A Model of Customer Satisfaction with Service Encounters Involving Failure and Recovery

TLDR

Customers react strongly to service failures, making effective recovery efforts critical. The study develops a customer‑satisfaction model for failure/recovery encounters using an exchange framework that blends consumer‑satisfaction and social‑justice concepts with resource‑exchange, mental‑accounting, and prospect‑theory principles. A mixed‑design survey experiment had customers evaluate failure/recovery scenarios in restaurant and hotel contexts to test the model. Results show customers prefer recovery resources that match the failure type and are commensurate in amount, offering managers guidelines for aligning recovery efforts with failure magnitude.

Abstract

Customers often react strongly to service failures, so it is critical that an organization's recovery efforts be equally strong and effective. In this article, the authors develop a model of customer satisfaction with service failure/recovery encounters based on an exchange framework that integrates concepts from both the consumer satisfaction and social justice literature, using principles of resource exchange, mental accounting, and prospect theory. The research employs a mixed-design experiment, conducted using a survey method, in which customers evaluate various failure/recovery scenarios and complete a questionnaire with respect to an organization they recently had patronized. The authors execute the research in the context of two different service settings, restaurants and hotels. The results show that customers prefer to receive recovery resources that “match” the type of failure they experience in “amounts” that are commensurate with the magnitude of the failure that occurs. The findings contribute to the understanding of theoretical principles that explain customer evaluations of service failure/recovery encounters and provide managers with useful guidelines for establishing the proper “fit” between a service failure and the recovery effort.