The Impact of Banks’ Strategies for Managing Customer Misbehaviour on Other Customers

Abstract

‘The customer is the king’ is a popular business phrase. Yet, is that true, even if a customer is wrong or behaves inappropriately? This study examines organisational strategies towards customers’ misbehaviour. The study has three objectives to achieve: to explore intervention strategies for dealing with customer misbehaviour, particularly property abuse, verbal abuse, and physical aggression; to investigate in terms of justice theory the effect of intervention strategies for customer misbehaviour, other customers’ satisfaction, customer trust, positive word of mouth, and intent to imitate; and to find the best strategies (i.e. those that have the least adverse effect on other customers) that banks use to deal with customer misbehaviour. The study is situated in the context of banking services, given the close proximity and the high rate of customer interaction with the organisation. This study was conducted in two phases; qualitative and quantitative methods were employed for the exploratory study design, starting with qualitative methods and ending with quantitative methods. The first phase used semi-structured interviews that were conducted with 19 participants including managers and employees from banks in Saudi Arabia. The second phase used the results of the first phase to inform an experimental design that was conducted with 897 participants, involving customers only. The finding of the first phase revealed four strategies used in banks toward customer misbehaviour: banishment, apologising, deterrence and expediting (BADE). Managers have the power to be tough on customers who misbehave, but frontline employees use soft action, such as expediting the service. The finding of the second phase showed that the influence of all perceived justice dimensions on satisfaction was significant for the banishment strategy. The influence of all the perceived justice dimensions on trust was significant for the banishment and expediting strategies. Interactional justice had a significant impact on positive word of mouth (WOM) for only two strategies, banishment and deterrence. The relationship between positive WOM and satisfaction was significant for all four strategies. There did not seem to be any influence of satisfaction on imitation of misbehaviour related to BADE strategies except in the case of the deterrence strategy, where there was a negative influence. For all four strategies, the relationship between trust and satisfaction was significant, as was the relationship between trust and positive WOM. The research makes six contributions. The first contribution is that banishment, apologising, deterrence, and expedition (BADE) are the strategies that managers can use to minimise the effects of customer misbehaviour on their employees. Second, different forms of customer misbehaviour - such as verbal abuse, property abuse and physical aggression - require different strategies, including BADE, to deal with each specific form. Third, the perceived fairness of the strategies that banks use to deal with customer misbehaviour positively influences the satisfaction and trust of observing customers. Fourth, observing customers will not copy the misbehaviour of others if tough strategies such as deterrence are applied to deal with customers who misbehaved. Fifth, the justice dimensions of banks’ BADE strategies for dealing with customers who misbehave can drive observing customers to engage in positive WOM through their satisfaction and trust. Finally, from observing customers’ viewpoint, banishment is the best strategy to use for dealing with customer misbehaviour. The practical implications of this study are that marketing policymakers need to consider giving the authority to employees to deal with customer misbehaviour, besides training them regularly. Banks should prevent customers from behaving inappropriately through BADE strateg