Consumer responses to compensation, speed of recovery and apology after a service failure

Abstract

This experimental study examined how the three dimensions of fairness (distributive, procedural and interactional) influence consumers' attributional processes, their post-recovery satisfaction and behavioral responses (repatronage intent and negative word-of-mouth) in a service failure context that does not invoke monetary costs to the consumer. Our results indicate that recovery outcomes (e.g. compensation), procedures (eg. speed of recovery) and interactional treatment (e.g. apology) have a joint effect on post-recovery satisfaction. Specifically, our findings suggest that compensation may not enhance satisfaction when the recovery process is well-executed (an immediate response combined with an apology). Similarly, compensation failed to lessen dissatisfaction with a poor recovery process (a delayed response without apology). It thus seems that compensation is a poor substitute for a good recovery process. However, offering compensation was effective in increasing satisfaction in mixed-bag recovery situations (delayed recovery with an apology, or immediate recovery without apology). Furthermore, we found that service recovery satisfaction acted as a full mediator between service recovery attributes (compensation, recovery speed and apology) and behavioral intentions (repurchase intent and negative WOM). Finally, our findings suggest that consumer attributions for stability and controllability for the failure vary across recovery efforts. Managerial implications for these findings are discussed.