The findings suggest that it is more important for service firms to focus their resources and efforts on improving customer experience when economic times are good, as opposed to when the economy is down.
This new finding contradicts previous beliefs that firms should increase their efforts to improve customer experience during difficult economic times to hold on to existing customers.
“When the economy is doing poorly, customers tend to focus more on price, irrespective of their personal income,” said Nita Umashankar, an assistant professor of marketing at Georgia State University inn the US.
“When the economy is doing better, customers pay attention to other aspects of the purchase decision,” Umashankar added.
“We would never advocate for firms to provide a poor experience to the customer, but you get a greater return for your investment when the economy is doing better,” she noted.
The study is based on panel survey and transaction data from an international airline carrier.
The researchers found the international airline carrier doubled its gain in revenue when it improved customer experience during better economic times.
The study appeared in the journal Marketing Science.