (Swift et al. , 1998). Next, customers should be able to report service failures through a variety of communication modes, including the telephone and e-mail.

Additionally, a service guarantee can be offered which may encourage the customers to complain when they are dissatisfied. A service guarantee also forces marketing to only make promises that operations can support. Withdrawing a service guarantee can have a devastating effect on customers’ trust in a company’s commitment to service quality. Hence, a service guarantee should not be offered until every part of an online shop’s operations is audited for its capability. This audit should include re-evaluation of the service blueprint, identification of the failpoints and checks of the adequacy of the service recovery strategy.

Appropriate pokayokes should be applied to prevent mistakes that could become service defects. The online shops’ customer service representatives should be empowered to resolve customers’ problems to achieve quick service recovery. Moreover, these customer service representatives should be able to connect emotionally with the customers who experience service failures and make genuine 26 efforts to delight them to ensure sustained patronage (Kandampully, 1998). If a new type of service failure occurs, attempts should be made to identify and understand the root causes of this problem by applying the critical incident technique (Bitner et al. 1990). Once the problem is fixed, this fail point should be recorded and shared with the pertinent employees. The service delivery system may have to be modified, if need be, so that the same problem can be avoided in the future. Conclusion Online shops should take customer defection very seriously. Customer defection analysis can provide important information about improving service quality through continuous improvement. Understanding the “economics of defections” and the principles of “cost of quality” is essential to making pertinent management decisions.

These decisions will primarily impact marketing and operations. Therefore, care should be taken to maintain consistency between marketing strategy and operations strategy. The Internet enables us to design a flexible service delivery system. This adds value to a customer’s shopping experience which can then be exploited to gain competitive advantage. However, online shops have to ensure that they have plans, policies and strategies for satisfying, recovering and retaining customers. Although these seem obvious, the results of this study show that some online shops are not paying close attention to these issues.

Thus, online shops have to make explicit management decisions at the operations level to maximize customer delight and minimize or eliminate customer outrage. References Bitner, M. J. , Booms, B. H. and Tetreault, M. S. (1990), “The service encounter: diagnosing favorable and unfavorable incidents”, Journal of Marketing, Vol. 54, pp. 71-84. Budzynski, J. (2001), “E-business: model for success or failure? ”, Agri Marketing, Vol. 39 No. 3, pp. 30-2. CSRE Campus Market Research Series (2001), “College students more inclined to shop online, survey finds”, Westchester County Business Journal, Vol. 40 No. 1, p. 21. Service failures and customer defection Sohel Ahmad Managing Service Quality Volume 12 . Number 1 . 2002 . 19±29 Hair, J. F. Jr, Anderson, R. E. , Tatham, R. L. and Black, W. C. (1998), Multivariate Data Analysis, Prentice-Hall, Upper Saddle River, NJ. Hayes, J. M. and Hill, A. V. (1999), “The market share impact of service failures”, Production and Operations Management, Vol. 8 No. 3, pp. 208-20. Heskett, J. L. , Jones, T. O. , Loveman, G. W. , Sasser, W. E. Jr and Schlesinger, L. A. (1994), “Putting the serviceprofit chain to work”, Harvard Business Review, Vol. 72 No. 2, pp. 164-74. Hunt, B. 2000), “Growth in online shopping forecast”, The Financial Times, 18 May, p. 6. Johnston, R. and Fern, A. (1999), “Service recovery strategies for single and double deviation scenarios”, The Service Industries Journal, Vol. 19 No. 2, pp. 69-82. Kandampully, J. (1998), “Service quality to service loyalty: a relationship which goes beyond customer services”, Total Quality Management, Vol. 9 No. 6, pp. 431-43. Ketchen, D. J. Jr and Shook, C. L. (1996), “The application of cluster analysis in strategic management research: an analysis and critique”, Strategic Management Journal, Vol. 17, pp. 441-58.

PR Newswire (2000), “Online survey by edu. com reveals college students plan to spend $2. 2 billion online this holiday season”, 21 November, p. 2987. Reichheld, F. F. and Sasser, W. E. Jr (1990), “Zero defections: quality comes to services”, Harvard Business Review, Vol. 68 No. 5, pp. 105-11. Rust, R. T. , Subramanian, B. and Wells, M. (1992), “Making complaints a management tool”, Marketing Management, Vol. 1 No. 3, pp. 41-4. Sparks, B. A. and Bradley, G. L. (1997), “Antecedents and consequences of perceived service provider effort in the hospitality industry”, Hospitality Research Journal, Vol. 0 No. 3, pp. 17-34. Swift, J. A. , Ross, J. E. and Omachonu, V. K. (1998), Principles of Total Quality, St Lucie Press, Boca Raton, FL. Wolfinbarger, M. and Gilly, M. C. (2001), “Shopping online for freedom, control, and fun”, California Management Review, Vol. 43 No. 2, pp. 34-55. Yavas, U. (1994), “Students as subjects in advertising and marketing research”, International Marketing Review, Vol. 11 No. 4, pp. 35-43. Yoo, B. and Donthu, N. (2001), “Developing a scale to measure the perceived quality of an Internet shopping site (SITEQUAL)”, Quarterly Journal of Electronic Commerce, Vol. 2 No. , pp. 31-45. Appendix. Online shopping survey These days many product and/or service providers conduct their businesses over the World Wide Web, a phenomenon known as e-commerce. This has led to a proliferation of ecommerce sites (online shops). You are about to complete a survey which is intended to gather information regarding your perceptions, preferences and experiences of online shopping. Thank you for completing the survey. 1. Your year in school __ Sophomore __ Junior __ Senior 2. Your gender __ Female __ Male 3. Your age _____ years 4. On average, how many hours do you surf the Internet per week? ____ hours 5. Please mention the most important reasons you use the Internet (up to five) a. _________________________________ b. _________________________________ c. _________________________________ d. _________________________________ e. _________________________________ 6. Have you ever shopped online? __ Yes __ No 6(a) If no, is there any particular reason why you did not shop online? 7. In the next year do you expect your online shopping to: __ decrease substantially __ decrease __ remain about the same 27 Service failures and customer defection Sohel Ahmad Managing Service Quality Volume 12 .

Number 1 . 2002 . 19±29 __ increase __ increase substantially If you answered no to question # 6, please STOP here. You have completed the survey ± thanks! Otherwise, please continue. 8. When did you first shop online? About ____ year(s) and ____ month(s) ago (Write one month if your answer is less than or equal to one month) 9. Approximately how many times have you shopped online in the last 12 months? ___ times 10. Please mention up to five products and/or services which you have purchased online or that you intend to purchase online in the next three months a. _________________________________ b. ________________________________ c. _________________________________ d. _________________________________ e. _________________________________ 11. What encouraged you to shop online? __ Convenience __ Competitive price __ Quality of product/service __ Other, please describe. 12. (a) If you have a question for an online product/service provider (online shop) that you could not find the answer to on the company Web site, what would be your preferred mode of communication (choose one)? Please explain each (i. e. the one you chose as well as the ones you did not choose) Toll-free telephone; Yes/No Why? _____________________________________ E-mail; Yes/No Why? _________________________________________________ Fax; Yes/No Why? ____________________________________________________ Others__________________; Why? _______________________________________ (b) Does your choice change if the telephone call is not toll free? __ No __ Yes. What would be your next most preferred mode of communication? _________________________________________________________ 13. Any bad experience with online shopping? __ No __ Yes. Please give a brief description. If you answered no to question # 13, please go to question # 19. Otherwise, please continue. 14.

Did you try to contact the online shop(s) regarding your problem(s)? ___ No, why not? ___ Yes If you answered no to question # 14, please go to question # 19. Otherwise, please continue. 15. How did you try to contact the online shop(s) (check all that apply)? __ Telephone __ Fax __ E-mail __ Others, please describe ______________________ Comments: 16. Were you able to contact the online shop(s)? ___ Yes ___ No Comments: 28 Service failures and customer defection Sohel Ahmad Managing Service Quality Volume 12 . Number 1 . 2002 . 19±29 If you answered no to question # 16, please go to question # 19. Otherwise, please continue. 17.

Did the online product/service provider (online shop) make an effort to fix the problem? __ No. Comments: __ Yes. How? If you answered no to question # 17, please go to question # 19. Otherwise, please continue. 18. Was the problem(s) resolved to your satisfaction? __ No __ Yes Comments: 19. Would you consider shopping at this e-commerce site (the site with which you had problems) in the future? __ No ___ Maybe ____ Yes Comments: 20. Would you voluntarily recommend this e-commerce site (online shop) to your friends? __ Strongly recommend __ Recommend __ Neutral __ Discourage __ Strongly discourage You have completed the survey ± thanks! 29