Identifying Appropriate Compensation Types for Service Failures

Abstract

This article examines how compensation type and failure type explain the recovery effect of compensation, using a meta-analysis (Study 1) and an experiment (Study 2). Drawing on resource exchange theory, we propose new classifications for both compensation and failure type and find three major results. First, consistent with our matching hypothesis, the strongest recovery effect is generally observed when compensation represents a resource similar to the failure it is supposed to offset, that is, immediate monetary compensation for a monetary failure, exchange for a flawed product, reperformance for a failed service, and psychological compensation for lack of attention. Surprisingly, lack of attention may also be rectified by the other compensation types. Second, consistent with our intertemporal choice hypothesis, immediate monetary compensation is generally more effective than delayed monetary compensation. Yet, this effect also varies with failure type. Third, resource-based classifications explain the recovery effect of compensation better than current classifications of compensation and failure type. As a theoretical contribution, the resource-based classifications help to explain the fluctuating effect sizes of compensation reported in prior research. From a managerial point of view, practitioners can choose the appropriate compensation type for a failure, one that repays in kind what customers have lost. As a result, companies achieve stronger recovery effects without additional costs.

A disztributív igazságosság fogalmának értelmezése a szolgáltatóvállalat nézőpontjából

“…Ennek fényében a készpénzben kapott kárpótlás értékesebb kell, hogy legyen, mint a kupon vagy bár-milyen más, jövőbeli vásárlási lehetőség. Több kutatási eredmény is bebizonyította, hogy a fogyasztó sokkal inkább értékeli a készpénzben történő kompenzálást, mint az időben elhalasztott, későbbi vásárlások során realizálható kedvezményeket (Bambauer-Sachse -Rabeson, 2015;Roschk -Gelbrich, 2014). Mindazonáltal a szolgáltató szemszögéből nézve a fogyasztóval való kapcsolat elmélyítését jobban szolgálja a kuponos megoldás, hiszen így lehetősége van arra, hogy a fogyasztó ad még egy esélyt a bizonyításra, és nem morzsolódik le.…”

Consumer’s Evaluation About Service Recovery: The Role of Social Comparison

“…Service recovery is the actions taken by a company when a service failure occurs (Hirschman, 1973), and the initiation of its process may occur by the company or the customer (Smith, Bolton, & Wagner, 1999). When there is a failure, the customer has the option to exit by not buying from the company anymore, or to voice, by expressing dissatisfaction to the company or to whom is interested in hearing it (Hirschman, 1973).…”

“…Each part of the complaint handling is liable to a justice consideration, and each aspect of the complaint resolution creates a justice episode (Bies, 1987, as cited in Tax et al, 1998. Thus, the service recovery process allows restoring the perceived justice (Pizzutti & Fernandes, 2010;Smith et al, 1999). In other words, the combination of the three dimensions of justice determines complainers' overall justice perception and their post-complaint behavior (Blodgett et al, 1997).…”

“…Although all recovery attributes have an effect on each type of justice, there will be a greater impact when the attribute is combined with the type of justice (Smith et al, 1999). Therefore, compensation will have a greater effect on distributive justice, procedures in answering the complaint will have a greater relationship with procedural justice, while employee's favorable behavior will have a greater effect on interactional justice.…”

“…If it is difficult to completely eliminate service failures, it is valuable for the company to understand how consumers evaluate and respond to the process of service recovery (Schoefer & Ennew, 2005). Complaints represent an opportunity for companies to engage in recovery efforts in order to positively influence subsequent behavior (Blodgett, Hill, & Tax, 1997) by restoring satisfaction, increasing purchase intention and positive word-of-mouth (Maxham III, 2001;Orsingher, Valentini, & Angelis, 2010), maintaining trust in the company (Tax, Brown, & Chandrashekaran, 1998;Pizzutti & Fernandes, 2008), encouraging forgiveness (Joireman, Grégoire, & Tripp, 2016), and avoiding retaliation (Grégoire & Fisher, 2008;Grégoire, Tripp, & Legoux 2009).…”