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

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

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, –

                        author

Nora Femenia, Ph.D

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… MORE >

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