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Customer Service Evaluation News 2/11/12

Employers feel no love for unscrupulous practice of ‘service sweethearting’

 

A new study led by two Florida State University marketing professors finds that some frontline service employees who are rewarded for hikes in customer loyalty and satisfaction also may engage in “service sweethearting,” a clandestine practice that costs their employers billions of dollars annually in lost revenue.

The study, the first to examine the employee and customer sides of this activity, will appear in the upcoming issue of the Journal of Marketing, a publication of the American Marketing Association. It identifies traits that may predispose some employees toward service sweethearting and may aid employers in weeding them out of the candidate pool. The study also reveals that in cases of sweethearting, customer loyalty is tied to the rogue employee rather than the company, so that firing the employee actually hurts the firm’s ability to retain customers.

The term service sweethearting describes the behavior of employees who provide friends and acquaintances with food and beverages or other free services that never appear on the bill. Though the practice is most prevalent in the hospitality industry, the potential for such behavior exists in any industry in which employees interact with customers at the point of sale, according to the study. In a retail setting, for example, a cashier may slide a product around a bar-code scanner, giving the false impression that a friend is paying for the item.

“Sweethearting may seem like a relatively innocuous behavior on the surface, but its financial implications are very serious,” said Michael Brady, the Carl DeSantis Professor of Business Administration in Florida State’s College of Business and one of the study’s co-authors.

Brady cited studies that show employee theft is estimated to cost U.S. firms up to $200 billion annually and is a contributing factor in from 30 percent to 50 percent of firm bankruptcies. For its part, sweethearting is estimated to account for up to 40 percent of revenue losses from theft — as much as $80 billion — and represents 16 percent of losses attributed to customers.

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