IMPACT OF SERVICE RECOVERY ON CUSTOMER LOYALTY
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IMPACT OF SERVICE RECOVERY ON CUSTOMER LOYALTY
Chapter One
INTRODUCTION
In today’s business world, competition has made it tough for sellers to survive, and new sellers and products enter the market on a daily basis. client loyalty has become an increasingly crucial idea in recent years in order to thrive, achieve a high profit, and minimise the costs associated with client switching.
The value of customer loyalty cannot be overstated in both products and services. However, both human and non-human errors can have an impact on client loyalty. These faults cannot be disregarded because they have a detrimental influence on the consumer satisfaction.
(Kau and Elizabeth, 2006, p. 101). Errors are more prevalent in service operations due to the complexity and diversity of the consumer’s demands. According to Swanson and Kelly (2001, p.194), service failure is defined as a series of problems that occur during service operation.
Service failure might occur due to the service person’s unavailability, a long wait time, inaccuracies in bank statements, and so on. To avoid the negative effects of a service failure on customers, the service provider should perform service recovery following the breakdown.
According to Grönroos (1988, p.10), service recovery is the process by which a service provider provides additional services in response to client complaints caused by service failure. Hart et al. (1990, p. 150) discovered in their research that more than half of all service recovery initiatives result in dissatisfaction with service.
According to Gilly (1987, p.294), clients who receive appropriate service responses are often more satisfied than those who were satisfied with the Core service but did not complain. According to Kau and Elizabeth (2006, p. 108), service recovery not only increases customer happiness but also customer trust, word of mouth, and loyalty.
The consumer who is disappointed but does not complain will have more negative comments to say than the customer who is dissatisfied even after complaining.
Original service recovery may have varying effects on customer satisfaction and loyalty, since observations reveal that customers may be satisfied but not loyal, and loyalty may be attributable to the original service rather than the service recovery.
According to Johnston and Michal (2008, p.80), the importance of service recovery research has grown dramatically over the previous two decades as a result of the fast adoption of customer-focused initiatives.
Service recovery is crucial because it can impact customer loyalty, which leads to positive word of mouth and draws additional consumers; however, if the recovery is poor, the effect is the opposite.
Tax and Brown (1998.) suggested that service recovery has an impact on a company’s financial position because customer loyalty is formed by customer satisfaction, which is the consequence of good service recovery methods.
STATEMENT OF PROBLEMS
Andreassen noticed in 1999 that the previous decade’s service recovery study had mainly focused on why, to whom, and how customers responded to displeasure.
Prior to that inspection, Goodwin and Ross (1992) concluded that less attention was paid to corporate replies to consumers’ expressed grievances, and that customers’ subsequent attitudinal and behavioural changes were not effectively tracked.
Furthermore, Conlon and Murray (1996) claimed that most current service recovery research at the time concentrated on the short-term impact of recovery efforts (i.e., compensation and apology quality) rather than exploring the actual determinants of service recovery satisfaction.
Furthermore, Ruyter and Wetzels (2000) discovered that very little study has been conducted on the relationship between service recovery and service quality factors (such as ongoing customer satisfaction, loyalty, and behavioural intentions).
As a result, service organisations were not properly identifying or analysing the drivers of service recovery satisfaction within the service industry, and the benefits of long-term satisfaction and customer retention were not fully realised.
Colgate and Norris (2001) proposed that recording the number and severity of service failures was the only way to demonstrate a commitment to a continuous quality improvement approach in the hospitality industry.
Thus, the researchers felt that a customer’s assessment of service quality was closely related to the frequency and severity of failures he or she encountered.
Furthermore, their research revealed that the organization’s response quality and problem resolution were crucial to the customer’s ongoing pleasure, loyalty, and inclinations to return or suggest.
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