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Money for nothing?: The impact of compensation on customer bad-mouthing behavior in service recovery encounters
Karlstad University, Faculty of Arts and Social Sciences (starting 2013), Service Research Center (from 2013). Karlstad University, Faculty of Arts and Social Sciences (starting 2013), Karlstad Business School (from 2013).ORCID iD: 0000-0003-0582-3324
Karlstad University, Faculty of Arts and Social Sciences (starting 2013), Service Research Center (from 2013). Karlstad University, Faculty of Arts and Social Sciences (starting 2013), Karlstad Business School (from 2013).ORCID iD: 0000-0003-2705-0836
University of Agder, NOR; Institute of Retail Economics, SWE.ORCID iD: 0000-0002-0283-8777
Karlstad University, Faculty of Arts and Social Sciences (starting 2013), Service Research Center (from 2013). Inland Norway University of Applied Science, NOR.ORCID iD: 0000-0002-5605-9285
2023 (English)In: Marketing letters, ISSN 0923-0645, E-ISSN 1573-059X, Vol. 34, no 1, p. 69-82Article in journal (Refereed) Published
Abstract [en]

As one of the retailer’s most potent recovery tactics to offset disgruntled customers, firms invest heavily in compensation to increase customer satisfaction and improve loyalty. However, the effectiveness of this tactic remains unclear. This study examines whether firm-offered compensation affects customers’ emotional responses and bad-mouthing behavior (i.e., telling others about a particular problem). Importantly, the study investigates whether the level of collaboration during the recovery encounter moderates the link between compensation and customers’ emotional responses, and whether collaborative efforts influence the effectiveness of compensation. The findings indicate that collaboration during the recovery encounter is necessary if compensation is to mitigate negative emotional responses, with downstream effects on bad-mouthing behavior. In confirming the importance of collaboration during recovery encounters, the findings have critical managerial and financial implications.

Place, publisher, year, edition, pages
Springer, 2023. Vol. 34, no 1, p. 69-82
Keywords [en]
Bad-Mouthing Behavior; Collaboration; Compensation; Complaint Management; Service Failure; Service Recovery
National Category
Business Administration
Research subject
Business Administration
Identifiers
URN: urn:nbn:se:kau:diva-85982DOI: 10.1007/s11002-021-09611-6ISI: 000745553000001Scopus ID: 2-s2.0-85123500882OAI: oai:DiVA.org:kau-85982DiVA, id: diva2:1595410
Note

Article part of Arsenovic's doctoral thesis (2021) Proactivity in Service Failure and Service Recovery as manuscript.

Available from: 2021-09-19 Created: 2021-09-19 Last updated: 2023-04-13Bibliographically approved
In thesis
1. Proactivity in Service Failure and Service Recovery
Open this publication in new window or tab >>Proactivity in Service Failure and Service Recovery
2021 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Although service failure and service recovery have been extensively researched, service employees struggle to recover an increasing number of customer complaints. The overall aim of this thesis is to explain the role of customer and employee proactivity in service failure and service recovery. Through a series of studies, this thesis examines how employee and customer proactivity influence customer responses after a service failure and in service recovery. In doing so, this thesis contributes to the service recovery literature in two ways.

First, by reconceptualizing service failure to include failures not necessarily linked to the core-service offering, this research contributes to the theory formation stressing the importance of seemingly “small details”. Doing so makes it possible to examine how seemingly minor interpersonal interaction can influence customer responses in the service environment and provide managers with a set of tools to manage failures of such seemingly minor interpersonal interaction. Introducing employee proactivity as a recovery tactic, this thesis demonstrates that when an employee shows a high level of proactivity during a service encounter, they can reduce the adverse effects that stem from the absence of expected interpersonal “small details” from earlier in the service encounter. As such, potentially serve to address a portion of the “silent mass” of customers who choose to stay silent.

Second, findings contrast lay belief that customers prefer the service providers to deal with service failures while they sit back and relax. Introducing service recovery collaboration as a potential service recovery response made it possible to document the benefits of including the customer as a proactive collaborator in the service recovery. Findings reveal that proactive customer behaviors in service recovery are particularly critical for customers with established relationships and in situations where compensation is the primary means of recovery.

Abstract [en]

The aim of this thesis is to explain the role of customer and employee proactivity in service failure and service recovery. Through a series of studies, this thesis examines how employee and customer proactivity influence customer responses after a service failure and in service recovery. In doing so, this thesis contributes to the service recovery literature in two ways. First, by reconceptualizing service failure, this research supports the theory formation stressing the importance of seemingly “small details”. However, by introducing employee proactivity as a recovery tactic, this thesis demonstrates how employee proactivity can reduce the adverse effects which stem from the absence of expected interpersonal “small details” which can potentially serve to address a portion of the “silent mass” of customers who choose to stay silent. Second, findings contrast lay belief that customers prefer the service providers to deal with service failures while they sit back and relax. In fact, this thesis documents the benefits of including the customer as a proactive collaborator in the service recovery. Findings reveal that customer inclusion is particularly critical for customers with established relationships and in situations where compensation is the primary means of recovery.

Place, publisher, year, edition, pages
Karlstad: Karlstads universitet, 2021. p. 90
Series
Karlstad University Studies, ISSN 1403-8099 ; 2021:25
Keywords
service failure, service recovery, complaint management, customer proactivity, employee proactivity, collaboration, customer responses
National Category
Business Administration
Research subject
Business Administration
Identifiers
urn:nbn:se:kau:diva-85983 (URN)978-91-7867-230-1 (ISBN)978-91-7867-241-7 (ISBN)
Public defence
2021-10-29, 11D227, Erlandersalen; Zoom, Karlstad, 13:00 (English)
Opponent
Supervisors
Note

Article 4 part of thesis as manuscript, now published.

Available from: 2021-10-07 Created: 2021-09-19 Last updated: 2022-11-09Bibliographically approved

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Arsenovic, JasenkoEdvardsson, BoOtterbring, TobiasTronvoll, Bård

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