Service Problems and Recovery Stratégies: An Experiment

Abstract This experiment examines the effectiveness of recovery strategies after a service failure on customer loyalty and complaint intentions. Respondents encountered different core failures in terms of problem severity (denial or delay) and criticality levels (high or low). The results suggest the effectiveness of service recovery strategiesassistance (fixing the problem) and/or compensation (defraying the costs incurred)varied depending on the type of service, problem severity, and criticality levels. The implication is that recovery strategies need to be matched to the specific incident. Service firms should focus on avoiding or reducing core failures. Getting it right the first time is the best strategy. Resume La presente recherche examine au moyen dune experience l'efficacite de differentes strategies de recuperation sur la fidelite et les intentions de porter plainte de la clientele a la suite dune defaillance de service. Les participants ont ete confrontes d differences defaillances de service en termes de gravite (interruption du service ou delai) et de niveau critique (eleve ou faible). Les resultats indiquent que l'efficacite des strategies de recuperation-aide technique (resolution du probleme) et/ou compensation financiere (defraiement des coats encourus)-varie en fonction du genre de service, de la gravite du probleme et des niveaux critiques. Les resultats de l'etude laissent supposer que les strategies de recuperation doivent etre associees a un incident specifique. Les entreprises de services doivent mettre l'accent sur 1'evitement ou la reduction des defaillances. La meilleure strategie consiste encore a donner le service correctement. Increased customer loyalty is a critical driver of a firm's long-term financial performance (Jones & Sasser, 1995). Customer dissatisfaction reduces loyalty and erodes the firm's reputation. A major cause of dissatisfaction is unsatisfactory problem resolution (Hart, Heskett, & Sasser, 1990) and up to 50% of customers who experience problems are not satisfied with the recovery strategy (Best & Andreasen, 1976; Zeithaml, Berry, & Parasuraman, 1990). When customers experience a problem with a service provider, they may respond by switching to a new supplier (exit), attempting to remedy the problem by complaining (voice), or staying with the supplier anticipating that "things will get better" (loyalty) (Hirschman, 1970). They may also talk to other consumers about the experience, and this negative word of mouth can also influence a firm's profits and reputation (Richins, 1987; Singh, 1990; Singh & Wilkes, 1996). It is thus important for the firm to develop a recovery strategy to respond to service problems. Interestingly, in spite of the importance of service recovery, according to Kelley and Davis, "a dearth of empirical research confines any theoretical discussion to anecdotal reports" (1994, p. 52). The objective of this paper is to provide empirical evidence on the effects on customers' future intentions toward the provider of different recovery strategies after a service failure (Figure 1). Using hospitality industry scenarios, subjects were presented with a new purchase situation where the provider's quality was known only by reputation. Purchase decisions varied according to the importance of the purchase to the consumer. Purchase outcomes included service failures where service was either denied or delayed. The service provider offered the following recovery strategies: (a) apology only, (b) apology and assistance, (c) apology and compensation, or (d) apology, assistance, and compensation. Subjects' intentions toward the provider were measured, including their propensity to voice their dissatisfaction and the likelihood that they would continue to do business with the provider. The study provides insight into the threats to the loyalty-building process and an opportunity to determine the value of a contingency approach in designing a service recovery strategy. …