CHALLENGE:
What is the cost of employees who slip their friends an extra appetizer or comp a drink at a restaurant? It may cost the service industry as much as $80 billion a year. But does this help the business? The answer is a disappointing, “NO.”
HOW THEY RESEARCHED IT:
Professors Clay Voorhees from Michigan State University, Michael Brady and Michael Brusco from Florida State University surveyed 171 service employees. These employees were instructed to request survey completions from two of their customers involved in a sweethearting incident and two of their customers who were not involved, resulting in 610 customer-completed surveys. The researchers hypothesized that sweetheart customers would develop close personal relationships with frontline staff and thereby lead to customer satisfaction with the business, and subsequently, loyalty to the business. Sweethearting with heavy usage regular customers was excluded from the study.
WHAT HAPPENED?
Any positive effect from sweethearting is tied to the collusive employee; the gain any business might receive is filtered out by the employee. Further, customers who were sweethearted provided inflated satisfaction, loyalty and positive word of mouth measures on the surveys. The threat of punishment has little deterrence because staff and customers are collaborating, unlike when staff is pitted against customer-shoplifters.
WHY MANAGERS SHOULD CARE:
Shrinkage and other retail losses are increasing globally. Sweethearting is one form of shrinkage. Further, businesses that reward staff on the basis of customer satisfaction are misapplying rewards when sweethearting is common. The researchers argue that a broad range of traits should be measured prior to hiring, including ethics and need for social approval. They suggest that such measures could circumvent the need to implement oppressive and alienating security measures.
CAN YOU HELP?
Have you found techniques that can inhibit sweethearting? Have you found when sweethearting is valid?
Source: Michael K. Brady, Clay M. Voorhees, & Michael J. Brusco (2011), “Service Sweethearting: Its Antecedents and Customer Consequences,” Journal of Marketing.
News pickups:
‘Sweethearting’ deals cost retailers billions, MSNBC, February 17, 2012 http://bottomline.msnbc.msn.com/_news/2012/02/17/10418928-sweethearting-deals-cost-retailers-billions
‘Sweetheart Deals’ Could Cost U.S. Companies $80 Billion a Year, U.S. News & World Report, February 14, 2012
http://www.usnews.com/news/articles/2012/02/14/sweetheart-deals-could-cost-us-companies-80-billion-a-year
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