The purpose of this paper is to present results from an empirical study of various service recovery designs. When service failures occur, service recovery is the primary way a firm can retain its customers and minimize the costs associated with customer defection and negative word of mouth. While researchers concur on the importance of service recovery in retaining customers, recommendations on implementation differ considerably. Consequently, actual service recovery design and results vary widely among practitioners.
The method employed uses an experimental design, employing controlled scenario manipulations.
This paper examines two issues that offer possible explanations for the variation in previous research results: elements of service recovery system design that make a difference and degree of primary failure. An additional issue, research methodology, may also contribute to variations in research results and is likewise addressed.
In failed service encounters, the degree of failure significantly affects customer satisfaction and loyalty. Both psychological and tangible factors are important contributors to service recovery satisfaction.
This study builds upon previous research and fills previous gaps by being the first study to experimentally test the impact that varying service recovery design has on recovery success within environments of varying levels of degree of failure.
