Monetary or nonmonetary compensation for service failure? A study of customer preferences under various loci of causality

Fu, Hui; Wu, Doris Chenguang; Huang, Songshan; Song, Haiyan; Gong, Jinhong

doi:10.1016/j.ijhm.2015.01.006

Cited by 37 publications

(26 citation statements)

References 80 publications

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“…However, the hypothesised relationships of distributive and informational justice with service recovery satisfaction are not supported in this study. The insignificant result of distributive justice contradicts the findings of other service recovery studies such as Kim, Kim, and Kim (2009) and Waqas, Ali, and Khan (2014), but is consistent with Fu, Wu, Huang, Song, and Gong (2015) and Roschk and Gelbrich (2014) who mentioned that providing compensation to customers does not always bring desirable outcomes. The results also show that informational justice was insignificantly 52 associated with service recovery satisfaction and inconsistent with the findings of other service recovery studies such as De Clercq and Saridakis (2015) and Taamneh (2015).…”

Section: Discussionsupporting

confidence: 70%

An Empirical Study on Service Recovery Satisfaction in an Open and Distance Learning Higher Education Institution in Malaysia

Amin

Piaralal

Daud

et al. 2020

IRRODL

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This study investigated the relationships among justice dimensions (distributive, procedural, interpersonal, and informational), university image, service recovery satisfaction, and customer behavioural outcomes (trust, word of mouth, repurchase intention, and loyalty). This study adopted a cross-sectional survey approach and data were collected through a survey of 303 students of Open University Malaysia in Malaysia who experienced service failure and service recovery. The framework was tested via partial least square structural equation modelling, and the results revealed a significant relationship between justice dimensions and service recovery satisfaction in terms of procedural and interpersonal justice. Service recovery satisfaction had a significant effect on all customer behavioural outcomes investigated. University image did not have a moderating effect on the relationship between justice dimensions and service recovery satisfaction. Theoretical and practical implications of the study are discussed in this paper.

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Section: Discussionsupporting

confidence: 70%

An Empirical Study on Service Recovery Satisfaction in an Open and Distance Learning Higher Education Institution in Malaysia

Amin

Piaralal

Daud

et al. 2020

IRRODL

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“…The findings of this study established that proactive service recovery provides guarantee to the customer about the e‐retailer's service promise and delivery. The findings resound the earlier findings such that companies should be proactive and demonstrate strong intention overcome any service failure rather than an adopting reactive service management approach (Fu, Wu, Huang, Song, & Gong, ). E‐retailer's intention of service recovery indicates that the company has the ability and adopts openness and positivity about two‐way communication and demonstrates intention to resolve any service failure.…”

Section: Implications and Conclusionsupporting

confidence: 78%

Appraisal of the potential of the growth of e‐retailer based on impact of perceived value on trust for online purchases

Babu

Dey

2018

Strategic Change

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Customer satisfaction for online purchase and its subsequent influence on customer trust is a pivotal in the proliferation of online businesses that in turn can foster global and national economic growth. The significance of understanding perceived value in the context of online shopping is as important as is in the context of traditional shopping. Quantitative data were collected from customers, who have online shopping experience. The analysis, carried out using structural equation modeling, suggests that customers' perceived acquisition value has a significant impact over their satisfaction which affects their trust with regard to an online retailer.

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“…In a situation of negative emotion during service failures a free gift or an apology can convert a negative emotion into a positive emotion (Golder et al, 2012). Fu et al (2015) examine the effectiveness of different post-failure compensation strategies and found strategies that comprise of both monetary and non-monetary compensation result in higher consumer satisfaction than those which offer one or the other. Similarly, Mattila and Cranage (2005) find that restaurant patrons' choice over the service delivery process, compensation and apology jointly influence their perceptions of fairness.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…The growing body of evidence shows that compensation leads to higher satisfaction than no compensation (Fu et al, 2015;Roschk and Gelbrich, 2014). In particular, a combination of monetary and non-monetary compensations have the greatest recovery effect; when there is a service failure, consumers not only desire for a sincere apology from the service provider but also want to be monetarily compensated for their loss (Grewal et al, 2008;Fu et al, 2015). Although abundant studies have been done related to service failure and recovery, to what extent service recovery needs to be done so that it is translated into recovery remains unanswered.…”

Section: Introductionmentioning

confidence: 99%

Guest preferences for service recovery procedures: conjoint analysis

Lee

2018

JHTI

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Purpose The ongoing challenge for hospitality firms is not to avoid service failures completely but rather to find effective ways of recovering from them. The purpose of this paper is to adopt conjoint analysis to examine guest preferences for service recovery actions that are taken simultaneously and the effect of such actions in the context of hotels in order to seek answers to the following research questions: what type of compensation bundle is most preferred by guests? and How effective are compensations in terms of recovery satisfaction, especially with regard to subsequent behavioral intentions? Design/methodology/approach In order to study guest preferences for compensation, choice-based conjoint (CBC) experiments were used. The CBC survey method involves presenting respondents with several hypothetical scenarios that include numerous combinations of compensation attributes. The survey sample was recruited through web-based panels run by a marketing firm. The online survey was designed and built in the Sawtooth Software platform. Conjoint analysis was carried out. Findings The conjoint analysis results show that among the different compensation attributes, consumers preferred discounts the most, followed by corrective actions and loyalty points. Among the discount levels, consumers favored “free one night certificate for a future stay” over “100 percent off one night’s room bill.” Regarding loyalty points, consumers desire more points than fewer points. In terms of correction levels, consumers appear to desire an “upgrade to a suite” over just moving to another room or having the original room cleaned. Moreover, consumers prefer that service recovery be handled by upper-level management. Research limitations/implications Several limitations should be discussed. For example, the type of service failure studied was limited to a booked room not being clean upon check-in. Different types and magnitudes of service failures may result in a different set of preferences for compensation bundles. In addition, the compensation attributes and levels were limited in scope even though they were obtained from interviews with managers at midsize hotels. Other attributes and attribute levels can be included in future studies. Originality/value Although an abundant number of studies have been done regarding service failure and recovery, the extent to which service recovery needs to be carried out before it translates into actual recovery remains unanswered. Using conjoint analysis, the study identified exactly which bundle of compensation items was most preferred by guests.

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Monetary or nonmonetary compensation for service failure? A study of customer preferences under various loci of causality

Cited by 37 publications

References 80 publications

An Empirical Study on Service Recovery Satisfaction in an Open and Distance Learning Higher Education Institution in Malaysia

An Empirical Study on Service Recovery Satisfaction in an Open and Distance Learning Higher Education Institution in Malaysia

Appraisal of the potential of the growth of e‐retailer based on impact of perceived value on trust for online purchases

Guest preferences for service recovery procedures: conjoint analysis

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