The Service Recovery Paradox: Increased Loyalty through Effective Service Recovery

image How is it possible that customers are more loyal after failures of products or services than they were before? Excellent service recovery is the key, and with the right activities companies can fully utilize this service recovery paradox.

The service recovery paradox states that with highly effective service recovery, a service or product failure offers the opportunity to achieve higher satisfaction ratings from customers than if the failure had never occurred. A bit less academically, this means that a good recovery turns angry and frustrated customers into loyal customers. In fact, it has the potential to create even more goodwill than if things had gone smoothly in the first place.

Nevertheless, not all service recovery efforts lead to increased satisfaction ratings as several studies have already shown. The key is to differentiate between service recovery situations that will lead to increased customer satisfaction and those that will not. Service recoveries that are most likely to produce increased customer loyalty are those where the failure is perceived not to be systematic or over which the company had little control. Even in cases of systematic failure over which the company had control, effective service recovery activities benefit both the customer and the company. A solution or remedy for the customer brings them satisfaction and post-failure actions by the company can eliminate the failure for current and future customers.

The key questions to ask of your organization are these:

  • Are you aware when your customers encounter service failures?
  • Have you thought about an “emergency plan” that can be put in action whenever your customers encounter a service failure?
  • Or do you plan to take ad-hoc action when the business relationship with your customers is endangered?

Read more about the service recovery paradox in these publications:

VP Magnini et. al., “The service recovery paradox: justifiable theory or smoldering myth?,” Journal of Services Marketing 21, no. 3 (2007): 213-225.

CA de Matos, JL Henrique, und C Alberto Vargas Rossi, “Service Recovery Paradox: A Meta-Analysis,” Journal of Service Research 10, no. 1 (2007): 60.

 

7 thoughts on “The Service Recovery Paradox: Increased Loyalty through Effective Service Recovery

  1. Bernhard

    the two article you reference above are pay per view

    do you have any free access links to these articles
    drop me a line via my email address

    cheers
    Miro

  2. Miro,

    unfortunately I can not put up the articles on my blog because that would interfere with copyright laws.

    One option to still get access to the articles is to write the authors an eMail and ask them for a copy. They might not send you exactly the same article, but probably help you out with a working paper or an already advanced paper.

    So the authors are: Dr. Vincent P. Magnini (http://www.longwood.edu/business/Faculty/magninivp.htm) and Celso Augusto de Matos, School of Management, Federal University of Rio Grande do Sul (PPGA-EA-UFRGS), (celsomatos@yahoo.com.br)

    I hope this information helps.

    Bernhard

  3. Recovery paradox, as far as i perceived it, it means that failures are helpful to increase the loyalty of the customers but isn’t it costly to fit in the mistakes to cause a service failure?
    We need to know the gaps , study the gaps so that there will be no chances of failure.In the other case we incur two costs: cots associated to fit in the mistake and costs associated with the recovery.

Leave a Reply