Branding through word of mouth is commonly regarded as one of, if not the best promotional tools and indicators of quality in existence. People trust the opinions of those closest to them far more than any others, and it is both human nature and completely logical to put more stock in claims coming from a wide range of non-colluding non-stakeholders than from someone who has something to gain or lose via misrepresentation of an object (e.g. a business and its product). For most firms in most industries, achieving rabidly positive and widespread word-of-mouth implies guaranteed success. However, what happens when a) customer retention is not possible and b) the product/service offered is such that previous customers (hereafter ‘alumni’) actively try to disavow having ever used it? We will study the case of pardons to break down a separate kind of signaling effect for quality when alumni review isn’t available.
To begin, we must first go over how pardons firms operate. In exchange for a fee higher than the cost of simply applying for the pardon oneself, the pardons firm agrees to provide its expertise in coordinating the application process with the many different bodies involved (courts, police stations, bureaus, etc.) to help ensure that the pardon is received by the end consumer as quickly and with as little difficulty as possible. In this way, the essence of the service is the speed with which the pardon is granted relative to the speed with which it could be granted. Here, the speed is a real-valued multivariate function with inputs SDS, SDC, SFP, BC where
SDS = speed of document shipping (from bureaus to consumer, from consumer to pardon processing agency)
SDC = speed of document completion (on the part of the consumer)
SFP = speed of form processing (on the part of the pardon processing agency)
BC = bureau coordination (efficiently managing the resources of each input into the pardon process on the part of the pardons firm)
An appropriate measure of quality for such a firm would be the cost of the service divided by the time taken to receive the pardon.
Next we must examine the essence of the product and determine what about it makes customer retention and word-of-mouth advertising impossible. The entire point of a pardon is to remove the evidence of a criminal past from a person’s official record. Since pardons must be granted for all convictions simultaneously, it is easy to see that a consumer will only ever need or want one, hence eliminating the prospect of retaining customers.
In order to propagate word-of-mouth, alumni must tell others positive things about the product/service, thus encouraging them to use it. However, this necessarily entails the alumni admitting to having used the product/service. As mentioned above, the entire reasoning behind requesting a pardon is to remove oneself from the stigma and legal restrictions arising as a result of being identified as a convict. From this we can see that pardons alumni are unlikely to engage in word-of-mouth because they will once again be identified as a criminal, which defeats the entire purpose.
How then does the market signal quality to potential consumers when alumni disavow all knowledge of the product/service? There are the other traditional signaling effects of price and presentation, but those are entirely controlled by the firm itself and can be easily manipulated to give off fuzzy signals. The answer is that prospective consumers signal quality to each other via negative, failed interactions. If the ‘sale’ is not completed, then the consumer maintains their criminal record and has a window in which to signal their discontent. Whether or not this is an accurate or effective signal for pardons firms is another matter entirely.