How a firm's best versus normal customers react to compensation after a service failure

Katja Gelbrich, Jana Gäthke and Yany Grégoire

Journal of Business Research, 2016, vol. 69, issue 10, 4331-4339

Abstract: This paper examines whether customers with a strong relationship do or do not react more favorably to different compensation amounts, compared to weak relationship customers. Drawing on a wide range of compensation amounts (eleven conditions between 0%–200%), Study 1 (hotel context) supports a moderating effect of relationship quality: the nonlinear curve progression between compensation and recovery satisfaction is less concave for strong—compared to weak—relationship customers. In particular, both customer groups are equally responsive to low compensation, but strong relationship customers react more favorably to high compensation. Study 2 demonstrates that this nonlinear pattern holds true for a different setting (restaurant context), and for customers' overall satisfaction judgment. Further, it supports that the moderating effect of relationship quality is mediated by perceived reciprocity. We discuss the theoretical implications for the recovery literature and formulate recommendations for the compensation that firms should offer to their best vs. normal customers.

Keywords: Compensation; Relationship quality; Transaction-specific and overall satisfaction; Nonlinear curve progression; Service recovery; Reciprocity (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296316301308
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:69:y:2016:i:10:p:4331-4339

DOI: 10.1016/j.jbusres.2016.04.010

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().