Retaining customers after service failure recoveries: a contingency model

Abstract

Purpose – The purpose of this paper is to propose and empirically test a customer retention contingency model in service failure settings. Specifically, this research investigates how service recovery satisfaction (SRS) influences the relationship quality (RQ)-behavior chain. It also examines the moderating role of RQ and switching cost (SC) in the proposed model. Design/methodology/approach – A two-part survey study was performed and 303 valid responses from banking services users were obtained. The structural equation modeling was used in order to test the research hypotheses. Findings – The results of this study show that SRS influences purchase intentions and behavior via RQ. In addition, SC moderate the effect of RQ on purchase intentions whereas RQ moderates the effect of purchase intentions on purchase behavior. Practical implications – From a managerial standpoint, this research provides implications for service recovery management. In particular, the findings indicate the importance of RQ. When a service failure occurs, RQ not only mediates the effect of SRS on purchase intentions, but also facilitates transforming behavioral intentions into actual behavior. Originality/value – This research fills a void in the service recovery literature by linking service recovery performance to the RQ-behavior chain.