The interplay of service experience and online consumer ratings

In this article, we examine the effects of service experience on both antecedents and consequences of online consumer ratings (OCR). Focusing on perceptions after the actual service, our framework is grounded in the expectation-disconfirmation theory, in which we distinguish two concepts: the valence of situational service experience (i.e., the positive/negative experience with a given service) and the level of accumulated service experience (i.e., knowledge from past experiences). In study 1, we analyze data from Yelp.com to show that the effects of positive and negative situational experience on OCR are exacerbated (weakened) when the level of accumulated experience is low (high). Study 2, consisting of a controlled experiment on services experiences, confirm the findings of Study 1 by finding that the effect of OCR on repurchase intentions is stronger when the valence (level) of service experience is negative (low) rather than positive (high). Key-words Online consumer ratings, service experience, valence, hotel booking. The interplay of service experience and online consumer ratings Introduction In the last years, the development of online consumer ratings (OCRs) has radically changed customer access to word-of-mouth, as consumers now can access reviews of thousands of other customers as sites such as Amazon.com, TripAdvisor.com or Hotels.com. As the opinions of other customers have a very high credibility when consumers form their expectations about services (Grönroos, 2007, building on Duncan and Moriarty, 1997), the rapid development and extensive availability of other customers’ online ratings have direct consequences for consumers' expectations and perceptions of services. Electronic word-of-mouth (eWOM) has become one of the most trusted sources of recommendations: 70% of consumers say that they trust online recommendations from virtual strangers (Nielsen, 2009). Although the service experience might play a fundamental role in service perceptions after the actual encounter (see Grönroos and Voima 2013), the extant literature pays little attention to the interplay of service experience and online consumer ratings. The service experience is the most important antecedent of online ratings; a customer who has a positive (negative) experience will leave a good (bad) online rating. However, two consumers who share the exact same service experience may leave different ratings. In this paper, we argue that the level of accumulated service experience plays an important direct and moderating role. The literature on the interplay between OCR and the level of service experience is scarce with the exception of Sridhar and Srinisavan (2012) who examined the effects of the level of service experience, measured as the number of previews reviews, but failed to find any significant direct or moderating effects. We believe that this result may be an artifact of data collection, due to independent booking website in which the average number of previous reviews and the standard deviation were quite low (1.9 and 3.8) and may not reflect the actual variability in the actual levels of accumulated service experience. The extant literature largely studies the direct impact of online consumer ratings on value and loyalty (Gruen et al., 2005), persuasiveness (Zhang et al., 2010), evaluations (Kim & Gupta, 2012) and sales (Chevalier & Mayzlin, 2006; Yang & Mai, 2010). Moreover, prior literature has investigated the boundary conditions associated with the effects of OCRs. Studies have shown the existence of various moderating factors such as popularity (Zhu & Zhang, 2010), search vs. experience (Park & Lee, 2009), life cycle (Liu, 2006; Cadario, 2014), emotional expressions (Kim & Gupta, 2012), consumption goals (Zhang et al., 2010) or even installed base (Yang & Mai, 2010). However, the literature is still limited in terms of service experience, with the exception of Zhu and Zhang (2010) who studied the related yet different concept of Internet experience. The authors found that the impact of OCR on sales is stronger when targeting consumers with greater Internet experience. Hence, one might expect a similar result such that the effect of COR on purchase decision is stronger with a greater level of accumulated service experience. However, we actually posit and find the opposite effect, that is, the effect of OCR on purchase decisions is stronger for consumers with a low level of service experience. We examine the effects of service experience on both online ratings (study 1) and repurchase intentions (study 2). Our theoretical contributions are two-fold. First, we conceptually distinguish two concepts: the valence of situational service experience and the level of accumulated service experience from past experiences. Second, given the mixed results and gaps in the literature, we provide a comprehensive twostage theoretical framework, in which we examine the effects of service experience on the antecedents (stage 1) and the consequences (stage 2) of OCR. More precisely, we find in study 1 that the effects of positive and negative situational experience on OCR are exacerbated (weakened) when the level of accumulated experience is low (high). Finally, we consistently find in study 2 that the effect of OCR on repurchase intentions is stronger when the valence of service experience is negative rather than positive. Theoretical background Consumers continue to evaluate the service after the actual interaction (Grönroos and Voima 2013) and our conceptual framework is rooted within the expectationdisconfirmation framework (Oliver, 1980) to acknowledge this situation, which Grönroos and Voima (2013) term the ‘customer sphere’. Building on this situation, we view satisfaction as a function of expectations and expectancy disconfirmation. In other words, evaluations after the service interaction depend on the actual service experience exceeding or equaling the expected service (Grönroos, 1984). Hence, we believe that the interplay of service experience and online consumer ratings depends on consumer expectations. In the next sections, we present our focal concepts of service experience and online consumer ratings, before building hypotheses through the lenses of consumer expectations. This leads to a two-stage comprehensive framework about the effects of service experience on the antecedents (stage 1) and consequences (stage 2) of OCR.