Earlier this month we posted a video that AT&T put out in response to a flurry of customer complaints.  A video in which, as Jackie Huba of Small Business Trends pointed out, AT&T never said "we're sorry."  And that raises the question, "Should companies apologize?"  A new paper from researchers at the University of Nottingham suggests that apologizing is a good idea:

After an unsatisfactory purchase, many firms are quick to apologize to customers. It is, however, not clear why they should do that. As the apology is costless, it should be regarded as cheap talk and thus ignored by the customer. In this paper, we test in a controlled field experiment whether apologizing influences customers’ subsequent behavior. We find that apologizing yields much better outcomes for the firm than offering a monetary compensation. 

Read The Power of Apology here.  

(H/T Mark Thoma)