Customers often react strongly to service failures, so it is critical that an organization's recovery efforts be equally strong and effective. In this article, the authors develop a model of customer satisfaction with service failure/recovery encounters based on an exchange framework that integrates concepts from both the consumer satisfaction and social justice literature, using principles of resource exchange, mental accounting, and prospect theory. The research employs a mixed-design experiment, conducted using a survey method, in which customers evaluate various failure/recovery scenarios and complete a questionnaire with respect to an organization they recently had patronized. The authors execute the research in the context of two different service settings, restaurants and hotels. The results show that customers prefer to receive recovery resources that "match" the type of failure they experience in "amounts" that are commensurate with the magnitude of the failure that occurs. The findings contribute to the understanding of theoretical principles that explain customer evaluations of service failure/recovery encounters and provide managers with useful guidelines for establishing the proper "fit" between a service failure and the recovery effort.
Customers often react strongly to service failures, so it is critical that an organization's recovery efforts be equally strong and effective. In this article, the authors develop a model of customer satisfaction with service failure/recovery encounters based on an exchange framework that integrates concepts from both the consumer satisfaction and social justice literature, using principles of resource exchange, mental accounting, and prospect theory. The research employs a mixed-design experiment, conducted using a survey method, in which customers evaluate various failure/recovery scenarios and complete a questionnaire with respect to an organization they recently had patronized. The authors execute the research in the context of two different service settings, restaurants and hotels. The results show that customers prefer to receive recovery resources that "match" the type of failure they experience in "amounts" that are commensurate with the magnitude of the failure that occurs. The findings contribute to the understanding of theoretical principles that explain customer evaluations of service failure/recovery encounters and provide managers with useful guidelines for establishing the proper "fit" between a service failure and the recovery effort. 1 This conceptualization was adapted from Bies and Moag (1986) and has been applied to complaint handling episodes (Tax 1993; Tax, Brown, and Chandrashekaran 1998). Although the three dimensions originally were presented as a sequence of events, we do not consider them sequential because, in practice, many of the exchanges overlap or occur simultaneously. 2 Several researchers have considered the influence of perceptions of justice (fairness) on customer evaluations and behavioral intentions (e.g.,
Many service organizations have embraced relationship marketing with its focus on maximizing customer lifetime value. Recently, there has been considerable controversy about whether there is a link between customer satisfaction and retention. This research question is important to researchers who are attempting to understand how customers' assessments of services influence their subsequent behavior. However, it is equally vital to managers who require a better understanding of the relationship between satisfaction and the duration of the provider-customer relationship to identify specific actions that can increase retention and profitability in the long run. Since there is very little empirical evidence regarding this research question, this study develops and estimates a dynamic model of the duration of provider-customer relationship that focuses on the role of customer satisfaction. This article models the duration of the customer's relationship with an organization that delivers a continuously provided service, such as utilities, financial services, and telecommunications. In the model, the duration of the provider-customer relationship is postulated to depend on the customer's subjective expected value of the relationship, which he/she updates according to an anchoring and adjustment process. It is hypothesized that cumulative satisfaction serves as an anchor that is updated with new information obtained during service experiences. The model is estimated as a left-truncated, proportional hazards regression with cross-sectional and time series data describing cellular customers perceptions and behavior over a 22-month period. The results indicate that customer satisfaction ratings elicited prior to any decision to cancel or stay loyal to the provider are positively related to the duration of the relationship. The strength of the relationship between duration times and satisfaction levels depends on the length of customers' prior experience with the organization. Customers who have many months' experience with the organization weigh prior cumulative satisfaction more heavily and new information (relatively) less heavily. The duration of the service provider-customer relationship also depends on whether customers experienced service transactions or failures. The effects of perceived losses arising from transactions or service failures on duration times are directly weighed by prior satisfaction, creating contrast and assimilation effects. How can service organizations develop longer relationships with customers? Since customers weigh prior cumulative satisfaction heavily, organizations should focus on customers in the early stages of the relationship—if customers' experiences are not satisfactory, the relationship is likely to be very short. There is considerable heterogeneity across customers because some customers have a higher utility for the service than others. However, certain types of service encounters are potential relationship “landmines” because customers are highly sensitive to the costs/losses arisi...
PurposeThe purpose of this paper is to review what we know – and don't know – about Generation Y's use of social media and to assess the implications for individuals, firms and society.Design/methodology/approachThe paper distinguishes Generation Y from other cohorts in terms of systematic differences in values, preferences and behavior that are stable over time (as opposed to maturational or other differences). It describes their social media use and highlights evidence of intra‐generational variance arising from environmental factors (including economic, cultural, technological and political/legal factors) and individual factors. Individual factors include stable factors (including socio‐economic status, age and lifecycle stage) and dynamic, endogenous factors (including goals, emotions, and social norms).The paper discusses how Generation Y's use of social media influences individuals, firms and society. It develops managerial implications and a research agenda.FindingsPrior research on the social media use of Generation Y raises more questions than it answers. It: focuses primarily on the USA and/or (at most) one other country, ignoring other regions with large and fast‐growing Generation Y populations where social‐media use and its determinants may differ significantly; tends to study students whose behaviors may change over their life cycle stages; relies on self‐reports by different age groups to infer Generation Y's social media use; and does not examine the drivers and outcomes of social‐media use. This paper's conceptual framework yields a detailed set of research questions.Originality/valueThis paper provides a conceptual framework for considering the antecedents and consequences of Generation Y's social media usage. It identifies unanswered questions about Generation Y's use of social media, as well as practical insights for managers.
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