Chapter 08 – Service Recovery
The Impact of Service Failure and Recovery
Service recovery is actions taken by an organization in response to a service failure. Failures occur because of
unreliability, late delivery, incorrect outcome, rude employees, and more. Unfixed failures can result in customers
leaving, negative word-of-mouth, and legal issues.
Service Recovery Effects
Resolving customer problems has a strong impact on customer satisfaction, loyalty, word-of-
mouth, and performance. Customers who never complain are least likely to repurchase. 50% of customers
who experience problems received no response from the firm. Extremely dissatisfied customers can
become “terrorists” and seek ways to publically criticize.
How Customers Respond to Service Failures
Customers who experience failures can respond in numerous ways. Negative emotions follow failure and impact
how customers evaluate the service recovery and their decision to return.
Why People Do (and Do Not) Complain
Customers who complain believe positive consequences may occur and that they would be
compensated for the failure. Non-complainers believe the opposite. Services that were seen a more
expensive would warrant time for a complaint (air line travel), than those who were cheaper (cab ride).
Types of Customer Complaint Actions
A dissatisfied customer may choose to complain on the spot, via phone, writing or Internet. This
gives the company a chance to recover. Some customers will spread negative word of mouth, giving the
company no chance to recover. Finally, some customers may choose to complain to third parties, or even
take legal action.
Types of Complainers
Passives – Least likely to take action. They doubt the effectiveness of complaining.
Voicers – Actively complain to the provider, but are less likely to spread negative WOM, to switch,
or go to third parties. These are the provider’s best friends. Constantly giving companies’ second
chances. They believe complaining has social benefits, and has positive benefits. Less likely to
spread negative WOM.
Irates – Most likely to spread negative WOM and switch.
Activists – Most likely to complain to all.
Customer Recovery Expectations
When customers complain, they have high expectations.
Understanding and Accountability
Customers are not looking for extreme action, but want to understand and for the firms to be
accountable. Remedies requested by customers include: Fixed service, refund, apology, explanation,
assurance, and ability to vent.
Three types of justice customers are looking for following complaints:
Outcome fairness – Customers expect outcomes that match their levels of dissatisfaction.
Monetary, apology, free services, discounts, or repairs/replacements.
Procedural fairness – Fairness in terms of policie