ODR And The Global Management Of Customers' Complaints: How Can ODR Techniques Be Responsive To Different Social And Cultural Environments?


by Nora Femenia, Ph.D

Paper presented at the Joint Conference of the OECD, HCOPIL, ICC, The Hague, Holland, December 12, 2000

Nora Femenia, Ph.D

Abstract:

This paper deals with the expanding universe of global online commerce, global customer relationship management and the role of an Online Dispute Resolution (ODR) system to manage and resolve customer's complaints. Here are some of the basic questions proposed:

1. How do cultural differences affect the use and implementation of ODR systems?

2. How can appropriate ODR systems be offered across cultures, to provide redress to failed customer experiences, and doing so enhance post-sales customer satisfaction?

3. Is ODR going to deliver in the promise to enhance customer's loyalty and satisfaction, and thus recovering lost and one-time customers as repeat customers?

A.- High/Low Context Cultures And Conflict Management Styles

Customers the world over diverge in their particular perceptions about expectations with online shopping experiences. Research shows how, in global commerce, people have to deal with such challenges as different cultures with their own languages and the corresponding grammatical structures pertinent to them. Cultures provide customers with different degrees of proximity in verbal interaction, different degrees of acceptance of personal information disclosure; and different skills to manage possible disputes with the online merchant either by denial, avoidance, confrontation, and or resolution.

A basic principle of dispute resolution theory is that people bring their cultural assumptions, as a naturalistic mindset applied to any dispute resolution process, be it face-to-face or online mediation, arbitration or any other online dispute resolution procedure.

These assumptions are beliefs about the nature of life, relationships, justice and conflict so completely accepted that they do not need to be stated, questioned, or defended. They are simply the lenses through which people construct reality. Cultural assumptions are a cluster of beliefs deemed to be fundamental by those who hold them because they shape their reality. Individuals inside a cultural group may assume that their beliefs are (or should be) universally held.

In any dispute resolution process, divergent cultural assumptions about conflict may cause one or both disputants to experience a sense of discomfort, uneasiness or misunderstanding, and even offense, allowing tensions to further escalate and so causing the failure of the process.

The silent loss of clients while attempting to shop online might very well be caused partially by differing expectations about the proposed online relationship, which when frustrated generate discomfort and customer alienation.

In general, cultural mindsets have been positioned along a continuum of beliefs either on the end of support and defense of individual rights or on the opposite side of strong group identification. Individualist and collectivist paradigms of human interaction are held in different degrees, by different social, cultural, and national groups.

The degree of belief in the individual's autonomy has been correlated with a low cultural context, and the belief in group-oriented interests has developed within high context social environments.

1.- Individualism and Low Cultural Context

Individualism is a social pattern that places the highest value on the interests of the individual. Individualistic people tend to see themselves as independent, and only loosely connected to the groups of which they are a part. Personal preferences, needs, rights and goals are individualist's primary concerns, and they place a great value on personal freedom and achievement. Self-reliance and competitiveness are traits, and the group is seen as a collection of individuals, so producing the low context society. When personal goals conflict with group goals, it is legitimate and acceptable to give priority to personal goals over the benefit of the community.

2.- Collectivism and High Context Societies

Collectivist societies place great value on achieving and maintaining group harmony. Collectivists view themselves as interdependent and closely linked to one or more groups. They often are willing to maintain a commitment to a group even at the price of their individual rights. Norms, obligations and duties to groups are primary concerns, and solidarity is the norm. Respectfulness and cooperation are social values.

The interests of individuals are often considered in second place and not a universal right, and the belief in the group-oriented welfare is primordial. When personal goals conflict with group norms, collectivists tend to forgo individual goals and to conform to group norms. (Wright, 1999)

3.- The Problem of Perceived Justice

Clients' expectations of redress differ according to what is considered just in different societies, according to how the problem is perceived. According to Hoffman and Kelley, (2000) equity theory, in general, explains that customers evaluate the sacrifice of time, effort and money done shopping against outputs received, for example, rewards, and customer satisfaction, and compare this balance with those of others in similar experiences.

The sum of the inputs is compared to the sum of outputs, which includes the specific recovery tactic (cash refund, apology, replacement) the manner of personnel, the service policies developed to handle those situations, and the image associated with responsive organizations. The perceived justice component of equity theory would then lead customers to ascertain whether the recovery strategy offered was fair or just.

Perceived justice suggests that the recovery process itself; the outcomes connected to the recovery strategy and interpersonal behaviors enacted during the redress process and the delivery of outcomes are critical in recovery evaluation. Courtesy and politeness exhibited by personnel, empathy, effort observed in resolving the situation, and the company's willingness to provide an explanation why the situation occurred count. This is the aspect of perceived justice that has the most impact on customer re-patronage and negative word of mouth intentions. (Hoffman & Kelley, 2000) In short:

From this comparison, three kinds of justice are produced:

a) Distributive justice: focus in the outcome of the company's recovery effort, what did the firm offer the customer to recover from the service failure?

b) Procedural justice: how is the process of delivering redress. Is it prompt and courteous? Timing, speed, and flexibility to adapt to customer's needs.

c) Interactional justice: politeness exhibited by personnel, empathy and acceptance of client's frustration or anger, genuine effort to resolve the situation, provision of some ADR mechanism, explanations given about the mistake. Validation of client's own view of the problem.

In a cross-culture approach, what is just varies according to the perceptual angle. For individualistic cultures, distributive justice means that the transaction will get back in track and people will get exactly what they bought, so interactional aspects take second place. (Blodgett et al, 1995)

For community cultures, the perception of being in a personal relationship, not an impersonal transaction, will take precedence and then interactional justice will prevail. Recovery strategies that are simply outcome-related and do not empathize with and or involve the customer and his group on an interpersonal level, injure the relationship and diminish customer loyalty. Respect for the person's dignity will go a long way in the high context community; being an appropriate ODR system offered the first step.

What clients do want is, from individualistic to community approach:

  • Quick complain reception, and resolution process;
  • Sympathy and understanding of their complaint, by means of some structure or interaction to process complain and obtain resolution;
  • To be made to feel a valued customer at all times, not just when they are complaining. (Cook and Macaulay, 1997)

4. - Low context customers' expectations and online conflict

In an individualistic culture, conflict is often considered a normal and inevitable result of an individual's effort to establish his or her place in society. In cultures such as that of the United States, conflict is seen as an instrument of social change, part of normal human interaction, and viewed in a positive light. Such cultures consider it permissible for individuals to question or challenge authority and to rebel or manifest their non-conformity with the dominant social paradigms.

Complaining is accepted and validated as a form of assertive behavior. Is in this kind of context that the perception of being frustrated by the online interaction, dissatisfaction with the process and its results, and in general, the accepted right of the customer to complaint and defend his rights are a logic consequence of the individualistic ethos.

Some features of the online interaction are especially problematic. There is no physical presence, only visual, textual elements; there is less immediacy and more distance, sometime extreme geographical distance and different time zones, promote weaker connection and less interactivity. The human imagination necessarily has to provide the missing elements of the interaction.

This causes a particular problem: given the high content of imaginary elements in online transactions, it is easy to understand the potential for disappointment that it presents. Because imaginary elements are so conducive to demands for instant self-gratification, the low context customer's tendency is to expect too much fast and so to generate a high level of frustration. People seek instant gratification, or immediate satisfaction. A good experience as promised by online shopping includes online responsiveness. It has to happen through:

  • Direct client-business communication
  • Fast, immediate identification of object or service desired
  • Sales process completion easy, fail-safe and immediate
  • Fast delivery promised now and enacted promptly.

If something goes wrong on the transaction, the low context customer expects to

  • Find expert complain handlers at the merchants' site
  • Mistakes quickly recognized, apologized and solved
  • Fast reply and simple, non-expensive solution or problem redress.

If a mediation mechanism is provided, more acceptable if perceived anonymous and impartial, but with good credentials.

5. - High context customers' expectations and online conflict:

In contrast, a nation like Mexico, for example, is a collectivist or "high context" culture. Because there is generally less social mobility and considerable social control by authority figures, some communities are characterized by less economic and industrial development. While this is not necessarily true of collectivist cultures in more highly industrialized societies, such as Italy or Japan, such cultures still have long historical traditions of collective thought and action.

Collectivist cultures have extended family and tribal structures of relationship. Such collectivist cultures place great value on cultural norms of the primary groups of which they belong, and emphasize compliance with group norms. The interests of individuals are often considered subordinate to the interests of the group, so access to some technological advantages such as the Internet would be still considered as a class symbol and not an individual right.

Conflict in this context could be seen as an aberration, and a survey of Korean-Americans found that the respondents viewed conflict as a shameful inability to maintain harmonious relationships with others. The Japanese avoid direct personal confrontation and so promote endless consensus-generating processes. Avoidance and denial of conflict is the preferred approach in high context societies.

In these cultures, the whole customer-merchant personification interaction is perceived against the background of all related experiences shared by the family, group or community, usually against the background of social differences and status pecking order. Information extracted from the individual's experience will be shared by word of mouth, and compared with others' similar experiences at the same social level. There is a stronger tendency to make a judgmental evaluation of the experience by accumulating data shared with others. Whatever negative action, probably perceived as coming from the shopping experience, once resistance to avoid conflict by avoidance is overcome, will be perceived as done to a collective "us".

Conflict within the group in collectivist societies is often viewed negatively because it has the effect of threatening group harmony. The tendency in collectivist societies is often to avoid acknowledging and discussing conflict, preferring to handle conflicting situations indirectly. Conflict involving other social levels is also avoided, because it involves a risk of humiliation. Is in this context that the individual client, isolated in front of the computer, will prefer to abstain from complaining even when losing, due to several considerations:

  • Has no clear perception of his individual right to complain as a consumer. Complaints are not accepted easily, because disrupt harmony and confront one side of the community (merchants) with the other side (customers);
  • Would refrain from complaining in order to avoid challenging merchant, imagined as well connected, powerful and resourceful;
  • If made to feel guilty or somehow responsible of the problem by merchant, would avoid complain altogether and develop resentment.
  • Prefer to gather information and compare experiences with relatives and peers before attempting to validate his rights.
  • Neutral, impartial mediation is not understood, because if someone has to intervene, better to have a trusted member of the community do the intervention, having the advantage of previous knowledge of the parties. Mistrust of functional third parties not familiar to the community.

The basic attitude is to give up or renounce any future satisfaction expected from complaining, because perceived higher cost of confronting the merchant. (Broadbridge, 1995) In this online interaction, the more technically powerful merchant represents an authority figure not easily challenged by individuals coming from community-oriented groups, not technically sophisticated, that fear shame if they fail.

There is even more potential for disappointment and development of mistrust in this type of community setting. Why? Because the rules of community interaction (between the client and the merchant as authority) will prevent the development of a healthy self-assertive position where individual rights can be expanded through a well formed complaint. Customers will not easily accept to fill an application provided by merchant, to explain in excruciating but anonymous detail what has been done to them, so accepting they have been humiliated. If they perceive the complain application as a mere form offered to serve some merchant purpose, as to provide statistical data, it will be further rejected.

Being invited to go through the process of filling pre-formed, easy complaint applications should offer some immediate reward for this kind of high context client, who would otherwise see the complain process as unjust (if he is not sure of the kind of prevailing justice offered) and merchant-serving.

Other prevalent practices by some business anywhere, which deploy defensive attitudes towards customers' complaints, send them the message that the company's viewpoint will be almost always upheld, so reconstructing the power dominance situation.

These practices elicit avoidance responses by customers who will not openly complain, but will use word of mouth to vent their frustration against the merchant. There is the potential for highly damaging offline and online bad-mouthing and other online forms of merchant's social criticism, channeled by the online connected clients into new community fora, such as Internet forums and chats.

In short: high and low context cultures produce different client's attitudes when customer-merchant conflict appears, which are also present in the search for ODR solutions. Cultural attitudes will decide if and how a complain will be filled, if acceptance of third party interventions such as online dispute resolution is possible, and the kind of redress mechanism necessary to provide relational justice and recover the merchant/client relationship, so delivering post-sales customer satisfaction.

B.- Some Points For Further Discussion:

First: Ignoring Or Denying Cultural Differences Of Global Customers Is The Problem .

As the Internet revolution completely transforms and redesigns the traditional marketing process, (Tobias, 1999), it is undergoing a radical transformation due to a number of factors, particularly, changing client demands. These forces are causing enterprises to question and re-examine the shopping process, the "customer experience," as perceived from the point of view of their global clients.

Why to focus on customer experience? Because it is the single most important factor in e-commerce success, and the main factor in silent losses, those truncated experiences where the visitor leaves the website in frustration, compounding 43% of visits. (Hurst, 2000)

Negative or positive images created in people's mindsets by customer experiences generate a relationship that, albeit imaginary, connects a client's mindset with a pleasant or non pleasant link to the company owning the website. All other different aspects of the computational part of the transaction (front end, back end, website touch and feel, speed) are invisible components of this customer's perception of the merchant.

Is upon this imaginary relationship that the trust or mistrust with the online merchant will be developed. And is the sheer quality of this relationship the one element which will decide if the customer perceives satisfaction or frustration, if she complains or not, how, when and with what results. Repeat customers are made from a satisfactory, pleasure-filled experience at the online merchant's website, where they perceive that transactional justice is delivered.

To re-focus marketing efforts on the customer, the concept of cross-cultural customer-centric vision has to be developed. Increasingly, enterprises are realizing that the biggest obstacle to having a customer-centric vision is that they have very little information captured and available about the global customer.

The task is enormous, because personalized service or product delivery has to imagine and please a singular shopper, differentiated by geographic data, culture or language. Before the specs of diversification are identified, some global criteria for solving online disputes have to be established.

Here is the challenge: How to identify human basic universal traits, common to all clients, while at the same time offer culturally appropriate satisfactory service to each, at a global level?

Second: It Is Good Business To Identify And Satisfy Human Needs Across Cultures. Repeat Clients Are The Ones That Have Good Customer Experience And Feel Their Cultural Needs Accepted.

Social interactions are the basic actions by which we deal with other humans in a daily basis. Face to face commercial interactions have become one of the means by which we allow others to support and confirm our identity, albeit as shoppers. Cultural interchanges in society are based on several of these "mutual recognition processes", and thus we came to expect confirmation of both our expectations and our identities through them.

Needs theory present them as the dynamic force for friction leading to conflicts. They are core human concerns, such as the need to receive recognition and respect through every transaction, even transactions that appear to be only interest-based. Human needs go beyond the interest of completing the transaction, towards the goal of reaping some symbolic benefits: the pleasure of finishing an efficient transaction; or the recognition as a valued online shopper, able to identify the product needed and process the whole online transaction seamlessly, and so on. Frustration of needs produces anger and rejection of the merchant and the process.

In short, humans strive to obtain two things when they shop, (money only being the vehicle for obtaining both):

  • The object or service originating the transaction;
  • Simultaneous identity confirmation as valued consumers, throughout the complete online transaction and further services/goods delivery, provided by a positive merchant/shopper relationship;
  • The needs for response, security, identity recognition, stimulation, perceived justice, meaning, rationality and control over their own destiny (Burton, 1990) are universal. Frustration over these unrecognized needs is at the root of the more intransigent conflicts, and it compounds event the most simple dispute resolution process if they continue to be ignored.

In the online commercial transaction it could very well develop a continuum of escalating perceptions:

  • Conflicts that start as interest-based: ("I want my money back")
  • If ignored or poorly handled may evolve into identity positions: ("I want to be heard and respected as a valued customer")
  • If not ODR is provided in time, client will move towards acting out of negative emotions, as revenge: ("I'll show them who I am").

The longer the dispute goes on unresolved, the more people would dig in into their dignity, prestige and need of recognition as a valued shopper (Rothman, 1997).

Third: Provision Of An ODR System Is The Way To Recover Lost Clients, So One-Time Customers Become Repeat Customers

Two important and related challenges facing global merchants in connection with the development of e-commerce are first building consumer confidence in completing online transactions and later providing an effective method of addressing consumer dissatisfaction with transaction outcomes. Developing trust and consumer confidence worldwide is highly culture-related; offering a universal dispute resolution mechanism that would take charge of the problem whenever and wherever it emerges is challenging.

There are three types of data that businesses need to develop positive customer relationships. Most business collect descriptive (customer's shopping activity) and relationship data (the stats on consumer's behavior, such as how many customers are NOT repeat customers data), (Hurst, 2000) but most are missing contextual data around the customer relationship. This information is the one that helps predict under which cultural premises will customers be repeat customers.

Contextual data is cultural data: the why and how customers buy in different cultural commercial environments. When personal and cultural variations emerge, different patterns of consumers' complaining behavior emerge. What truly drives customer behavior, and in particular here, what drives customer's complaining behavior across different social, economic and cultural groups? Is it possible to identify universal criteria for redress of customer frustration at a global level?

As this information is yet to be developed, and reality indicates that lost customers compose a very high proportion of site visitors, ODR becomes the solution to the lost customer: a recovery service by which customers are brought back to the shopping experience with a merchant. The whole point of providing a no-cost, accessible, fast and culturally adapted online dispute resolution service to cross-cultural clients is to help retain satisfied and loyal customers. International regulatory commerce institutions are now in search of a way of providing accessible and efficient ways of solving online transactions disputes, effectively and with internationally acceptable guarantees of equity and fairness.

Fourth: Post Sales Customer Service Is Now ODR System

The term Online Dispute Resolution (ODR) covers all methods of resolving disputes related to obligations resulting from contracts concluded electronically (primarily over the Internet) between professional sellers of goods and providers of services and final consumers (B2C) operated by impartial bodies, other than the courts of law.

Reliable dispute resolution systems that costs consumers little or nothing bolster consumer confidence in e-commerce, stimulate transaction volume, and demonstrate that online businesses can be self-regulatory and do not need to be burdened with extensive government regulation. The impetus for a movement towards reliance upon automated consumer-to-merchant dispute resolution services is coming from both economic and regulatory actors. There are no other alternatives to post-sales customer service offered now that could guarantee fast, efficient redress of online conflicts as ODR systems. (Carblanc, 2000)

ODR systems have been developed primarily by business organizations in order to provide speedier, more informed, and more cost-effective dispute resolution by experts that can be obtained through traditional civil courts systems. Wherever possible, direct business/consumer resolution is and will be the preferred instrument for solving customer complaints in B2C Internet transactions. These services are part and referred as customer satisfaction systems, and they may become a step in the chain of redress. (GBDe, 2000)

Fifth: What Constitutes A Culturally Friendly ODR System?

When personal and cultural variations emerge, different patterns of consumers' complaining behavior emerge. What truly drives customer behavior, and in particular here, what drives customer's complaining behavior across different social, economic and cultural groups? Is it possible to identify universal criteria for redress of customer frustration at a global level? There is simply not enough information available now about how to understand cross-cultural customers want and needs.

Two important and related challenges facing global merchants in connection with the development of e-commerce are first building consumer confidence in completing online transactions and later providing an effective method of addressing consumer dissatisfaction with transaction outcomes. Developing trust and consumer confidence worldwide is highly culture-related; offering a universal dispute resolution mechanism that would take charge of the problem whenever and wherever it emerges is challenging.

For the purpose of considering which general traits a universally acceptable online DR mechanism should offer, we propose to focus on the following areas of concern.

  • Establishing global legitimacy of complaining behavior;
  • Including support for human needs of recognition and respect, and the different forms they might present in high and low contexts societies. Issues such as how to make the knowledge from the customer experience transferable to the clients' community now need to be discussed.
  • Identifying an ODR process model best responsive to cross-cultural perceptions, with variable features as:
    • offering web sites with diverse levels of technical sophistication and equipment demands;
    • diverse procedures concerning methods of website/client interaction, different mixes of media (writing, voice, etc);
    • different modes of payment and delivery, etc.

C.- Some Practical Recommendations

Some elements of a cross-cultural ODR post-sales online program:

1. - It has to begin always with an apology (Fisher et al, 1999) that acknowledges the customer as a real person with definite needs. Customers who are satisfied with the way a complaint is handled are those who feel confirmed in their identity as valued customers. No denial, excuse or ignoring the problem as it is perceived from the customer's point of view. It would help to train personnel to frame information from complaints as valuable feedback.

2. - It has to identify the problem in a fast, efficient and respectful way. Satisfactory complaint handling has to include plenty of opportunities for the customer to be listened to, and to perceive that due and respectful attention is directed to the issue. Some clients from high context cultures will either be too expressive or reticent about their feelings; both styles have to be processed fast, because both will wish to have immediate satisfaction.

3, -

to top of page

Biography




Since 1996, Dr. Femenia has developed and operated two bi-lingual web sites dedicated to dispute resolution training and conflict resolution, www.inter-mediacion.com, (in Spanish) and www.falklands-malvinas.com, the latter being hyperlinked by more than 100 other web sites.

She holds a Ph.D. in Conflict Resolution from Maxwell School of Citizenship and Public Affairs at Syracuse University, New York. A native born Spanish speaker, she is the author of National Identity in Times of Crises, 1996, Nova Science Publishers.

From 1996-1999, she taught different courses full-time at Nova Southeastern University, some of them on cross-cultural conflict. She has developed numerous conflict management training programs for corporations, South American governments and has consulted for the Inter-American Development Bank and World Bank on reformation of civil justice systems in South American.

Currently Dr. Femenia is certified as a Florida State bi-lingual family mediator, a NASD arbitrator, and also Associate Professor of Dispute Resolution at Florida International University, delivering ADR training programs for Spanish speaking professionals.

Dr. Femenia was an invited panelist at the FTC's workshop on "Alternative Dispute Resolution for Consumer Transactions in the Borderless Online Marketplace," held on June 6-7, 2000, Washington DC.

------------

Nora Femenia, quien recibió su Ph.D. en 1993 en la Maxwell School of Citizenship and Public Affairs, de Syracuse University, Program of Análisis and Resolution of Conflicts, ha enseñado en varias universidades, tales como American University, Nova Southeastern University, the School for International Training y ahora Florida International University. Sus cursos van desde Resolución de Conflictos Internacionales hasta Teoría de Conflictos, Diseño de Sistemas, Evaluación de Operaciones de Peacemaking y Mediación, en dos idiomas. Ella ofreció las primeras 40 horas de capacitación en mediación desde la NSU, en Florida, desde 1997 al 99, en castellano. Ahora tiene a su cargo algunos cursos dictados por el Labor Center de la Florida Internacional University.

Su experiencia profesional en el campo la ha llevado a intervenir en los proyectos de la reforma de la justicia en Latinoamérica, y en la introducción de la mediación en varios países: Paraguay, Costa Rica, Argentina, Ecuador por parte del Banco Mundial y el BID. Ahora ella funciona como consultora de empresas en temas de conflictos de personal, aplicando un enfoque sistémico, desde www.creativeconflicts.com.

Su página www.inter-mediacion.com, online desde 1996, ha provisto educación en temas de mediación a multitud de profesionales de habla hispana. Esta Web hizo difusión de temas nuevos como la ética, resolución de conflictos online y mediación apreciativa que ahora se han hecho accesibles. También se ofrecieron desde aquí los primeros cursos online sobre temas de resolución de conflictos, certificados en asociación con la FIU. Mantiene un blog: www.mediadorexitoso.blogspot.com, y un forum internacional bilingüe dedicado a la resolución pacífica del conflicto del Atlántico Sur www.falklands-malvinas.com/forum.



Email Author
Website: www.inter-mediacion.com

Additional articles by Nora Femenia, Ph.D

Comments

The views expressed by authors are their own and do not necessarily reflect the views of Resourceful Internet Solutions, Inc., Mediate.com or of reviewing editors.




Straus Institute for Dispute Resolution

Copyright 1996-2014 © Resourceful Internet Solutions, Inc. All rights reserved.