The Effectiveness of Compensation Given to Complaining Consumers: Is More Better?

Abstract

Most major consumer products companies offer compensation (e.g., refunds, coupons, replacement products) to their dissatisfied consumers to resolve their complaints.  However, it is not clear if greater amounts of compensation have significantly positive effects on complaining consumers. This study evaluated the impact that greater amounts of compensation had on 1,796 consumers who complained to a major consumer products company. The results showed that greater amounts of compensation did not significantly increase these complaining consumers' repeat purchase intentions, word-of­ mouth communication, or satisfaction with the company's compensation offer.