The Complex Role of Complexity

Abstract

During professional service encounters, integrating customers into the process of service provision is both important and challenging, as the complexity of professional services can impair value creation at the service provider–customer interface. This study addresses this problem by examining how service complexity impacts customer cognitive capacity and finally important marketing outcomes. Through an examination of 310 interactions between service providers and customers of a retail bank, this study shows that customers’ cognitive capacity is drastically reduced at moderate levels of perceived complexity. Subsequently, a lack of cognitive capacity decreases customer satisfaction with the encounter and loyalty intentions toward the company, two important drivers of company profitability. Results further show that service providers’ ability to adapt to the specific nature of the encounter helps customers to conserve cognitive capacity. This study hence contributes to service literature by emphasizing the central role of perceived service complexity and establishing the importance of customers’ cognitive capacity in professional service encounters. From a managerial perspective, this study underlines the importance of decreasing service complexity to avoid the negative consequences of mentally overtaxing customers and shows how service providers can effectively use adaptive selling to manage customers’ cognitive capacity at the service provider–customer interface.