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Customer dissatisfaction and defection: The hidden costs of downsizing

Customer dissatisfaction and defection: The hidden costs of downsizing
Customer dissatisfaction and defection: The hidden costs of downsizing
Downsizing has been the subject of a good deal of research. Very little research, however, has examined the impact of downsizing on customers. Using a case study approach with a Fortune 100 company, we measured the attitudes, in a telephone survey, of 534 B2B service customers before a significant downsizing event and 994 customers afterwards. Our findings show that a significant downsizing event has an immediate and negative impact on customer satisfaction levels and on projected retention rates. This will lead to a direct, negative financial impact on the service provider due to a loss of expected future customer revenue. The lost revenue substantially offsets the short term labor cost savings from the downsizing.
0019-8501
405-413
Williams, Paul
ae414ef5-40ec-4cd6-a79e-97c72343d781
Khan, M. Sajid
3e05db9b-0203-4142-a5c5-99f4870c0cb7
Naumann, Earl
717a303f-0aca-45b9-a090-b0fbdca63c96
Williams, Paul
ae414ef5-40ec-4cd6-a79e-97c72343d781
Khan, M. Sajid
3e05db9b-0203-4142-a5c5-99f4870c0cb7
Naumann, Earl
717a303f-0aca-45b9-a090-b0fbdca63c96

Williams, Paul, Khan, M. Sajid and Naumann, Earl (2011) Customer dissatisfaction and defection: The hidden costs of downsizing. Industrial Marketing Management, 40 (3), 405-413. (doi:10.1016/j.indmarman.2010.04.007).

Record type: Article

Abstract

Downsizing has been the subject of a good deal of research. Very little research, however, has examined the impact of downsizing on customers. Using a case study approach with a Fortune 100 company, we measured the attitudes, in a telephone survey, of 534 B2B service customers before a significant downsizing event and 994 customers afterwards. Our findings show that a significant downsizing event has an immediate and negative impact on customer satisfaction levels and on projected retention rates. This will lead to a direct, negative financial impact on the service provider due to a loss of expected future customer revenue. The lost revenue substantially offsets the short term labor cost savings from the downsizing.

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More information

Accepted/In Press date: 13 April 2010
Published date: 1 April 2011

Identifiers

Local EPrints ID: 472821
URI: http://eprints.soton.ac.uk/id/eprint/472821
ISSN: 0019-8501
PURE UUID: 99426721-36d9-4683-b5d0-31f2e88d2063
ORCID for Paul Williams: ORCID iD orcid.org/0000-0003-2178-488X

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Date deposited: 19 Dec 2022 17:57
Last modified: 17 Mar 2024 04:02

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Contributors

Author: Paul Williams ORCID iD
Author: M. Sajid Khan
Author: Earl Naumann

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