The role of customer participation in customer satisfaction with service recovery

Joohyung Park, Purdue University

Abstract

Despite that service retailers are continually seeking ways to ensure customer satisfaction service failure is unavoidable due to the unique nature of service such as co-production with customers and the inseparability of production and consumption. More importantly, delivering an effective service recovery is vital in the long-term survival of businesses because a recovery encounter represents a critical moment when customers determine whether they will stay with a business or leave (Keaveney, 1995). However, the current understanding of when and how various types of recovery strategies work (or do not work) still remains incomplete. The purpose of this study was to advance the current understanding of customer satisfaction with service recovery by exploring how consumers respond to different service recovery strategies when a firm is responsible for the initial service failure in a hotel service context. The two recovery strategies of interest in this study were customer participation in service recovery and compensation. Building on justice theory, this study proposed that the two service recovery strategies would have a positive impact on customers' justice perceptions (procedural, interactional, and distributive justice), which in turn would influence customer satisfaction with the service recovery. To test the hypotheses, an online scenario-based experiment was employed within each of two possible recovery outcome contexts: a positive outcome and a negative outcome following service recovery efforts. In the positive outcome context, two pertinent dimensions of perceived justice were identified: procedural/distributive justice and interactional justice. Customers' participation in the service recovery (i.e., co-creation of recovery vs. firm recovery) was found not to have any positive impact on their justice perceptions. Compensation, however, was found to have a positive impact on customers' procedural/distributive justice perception. No interaction effect between customer participation and compensation was found. Further, procedural/distributive justice positively influenced customers' satisfaction with service recovery, but interactional justice did not. In the negative outcome context, three dimensions of perceived justice were found to be salient, as anticipated: procedural justice, distributive justice, and interactional justice. Customers' participation did not have any positive impact on their justice perceptions. Compensation, however, did have a positive impact on all three justice perceptions. The interaction effect of the two recovery strategies was not significant. Finally, procedural and distributive justice positively influenced customers' satisfaction with service recovery, but interactional justice had no influence on satisfaction with service recovery. Additionally, a post-hoc analysis explored a potential reason underlying the null effects of customer participation. The results implied that, instead of whether or not consumers participate in service recovery encounters, consumers' attitude toward co-creation of service recovery is likely to play an important role in making a difference in justice perceptions about service recovery. This study contributes to the literature on customer participation/co-creation, service failure and recovery management, and customer satisfaction by enhancing the understanding of the effectiveness of customer participation and compensation as recovery strategies and the influence of customers' justice perceptions on their satisfaction with service recovery.

Degree

Ph.D.

Advisors

Ha, Purdue University.

Subject Area

Marketing

COinS