Customer dissatisfaction and defection: The hidden costs of downsizing

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.

This record has no associated files available for download.