Exploring the Role of Complaint Handling among Complaining Consumers

Abstract

Differentiating organization through service quality and engaging customer for long-term profit motive is a strategic adaptation for the complex competitive retail platform in India. Such approach incorporates the value of trust to ensure desired customer retention. The procedure further intensifies when an organizational approach emphasize effective complaint handling system within its service protocol. Based on this established relationship, this study explores the viability of the framework in the presence of customer complain intention categories with Indian context. Data for this descriptive study are collected using a structured questionnaire from 450 respondents. Out of the three types of complainants (consumer complaint intention), voice complaint intention appeared as the strongest determinant of consumer trust and retention as compared to private and third party complaint intention. On providing complaint handling, the strength of the relationship improved to the greatest extent for private complaint intention while there was no effect of complaint handling for voice complaint intention. Results of the study highlight as to what extent complaint handling matters for different types of complainants (voice, private and third party). Such practices can help the retailers distinguish and accordingly handle various types of complainants. Effective complaint handling practices can make the complainants more trustworthy and loyal than before.

Keywords

Consumer complaint intention complaint handling consumer trust retention customer handling Indian retail

Introduction

With growing competition both in services and manufacturing sector, strategic focus has shifted to define retention strategy for the customers. A competitive framework for such retention strategy requires considering a strong system that can take care of complaining customers (Tronvoll, 2012). Past studies have highlighted a well-defined service recovery process as a need of an hour (Bambauer-Sachse & Rabeson, 2015; Edvardsson, Tronvoll, & Höykinpuro, 2011; Tax & Brown, 2012). Such interest has emerged because of its implication on customer’s repurchase intention, brand loyalty, service recovery strategies of the organization and spread of negative word of mouth (Cheng & Lam, 2008). Fornell and Wernerfelt (1987) say that ‘complaint is an attempt of the customer to change an unsatisfactory situation’. Customer complaining has increased significantly over the past few years, possibly because of increasing influence of social media, particularly Facebook and Twitter (Winch, 2011). Customers can post their comments and give their feedback on the company’s products by visiting their Facebook pages without any social fear (Clark, 2013; Urban, 2008). Yet, the proportion of customer complaints to dissatisfied customer is short. Very few customers actually complain to the company (Choraria, 2013; Haverila & Naumann, 2009). The reason being that customer evaluate cost–benefit trade-off during complaining (Kim et al., 2003), sometimes they may feel it is not worth complaining, suppliers might sometimes just ignore the complaints and others might not know where to actually file a complaint (Chebat, Davidow, & Codjovi, 2005; Zeelenberg & Pieters, 2004).

With the increase in globalization, study of consumer complaint behaviour (CCB) and intention, its antecedents and consequents has also increased. Today’s competitive environment has encouraged the customers to become more demanding regarding their product purchases, in complaining about poor after sales service, product quality and value for the money spent (Brownlie & Lemond, 1992). Consumers from different age categories, demographic profile, socio-economic class, income, education level, cultural background exhibit different type of CCB and complaint intentions (McColl-Kennedy & Sparks, 2003; Ngai et al., 2007; Yuksel et al., 2006). India, being one of the fast developing countries with its massive population has become a promising market for retail business expansion (Pandey, Khare, & Bhardwaj, 2015). Organized retail industry caters to day-to-day needs of the consumers of every kind, be it a working professional or a student with different sources of income. Competitive pressure has forced the organized retail sector of India to come up with strategies to reduce complaint incidences and improve upon their complaint handling practices (Forbes, Kelley, & Hoffman, 2005). As per Mukherjee, Pinto and Malhotra (2009), future research on complaining should use wider demographic samples in terms of age, educational level, geographical regions and socio-economic classes. To achieve diversity among different types of complaining consumers and their experiences with complaint handling, retail industry appeared to be a good choice for this study.

Customer complaints serve benefits for both the firm and the customer. The firms get valuable feedback from the customers providing them a chance to improve upon their service delivery processes in future and also prevent customers from switching (Hansen, Wilke, & Zaichkowsky, 2010; Reynolds & Harris, 2006). Improvement in service quality level helps build long-term relationships between the consumer and the provider and enhances loyalty among consumers (Nor & Musa, 2011). Complaints raised towards a firm can be regarded as an opportunity to strengthen the relationship between the customer and the firm (Mousavi & Esfidani, 2013). As consumers are increasingly becoming more and more sophisticated and markets increasingly competitive, retailers have started realizing the importance of consumer complaint handling. If the customer’s needs are not met they may easily switch to another retail store and quote their previous negative experiences among their acquaintances (Bouzaabia, Bouzaabia, & Capatina, 2013). These retailers are very well aware of the fact that complaining and redress-seeking customers are an opportunity for them to improve upon their products and services (Knox & Van Oest, 2014; Subramanian, 2015).

Research among the complaining consumers has shown that two-thirds of the dissatisfied consumers do not complain but rather switch to another service provider and/or engage in negative word of mouth (Corrada, Varela, & Svensson, 2015; Liu & Mattila, 2015; Richins, 1983; Singh, 1988). It costs more to acquire new customers rather than keeping the existing ones (Johnson & Selnes, 2004; Yavas & Babakus, 2009). This potential loss of customers affects the market share and image of the firm. Firms are, therefore, advised to encourage customers to complain because they provide an opportunity to them to get a feedback and improve upon their service failures (Robertson, 2012). Organizations must identify the factors causing the consumers to complain and complaint intention of the consumers to ensure their success (Taleghani et al., 2011). Understanding consumer reaction to service failure and using appropriate service recovery strategies to make consumers feel justified are very essential for the survival of the organization (Abbas, Abdullateef, & Mokhtar, 2014). Firms can increase their customer retention rate and minimize negative word of mouth if they are able to effectively deal with customer dissatisfaction resulting from purchase (Crie & Ladwein, 2002; Oliver, 2014; Tax, Brown, & Chandrashekaran, 1998). Retention of current customers secures firm’s revenue for the future (Adebiyi & Adeola, 2014) and also improves firm’s profitability (Lee, 2015) through increased customer spending by cross selling (Seock & Lin, 2011) and up selling (Lin & Bennett, 2014). Therefore, understanding the phenomena of consumer complaining has gained importance (Phau & Sari, 2004; Wen Hua, Abdullateef, & Mokhtar, 2011).

This study aims to identify the role of complaint handling on consumer trust and retention among three types of complaining consumers. This is achieved by measuring the trust and retention levels of the complainants in the absence and presence of complaint handling. The study is conducted in context of organized retail sector of India. This study will help the retail firm managers to deal effectively with complaining consumers. In this competitive world where high standard of service is expected by consumers, it is imperative to study complaint intentions and efficacy of complaint handling mechanism in order to provide effective solutions for their problems. Consumers having different complaint intention need to be dealt differently. The theoretical contribution is in the form of measuring the effect through a structured model and assessing the reliability and validity of the model.

Theoretical Background

Consumer Complaint Intention: The Concept

‘Intention refers to the individual’s anticipation of future behaviour’ (Swan and Trawick, 1981). ‘Intention represents a person’s motivation in the sense of his/her conscious plan or decision to exert an effort to perform the behavior’ (Cheng & Lam, 2008). As per Singh (1989), the consumer complaint intentions construct is defined as ‘dissatisfied consumer’s predisposition for one or more complaint behaviour’. Singh (1988) has classified complaint intentions into three types. They are classified as voice complaint intentions, private complaint intentions and third party complaint intentions.

When talking of complaining, importance of studying CCB and intentions cannot be ignored. CCB is defined as ‘a set of multiple (behavioural and non-behavioural) responses, some or all of which are triggered by perceived dissatisfaction with a purchase episode’ (Singh, 1988). It becomes necessary to measure complaint intentions rather than complaint behaviour when talking of dimension analysis (analysis and delineating of various CCB options, i.e., voice, private, third party action). The behaviour data (did/did not do) do not reveal the intensity with which consumers evaluate the CCB options. When a consumer strongly intended to complain about the dissatisfactory experience, they could not do so because of unavoidable situational circumstances like an unplanned trip. In such scenario, the actual consumer behaviour provides little information on as to what complaint response was strongly or weakly preferred by the consumer. This makes the behaviour data insufficient for dimensional analysis (Singh, 1990) and this is where the importance of complaint intentions actually comes into being. Organizations must identify the factors causing the consumers to complain and complaint intention of the consumers to ensure their success (Taleghani et al., 2011).

Singh (1988) has classified complaint intentions into three types. Swimberghe, Sharma and Flurry (2009) and Velasquez et al. (2010) have also given a similar classification of complaint intention. Complaint intentions are classified as voice complaint intentions, private complaint intentions and third party complaint intentions:

Voice complaint intention: Any attempt at all to change rather than escape from an objectionable state of affairs (Hirschman, 1970). It entails effort and motivation on the part of the consumer (Singh, 1990). ‘They are responses directed towards objects directly involved in the dissatisfying relationship’ (e.g., salesperson, retailer, provider) (Singh, 1990). Voicing of complaints by the consumer is least harmful of all other coping strategies. Service providers are rather advised to encourage customers to complain because they provide an opportunity to them to get a feedback and improve upon their service failures (Fornell & Wernerfelt, 1987; Robertson, 2012). If the consumers are not able to reach the service provider through their voice then they go for third party complaining (Blodgett & Granbois, 1992) and negative word of mouth (Halstead, 2002).

Private complaint intention: Signify negative word of mouth intentions (e.g., friends/relatives) and exit from exchange relationship (Singh, 1990). Negative word of mouth has deleterious effects on the service provider’s image because it has the ability to influence the opinions of numerous other customers (Richins, 1983). Private actions taken by the consumers (like negative word of mouth and boycott) in case of dissatisfaction though may not be visible to the service providers are more important than the redress seeking or complaining actions of the consumers (Day & Landon, 1977).

Third party complaint intention: Refers to complaining to formal agencies not directly involved in the exchange relationship (Singh, 1989, 1990). Such intentions are not restricted merely to the decision of complaining/not complaining, rather the consumers have other options also such as contacting better business bureau (BBB), the newspaper or a lawyer. Consumers go for such intentions in the want of seeking redress, for warning other people or to simply ‘get it off the chest’ (Singh, 1988). Such intentions do not include intentions directed towards the seller. If the voice complaint intentions of the consumer are not resolved up to expectations, they might turn into third party complaint intentions (Blodgett & Granbois, 1992). Presence of third party complaint intentions among consumers can have negative effects on the retailers.

So while the consumers with voice complaint intentions are beneficial, the area of concern for the retailers is consumers with private and third party complaint intention.

Complaint Handling: The Positive Consequences

Complaints provide an opportunity to the firms to improve upon themselves and provide better services to customers (Michel, Bowen, & Johnston, 2008). The main aim of complaint handling is to minimize the negative effects due to service/product failure and ultimately retain the customers (Nwankwo & Ajemunigbohun, 2013). Complaint handling or service recovery is conceptualized as a process wherein marketing activities are initiated in order to regain customer trust, lost due to a service failure and to meet customer expectations (Baksi & Parida, 2013). Effective service recovery can build a positive image of the organization and promote customer repurchase intentions and loyalty (Deb & Lomo-David, 2014; Murphy et al., 2014). Satisfactory output of service recovery results in customer trust and loyalty wherein loyalty is defined as customer’s repurchase intentions and reluctance towards other service providers (Baksi & Parida, 2013). Loyalty has also been defined as a long-lasting positive attitude of consumer revealed in the form of repatronage behaviour (Ruiz-Molina et al., & Berenguer-Contrí, 2009). Those customers who complained to the firms had a higher level of repurchase intention than those who did not complained (Maxham & Netemeyer, 2002). If the complaints of the customers are not effectively handled, it can make the customers switch to competitors and this can pose a long-term threat to customer retention (Nikbin, Ishak, & Marimuthu, 2010). Those firms which develop an image in the minds of the customers of consistently resolving their complaints gain customer loyalty (Kemp, 1999). If a firm handles the customers’ complaints effectively, it helps build good customer relationships and make the customers spread positive word of mouth (Boshoff & Allen, 2000; Shields, 2006). If the customer spreads positive word of mouth for a company, the relationship is strengthened while spreading negative word of mouth signifies a weakened relationship (Sivadas & Baker-Prewitt, 2000). Effective service recovery retains the existing consumers and gains consumer loyalty (Yuanyuan, Minxue, & Huawei, 2011). Easy and fast complaint handling procedures encourages customers to complain (Gelbrich & Roschk, 2010; Huppertz, 2007). Effective service recovery increases the level of trust among the customers (Kau & Loh, 2006). Effective handling of complaints results into customer satisfaction, trust, spreading positive word of mouth and repurchase intention (Mensah, 2012). Conflict resolution which is fair leads to customer trust (Kau & Loh, 2006; Oxoby & Zapata, 2015).

Research Gaps

Extensive research has been done on studying the effect of various factors on complaint intention (e.g., Day, 1984; Kim et al., 2003). A lot of research has been done on the same while gaps remain in understanding of the impact of complaint intention. Research on complaining behaviour/intention has been mainly Western in origin with concentration of studies in the US and Europe (Liu & McClure, 2001). Very less amount of research exists in non-Western context (Yuksel, Kilinc, & Yuksel, 2006).

Most of the studies of CCB and intentions have used a scenario-based approach using the critical incident technique (Kim et al., 2003). Respondents found the scenario descriptions very realistic but they also felt that they were unable to express their real feelings and behaviours as they would have in a real situation (Morrison & Huppertz, 2010). Studying the impact of service recovery in field with actual customers would provide more external validity to the findings (Morrison & Huppertz, 2010). Future research should use wider demographic samples in terms of age, educational level, geographical regions and socio-economic classes (Mukherjee et al., 2009).

It is essential to include perceived justice (complaint handling) in the CCB model. Limited research has been done to study the impact of perceived justice post-CCB/intention (Blodgett, Hill, & Tax, 1997).

Objectives

The main objective of this article is to develop a model of consumer complaint intention. To study as to what extent the three types of complaint intentions of the consumers convert to positive intentions through complaint handling. Positive intentions are measured by consumer trust and retention. Retention is measured in terms of intention to use and behavioural loyalty. The study is conducted in the context of organized retail sector of India. The primary objectives of the study are:

To study the level of trust when consumers possess voice, private and third party complaint intention and changes in trust level when provided with complaint handling.

To study the level of intention to use among consumers when they possess voice, private and third party complaint intention and changes in the level of intention to use when provided with complaint handling.

To study the level of behavioural loyalty when consumers possess voice, private and third party complaint intention and changes in the level of behavioural loyalty when provided with complaint handling.

Hypotheses

Consumer Complaint Intention

Complaints provide valuable feedback to the firms. Without complaints firms would not be able to know their shortcomings and retain their consumers (Taleghani et al., 2011). Consumer complaint intentions have been categorized into voice, private and third party complaint intentions (Singh, 1988). Unfavourable complaining intentions (private and third party actions) exists as one of the dimension of customer loyalty and its presence indicates whether or not there is prevalence of loyalty of one party towards the other (Zeithaml, Berry, & Parasuraman, 1996). Negative word of mouth behaviour (private action) can significantly affect the buying behaviour of customers, their trust and retention for the firm (Mitchell & Critchlow, 1993). A high percentage of private and third party complaint intentions in a consumer reflect that the level of loyalty is low. Voice complaint intention converts to third party complaint intention when voice intentions of the consumers are not handled well resulting in decrease of trust and loyalty towards the retailer (Blodgett & Granbois, 1992; Halstead, 2002). On the other hand, level of trust and loyalty is high in case of voice complaint intention which motivates them to come and make a complaint with a belief that their complaints would be resolved satisfactorily (Singh, 1990; Wilson et al., 2012). When service failure occurs, reaction of the consumers is determined by the level of loyalty. A customer who is attached to the company may continue to remain loyal towards the company and considers the service failure as a mistake (voice complaint intention), while those customers who are comparatively less loyal may also continue to stay because they have no other option (private complaint intention). Such customers spread negative word of mouth and may defect towards competitors if any opportunity comes forward (Abbas et al., 2014). If the dissatisfied customers complain (voice actions), they would be more loyal than those who do not complain (private actions) (Fornell, 1976). According to a study by Technical Assistance Research Programs (TARP, 1986), it has been shown that customers who complain are more loyal to the organization as compared to those customers who never complain irrespective of the fact that their complaint was resolved up to the mark or not.Complaint intentions exist as an indicator of whether the customers would remain or defect from the company (Zeithaml et al., 1996). Complaints raised towards a firm can be regarded as an opportunity to strengthen the relationship between the customer and the firm (Mousavi & Esfidani, 2013). Halstead and Page (1992) argued that ‘reduction of dissatisfaction due to complaining is responsible for the positive relationship between complaining and repurchase intention’. Complainers have a higher level of loyalty and repurchase intention as compared to non-complainers (Mousavi & Esfidani, 2013; Namkung, Jang, & Choi, 2011).

On the basis of the relationships between the constructs, we put forward the following major hypotheses:

Voice Complaint Intention

H1: Voice complaint intention has a significant effect on consumer trust.

H2: Voice complaint intention has a significant effect on intention to use.

H3: Voice complaint intention has a significant effect on behavioural loyalty.

Private Complaint Intention

H4: Private complaint intention has a significant effect on consumer trust.

H5: Private complaint intention has a significant effect on intention to use.

H6: Private complaint intention has a significant effect on behavioural loyalty.

Third Party Complaint Intention

H7: Third party complaint intention has a significant effect on consumer trust.

H8: Third party complaint intention has a significant effect on intention to use.

H9: Third party complaint intention has a significant effect on behavioural loyalty.

Effective Complaint Handling

If a firm handles the customers complaint’s effectively, it helps build good customer relationships (Boshoff & Allen, 2000). Service recovery and complaint management are employed as main methods for retaining customers (Lu, Lu, & Wang, 2012). Satisfactory complaint handling ensures customer loyalty towards the firm (Huang et al., 2014). To maintain their competitive level in the marketplace and gain customer loyalty, it is essential for the firms to pay heed to customer complaints (Broadbridge & Marshall, 1995). Complaining behaviour can affect customer repurchase intentions depending on the effectiveness of complaint handling (Lu et al., 2012). Tax et al. (1998) accept the fact that handling the customer complaints effectively can develop customer trust and commitment towards the service provider. Complaints help the company to identify the customer problem and reestablish their lost trust (Claro et al., 2014). If complaints are resolved satisfactorily it will lead to trust, commitment and long-term relationship with the service provider; however, if they are not resolved properly, it will promote consumer mistrust towards the organization (Iyiola & Ibidunni, 2013). Effective complaint handling influences customer’s emotions and loyalty towards the firm (Svari et al., 2010). As said by Oh (2006), ‘having an understanding of consumer complaining behaviour and effective handling of complaints can increase customer commitment, build customer loyalty and satisfy the customers’. Effective service recovery can build a positive image of the organization and promote customer repurchase intentions and loyalty (Huppertz, 2007). If the customer complaints are managed effectively, it improves customer satisfaction level and increases repurchase behaviour (Bateson & Hoffman, 2011; Lovelock & Wirtz, 2011). If the retailers provide effective recovery solutions to the customers, it gives rise to trust among them (Astuti & Dharmmesta, 2011). Effective complaint handling creates a positive customer experience. This positive experience promotes future repurchase intentions and referral behaviour among consumers (Lin & Bennett, 2014). Customers who have undergone a successful service recovery become more loyal to a firm than the ones who never had such an experience (Kotler, 1997). Customers who are satisfied with the service recovery provided by the firm show patronage and loyalty towards the firm (Annamalah et al., 2011; Ghalandari, Babaeinia, & Jogh, 2012; Nikbin et al., 2012).

On the basis of the relationships between the constructs, we put forward the following sub-hypotheses:

Voice Complaint Intention

H1a: When provided with effective complaint handling, voice complaint intention will have a significant and greater (positive) effect on consumer trust.

H2a: When provided with effective complaint handling, voice complaint intention will have a significant and greater (positive) effect on intention to use.

H3a: When provided with effective complaint handling, voice complaint intentions will have a significant and greater (positive) effect on behavioural loyalty.

Private Complaint Intention

H4a: When provided with effective complaint handling, private complaint intention will have a significant and greater (positive) effect on consumer trust.

H5a: When provided with effective complaint handling, private complaint intention will have a significant and greater (positive) effect on intention to use.

H6a: When provided with effective complaint handling, private complaint intention will have a significant and greater (positive) effect on behavioural loyalty.

Third Party Complaint Intention

H7a: When provided with effective complaint handling, third party complaint intention will have a significant and greater (positive) effect on consumer trust.

H8a: When provided with effective complaint handling, third party complaint intention will have a significant and greater (positive) effect on intention to use.

H9a: When provided with effective complaint handling, third party complaint intention will have a significant and greater (positive) effect on behavioural loyalty.

Methodology

The model of consumer complaint intention (Figure 1) studies the effect of independent variables’ consumer complaint intention (voice, private and third party complaint intention) and effective complaint handling on dependent variables consumer trust and retention (measured by intention to use and behavioural loyalty). We will confirm the constructs with the help of confirmatory factor analysis testing how well the measured variables represent the constructs as suggested by Hair et al. (2006). With the help of a structural equation model, we will study the cause and effect relationships between the latent constructs (Hair et al. 2006). This will help us to test the propositions. Unit of analysis is all those respondents who have faced a service failure/product failure in an organized retail store (grocery/apparel/electronics/supermarket) in the last 6 months, have complained to the retailer and have also received the firm’s response. Consumer segments from different educational levels, locations, age categories and socio-economic classes were selected. Care is taken to ensure that they have sufficient maturity and intellectual level. Respondents are asked to report their complaint intention for the retail store if the same unsatisfactory experience happened to them again in future. Sample sizes in the range of 150–400 are suggested for maximum likelihood technique to produce stable results (Hair et al., 2006). Hence, a sample size of 450 seemed to be appropriate to produce valid results. The sampling technique used for data collection is snow ball sampling (a type of non-probability sampling technique). The data are collected pan India. Four metropolitan cities of India, namely Delhi, Mumbai, Chennai, Kolkata, and three non-metropolitan cities of India, namely Ahmedabad, Jaipur and Lucknow, were selected for data collection. Questionnaire constructed on the basis of established scales was circulated among the respondents.

Figure 1.

Source: Authors’ own.

Measurement Instruments

To measure all the variables, established scales were taken. To measure consumer complaint intention, consumer complaint intention scale given by Singh (1988) was taken. Items are measured on a 5-point Likert scale (1—very unlikely to 5—very likely) with alpha reliability values ranging from 0.7 to 0.85.

To measure effective complaint handling, perceived justice was measured on three dimensions: interactional justice, distributive justice and procedural justice. Established scales to measure interactional justice (Tax, 1993), procedural justice (Tax, 1993) and distributive justice (Oliver & Swan, 1989; Tax, 1993) was taken. Perceived justice (effective complaint handling) was measured taking collectively the three types of justice. Items are measured on a 5-point Likert scale (1—strongly disagree to 5—strongly agree) with alpha reliability values ranging from 0.88 to 0.93.

Consumer trust was measured using a scale given by Singh and Jain (2015). Items are measured on a 5-point Likert scale (1—strongly disagree to 5—strongly agree) and reliability values ranged from 0.743 to 0.771.

Consumer retention was measured on two dimensions: intention to use and behavioural loyalty. Intention to use scale was given by Garbarino and Johnson (1999) and scale to measure behavioural loyalty was given by Parasuraman, Zeithaml and Malhotra (2005). Intention to use scale has alpha reliability greater than 0.7 and behavioural loyalty scale has alpha reliability ranging from 0.88 to 0.96. Items are measured on a 5-point Likert scale (1—strongly disagree to 5—strongly agree).

Results

A confirmatory factor analysis using Amos 18.0 was conducted to test the measurement model (Figure 1). The measurement model indicated an acceptable model fit for the data collected. Details of fit indices for measurement model are given below:

Goodness of fit index (GFI) = 0.901, adjusted goodness of fit index (AGFI) = 0.865, comparative fit index (CFI) = 0.853 and root mean square residual (RMR) = 0.070. Values are significant at p < 0.001. The model indicates that the items are reliable indicators of the constructs.

The results of confirmatory factor analysis demonstrated a good fit on the basis of the fit indices. AGFI of 0.9 or more is associated with good fitting models (Hair et al., 2006). AGFI value of 0.901 is hence acceptable. AGFI values are typically less than GFI values (Hair et al., 2006). AGFI value of 0.865 is close to the recommended level of 0.9 and is hence acceptable. RMR of 0.08 or less is acceptable (Browne & Cudeck, 1992). RMR value of 0.070 shows acceptable model fitness. A CFI value of 0.85 represents progress and hence should be acceptable (Bollen, 2014). CFI value of 0.853 is above the recommended level and is hence acceptable.

According to Teo (2011), ‘the adequacy of the measurement model indicates that the items are reliable indicators of the hypothesized constructs which allow tests of the structural relationships in the model’ (Chakraborty & Sengupta, 2014).

Reliability and Validity of the Model

According to Malhotra and Dash (2011), ‘composite reliability is the total amount of true score variance in relation to the total score variance’. As per Hair et al. (2006), Cronbach’s alpha reliability coefficients equal to/greater than 0.7 show adequate reliability. All the measured constructs showed adequate reliability (> 0.7) (Table 1). Voice complaint intention construct has a reliability of 0.612. ‘Reliability between 0.6 and 0.7 may be acceptable provided that other indicators of a model’s construct validity are good’ (Hair et al., 2006).

Construct validity can be established using convergent validity, discriminant validity and nomological validity. Factor loadings of the construct, reliability of the constructs and average variance extracted were used to determine the convergent validity of each construct. According to Teo (2011), ‘convergent validity examines whether the respective indicators are measuring the constructs’. As per Hair et al. (2006) for factor loadings ‘good rule of thumb is that standardized factor loading estimates should be 0.5 or higher and ideally 0.7 or higher’. In our case, all the standardized factor loadings are greater than 0.5 (Table 1). For variance extracted, ‘a VE of 0.5 or higher is a good rule of thumb suggesting adequate convergence’ (Hair et al., 2006). Variance extracted for each construct was found to be greater than 0.5 (Table 2). Overall seeing the reliability, factor loadings and variance values, the results supported convergent validity of constructs used in the model. ‘Discriminant validity is the extent to which a construct is truly distinct from the other constructs’ (Hair et al., 2006). To achieve discriminant validity, the variance extracted estimates of the constructs should be greater than the square of the correlation estimate between the constructs. Average variance extracted for each construct was found to be more than their respective squared multiple correlations (Table 3). The results, thus, show discriminant validity. ‘Nomological validity is established by examining whether the correlations among constructs in a measurement theory make sense’ (Hair et al., 2006). All the constructs were found to be significantly correlated. The results, thus, support the nomological validity of the proposed model. The proposed model, thus, shows adequate construct validity.

Table 1.

Reliability and Factor Loadings of the Constructs

Construct	Item	Standardized Factor Loadings	Composite Reliability
Voice complaint intention (VI)	VI1 VI2	0.779 0.501	0.612
Private complaint intention (PI)	PI1 PI2 PI3	0.629 0.741 0.544	0.708
Third party complaint intention (TI)	TI1 TI2 TI3 TI4	0.641 0.739 0.768 0.700	0.803
Effective complaint handling (ECH)	ECH1 ECH2 ECH3 ECH4	0.732 0.611 0.520 0.776	0.745
Consumer trust (CT)	CT1 CT2 CT3	0.621 0.900 0.780	0.813
Intention to use (IU)	IU1 IU2	0.813 0.501	0.705
Behavioural loyalty (BL)	BL1 BL2 BL3 BL4 BL5	0.618 0.750 0.656 0.620 0.640	0.792

Source: Authors’ own.

Table 2.

Squared Multiple Correlations and Average Variance Extracted

	VI	PI	TI	ECH	CT	IU	BL
V1	0.55
PI	0.0196	0.57
TI	0.033	0.010	0.66
ECH	0.031	0.069	0.087	0.58
CT	0.053	0.036	0.0001	0.0003	0.75
IU	0.0001	0.017	0.061	0.004	0.16	0.51
BL	0.025	0.025	0.094	0.006	0.206	0.261	0.53

Source: Authors’ own.

Notes: Diagonal values (in bold) are variance extracted for each construct and values below the diagonal are the squared multiple correlations of the constructs. VI = voice complaint intention, PI = private complaint intention, TI = third party complaint intention, ECH = effective complaint handling, CT = consumer trust, IU = intention to use, BL = behavioural loyalty.

Structural Model

We have used structural equation modelling to test the hypothesis. On the basis of standardized regression weights, we will test the effect of complaint intention (voice, private and third party) on trust and retention (intention to use and behavioural loyalty) for hypotheses H1– H9. Taking complaint handling as another independent variable, we will test the effect of complaint intention and complaint handling on trust and retention for hypotheses H1a–H9a. The results of hypotheses testing (H1–H9 and H1a–H9a) are presented in Table 3.

Table 3.

Results of the Hypothesized Relationships

Hypothesized Relationships(Complaint Intention with Trust and Retention)	StandardizedRegression Weights	P-Value	Hypothesized Relationships(Complaint Intention and Complaint Handling with Trust and Retention)	StandardizedRegression Weights	P-Value
Voice Complaint Intention
H1: Voice intention ➔ Trust	0.946	*	H1a: Voice intention ➔ Trust	0.570	*
H2: Voice intention ➔ Intention to use	0.871	*	H2a: Voice intention ➔ Intention to use	0.057	*
H3: Voice intention ➔ Behavioural loyalty	0.922	*	H3a: Voice intention ➔ Behavioural loyalty	0.425	*
Private Complaint Intention
H4: Private intention ➔ Trust	0.315	*	H4a: Private intention ➔ Trust	0.812	*
H5: Private intention ➔ Intention to use	0.149	*	H5a: Private intention ➔ Intention to use	0.876	*
H6: Private intention ➔ Behavioural loyalty	0.090	0.162	H6a: Private intention ➔ Behavioural loyalty	0.863	**
Third Party Complaint Intention
H7: Third party intention ➔ Trust	–0.074	*	H7a: Third party intention ➔ Trust	0.227	*
H8: Third party intention ➔ Intention to use	0.467	*	H8a: Third party intention ➔ Intention to use	0.501	*
H9: Third party intention ➔ Behavioural loyalty	0.377	**	H9a: Third party intention ➔ Behavioural loyalty	0.376	**

Source: Authors’ own.

Notes: Values are significant at *p < 0.001 and **p < 0.05.

Hypotheses Testing

Voice Complaint Intention

Table 3 summarizes the relationships among each type of complaint intention with trust and retention with and without complaint handling. Voice complaint intention has a positive, significant and strong relationship with trust (H1), intention to use (H2) and behavioural loyalty (H3). Thus, hypotheses HI, H2 and H3 are supported. The paths are statistically significant at p < 0.001. This means that a positive change in voice complaint intention will result in a positive change in consumer trust, intention to use and behavioural loyalty. When complaint handling is provided in case of voice complaint intention, the strength of the relationship of voice complaint intention with trust (H1a), intention to use (H2a) and behavioural loyalty (H3a) decreases significantly. However, the relationship is still positive and significant at p < 0.001. Thus, a partial support is extended for hypotheses H1a, H2a and H3a since the relationship is significant and positive but not greater than before.

Private Complaint Intention

Private complaint intention has a positive and significant relationship with trust (H4) and intention to use (H5). The relationship of private complaint intention with behavioural loyalty (H6) is insignificant but positive. Thus, hypotheses H4 and H5 are supported but hypothesis H6 is not supported. The paths for H4 and H5 are statistically significant at p < 0.001. This means that a positive change in private complaint intention will result in a positive change in consumer trust and intention to use but no change in behavioural loyalty. When complaint handling is provided in case of private complaint intention, the strength of the relationship of private complaint intention with trust (H4a), intention to use (H5a) and behavioural loyalty (H6a) increases significantly. The relationships are now positive, significant and greater than before. The insignificant relationship of private complaint intention with behavioural loyalty has now become significant. H4a and H5a are statistically significant at p < 0.001 and H6a is statistically significant at p < 0.05. Thus, a strong support is extended for hypotheses H4a, H5a and H6a.

Third Party Complaint Intention

Third party complaint intention has a significant negative effect on consumer trust (H7). This means that a positive change in third party complaint intention will result in a negative change in consumer trust. The path is statistically significant at p < 0.001. Third party complaint intention has a significant positive relationship with intention to use (H8) and behavioural loyalty (H9). The path is statistically significant at p < 0.001 (H8) and p < 0.05 (H9). This means that a positive change in third party complaint intention will result in a positive change in intention to use and behavioural loyalty. Thus, hypotheses H7, H8 and H9 are supported. On providing complaint handling, the negative relationship of third party complaint intention with trust becomes positive and greater than before while still significant at p < 0.001 (H7a). The relationship of third party complaint intention with intention to use also becomes greater than before while still positive and significant at p < 0.001 (H8a). However, there is no increase in the strength of relationship of third party complaint intention and behavioural loyalty. The relationship is still positive and significant at p < 0.05 (H9a). Thus, a strong support is extended for hypotheses H7a and H8a but a partial support for hypothesis H9a.

Discussion

The results of the study can be interpreted as follows.

Voice Complaint Intention

The results show that voice complaint intention positively affects consumer trust (Table 3). This is in consonance with the literature which says that consumers with high voice intention are preferable for the retailers because such consumers approach the firm and file a complaint rather than spreading negative word of mouth (Robertson, 2012; Singh, 1990). A customer who is attached to the company may continue to remain loyal towards the company and considers the service failure as a mistake (voice complaint intention) (Abbas et al., 2014). If the dissatisfied customers complain, they would be more loyal than those who do not complain (Fornell, 1976). Results of the study show a strong positive relationship between voice intention and consumer trust. Organizations build consumer trust and loyalty through long-term relationships and a single service failure incident does not erode all the goodwill consumer has for the organization. However, prior positive experiences of the consumer also do not completely remove the negative effects of service failure from consumer’s mind and it can have an effect on their future repurchase intentions (Iyiola & Ibidunni, 2013). Usually, having a high percentage of voice complaint intention signifies that a consumer has loyalty towards the retailer. This is so because such consumers have a belief about the retailer that their complaints would be resolved up to their expectations which motivates them to make a complaint (Singh, 1990; Wilson et al., 2012). In case of voice complaint intention, on providing complaint handling the strength of the relationship has been found to decrease. The reason can be explained through this simple logic. Voice intention signifies trust and loyalty towards the retailer as per the literature and results of our study. They have a lot of expectations from the firm. They carry a belief that their complaints would be resolved satisfactorily. The high expectations somewhere fall short in comparison to the actual complaint handling provided to them. According to a study by TARP (1986), it has been shown that customers who complain are more loyal to the organization as compared to those customers who never complain irrespective of the fact that their complaint was resolved up to the mark or not. As per the results also it has been found that complaint handling does not matter much in case of voice complaint intention. The trust would either remain the same when complaint handling is provided or would decrease in case complaints are not resolved satisfactorily. Same trend is seen in case of intention to use and behavioural loyalty.

Private Complaint Intention

Unfavourable complaining intentions (private and third party actions) exists as one of the dimension of customer loyalty and its presence indicates whether or not there is prevalence of loyalty of one party towards the other (Zeithaml et al., 1996). A high percentage of private complaint intentions in a consumer reflect that the level of loyalty is low and having consumers with high private complaint intention is detrimental to the firm (Day, 1977; Singh, 1990). When service failure occurs, reaction of the consumers is determined by the level of loyalty. A customer who is attached to the company may continue to remain loyal towards the company and considers the service failure as a mistake (voice complaint intention), while those customers who are comparatively less loyal may also continue to stay because they have no other option (private complaint intention). Such customers spread negative word of mouth and may defect towards competitors if any opportunity comes forward (Abbas et al., 2014). If the customer’s feel that the firm will not pay attention to their problems, customers choose to remain silent and stop buying the product or service from the firm (Kim et al., 2003). They feel alienated from the firm and assume the value of complaint and likelihood of successful complaint as low (Kim et al., 2003). Voice complaint intentions also convert to private complaint intention in the absence of complaint handling (Halstead, 2002). If the dissatisfied customers complain (voice actions), they would be more loyal than those who do not complain (private actions) (Fornell, 1976). Consumers with private complaint intention are less loyal than those with voice complaint intention and they do not approach the firm to make a complaint. They either exit or continue to remain with the same firm due to no other option available and spread negative word of mouth. This is clearly reflected in the results as well (Table 3). The strength of the relationship of private complaint intention in case of trust and intention to use is much less in comparison to that of voice complaint intention. However, the relationship with private complaint intention is found to be positive in case of trust and intention to use. This might be due to the fact that consumers have been found to possess more than one complaint intentions at the same time (Singh, 1990). A study conducted on library users in South Korea (Oh, 2004) revealed that some users had positive attitude towards complaining. Despite of that they did negative word of mouth (private action) and/or complained to the library (voice action). Voice and private complaint intentions have been found to coexist. So, even having trust towards retailer cannot ensure that consumers will not go for private complaint intention. However, there is no effect of private complaint intention on behavioural loyalty. Presence or absence of private intention does not have any effect on behavioural loyalty. On providing complaint handling in case of private complaint intention, there is a significant increase in trust, intention to use and behavioural loyalty. Greatest effect of complaint handling is in case of behavioural loyalty. On providing complaint handling the relationship between private intention and behavioural loyalty has now become positive and significant. In case of trust and intention to use the relationship which was initially also positive has now become more positive than before.

Third Party Complaint Intention

If the consumers are not able to reach the service provider through their voice then they go for third party complaining (Blodgett & Granbois, 1992). Presence of third party complaint intention indicates low level of trust for the retailer (Singh, 1990). Consumers with high third party complaint intention are detrimental to the firm (Singh, 1990). Results of the study show that there is a negative relationship between third party complaint intention and trust (Table 3). With the increase in third party complaint intention trust will decrease. Presence of third party complaint intention indicates highest level of dissatisfaction so as third party complaint intention increases trust decreases. The result is in consonance with literature which says that presence of third party complaint intention indicates low level of trust for the retailer (Singh, 1990). However, there is positive relationship of third party complaint intention with intention to use and behavioural loyalty. The results reflect that there is low level of trust among third party complainers but this does not mean that consumers will not revisit the store and do their purchases. On providing complaint handling there is increase in the level of trust and intention to use. The negative relationship of third party intention with trust has now become positive. In case of behavioural loyalty there is no increase when complaint handling is provided. So, complaint handling does not matter for behavioural loyalty and matters the most for trust when talking of third party complaint intention.

Managerial Implications

This study has important implications for the retail firms. Aim of this study is to help the retail firm manager’s deal effectively with complaining consumers. It is necessary to study complaint intentions of the consumer in order to provide effective solutions to the retailer to deal with consumers with different types of complaint intentions (Singh, 1990). Consumers having different complaint intention need to be dealt differently. Results of the study prove as to what extent complaint handling matters for different consumer complaint intention (voice, private and third party). Such practices if taken care of can retain the consumers and make them more trustworthy and loyal than before.

Limitations

The data collection was done in seven cities of India due to resource constraints. Seeing the presence of socio-economic and cultural diversity in India, a replication of this study in different regions and different cultures can improve the generalizability of the findings. The study takes into account only the retail sector so the findings of the study might not be applicable to other industry or sector.

The responses of the study were collected by asking the respondents to recall a recent product/service failure incident and respond to questions on the basis of their perception and emotions. Although this method allowed us to collect huge amount of sample with service encounters having real failures, memory lapses might have produced biased responses.

Scope for Future Research

Studies say that a certain amount of dissatisfaction is essential for the customers to complain (Day, 1984; Day & Landon, 1977). However, there might be other factors also which persuade a consumer to complain. They can be consumer-specific, market-specific or product-specific factors. Using the variables of the present study, studies on complaining, recovery and its consequences can be replicated for other sectors and differences can be analyzed.

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