Edited by Robert M. Morgan, Janet Turner Parish and George Deitz
Chapter 6: Service failure and recovery: implications for relationship marketing
Relationship marketing is built on the premise that building and maintaining relationships with customers leads to long-term retention, which in turn results in higher firm profitability. Service failure and recovery management is a key driver of customer relationship quality and ultimately customer retention (Hoffman, Kelley and Soulage 1995; Roos 1999). Research investigating why customers choose to remain with a firm indicates the most important reason, out of all the reasons identified, is “lack of a critical incident,” or the lack of a memorable service failure (Colgate et al. 2007). Given the nature of services, however, some degree of failure is inevitable. Thus, firms must have well-planned processes and systems in place to identify failures when they occur, to learn from failures by improving service delivery, and to manage recoveries effectively, thereby restoring satisfaction, trust, and loyalty to the firm (J.S. Smith et al. 2009; J.S. Smith and Karwan 2010). Service failure involves activities that occur as a result of customer perceptions of initial service delivery performance falling below the customer’s expectations, or “zone of tolerance” (see Zeithaml et al. 1993). Service recovery involves the actions taken by an organization in response to a service failure (Gronroos 1988), presenting a critical opportunity by which the company may not only restore satisfaction but potentially even delight the customer with its efforts.
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