Consumer as Stakeholder in Service Crises

Consumer as Stakeholder in Service Crises: Perspectives from Services MarketingAuthor(s): Steve Baron, Kim Harris and Dominic ElliottReviewed work(s):Source: Risk Management, Vol. 7, No. 2 (2005), pp. 49-63Published by: Palgrave Macmillan JournalsStable URL: http://www.jstor.org/stable/3867687 .Accessed: 18/05/2012 12:43

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Risk Management: An International Journal 2005, 7 (2), 49-63

Consumer as Stakeholder in Service Crises:

Perspectives from Services Marketing

Steve Baron, Kim Harris and Dominic Elliott'

This paper seeks to increase understanding of the subtleties of the consumer stakeholder role in crises that affect service organisations. In so doing, it focuses on research

findings that have adopted a consumer perspective on service failures and service

recovery, and evaluates current services marketing research on thefundamental notion

of consumer participation in service production. A case study of an organisation that was subject to two crises over a two-year period is used to highlight the elements of a services marketing approach to service recovery, and to make clear the effect of consumers 'participation in services on their behaviours in service crises. While there is some evidence, in the case study, of the appropriateness of 'standard'service recovery strategies, it is argued that it is the implications of consumerparticipation in services-

especially the roles of dysfunctional consumers, and the dynamics of consumer-to- consumer interactions-that are the most important in understanding the consumer stakeholder role in service crises. In summary, the 'customer as stakeholder 'approach from services marketing advocated in the paper further enhances the necessarily multifunctional risk management processes that companies require to improve their

operational and strategic resilience.

Key Words: Services marketing; consumer participation; service failure; service recovery

Introduction

A feature of organisational crises is that they involve a wide range of stakeholders (Shrivastava, 1987; Smith, 1990; Elliott and McGuinness, 2002). Although a key stakeholder group is that of customers or consumers, an emphasis of much research in the field of risk and crisis management has concerned other groups. For example, Bennett (2005) focused on journalists, O'Hara et al

(2005) on workplace groups, Quarantelli (2002) and Sj6berg (2005) on 'publics'. A central aim of this paper is to consider how a services marketing approach may inform a crisis management one. The 'customer as stakeholder' approach from services marketing augments the multifunctional risk management processes that organisations require to improve their resilience. Marketing as a

discipline has historically advocated that organisations should focus on the customer/consumer with the primary aim of creating satisfied customers/consumers (Vargo and Lusch, 2004a). In the

sub-discipline of services marketing, research has also encompassed the examination and classification of service failures, together with empirically supported strategies for service recovery (see for example Andreassen, 1999; Boshoff, 1997; Hoffman et al, 2003; Mattila, 2001; Tax et al, 1998; Zemke and Bell, 1990; Zhu and Sivakumar, 2001).

Service organisations, in both the private and public sectors, have been the subjects of crises in the 21st century. For these organisations, the consumers' roles, as stakeholders in the focal

operational crisis and post-crisis recovery phases (Smith, 1990), are clear to see. In July 2003 in

Copyright ? 2005 Perpetuity Press Ltd 49


the UK, for example, an unofficial strike by British Airways (BA) check-in staff at London's Heathrow airport resulted in BA cancelling hundreds of flights during one of the busiest weekends of the year. Television testimony from some of the thousands of stranded passengers resulted in worldwide negative publicity for BA. BA shares dropped more than five per cent, and the company had to 'pull' a multi-million-pound advertising campaign that was planning to show flight delays and empty check-in desks at rival airlines (USA Today, 23rd July 2003). Also in the UK, the Health Secretary, John Reid, admitted in June 2004 that the methicillin-resistant staphylococcus aureus (MRSA) 'superbug' was 'the biggest threat facing the National Health Service' (NHS). The UK tabloid newspaper Sunday Mirror was contacted by hundreds of victims and relatives outlining 'the devastating experiences at the hands of the superbug' (Sunday Mirror, 27th June 2004). Many made claims that the lack of hospital cleanliness was a contributory factor in the spread of MRSA. Treating MRSA was reputedly costing the NHS ?1 billion per year, and plans have been made to spend an extra ?3 billion for research and development into the superbug crisis.

This exploratory paper examines the 'consumer as stakeholder in crises' through the lens of marketing, and, in particular of the services marketing sub-discipline. It highlights the implications, for crisis management, of understanding consumer participation in service production, and also summarises research on service failure and recovery. It is structured as follows. First, a brief historical development of services marketing research is provided. This is followed by an analysis of service recovery efforts and consumer roles in a particular case study of a service organisation involved in two crises between late 2003 and early 2005. Finally, as a result of the case study findings, implications of a (services) marketing perspective on consumers as stakeholders in crises are discussed.

Services marketing research and insights: a brief history

The marketing management school of thought that embraces the marketing concept and customer orientation can be traced back to the early 1950s (Vargo and Lusch, 2004a). Attention given to the specific study of the marketing of services is normally recognised as beginning in the 1970s (Fisk et al, 1993), with Shostack's (1997) paper being seen as the catalyst and motivation for research addressing exchange phenomena that had been largely ignored in the (then) dominant manufacturing output approach to marketing (Vargo and Lusch, 2004b).

Fundamentals of service research

Unsurprisingly, early research in services marketing was focused on what made services different from goods, and on the marketing implications that followed from the differences. The identified characteristics of services, ie intangibility, heterogeneity, perishability and inseparability, have provided a core to the structure of services marketing textbooks from the early 1980s to the present. Each of the characteristics is seen as a negative-a problem to be faced with the marketing of services which, by implication, is not present to the same extent in the marketing of goods. Thus, for example, the intangibility characteristic of services is felt to increase risk for the purchasing consumer, because of the absence of the reassuring effect of touching the physical product to form quality judgements (Baron and Harris, 2003). In a similar vein, heterogeneity of services is seen as a challenge, as services are relatively more difficult to standardise than goods, and perishability is seen as a greater problem for services given that they cannot generally be inventoried to smooth out fluctuations in supply and demand. The inseparability characteristic relates to the simultaneous nature of production and consumption in services (as opposed to the separated, sequential process of production, purchase and consumption of goods), and it is this characteristic of services, and its implications for consumer participation in service production, that is explored further in this section.

Consumer as Stakeholder in Service Crises 50


One of the simplest and yet most helpful frameworks arising from the early studies of the marketing of services, is the 'servuction system' (Langeard et al, 1981), reproduced here as Figure 1. It represents the elements of person-to-person encounters that typified most services of the time. In the part of the system that is visible to a consumer of the service, it shows that a consumer (labelled A) interacts with employees of the service organisation (contact employees), the physical service environment, and other consumers (labelled B). (So, for example the NHS hospital patient will interact with doctors, nurses, cleaners and other employees essential to the service provision, with the physical elements of the hospital, such as wards, beds, washing facilities, etc, and with other patients). Each of the interactions, and the cumulative effect, can affect the consumer's holistic experience with the service. The part of the system that is invisible to the consumer consists of elements that support the process, for example computer systems and staff training programmes. The visible part of the servuction system is particularly useful as it emphasises the

consumerpresence during service delivery, and also the presence of other consumers. Consumers

Aparticipate in the production of their own service experience, and therefore play, together with Consumers B, the roles of co-producers of the service. Thus, service production is seen in its

entirety, not just as a task of managing the service employees and the physical environment.

Figure I. The servuction system

Inanimate Customer environment A

Invisible organisation Contact with and system personnel or

service Customer provider B

Invisible Visible

Bundle of service benefits received by

customer A

Source: Langeard et al, 1981.

The socio-technical environment has changed considerably since the 1980s. The servuction system was developed prior to the advent of the vast array of technology-based services that are available to today's consumers (Meuter et al, 2000). Furthermore, it clearly could not acknowledge the

fast, global communication processes that are available for 21st-century consumers to use both before and after the service encounter. Therefore, more recent adaptations of the servuction system include the additional interface with the physical system provided by information and communication technology (see, for example, Baron et al, 2000).

There are signs in the early 2000s that services marketing is emerging from the shadows of its

parent discipline, marketing. Vargo and Lusch (2004a), building on arguments from Gronroos

(1994) and Gummesson (1995), argue that marketing has a new dominant logic in which service

provision is fundamental to economic research, and that all marketing, notjust services marketing, should break free from goods marketing (Vargo and Lusch, 2004b). They call into question whether the four characteristics of services-intangibility, heterogeneity, perishability and inseparability-

Steve Baron, Kim Harris and Dominic Elliott 51


should be seen as hurdles to be overcome by services marketers; on the contrary, with regard to

inseparability, they argue that, rather than striving to overcome it by, for example, minimising the interference of consumers in the service production (Beaven and Scotti, 1990), a truly consumer

perspective renders separability impossible, and would regard offerings without some form of consumer involvement as disadvantaged. As illustrated in Figure 1, consumer-to-consumer ('c2c') interactions often take place during a service experience. The 'new dominant logic' suggests also that attempts to minimise consumer interference of c2c interactions are both misguided and unlikely to be practically possible.

Servicefailure and recovery Recovering service failures has been identified as 'a common frontline tactic to enhance customer satisfaction and customer perceptions of service quality' (Brown et al, 1996:32). The area of service recovery and service failures has attracted much attention in the services marketing literature 'as a result of the premise that service failures are inevitable, but dissatisfied customers are not' (Michel, 2001:20).

The research on service recovery and service failure has been wide-ranging, and structured around the notions:

* that service failures may or may not lead to service recovery;

* that service recovery results in outcomes; and

* that outcomes result in consequences for a service organisation.

Servicefailure. Many authors refer to the inevitability of service failures in most service businesses. Equally, there is a recognition that improved service design may reduce the number of service failures (Ahmed, 2002; Brown et al, 1996), and the role of the customer contact person in creating/ avoiding service failures is often emphasised (see, for example, Schlesinger and Heskett, 1991).

There have been attempts to categorise service failures. Michel (2001), for example, identifies failures of advice, process, interaction, documents, information, conditions, systems and third parties. Lewis and Spyrakopoulos (2001) prefer to categorise failures according to service provider error, customer error and associated organisation error. Such categorisations are believed to be managerially helpful, but fail to reflect on the potential crises resulting from the magnitude of the failure. For example, the air traffic controllers' strike may be a service failure or service crisis for an airline, depending on a number of factors, such as the time taken to recover the failure, the expense involved, and the time of year (eg Christmas/New Year).

Service recovery. Research on service recovery has three strands. First, service recovery is discussed in terms of organisational philosophy or strategy (Brown et al, 1996); here it is regarded as an integral component of consumer retention, and hence of relationship marketing. Second, there is a process approach to service recovery (Colgate, 2001), where the emphasis is on effective measurement of service recovery antecedents, processes and outcomes, and on the identification of representative satisfied and dissatisfied customers. Third, there are attempts to identify the contingencies that may determine service recovery policies. Hoffman and Kelley (2000) specify the contingencies as relationship depth, duration of encounter, relationship proximity, criticality of consumption, degree of customisation and switching costs. Mattila (2002) concentrates on the interplay of service type and magnitude of failure on customers' evaluations of service failures. In each strand, the managerial importance of achieving a greater understanding of service recovery (and service failures) is emphasised. Despite this, scholarly research in service recovery is still said to be in 'in its infancy stage' (Mattila, 2002:583).



Outcomes of service recovery. These are mostly considered in terms of consumer and employee levels of (dis)satisfaction. Lewis and Spyrakopoulos (2001), drawing on the work by Bitner, Booms and colleagues on (dis)satisfaction with service encounters, categorise critical incidents relating to service recovery as:

* employee response to service delivery failures;

* employee response to customer needs/requests;

* unprompted employee actions; and

* problem consumers.

Alternatively, outcomes (or recovery experiences) have been classified, and sub-categorised according to the notion of consumer perceived justice: distributive, procedural and interactional (Hoffman and Kelley, 2000; Michel, 2001). Here it is advocated that, for many types of service failure, an individual consumer is seeking justice through some or all of the following forms: compensation, apology (distributive justice); promptness, flexibility (procedural justice); empathy, honesty, commitment (interactional justice).

Whichever form of classification is applied, there is an underlying assumption that a service failure can be recovered through appropriate employee/consumer interactions.

Consequences for a service organisation. When service recovery is not undertaken effectively, the negative consequences for the organisation are summarised as lost customers, negative word- of-mouth, employee dissatisfaction (Lewis and Clacher, 2001), lack of loyalty, voice (ie complaining) and exit from the organisation (Colgate, 2001). The consequences are often linked to issues of attribution regarding the initial service failure and/or lack of adequate recovery (Swanson and Kelley, 2001; Lewis and Clacher, 2001). The consequences, in the main, seem to be at the individual consumer level, although there is an implicit argument that the cumulative effect of the consequences of not having effective service recovery mechanisms will damage a service organisation.

Services marketing contributions In summary, when considering consumers as stakeholders in service organisation crises, services marketing research may provide insights, through offering:

* a focus on the fundamental notion of consumer participation in service production, including consumer-to-consumer interactions; and

* a consumer-centric approach to service recovery.

A case study of the crises surrounding the passenger cruise ship Aurora is now examined with a view to evaluating these potential contributions.

Case study: the Aurora-from crisis to crisis

Mariners' folklore attributes bad luck to ships when the champagne bottle fails to break at the launch. The cruise ship Aurora suffered such a fate in 2001, and its subsequent history has added spice to the seafaring storybook. It broke down on its maiden voyage, costing its owners P&O Cruises ?6 million, and subsequently was the focus of two further crises for P&O, one in 2003 and another in 2005. The details of these two latter crises are now presented.



Crisis 1: the virus outbreak When the Novo virus broke out on the Aurora in late 2003, an international problem was triggered (see, for example, Vasagar and Tremlett, 2003; Searle et al, 2003). A non-exhaustive list of stakeholders includes the almost six hundred passengers and crew who were confined to cabins; the passengers and crew unaffected by the virus; P&O, the owners of the cruise ship; Greek and Spanish government agencies; potential cruise customers; the lawyers who

sought to contact Aurora passengers with a view to encouraging litigation; and the world's media. The cruise was intended to last for 17 days, with specified stops at ports located around the Mediterranean. The scale of the virus outbreak required the speedy allocation of further medical personnel and resources (Dolan, 2003). This, and the extended scope triggered by the negative reactions of the Greek and Spanish authorities (Greek port authorities refused the ship permission to dock in Athens and the Spanish government closed its border with Gibraltar to Aurora passengers), took P&O by surprise. The company sought to control the

tangible health problems, but found the scope of the political and media-induced crises more difficult to manage. The media crisis was further exacerbated by the ease with which

passengers could use moder technology to communicate with family, friends, lawyers and the media, and thus creating another layer of uncertainty. P&O's credibility came into question, some passengers criticising the company for its slow and tardy response. The media re- examined past virus outbreaks on P&O cruise ships, thereby questioning the company's ability to manage. Although ostensibly a crisis triggered by the cumulative impact of many passengers and staff catching a virus, the scale and scope of the crisis were greatly exacerbated

by other stakeholders and by the extensive media scrutiny, fuelled in part by the desire of some customers for compensation (Hamilton, 2003).

Crisis 2: the cruise that wasn't Over 1700 passengers paid between ?9800 and ?42,000 for a 103-day cruise on the Aurora,

taking in 23 countries. The ship was due to set sail from Southampton on 9th January 2005. Due to engine problems, the departure date was delayed and the Aurora left Southampton on 11th

January. It developed further engine problems immediately, and returned to port for more repairs. At this point, the Aurora's problems attracted media attention, with a short trip around the Isle of

Wight being linked to the prices the passengers had paid. Headlines of the form 'Jinxed cruise

ship Aurora still stuck in the Solent' (The Times, 12th January 2005) indicated the media's stake-

holding in the emerging crisis. P&O recognised the passengers as stakeholders: they were offered free drinks with meals and at all 12 of the bars, and their money back if they wanted to call off their holiday. At this point 385 passengers left the ship.

It was not until 19th January that Aurora attempted once more to set sail. Again, problems with the propulsion system caused it to 'limp back' to Southampton. So, finally, on 20th January (11 days after the original sailing date) the cruise was cancelled and the passengers disembarked. By this time, the story was a main feature on UK terrestrial and satellite news programmes, and the cameras were on the disembarking passengers. On 21st January, for example, the BBC 24-hour news programme showed interviews with Aurora passengers who were wheeling their (many) suitcases on to the dock at Southampton. 'Surprisingly', according to the news report, 'many passengers had enjoyed their short trip', and this was supplemented with interviews that were, in the main, supportive of what the company had done in the difficult circumstances. Less to P&O's

liking, the report traced back through Aurora's history, even referring to its nickname of the

'plague ship', recalling crisis 1 above.

Possibly in view of the bad publicity from some passengers, and perceived exaggerated claims for compensation (Vasagar, 2003) associated with crisis 1, P&O issued the following statement on 20th January 2005:



Passengers will be refunded their full fare with compensation of 25 per cent of the amount paid for their holiday to be used as a future credit on a cruise holiday booked before the end of January 2007. (Prynn, 2005)

They also provided free drinks/meals for the passengers, and brought in some well-known entertainers, over the 11-day period. Overall, the cancellation of the cruise cost P&O over ?20 million.

A services marketing perspective

The aim of this section is to address the issue of consumers as stakeholders in service crises through adopting a consumer-oriented perspective. The case study above provides a mechanism for drawing attention to the identified concepts of service recovery and consumer participation in service production, concepts that are continually discussed and refined in the services marketing literature, but are relatively less recognised in theses of crisis management.

Service recovery efforts The consumers as passengers in crisis 1 (C1) were generally seen to be dissatisfied with the organisation (P&O):

Their treatment was a case of 'the horse had bolted before they shut the door'. I won't go through this again. As far as I'm concerned, it's P&O once and once only. (Passenger Raymond McCourt, reported on BBC Online, 11th November 2003)

The opposite was more often the case in crisis 2 (C2):

We have been wined and dined for free and spent 12 days on a marvellous ship. Obviously we are all disappointed, but I think the vast majority [of passengers] have been stoical and reasonable. (Passenger James Hanley, interviewed on BBC News, 21st January 2005)

Furthermore, passenger attributions regarding the service failure(s) were more forgiving in C2:

Ten days' holiday in a five-star hotel, all free-you can't ask [P&O] for anything more, can you? (Passenger interviewed on BBC News, 21st January 2005)

It is tempting to assume, therefore, that the service recovery processes in C2 were superior to those in C1, and furthermore that P&O will stand to benefit from adopting superior service recovery processes. This view would be supported by research that focuses specifically on satisfaction as an outcome of service recovery initiatives (for example, Boshoff, 1999; Hart et al, 1990; Smith and Bolton 1998). Service recovery is taken to be a multi-dimensional construct, based on consumers' search for distributive, procedural and interactive justice. Boshoff's (1999) model, for example, proposes that service recovery is made up of six dimensions: communication, empowerment, feedback, atonement, explanation and tangibles. These dimensions need to be managed effectively during service recovery. If so, satisfaction with service recovery can be increased (or dissatisfaction reduced), and ultimately consumer loyalty can be maintained or increased. Such models have an intuitive appeal, and fit well with organisational philosophies that place customer retention as a key component. They also provide a rationale for specific, common-sense policies (managerial checklists) that support employee responses to service delivery failures. The following guidelines are indicative. For the dimension of 'communication', it is recommended that the service organisation should ensure that employees communicate clearly to consumers, ask questions to clarify the situation, show understanding, and be reliable and honest



in their efforts to redeem the failure. For 'atonement', employees are urged to be polite, and the

organisation should ensure that consumers receive an apology and are compensated for any financial loss. Under 'explanation', employees and the organisation are encouraged to give a full

explanation of why the problem has occurred.

There is evidence, in the reported accounts of C2, that P&O's activities reflect some of this

thinking. For example, communication/interactional justice was apparent even at the first return to port on 11th January. A spokesperson for P&O maintained that passengers had been kept fully informed, and that drinks were 'being offered at dinner and at the bar free of charge' (Naughton, 2005). Later, when the decision was finally made to cancel the cruise, the company issued an

apology:

P&O Cruises apologises for the disappointment this has caused passengers and offers its assurance that everything possible was done to get Aurora's Grand Voyage under way before this difficult but unavoidable decision was taken.

The free drinks, also part of an atonement/distributive justice effort, once introduced became an

expectation of behalf of the passengers for the whole of the period of engine repair. Reputedly, passengers consumed 1600 bottles of beer, 1800 bottles of wine and champagne, 146 bottles of

spirits and 1300 cocktails, all free, in the last 24 hours before the cruise was finally cancelled

(The Daily Telegraph, 22nd January 2005). Compensation was generous (money back and further cruise vouchers, building switching costs so as to maintain loyalty) and made very public. In

justifying this generosity, P&O's Managing Director, David Dingle, emphasised that the people on board were 'among our most regular and loyal passengers', linking consumer satisfaction with service recovery to consumer loyalty. Explanations of the delays were regularly given to

passengers, but sometimes with mixed effect:

If the captain came on the tannoy, you knew it would be good news, but if it was the managing director, you got that sinking feeling. (Passenger Norma Fretwell, interviewed on BBC News, 21st January 2005)

What were the outcomes of these efforts? It was reported that 'most of the passengers were fairly positive leaving the ship and praised how P&O had handled the problems' (BBC News, 21st

January 2005). The consequence that the company would hope for is maintained or increased

loyalty of its customer base, with associated positive word-of-mouth. The service recovery principles outlined above appear to have credibility when focusing on the 'consumer as stakeholder' in C2.

In C1, do the lower levels of consumer satisfaction with P&O's service recovery efforts result from a failure to apply service recovery systems, or are there other underlying reasons? This

question raises some points of difference between C2 and C1, and requires a more fundamental consideration of consumers' roles in service settings.

Elliott et al (forthcoming) outline five common characteristics of organisational crises: they involve a wide range of stakeholders; there are time pressures requiring an urgent response; a crisis

usually results from a surprise to the organisation; there is a high degree of ambiguity, in which cause and effects are unclear; and a crisis creates a significant threat to an organisation's strategic goals. While C and C2 can both be labelled as crises according to these characteristics, arguably C1 was subject to greater time pressures, more surprises and greater ambiguity than C2, and

crucially there were more stakeholders involved in C1, which could even threaten international relations. While the service recovery literature recognises that an organisation requires coordinated efforts to develop procedures, policies and human competencies to deal with service failures, the unit of analysis within the literature is predominantly at the level of the individual service encounter



(see, for example, Lewis and Spyrakopoulos, 2001). A service recovery 'approach' fails to anticipate the role other stakeholders may play in escalating dissatisfaction into a crisis. For example, in C1, the actions of the Greek and Spanish authorities further exacerbated the potential for customers' dissatisfaction by denying them access to parts of their itinerary. Transaction analysis of individual encounters, it could be argued, fails to see the 'bigger picture', as dissatisfaction escalates towards a full-blown crisis.

There is no reason to disbelieve that P&O applied sound service recovery policies to try to reduce consumer dissatisfaction in C1. However, in the more complex storyline surrounding C1, they did not work as well. Even worse, there was evidence that some passengers were behaving in a dysfunctional way, which caused resentment from fellow passengers:

Some people didn't help themselves by seeking publicity. Headlines like 'Left adrift on ship from hell'. We had a laugh about that. (Passenger Dave Dutton, reported on BBC online, November 11th 2003)

Everyone is compensation crazy these days. People saw a way to make money-I hope they don't get any. (Passenger Joan Johnson, reported on BBC online, November 11th 2003)

Consumer participation in services From the crisis management field, there is now a view that organisational crises are the product of socio-technical failures, possibly resulting from the technological change which has fundamentally altered the relationship between systems and their human elements (Elliott and Smith, 2004). In parallel, conceptualisations in the services marketing field, recognising consumer participation in services that was made explicit in the servuction system, have resulted in the identification of a 'social-servicescape' (Tombs and McColl-Kennedy, 2003). Here, it is argued that the social environment and purchase occasion influence consumers' affective and cognitive responses, and consumers often play key roles in influencing the emotions of other consumers. Due to the influence of on-site customer participation, the social component of the socio-technical system plays a different, arguably more significant, role in a crisis within a service context than in one within a manufacturing context.

The nature, form and impact of all manifestations of consumer participation and response have been extensively researched within services marketing (Bowen, 1986; Kelley et al, 1990; Lengnick- Hall et al, 2000; Lovelock and Young, 1979; Mills and Moberg, 1982; Rodie and Kleine, 2000), and yet appear to have received little attention within the crisis management literature. According to Mills et al (1983), there are many occasions when consumers have the resources (eg information, ability and motivation) to perform more effectively than full-time employees. The ability of consumers to perform the role of partial employee has been termed their 'relational competence' (Bendapudi and Berry, 1997), which is driven by individual variables (customer characteristics), situational variables (characteristics of the service situation) and the interaction between them. Just as employees need to be trained to operate effectively within a service setting, organisations need to make sure that consumers have a clear understanding of the role they are expected to perform, have the ability to perform it and receive valued rewards for effective performance (Bowen, 1986). The benefits to an organisation from effective consumer participation have been identified as increased productivity, the provision of value-added services, and enhanced customer retention and loyalty.

'Dysfunctional 'consumer behaviour While mainstream research into service recovery continues to seek empirical confirmation of the relationships between the service recovery dimensions and satisfaction with the service recovery (using, for example, the RECOVSAT research instrument (Boshoff, 1999)), other authors have emphasised that many consumers are acutely aware of



organisations' efforts to employ such checklists. Furthermore such an awareness can be used by unscrupulous, or 'dysfunctional', consumers to the disadvantage of the organisation (Harris and

Reynolds, 2003; 2004). The positive, benefit-based conclusions of consumer participation are based on the notion of a 'functional' consumer: one who acts in an honest and rational way, and who only complains when subjected to a genuine service failure. In crisis situations, consumers

may have the opportunity or inclination to act in a dysfunctional way, ie play the role of

'jayconsumer'-a consumer who deliberately acts in a thoughtless or abusive manner, causing problems for the organisation, employees or other customers (Lovelock, 1994).

Deliberate thoughtlessness (to take one aspect of jayconsumer behaviour) is noticed by other consumers and can take on an increasingly significant meaning in the focal operational and post- crisis phases of crises. In C1, consumer comments at the height of the crisis provide illustrations:

I believe someone came on board with it (the virus) who didn't have good personal hygiene standards. We were issued with wipes to use before handling everything, and I saw people using them to wipe trays, not their hands. P&O have to cater for idiots. (Passenger Sam Turner, reported on BBC Online, November 11th 2003)

This year I have been on Oceana, Oriana and just recently Aurora. I can only put the blame down to some passengers, where they don't wash their hands after going to the bathroom, then proceed back into the restaurant or other food areas. (Passenger Ray Prichard, reported on BBC Online, November 11th 2003)

Jayconsumers have been found to exhibit many forms of behaviour in service settings (Harris and Reynolds, 2004). One particular form, the 'compensation letter writer', refers to those consumers who complain illegitimately, with little or no justification for their complaint. Such consumers are likely to be even more aggressive with their claims for compensation, once they perceive, from a position as participants in the service-related crisis, that the organisation is

reacting to negative publicity.

According to Vasager (2003), a female passenger in C1 (who had appeared on a Channel 4 show 'Wife Swap') was quoted as saying:

It was an absolute nightmare, and I will never be going on a cruise again. We will be suing for being held hostage on the ship.

However, she was criticised by a fellow passenger, who observed that:

The person who was shouting loudest was from a programme called 'Wife Swap'. Quite frankly, anyone who goes on that programme has no credibility whatsoever.

Even worse from an organisational perspective, there are the 'vindictive consumers', who, according to Harris and Reynolds (2004:348), 'deliberately and maliciously verbally spread negative word of mouth concerning an organisation', or 'attempt to evade responsibility for their own behaviours through blaming organisational personnel'. Jayconsumers may represent a

minority in a service crisis setting, but their behaviour represents a rogue element that is difficult to control or predict through conventional service recovery strategies, which assume that dissatisfaction, or even consumer anger, has some proper justification (Bougie et al, 2003).

Consumer-to-consumer interactions. In many service settings, a feature of consumer participation, highlighted by the servuction system, is the opportunity for consumers to interact with each other

during service encounters. Consumers are often in a position to talk on-site with other consumers, and to help, advise or abuse them. Consumer roles have been identified in c2c interactions that reflect generally altruistic motives for the interactions, and that result in mutual help. McGrath



and Otnes (1995) identified consumers adopting the roles of proactive helper, reactive helper and

help-seeker in their interactions with other shoppers in a US retail store environment. Empirical research undertaken in the UK provided additional evidence of these roles being played in retail (Harris et al, 1999), leisure (Parker and Ward, 2000) and transport (Harris and Baron, 2004) services. These studies sought to draw attention to the fact that consumers can, and frequently do, act positively towards other consumers, and their ability and willingness to share knowledge and offer advice can represent effective, additional human resources to a service organisation.

In service crises, consumers are most likely to have experienced a relatively high level of dissatisfaction through service failure with the core or peripheral provision. Harris and Baron (2004) have demonstrated, in the context of rail travel, that consumers may respond to high levels of dissatisfaction in a 'we're all in it together, so let's make the best of it' manner, rather than with jayconsumer behaviours. There is evidence that this may have been the case in C2, through reports of (sometimes ironical) passenger perceptions of the 11-day non-event:

These are hardened cruisers-it's the British bulldog spirit. (Passenger Maurice Lee, interviewed on BBC News, 21st January 2005)

Some of the people were irate but you have to be philosophical-worse things happen at sea. (Passenger Fred Leeson, interviewed on BBC News, 21st January 2005)

We've learned all about the city [Southampton]. We know where the high street is and the post office, so it's not all been disappointing. (Passengers Henry and Edna Forrest, interviewed on BBC News, 21st January 2005)

In the television coverage, disembarking passengers commented positively on the 'bonhomie' that existed on board, and on the quality of the entertainment that the company had organised specially for them.

Harris and Baron (2004) contend that, where high levels of dissatisfaction exist, c2c conversations have a stabilising impact on consumer expectations and perceptions of their service experiences, through the reduction of customer anxiety, the enactment of the partial employee role (especially in the absence of rail employees), and the supply of social interaction (often involving the sharing of mutual moans about the service). In turn, this helps defuse consumers' dissatisfaction levels through raising their tolerance of service inadequacies and increasing their capacity to cope with them. Although the Harris and Bacon study provided some examples of consumers complaining about other consumers, this was relatively infrequent, and fellow consumers were rarely blamed for service failures. It seems reasonable to assume that, if consumers start attributing blame for service failures to the behaviours or attitudes of fellow consumers, then the stabilising effect of c2c interactions will weaken, and triggers for crises are more likely to occur.

Two differences between C 1 and C2 in relation to c2c interactions are evident from reports. First, in Cl consumers were vocal in blaming other consumers for the service failure, especially with reference to the perceived thoughtlessness of other consumers regarding hygiene, and their complaining behaviours. In C2, there were no reported attributions of blame to fellow passengers. Second, measures to control infection dictated that fellow consumers were kept apart in C1:

Sometimes you'd hardly know there's anybody about-you don't see a soul, which is most unusual. The atmosphere is a combination of gloom and worry. (Passenger Sheila Elton, reported on BBC Online, November 11th 2003)

In C2, by contrast, consumers repeatedly engaged with each other in the bars and entertainment events:



... it was a normal cruise with us all going to talks and seminars, line dancing and having normal meals-and having free drinks, I do admit that. (Passenger John Miller, interviewed on BBC News, 21st January 2005)

Implications

From the services marketing literature, an understanding of service failures and service recovery strategies is evolving. Although the reported research has a consumer orientation, a managerial perspective flavours the current wisdom. Thus research on the determinants of consumer (dis)satisfaction with service recovery processes tends to be driven by a desire to provide management with checklists for service recovery actions that have empirical validity. The discussion surrounding the perceived service recovery efforts of P&O Cruises, in relation to C2, provides some justification for the application of these ideas in the management of a service crisis. Such service recovery strategies, however, may only have limited application.

First, the transaction-specific focus that dominates service recovery research may render resulting strategies less effective in service crisis situations as the number of stakeholders increases, and as the consumer stakeholder role is less central to the crisis resolution. This may explain the relatively less evidence of the resolution of consumer dissatisfaction in C1. Second, the adoption of service recovery systems, utilising the elements of the multi-dimensional nature of service recovery, can be expensive. Most of the ?20 million cost that P&O incurred through the eventual cancellation of the C2 cruise has been attributed to the measures used to alleviate potential passenger dissatisfaction with the organisation. Third, and related to the above, the strategies are based on the premise that reduction of consumer dissatisfaction with service recovery is related positively to desirable consequences, such as consumer loyalty towards the organisation. The satisfaction- loyalty relationship has been questioned (see, for example, Bougie et al, 2003), and reported consumer dissatisfaction with P&O's responses to C1 appears not to have deterred 'loyal' passengers booking for the intended cruise in C2.

However, from the services marketing and more general marketing and consumer behaviour literature, in keeping with the argument for a new dominant logic for marketing, fundamental ideas relating to consumer participation in service production may prove to be the most helpful in

understanding the consumer stakeholder role in service crises. The case studies give face validity to two emerging strands of research: 'jayconsumer behaviours' and the impact of c2c interactions. Both are as yet under-researched areas, but appear to have relevance to a wide range of service organisations (for example, the crises at BA and the NHS mentioned in the Introduction). Tentative assertions from the analysis of C and C2 are that there are benefits to be gained from monitoring all forms of consumer participation, but of particular interest are jayconsumer behaviours, which could inflame a crisis, and the stabilising impact of c2c interactions on consumer dissatisfaction levels. Interestingly, C1 and C2 have (inadvertently) attained some of the properties of a field experiment with respect to c2c interactions, where in the former case such interactions were limited, whereas in the latter they were encouraged. There is scope for research that examines, more formally, the relationship between the opportunity to interact with fellow consumers and the subsequent perceptions of a service experience. The particular effects of consumer participation are probably too subtle to be detected by the self-completion satisfaction surveys (such as RECOVSAT) that are commonplace in the service industries, and which rarely seek feedback on behaviours of fellow consumers; more imaginative procedures for monitoring consumer perceptions (including those of other customers' behaviours) are called for.

The importance of the role played by individual customers and together is one that has not been fully explored. The services marketing approach outlined in this paper augments further the multi-functional risk management processes that organisations require to improve their operational and strategic resilience.



Notes

1 Steve Baron is Professor of Marketing, Kim Harris is Reader in Services Marketing, and Dominic Elliott is Professor of Strategic Management and Business Continuity, Management School, University of Liverpool; email: [email protected].

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Article Contentsp. 49p. 50p. 51p. 52p. 53p. 54p. 55p. 56p. 57p. 58p. 59p. 60p. 61p. 62p. 63

Issue Table of ContentsRisk Management, Vol. 7, No. 2 (2005), pp. 1-70Front Matter [pp. 1 - 6]Seven Myths of Risk [pp. 7 - 17]Uncertainty Management of General Conditions in a Project [pp. 19 - 35]Different Strategies: Equal Practice? Risk Assessment and Management in Municipalities [pp. 37 - 47]Consumer as Stakeholder in Service Crises: Perspectives from Services Marketing [pp. 49 - 63]Risk Management on the Internet [pp. 65 - 66]Reviewsuntitled [pp. 67 - 68]untitled [pp. 69 - 70]

Back Matter

Consumer as Stakeholder in Service Crises

Documents

service crises

service failures

notforprofit service

service production

service organisations

services marketing approach

consumer stakeholder

services marketingauthors