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Where service recovery meets its paradox: Implications for avoiding overcompensation
University of Gävle, Faculty of Education and Business Studies, Department of Business and Economic Studies, Business administration.
University of Gävle, Faculty of Education and Business Studies, Department of Business and Economic Studies, Business administration.ORCID iD: 0000-0003-0084-007x
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2022 (English)In: Journal of service theory and practice, ISSN 2055-6225, E-ISSN 2055-6233, Vol. 32, no 7, p. 1-13Article in journal (Refereed) Published
Abstract [en]

Purpose

The service recovery paradox (SRP) is the phenomenon that happens when customer satisfaction level post-service failure and recovery surpasses the customer satisfaction level achieved at error-free service. The aim of this study was to identify how large the size of compensation has to be at recovery for customer satisfaction to surpass that of error-free service (i.e. to identify a threshold value for SRP). The purpose of this is to inform managers how to restore customer satisfaction yet avoid overcompensation.

Design/methodology/approach

The paper covers two studies. Study 1 used the novel approach of asking participants who had experienced a service failure in the hotel industry what amount of money (recovery) would make them more satisfied than in the case of error-free service. Study 2 then tested the compensation levels expressed by Study 1 participants to be sufficient for the service recovery paradox to occur.

Findings

Study 1 indicated that the threshold for the SRP was (on average) around 1,204 SEK, or just over 80% of the original room reservation price of 1,500 SEK (approx. $180). Study 2 found that (on average) the customer satisfaction of participants who received 1,204 SEK in compensation for service failure marked the point where it surpassed that of error-free service. Participants who received 633 SEK were less satisfied; participants who received 1,774 SEK were more satisfied.

Research limitations/implications

The findings are context-specific. Future research should test the findings' generalizability.

Practical implications

The approach used in this paper could provide managers with a tool to guide their service recovery efforts. The findings could help hotel managers to make strategic decisions to restore customer satisfaction yet avoid overcompensation, given a legitimate service failure in which the organization is at fault.

Originality/value

Numerous previous studies have investigated the occurrence or absence of the SRP at predetermined compensation levels. This paper used a novel approach to find a quantitative threshold at which the magnitude of the recovery effort makes customer satisfaction surpass that of error-free service

Place, publisher, year, edition, pages
Emerald , 2022. Vol. 32, no 7, p. 1-13
Keywords [en]
Service recovery paradox, Compensation, Hotel industry, Customer satisfaction
National Category
Business Administration
Research subject
Intelligent Industry
Identifiers
URN: urn:nbn:se:hig:diva-37189DOI: 10.1108/JSTP-06-2021-0120ISI: 000797177300001Scopus ID: 2-s2.0-85130453760OAI: oai:DiVA.org:hig-37189DiVA, id: diva2:1604482
Available from: 2021-10-20 Created: 2021-10-20 Last updated: 2022-12-05Bibliographically approved

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Molin, JonasAhmadi, ZahraSörqvist, Patrik

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Edström, AndreasNylander, BeatriceMolin, JonasAhmadi, ZahraSörqvist, Patrik
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