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INTRODUCTION
The "customer-getting" function of marketing advertising, sales promotion, personal selling receives a substantial percentage of the marketing budget, executive attention, and management time from skilled marketing personnel. Defensive marketing (e.g., retaining dissatisfied customers) historically has been neglected as an area of marketing study.(1) However, the rapid growth of organizations, such as the Society of Consumer Affairs Professionals indicates that corporations are beginning to realize how important customer-retaining activities are to post-purchase consumer satisfaction.(2) Additionally, the widespread establishment within firms of formal structures for consumer affairs has been a direct response to consumer discontent.(3) An effective complaint-handling strategy is essential for companies that wish to improve post-purchase consumer satisfaction.
Customers who are dissatisfied with how an organization handles their complaint may turn for help to a variety of consumer agencies, such as Better Business Bureaus or state consumer agencies. The consumer may also switch brands if he or she is not satisfied with how a company responds to a formal complaint. The cost of losing a customer usually far exceeds the cost of trying to satisfy and retain that customer. For example, it has been suggested that "A lost customer reduces company profits by $118, compared with a $20 cost to keep a customer satisfied".(4) Given the increased competition for customer loyalty, losing a customer today is probably even more costly than it was a few years ago. Additionally, government studies have noted that customers are likely to tell others about their dissatisfaction with a product.(5,6)
Several factors make it imperative that businesses implement defensive marketing strategies to retain dissatisfied customers, Because of lower population growth and income in the decade ahead, existing customers will be more of an asset than in the past. New product opportunities are harder to find and hold onto as more firms pounce on the new products available. Pressure from government agencies to reduce consumer dissatisfaction creates a need to care better for customers, especially after the sale. Finally, a conservation ethic regarding limited resources, especially energy, is paralleled by the notion of customers as finite human resources and as part of the larger community of the corporation.
Defensive marketing can impact a firm's market share and profits and also can lower the cost of offensive marketing.(1) Additionally, a company's...