The Effect of Service Quality and Expectations on Customer Complaints

Customer complaints measure consumers’ dissatisfaction with the quality of a product or service. If product quality is unobservable ex ante, customer complaints may be driven by expectations as well as by the actually experienced quality level. I test whether the level of quality that could be expected prior to consumption affects the number of customer complaints after controlling for – ex post observable – actual quality, using data from the U.S. airline industry. I find that there are fewer complaints when actual quality is higher. Controlling for actual quality, a higher level of expected quality leads to more complaints.