It's all in the delivery

Susan Hogan

Assistant Professor of Marketing Susan Hogan is completing research exploring how best to deliver non-critical bad news to a customer in order to elicit the most favorable, or least damaging, customer evaluations. Her results indicate that how the information surrounding the problem is delivered can impact the relationship’s quality and the probability of the relationship continuing.

Q. Many companies are focused on building better relationships with customers. Where do the messenger and non-critical problems come into play?
A. Impressions and opinions formed by current and potential customers about the firm and its products are often based on their encounters with messengers—who are, in most cases, the company agents. The agent has been identified as the heart of the exchange relationship; however, much of the existing research has focused on the relationships between organizations vs. individuals.

While one non-critical problem won’t single-handedly determine the fate of the business relationship continuing, these problems happen more frequently and do have an impact.

Q. What is the best way to deliver bad news?
A. Even for non-critical information, an agent should adopt a forthcoming delivery style, and disclose the bad news and the reason behind the bad news quickly.

Q. What do your results suggest?
A. While agents derive a significant benefit from being forthcoming with negative information, they often undermine this positive effect due to where they assign blame. Specifically, while taking personal responsibility for a negative event bodes well for the agent, it does not bode well for the agent’s firm. The best thing agents can do for the sake of their employer is to pass the blame for the bad news outside of their own firm. These results suggest that there exists a potential principal-agent conflict.