Assessing the Effects of Post-Purchase Dissatisfaction and Complaining Behavior on Profitability: A Monte Carlo Simulation

Authors

  • Jeffrey Blodgett
  • Haitao Li

Abstract

The authors present a Monte Carlo simulation demonstrating the effect of post-purchase dissatisfaction and complaining behavior on profitability. Although it is widely believed that improvements in complaint management can increase profits, empirical evidence is lacking. Based on pre-specified probabilities of complaint behaviors, and inputs regarding different outcomes (specifically justice, repatronage, and word-of-mouth), a simulation model is developed. The model allows one to estimate the opportunity costs of post-purchase dissatisfaction and complaint behavior. "What if" analyses are also conducted in order to estimate the impact of changes in complaint management and recovery outcomes on profitability.

Issue

Section

Journal Articles