Introduction

The point of retail service delivery is crucial to a business as previous research shows that negative deviations from consumers’ service expectation often reduce the likelihood of subsequent customer referrals [1]. Nonetheless, effective management of referral likelihood at the point of retail service delivery remains an understudied area. Today, with the ubiquitous presence of digital communication channels, the importance of customer referral is again emphasized by marketing scholars and practitioners taking the form of electronic word-of-mouth or social media referrals ([2, 3]). Most customers can easily recall a service failure [4, 5]. When failures occur in servicescapes [6], the presence of other customers is likely to impact consumer reactions to the incident. Despite progress in understanding social presence effects on consumption [712], whether and how the presence of others affects consumer reactions to a service failure is unknown. Seeking to improve effective customer management at the point of retail service delivery, three studies examine social presence effects on referral likelihood following a service failure. The studies identify affective and cognitive pathways associated with social presence effects and build a nomological net that features social presence, blame attribution, and cognitive load.

Study findings convserge to show that social presence (vs. no presence) offsets service failure by increasing referral likelihood. Social presence effects appear to follow pathways delineated by two major theories: evaluation–apprehension theory, (e.g., [1315]) and distraction-conflict theory [16]. While social presence effects are often explained by co-occurrence of pathways predicted by both theories, there are conditions (internal vs. external blame attribution; low vs. high cognitive load), where one or the other pathway is activated or muted. Together, the results illuminate social presence effects on customer referral likelihood following retail service failures (studies 1–3), the underlying pathways of such effects (studies 1–3), and the moderating role of blame attribution (studies 2–3) and cognitive load (study 3).

Theoretical Background

Social presence is defined as a social entity (i.e., another person or group of people) that is physically present but does not engage the consumer (e.g., other diners at a restaurant; [7]). Past research strongly supports the centrality of social presence in influencing consumer cognitions, emotions, and behaviors [7, 17]. For example, Puntoni and Tavassoli [17] investigate how social presence influences the way people process and remember cues. They find that the presence of others leads to automatic activation of impression management concerns and increases the accessibility of words that are applicable to social desirability. A number of other studies demonstrate that felt emotions (e.g., embarrassment and pride) are more acute in the presence of others ([7, 9, 18, 19]). Finally, research shows that individuals usually refrain from activities that project negative images in public [7]. For example, Herman et al. ([20]; see also [21]) find that the amount of food intake varies depending on whether or not the eating behavior is observed by others.

Researchers have employed two major theories to explain social presence effects. First, evaluation–apprehension theory is linked to seeking and maintaining positive public image (e.g., [1315]). The second, distraction-conflict theory, is associated with attention conflict and cognitive overload [16, 22]. For decades, advocates have marshaled evidence for each theory [7, 9, 16]. Recently, however, researchers have argued for an integrative approach, one which posits that individuals process social presence through two parallel routes: (1) those reflecting evaluation of current individual abilities (evaluation–apprehension theory), and (2) those reflecting a momentary sense of discomfort (distraction-conflict theory) [2325]. The present research adopts the integrated approach and posits that social presence effects on customer referral likelihood operate through two parallel pathways, each of which are made more or less active depending on contextual factors.

Evaluation–Apprehension Theory, Emotions, and Referral Likelihood

Evaluation–apprehension theory argues that the desire to make a good impression and the fear of negative evaluation become more salient when individuals are in public spaces with others present (e.g., [13, 15]). Thus, individuals are more likely to view themselves from third party observer perspectives [26, 27], and internalize evaluative standards against which they evaluate their public identities [28]. Internalized behavioral standards regarding regulation of emotion in social situations [28, 29] may lead to perceived differences between the actual and ideal self, increasing the likelihood of certain felt emotions and reducing the likelihood of others.

Specifically, research has demonstrated that social presence facilitates self-directed negative emotions (such as embarrassment; [7, 9, 18]) and inhibits other-directed negative emotions (such as anger; [30]). Although social presence influences anger, as well as embarrassment, anger appears to be particularly pertinent to the study of social presence effect on referral likelihood following a service failure. This is because anger (rather than embarrassment) is considered the most dominant affective reaction to service failures [31, 32] as hedonic bias drives people to ascribe failures to others rather than to themselves [33].

Anger is a retrospective emotion that tends to occur when people attribute a goal-incongruent event to external sources [34]. Previous research has documented inhibition of anger in the presence of social observers. Such inhibition occurs due to increased salience of public standards of certain behaviors [35]. When individuals direct their attention to the public self, they become impression managers who are sensitive to others’ evaluation of them [13] and regulate their emotions to match others’ expectations [36]. Therefore, even in negative and stressful circumstances, such as service failures, individuals will still be motivated to appear positive and engaged because negative emotions such as anger presumably have negative social consequences [30]. It is then reasonable to argue that there is a general tendency for individuals to withhold their feelings of anger during a service failure when they are observed by other customers. Supporting this prediction, a number of studies has provided evidence that a social audience attenuates anger as individuals attempt to maintain positive self-images in public [30, 37]. In turn, reduced anger increases the customer’s likelihood of making recommendations to others [31]. Therefore, it is reasonable to argue that social presence (vs. no social presence) during a service failure will help increase referral likelihood and that this effect is mediated by reduced levels of felt anger.

Distraction-Conflict Theory, Cognitions, and Referral Likelihood

An alternative social presence effects theory, distraction-conflict theory, predicts that the presence of others causes attention conflict and leads to cognitive overload [16, 22]. This theory is based on the drive theory of social facilitation [38, 39], which predicts that the presence of others increases physiological arousal, enhancing alertness for the unexpected, and preparedness to respond to the actions of others. Distraction-conflict theory [16, 22] predicts that enhanced alertness produces attention conflict with the task at hand, for example, generating cognitions about a service failure. In addition to enhanced psychological arousal, there are other possible reasons such as social comparison and threat monitoring (see [23] for a review) that increases attention conflict when there is social presence. As a result, social presence appears likely to contribute to cognitive overload and decrease resources available to the customer to generate negative cognitions about others associated with the service failure. Fewer other-directed negative cognitions about the service failure should in turn increase the consumer’s propensity to make referrals. This theoretical rationale, coupled with predictions derived from evaluation–apprehension theory, leads to the following hypotheses:

  1. H1

    Following a service failure, social presence (vs. no social presence) will increase the customer’s likelihood of making referrals.

  2. H2

    The effect of social presence on referral likelihood is mediated by

    1. (a)

      Reduced negative other-directed emotion (anger)

    2. (b)

      Fewer negative other-directed cognitions

Blame Attribution

Previous research not only identifies two distinctive and parallel pathways but suggests that each pathway can be made salient by individual differences such as positive- versus negative-orientation [23]. Our study extends these insights to explain the effect of social presence on consumer referral and further argues that a contextual factor, blame attribution, also moderates processing of service delivery failure in the presence of others. Relative to individual difference factors, contextual factors are more easily manipulated and controlled and, therefore, hold greater managerial significance.

During a service encounter, service conflict can be induced by frontline staff or by consumers themselves. In fact, consumer-induced incidents contribute to about 43 % of all service failures [40]. It is, therefore, fruitful to examine service failure that arises from consumer error as well as provider error. Previous research has found that blame attribution during the service failure has significant impact on consumers’ word-of-mouth behavior intentions toward the firm [4143]. According to attribution theory, perceived causal locus (external or internal) is an important determinant of emotional response to a given event [44]. If the service failure is externally-attributed, the shopper is likely to focus on ways of responding appropriately in the presence of others. As predicted by evaluation–apprehension theory, emotion regulation in the presence of others [30, 37] may reduce other-directed emotions such as anger. Given the lack of self-blame, however, the presence of others should have no impact on self-directed emotions such as embarrassment. In addition, there is little motivation for extra cognitive effort to elaborate on the service failure. Thus, it is unlikely that social presence will affect the number of negative thoughts (toward self or other) in the external attribution condition.

On the other hand, when the service failure is partially or wholly the customer’s fault, the shopper’s focus is likely to be on self-related issues that may have led to the service failure. As such, he/she will feel little or no anger. Instead, fewer negative cognitions associated with the failure (e.g., regarding the salesperson) are expected due to increased cognitive load as predicted by distraction-conflict theory. Social presence in this condition should reduce other-directed negative cognitions but have no impact on other-directed emotions such as anger.

Although social presence versus no social presence is expected to increase referral likelihood in both external- and internal-attributed service failures, the underlying process is expected to differ depending on blame attribution. In the external condition, it is predicted to occur because of reduced other-directed negative emotion (anger). In the internal attribution condition, this outcome is hypothesized to occur as a result of reduced other-directed negative cognitions. Thus, in addition to hypothesizing social presence main effects across blame attribution conditions, mediation pathways are predicted to differ depending on whether the customer externally or internally attributes the service failure. These expectations are now stated formally as follows:

  1. H3

    When the customer externally attributes a service failure, reduced negative other-directed emotion (anger) alone will mediate the relationship between social presence (versus no social presence) and referral likelihood.

  2. H4

    When the customer internally attributes a service failure, fewer negative other-directed negative cognitions alone will mediate the relationship between social presence (vs. no social presence) and referral likelihood.

Cognitive Load

To further validate our theoretical model, we then examine the effects and pathways associated with social presence among individuals who are under high cognitive load. Gilbert et al. [45] have shown that an individual’s ability to process information is impaired in conditions of high cognitive load relative to conditions of low cognitive load. Ward and Mann [46] have demonstrated that cognitive load prevents individuals from processing information regarding the dietary consequences of eating behavior thereby inhibiting control of food consumption. Similarly, Drolet and Luce [47] have found that high cognitive load leads to less processing of product attribute information based on self-goals during decision making. In summary, individuals under high cognitive load have relatively less cognitive capacity to process incoming information.

As noted earlier, there are two different pathways that drive social presence: one is driven by emotions and the other by cognitions. We posit that the pathway associated with social presence in the internal attribution condition is driven by cognitions and, therefore, requires the customer to have sufficient cognitive processing capacity for the social presence effects to surface. We contend that the customer will generate fewer other-directed negative cognitions regarding the service failure with (vs. without) a social audience. This difference, however, may not be observable when an individual has limited cognitive capacity, as other-directed negative cognitions may already be limited due to restrained cognitive capacity. On the other hand, the pathway in the external-attribution condition should still hold even when cognitive capacity is lower, as the process is affective in nature and, thus, should not be influenced by an individual’s cognitive capacity. This leads to prediction of a two-way interaction effect involving social presence and blame attribution on referral likelihood under conditions of high cognitive load. That is, under high cognitive load, social presence effects on referral likelihood should only occur when the service failure is externally attributed. In other words, when cognitive load is high, H3 should hold, but not H4.

Study 1

Method

Study 1 featured a two (social presence vs. no social presence) between-subject one-factor design. Participants were recruited from a large American university. A bookstore checkout experience served as the servicescape context due to its familiarity to participants. A scenario approach featuring cartoon figures enabled participants to project themselves into the service experience. Social presence was manipulated by depicting other customers (vs. no customers) in the vicinity of the checkout counter and cashier. The service failure scenario featured the cashier’s response to a disagreement between the customer and cashier regarding product price. In the scenario, the cashier states that the price of the book is $9 and the customer responds, “But it says that I have a 30 % off discount.” The cashier answers, “30 % off? Let’s see. I’m sorry but I can’t give you the 30 % discount. The 30 % discount is for reference book only. All novels are 10 % off. Would you still like to buy the book?”

Following random assignment to treatment, participants were asked to imagine themselves as customer in a bookstore checkout scenario. They then read one of two treatment scenarios with cartoon illustrations with or without the presence of others depicted. Thereafter, participants filled-out a thought bubble regarding their reactions to the experience, followed by outcome and demographic measures. They were thanked and debriefed. This process resulted in 57 usable responses (41.8 % females, M age = 24.23).

Embarrassment as self-directed negative emotion and anger as other-directed negative emotion were measured [48]. Two independent coders categorized thought listings into self-directed and other-directed negative cognitions (intercoder reliability = 0.94). Discrepancies were resolved through discussion. Two items captured referral likelihood (“The likelihood that I will recommend this bookstore to a friend is,” and “The possibility that I will say positive things about the bookstore is,” 1 = very low/9 = very high; γ = 0.86; [3, 49]). All measures in the three studies employed nine-point scales.

Results and Discussion

Among participants in the “no social presence condition,” 85.7 % correctly reported that there was no other customer in the store. Under the “social presence” condition, 88.5 % correctly recognized social presence. Hence, the social presence manipulation was successful. Given that consumers need to be aware of social presence for it to have an impact ([9, 18]), in the subsequent analysis, the manipulation check was used as a more precise measure to indicate social presence [9]. In support of H1, participants who were exposed to and noticed social presence in the retail scenario were more likely to make referrals to others (M nsp = 2.23 vs. M sp = 3.28; t [46] = 2.43, p < 0.02; see Table 1). To test H2, we investigated whether anger and negative other-directed cognitions were primary mediators of the relationship between social presence and referral likelihood. In the analysis, we included all possible mediators: anger, embarrassment, and number of negative self- and other-directed cognitions (see Fig. 1).

Table 1 Descriptive statistics—study 1
Fig. 1
figure 1

Mediation analysis—study 1. *p ≤ 0.10, **p ≤ 0.05, ***p ≤ 0.01

Consistent with the recent guidelines for mediation testing [50], we used bootstrapping to assess indirect effects. Using 5,000 bootstrap samples, we estimated 2 significant indirect effects: social presence increases referral likelihood through attenuated anger (b = 0.77, z = 2.39, p < 0.02; 95 % confidence interval 0.23 to 1.54) and diminished negative other-directed cognitions elicited by the service failure (b = 0.38, z = 1.72, p < 0.09; 95 % confidence interval 0.09 to 0.98; see Fig. 1). The direct effect of social presence on referral likelihood was nonsignificant (p > 0.47), suggesting an “indirect-only mediation.” Consistent with our hypothesized theoretical framework, test results indicate the likelihood of two mediators, i.e., anger and negative other-directed cognitions. Hence, H2 is supported.

This experiment shows that the presence of other customers in a negative service encounter may increase referral likelihood. The results also lend support to a parallel process for social presence effects. While the results from study 1 demonstrate that the two processes jointly drive social presence effects, the question remains whether each process can be made salient by a situational factor, blame attribution. The following study explores this possibility.

Study 2

Method

Study 2 featured a 2 (social presence vs. no social presence) × 2 (external- vs. internal-attribution) between-subject factorial design. One hundred twenty-one students from a large American university participated in study 2 (48.8 % females, M age = 21.23). They were exposed to a service failure scenario that manipulated social presence and blame attribution. Manipulation of social presence followed study 1. Blame attribution was manipulated by the cashier’s reply to the customer’s question on the book price. Similar to study 1, in both scenarios, the cashier states that the price of the book is $9 and the customer responds, “But it says that I have a 30 % off discount. In the externally-attributed condition, the cashier says, “30 % off? Let’s see. Oh no, this book was on the wrong shelf. We are very busy today and we haven’t had enough time to re-shelve all the books after some customers accidentally put them in the wrong place. All novels are 10 % off. Would you still like to buy the book?” “In the internally-attributed condition, the service provider answers, “I don’t know how you missed our sale signs. This novel is not 30 % off. Our signs clearly state that the 30 % off discount is for reference books only. All novels are 10 % off. Would you still like to buy the book?”

Multiple pretests determined that (1) the amount of information conveyed in studies 1 and 2 stimuli was comparable and (p > 0.15) and (2) the attribution manipulation in study 2 successfully shifted blame in the self- versus other-condition (p < 0.01). Measures and procedures in study 2 were similar to those in study 1. Two independent coders categorized thought listings as self-directed negative cognitions and other-directed negative cognitions (intercoder reliability = 0.91). Discrepancies were resolved through discussion.

Results and Discussion

Among participants in the “no social presence condition,” 75.4 % correctly reported that there was no other customer in the store. Under the “social presence” condition, 96.9 % correctly recognized social presence. Hence, the social presence manipulation was successful. Once again, the manipulation check was used to indicate social presence [9]. As expected, internally-attributed service failure elicited stronger feeling of shame than externally-attributed service failure (M internal = 4.84 vs. M external = 3.50; t [119] = 2.95, p < 0.01). Hence, the blame attribution treatment operated as intended.

ANOVA analysis established that both social presence and blame attribution exerted main effects on referral likelihood (p < 0.05). As hypothesized, referral likelihood increased in the social presence condition (M nsp = 3.14 vs. M sp = 3.97; t [106] = 2.57, p < 0.02; see Table 2). To test H3, we modeled anger as the primary mediator; whereas to test H4, we modeled negative, other-directed cognitions as the primary mediator of the relationship between social presence and referral likelihood. In both analyses, we included all possible mediators: anger, embarrassment, and number of negative self- and other-directed cognitions (see Fig. 2).

Table 2 Descriptive statistics—study 2
Fig. 2
figure 2

Mediation analysis—study 2. *p ≤ 0.10, **p ≤ 0.05, ***p ≤ 0.01

Looking first within the external attribution condition, using 5,000 bootstrap samples, the analysis produced one significant indirect effect. Social presence increased referral likelihood by attenuating anger elicited by the service failure (b = 0.28, z = 1.73, p < 0.09; 95 % confidence interval 0.02 to 0.76; see Fig. 2). The direct effect of social presence on referral likelihood was not significant (p > 0.95), suggesting an “indirect-only mediation.” No other mediation relationship is identified. Thus, supporting H3, mediation analysis provides evidence for anger as the sole mediator of social presence effects on referral likelihood when the service failure is externally attributed. In the internal attribution condition, mediation analysis identified one significant indirect effect: social presence enhanced referral likelihood by reducing negative other-directed cognitions (b = 0.46, z = 1.72, p < 0.09; 95 % confidence interval 0.03 to 1.22; see Fig. 2). The direct effect of social presence on referral likelihood was not significant (p > 0.11), suggesting an “indirect-only mediation” and indicating that a lower level of negative other-directed cognitions is the sole mediator of social presence effects on referral likelihood when the service failure is internally attributed. Hence, H4 was supported.

Study 2 replicates social presence effects on referral likelihood following a service failure. Consistent with study 1, social presence increases referral likelihood regardless of blame attribution. However, study 2 further reveals the complexity of social presence effects as the pathway through which it impacts referral likelihood appears to vary depending on whether the blame is externally or internally attributed. When service failure is externally attributed, social presence attenuates other-directed negative emotion (i.e., anger) which leads to greater referral likelihood. When service failure is internally attributed, social presence reduces other-directed negative thoughts, resulting in increased referral likelihood. In other words, the mechanism for social presence effects during an internally- (externally) attributed service failure is a cognitive evaluation (affective appraisal) process. To further validate our theoretical model, study 3 is designed to mute the cognitive evaluation process in internal attribution by increasing cognitive load. We posit that under high cognitive load, social presence effects on referral likelihood will occur only when the service failure is externally attributed.

Study 3

Method

Study 3 featured a 2 (social presence vs. no social presence) × 2 (external vs. internal attribution) between-subject factorial design. One hundred twenty-six students from a large American university participated in study 2 (50 % females, M age  = 22.84). All participants received a high cognitive load manipulation in which they were given 2 min to memorize a randomly selected set of 20 words in anticipation of a recall memory test [46]. After 2 min, they were exposed to the social presence and attribution manipulations. Service failure, social presence, and blame attribution stimuli were the same as in study 2. Measures and procedure were also similar. Two independent coders categorized thought listings into self-directed and other-directed negative thoughts (intercoder reliability = 0.91). Discrepancies were resolved through discussion.

Results and Discussion

Among participants in the “no social presence condition,” 80.3 % correctly reported that there was no other customer in the store. Under the “social presence” condition, 86.4 % correctly recognized social presence. Hence, the social presence manipulation was successful. Similar to studies 1 and 2, the manipulation check was used to indicate social presence [9]. As expected, the internally attributed negative service experience elicited stronger feelings of shame (M internal = 4.52 vs. M external = 3.56; t [123] = 2.07, p < 0.05). Hence, the blame attribution treatment was successful.

A 2 × 2 ANOVA analysis revealed that blame attribution exerted main effect on referral likelihood (p < 0.04). However, the significant main effects were qualified by a significant two-way interaction (p < 0.04, one-tailed). Planned contrasts revealed that, as predicted, when the service failure was internally attributed, social presence had no effect on referral likelihood (p > 0.90). When the service failure was externally attributed, however, referral likelihood was significantly increased in the social presence condition relative to the no presence condition (M nsp = 4.12 vs. M sp = 5.29, t [53] = 2.66, p < 0.02; see Table 3).

Table 3 Descriptive statistics—study 3

Analysis (see Table 3 and Fig. 3) revealed that when blame is internally attributed, no mediation effect is identified. However, when blame is externally attributed, social presence leads to greater referral likelihood by reducing negative other-directed emotion (i.e., anger) elicited by the service failure (b = 0.32, z = 1.60, p < 0.11; 95 % confidence interval 0.01 to 1.05; see Fig. 3). The direct effect of social presence on referral likelihood was also significant (p < 0.05). In addition, the indirect and direct paths had the same sign, suggesting a “complementary mediation” involving anger, which concurs with our hypothesized theoretical framework [50]. Hence, H3 was supported.

Fig. 3
figure 3

Mediation analysis—study 3. *p ≤ 0.10, **p ≤ 0.05, ***p ≤ 0.01

Study 3 confirms our predictions that, under high cognitive load, the affective process underlying social presence effects during an externally attributed service failure results in attenuated other-directed negative emotion (i.e., anger) which in turn heightens referral likelihood. By contrast, during an internally attributed service failure, high cognitive load severely limits cognitive processes associated with social presence, and as a result, its effects on referral likelihood are no longer evident.

Discussion

Theoretical Implications

Referral marketing has recently attracted a great deal of attention from marketers, especially due to the emergence of social media. Social media affords consumers venues to share their opinions and experiences [51]. More importantly, it offers companies opportunities to take advantage of customer referrals, as consumers constantly recommend products and services to others via social media, now considered the world’s largest referral channel [52]. It is therefore imperative for retail managers to identify ways to encourage customer referral likelihood at the point of retail service delivery. Unfortunately, empirical evidence is scant regarding social context influences on referral likelihood after a service failure. This raises the need to study how the presence of others (e.g., strangers or friends) during a public service failure affects subsequent customer referral likelihood.

For most consumers, connections with others are central and ongoing facets of life [53]. This reality is manifested, in part, by the dramatic impact of a social audience on an individual’s service failure experience. Consider, for instance, how differently a customer is likely to react if a cashier refuses to accept an advertised discount in the presence of other customers as opposed to when the customer is alone. Despite its clear importance, limited research has investigated the impact of social presence on customer referral likelihood during service failures (see [54, 55], for a few rare exceptions). Addressing this gap, this research examines the effect of social presence on referral likelihood during a service failure. In three studies, although referral likelihood is inevitably low given the service failure, social presence (vs. no presence), however, is found to significantly increase referral likelihood.

In addition, this research has made other unique theoretical contributions to the development of social presence theory. For decades, marketing researchers and psychologists have employed two competing theories to account for social presence effects. However, efforts to integrate these theories into a comprehensive framework are limited [23]. As such, the second objective of this research is to test two theories of social presence, as well as explore the conditions in which each theory is more predictive of underlying processes and outcomes. Study 1 results show that the social presence effect is shaped jointly by two parallel processes: an affective process (anger) as predicted by evaluation–apprehension theory and a cognitive process (number of other-directed negative cognitions) as predicted by distraction-conflict theory. Study 2 demonstrates that when the service failure is externally attributed, an affective process drives social presence effects on referral likelihood. When the service failure is internally attributed, a cognitive process better accounts for participant reactions to social presence. These processes are further investigated in study 3 among individuals experiencing high cognitive load. Study 3 indicates that under high cognitive load, social presence effects on referral likelihood occur only when the service failure is externally attributed with an affective pathway (feelings of anger) mediating these effects. However, when the service failure is internally attributed, due to cognitive depletion, social presence effects are no longer significant under high cognitive load. These findings further validate the processing mechanisms of social presence effects on referral likelihood.

Managerial Implications

Failures during retail service encounters are all too frequent [56]. The current studies therefore hold significant implications for retail managers who manage daily service encounters. Over the years, marketing scholars have highlighted the importance of the retail store environment on customer service experience (e.g., [57, 58]). While recent studies suggest that recovery efforts such as downward social comparisons may increase customer referral likelihood after a service failure [1], the present research indicates that managers may employ contextual cues (i.e., social presence and blame attribution) to assist recovery from a failed service encounter. For example, if environmental cues in the retail setting and service provision strategies are designed to minimize cognitive load while increasing the likelihood of noticeable customer social presence, then regardless of blame attribution, social presence should increase customer referral likelihood whenever the inevitable service failure occurs. Designing servicescapes that facilitate the effects of social presence might therefore present managers with precious opportunity to positively moderate service recovery.

In addition, to improve perceived service quality, retailers often train frontline staff to look for nonverbal cues that a customer might be underwhelmed. This task has become increasingly difficult in the highly competitive global marketplace and almost daunting in the digital environment where customer referral is a prominent feature [51]. To respond to these challenges, retail managers may find social presence a particularly valuable tool for minor service failures that are relatively harder to detect. In addition, social presence can be facilitated through the physical design of the offline and online servicescapes. For example, employing more open checkout space in brick-and-mortar stores and avatars online to mimic the presence of other shoppers in click-and-mortar stores may moderate the negative impact of service failures. Furthermore, redirecting blame to the service provider may help sustain the positive effect of social presence even when the customers are experiencing cognitive depletion.

Finally, although businesses are increasingly offering financial incentives for referrals from existing customers (e.g., Netflix has incentivized current subscribers to recruit new customers; [51]), recent research suggests that “organic” (or “unpaid”) customer referrals are substantially more effective in generating valuable customers than firm-stimulated referrals. This appears particularly true when the paid nature of stimulated referral activity is known to perspective customers [51]. For this reason, the current research expands the tool kit for managers wishing to employ contextual cues such as social presence to generate valuable organic customer referrals even after the service encounter.

Limitations and Future Research

Finally, this research suggests areas for future investigation. Printed cartoon scenarios were used as stimuli. This approach met theoretical objectives while reducing likely prior knowledge and experience confounds. However, subsequent studies should externally validate our findings in more realistic settings using field experiments. Future research should also identify factors that influence social presence processes. For example, Uziel [23] suggests that different reactions to social presence can be made salient at different times depending on individual difference factors. Prior research suggests a strong positive self-focus for independent individuals (e.g., Americans) and a negative or neutral self-focus for interdependent individuals (e.g., Asians; [59, 60]). Interactions between such culture-based individual differences, social presence, and blame attributions could be particularly interesting from both theoretical and managerial perspectives. Yet, to date, the study of social presence in a cross-cultural context remains very limited [61]. Certainly, more work needs to be done before we have a complete understanding of social presence, a social situational factor that contributes tremendously to the development of consumer theory and effective marketing strategies.